As filed with the SEC on
December 30, 1994
Registration No. 33-43847
811-5591
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 13 </R X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No.
12 X
The Dreyfus/Laurel Funds Investment Series
(formerly The Laurel Company Investment Series
(Exact name of Registrant as Specified in Charter)
One Exchange Place, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 225-5267
John E. Pelletier
Secretary
The Dreyfus/Laurel Funds Investment Series
One Exchange Place
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
X immediately upon filing pursuant to Rule 485(b)
on _______________pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)
on pursuant to Rule 485(a)
The Registrant has previously filed a declaration of indefinite
registration of its shares pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended. Registrant's Rule 24f-2 Notice for the
fiscal year ended August 31, 1994 was filed on December 29, 1994.
The Dreyfus/Laurel Investment Series
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)
_______________________________________________________________
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Being Price Per Offering Registration
Registered Registered Unit Price(5) Fee
_________________________________________________________________
Shares of
Beneficial
Interest
$.001
par value
per share N/A N/A
Contrarian
Fund 1,202,173 $14.82(2) $17,816,201 $200.00
Short-Term
Bond Fund 1,518,858 $11.73(3) $17,816,201 $200.00
_________________________________________________________________
The Dreyfus/
Laurel
Investment
Series 2,721,031 N/A $35,632,402 $400.00
_________________________________________________________________
(1) The shares being registered as set forth in this table are in
addition to the indefinite number of shares of beneficial interest which
the Registrant has registered under the Securities Act of 1933, as
amended (the"1933 Act"), pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Registrant"s Rule
24f-2 Notice for its fiscal year ended August 31, 1994, was filed on
October 31, 1994.
(2) Based on the Fund's net asset value of $14.82 on December 15, 1994
pursuant to Rule 457(d) under the 1933 Act and Rule 24e-2(a) under the
1940 Act.
(3) Based on the Fund's net asset value of $11.73 on December 19, 1994
pursuant to Rule 457(d) under the 1933 Act and Rule 24e-2(a) under the
1940 Act.
(4) In response to Rule 24e-2(b) under the 1940 Act: (1) the
calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2; (2) shares of beneficial interest in the aggregate amount of
$52,596,727 were redeemed or repurchased by the Registrant during the
fiscal year ended August 31, 1994; (3) $18,124,325 of this amount was
used for reductions pursuant to Rule 24f-2 during the current fiscal
year; and (4) the remaining $34,472,402 of the total redemptions and
repurchases are being used for reduction in this amendment pursuant to
Rule 24e-2(a). During its current fiscal year, the Registrant has filed
no other post-effective amendments for the purpose of the reduction
pursuant to paragraph (a) of Rule 24e-2.
THE DREYFUS/LAUREL INVESTMENT SERIES
(formerly The Laurel Investment Series)
FORM N-1A
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A.
Item No. Prospectus Caption
1. Cover Page Cover Page
2. Synopsis Expense Summary; Investor Shares Distribution Plan
3. Financial Highlights Financial Highlights;
Performance Information
4. General Description of Cover Page; Investment Objectives;
Registrant Investment Policies; The Laurel Funds Investment
Series
5. Management of the Fund Expense Summary; Management
6. Capital Stock and Other Special Shareholder Services;
Securities The Laurel Funds Investment Series; Distributions;
Taxes
7. Purchase of Securities How to Invest in The Laurel Funds; Special
Shareholder Services; Share Price
8. Redemption or Repurchase How to Redeem Shares; Share Price;
Distributions; Special Shareholder Services
9. Pending Legal Proceedings Not Applicable
Part B Statement of Additional
Item No. Information Caption
10. Cover Page Cover Page
11. Table of Contents Contents
12. General Information Management of the Trust
and History Custodian and Transfer Agent
13. Investment Objectives and Investment Policies
and Policies
14. Management of the Fund Management of the Trust;
Distributor; Custodian and Transfer Agent
15. Control Persons and Management of the Trust
Principal Holders of
Securities
16. Investment Advisory and Management of the Trust
and Other Services Purchase of Shares; Custodian; Transfer
Agent
17. Brokerage Allocation Investment Policies
18. Capital Stock and Purchase of Shares; Taxes;
Other Securities Description of the Trust
19. Purchase, Redemption and Purchase of Shares; Redemption of
Pricing of Securities Shares; Valuation of Shares;
Being Offered
20. Tax Status Taxes
21. Underwriters Purchase of Shares
22. Calculation of Performance Performance Information
Data
23. Financial Statements Financial Statements
PROSPECTUS
Dreyfus/Laurel Contrarian Fund
Investor and Class R Shares
December 30, 1994
THE DREYFUS/LAUREL CONTRARIAN FUND is a diversified equity fund seeking
long-term growth in the Fund's per share net asset value by investing pri-
marily in common stocks which are believed to be undervalued, as measured
by various financial tests.
THIS PROSPECTUS describes the Dreyfus/Laurel Contrarian Fund (the "Fund")
of The Dreyfus/Laurel Investment Series (formerly The Laurel Investment
Series and prior thereto The Boston Company Investment Series), a manage-
ment investment company that is part of The Dreyfus Family of Funds. This
Prospectus describes two classes of shares--Investor Shares and Class R
Shares (collectively, the "Shares")--of the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional infor-
mation about the Fund is contained in a Statement of Additional Informa-
tion (the "SAI"), which has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request without charge by
calling or writing to The Dreyfus Family of Funds. The SAI bears the same
date as the Prospectus and is incorporated by reference in its entirety
into this Prospectus.
In addition to this Fund, The Dreyfus Family of Funds also offers other
funds that provide investment opportunities for you in the equity, fixed
income and money markets. For more information about these additional in-
vestment opportunities, call 1-800-548-2868
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DE-
POSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT
RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE
"EXPENSE SUM-
MARY" SECTION OF THIS PROSPECTUS. THE FUND PAYS MELLON BANK,
N.A. ("MELLON
BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON
BANK OR AN
AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE
FUND, SUCH AS
CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE
FUND IS DIS-
TRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Expense Summary 5
Financial Highlights 8
Investment Objective and Policies 10
Other Investment Policies and Risk Factors 11
HOW TO DO BUSINESS WITH US
Special Shareholder Services 17
Investor Line 17
How to Invest in the Fund 17
By Mail 18
By Telephone 18
By Wire 18
By Automatic Monthly Investments 19
By Direct Deposit 19
By In-Kind Purchases 19
When Share Price is Determined 20
Additional Information About Investments 20
How to Exchange Your Investment From One Fund to Another 21
By Telephone 21
By Mail 21
Additional Information About Exchanges 21
How to Redeem Shares 22
By Telephone 22
By Mail 22
By Automated Withdrawal Program 23
Redemption Proceeds 23
Additional Information About Redemptions 24
How To Use The Dreyfus Family of Funds in a Tax-Qualified
Retirement Plan 24
How to Transfer an Investment to a Dreyfus Family of Funds'
Retirement Plan 24
OTHER INFORMATION
Share Price 25
Performance Advertising 25
Distributions 26
Taxes 27
Other Services 29
Further Information About The Fund 29
The Dreyfus/Laurel Investment Series 29
Management 30
Distribution Plan (Investor Shares Only) 32
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE
FUND'S SAI INCOR-
PORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING
MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE DISTRIBU-
TOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
BE LAWFULLY
MADE.
EXPENSE SUMMARY
The purpose of the following table is to help you understand the various
costs and expenses that you, as a shareholder, will bear directly or indi-
rectly in connection with an investment in the Investor or Class R Shares
of the Fund. (See "Management.")
<TABLE>
<CAPTION>
Investor Class R
Shares Shares
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none
Maximum Sales Load Imposed on Reinvestments none none
Deferred Sales Load none none
Redemption Fee none none
Exchange Fee none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
Management Fee 1.25% 1.25%
12b-1 Fee 0.25% none
Other Expenses* 0.00% 0.00%
Total Fund Operating Expenses 1.50% 1.25%
EXAMPLES
You would pay the following on 1 year $15 $13
a $1,000 investment, assuming (1) a 3 years $47 $40
5% annual return and (2) redemption 5 years $82 $69
at the end of each time period: 10 years $179 $151
<FN>
* Does not include fees and expenses of the non-interested Trustees (in-
cluding counsel). The investment manager is contractually required to
reduce its Management Fee in an amount equal to the Fund's allocable
portion of such fees and expenses, which are estimated to be 0.02% of
the Fund's net assets. (See "Management.")
</TABLE>
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE
CONSIDERED A REPRE-
SENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
MORE OR LESS
THAN THOSE SHOWN.
The Fund understands that banks, securities brokers or dealers and other
financial institutions (including Mellon Bank, and its affiliates) (col-
lectively "Agents") may charge fees to their clients who are owners of the
Fund's Investor Shares for various services provided in connection with a
client's account. These fees would be in addition to any amounts received
by an Agent under its Shareholder Servicing and Sales Support Agreements
("Agreements") with Premier Mutual Fund Services, Inc. ("Premier"). The
Agreement requires each Agent to disclose to its clients any compensation
payable to such Agent by Premier and any other compensation payable by the
client for various services provided in connection with its account.
Long-term shareholders of Investor Shares could pay more in Rule 12b-1
fees than the economic equivalent of the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc.
[This Page Intentionally Left Blank]
FINANCIAL HIGHLIGHTS
The table below is based upon a single Investor Share outstanding through-
out each fiscal year and should be read in conjunction with the financial
statements and related notes that appear in the Fund's Annual Report dated
August 31, 1994. The financial statements included in the Fund's Annual
Report
DREYFUS/LAUREL CONTRARIAN FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR(1)
YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
1994+++, #
<S> <C>
Net asset value, beginning of year $17.81
Income from investment operations:
Net investment income/(loss)*** (0.12)
Net realized and unrealized gain/(loss) on investments (0.32)
Total from investment operations (0.44)
Less distributions:
Distributions from net investment income --
Distributions from net realized capital gains (0.80)
Total distributions (0.80)
Net asset value, end of year $16.57
Total return++ (2.55)%
Ratios to average net assets/Supplemental data:
Net assets, end of year (in 000's) $2,950
Ratios of operating expenses to average net assets** 1.83%
Ratios of net investment income/(loss) to average net
assets (0.68)%
Portfolio turnover rate 65%
<FN>
(1) Effective April 4, 1994 the Retail and Institutional classes of shares
were reclassified as a single class of shares known as the Investor
Shares. The amounts shown for the year ended August 31, 1994, were
calculated using the performance of a Retail Share outstanding from
September 1, 1993 to April 3, 1994, and the performance of an Investor
Share outstanding from April 4, 1994 to August 31, 1994. The Financial
Highlights for the year ended August 31, 1993 and prior years are
based upon a Retail Share outstanding.
* The Fund commenced selling operations on October 17, 1988.
** Annualized expense ratios before waiver of fees and/or reimbursement
of expenses by investment adviser, transfer agent and custodian for
the years ended August 31, 1994, 1993, 1992, 1991, 1990 and the period
ended August 31, 1989 would have been 3.69%, 4.70%, 3.88%, 5.18%,
4.58%, and 5.28%, respectively.
*** Net investment income/(loss) per share before waiver of fees and/or
reimbursement of expenses by the investment adviser, transfer agent
and custodian for the years ended August 31, 1994, 1993, 1992, 1991,
1990 and the period ended August 31, 1989 would have been $(0.44),
$(0.54), $(0.24), $(0.24), $(0.14) and $(0.18), respectively.
</TABLE>
dated August 31, 1994 are incorporated by reference to the SAI and have
been audited by KPMG Peat Marwick LLP, independent accountants, whose re-
port appears in the Fund's Annual Report. The Fund did not offer Class R
Shares during the fiscal year ended August 31, 1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1993+++ 1992 1991 1990 1989*
$14.00 $14.08 $12.06 $ 14.95 $12.00
(0.12) 0.04 0.13 0.15 0.18
4.90 0.67 3.08 (1.80) 2.82
4.78 0.71 3.21 (1.65) 3.00
-- (0.09) (0.22) (0.14) (0.05)
(0.97) (0.70) (0.97) (1.10) --
(0.97) (0.79) (1.19) (1.24) (0.05)
$17.81 $14.00 $14.08 $ 12.06 $14.95
35.97% 5.10% 29.93% (11.47)% 25.05%
$3,503 $2,666 $2,197 $ 1,831 $1,635
2.00% 1.99% 2.00% 2.00% 1.84%+
(0.81)% 0.25% 1.09% 1.34% 1.75%+
39% 76% 205% 176% 93%
<FN>
+ Annualized.
++ Total return represents aggregate total return for the periods indi-
cated.
+++ Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for this
period since use of the undistributed income method does not accord
with results of operations.
# Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager. From April 4, 1994 to October 16, 1994,
Mellon Bank served as the Fund's investment manager. Prior to April 4,
1994, The Boston Company Advisors, Inc. served as the Fund's invest-
ment adviser.
</TABLE>
DREYFUS/LAUREL CONTRARIAN FUND
INVESTMENT OBJECTIVE AND POLICIES
The Dreyfus/Laurel Contrarian Fund is a diversified fund that seeks long-
term growth in the Fund's per share net asset value ("NAV") by investing
primarily in common stocks which are believed to be undervalued, as mea-
sured by various financial tests. Under normal conditions, the Fund will
invest at least 80% of its assets in equity securities. The Fund may also
invest up to 20% of its total assets in corporate bonds which, in the
judgment of the Fund's investment manager, The Dreyfus Corporation (the
"Manager"), are undervalued, without regard to their quality or rating.
In pursuing its objective, the Fund will seek primarily investments that
offer opportunities for capital appreciation. The Fund will not consider
current yield of a security, except to the extent that the dividend or in-
terest rate of the security may affect opportunities for capital apprecia-
tion.
The Fund estimates the intrinsic value of a stock based on numerous fac-
tors, including cash flow, return on equity, return on assets, fixed
charge coverage, and ratios of costs to revenues. The Fund also considers
the current value of fixed assets and real estate, cash items, net working
capital, debt, and historical book value. The Fund also seeks stocks with
a price-earnings ratio below that of the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500") and a yield higher than the S&P 500.
The Fund invests in corporate bonds when, in the opinion of the Manager,
the capital appreciation available from these securities is equal to or
greater than that available from the Fund's equity holdings. There is no
minimum rating to the fixed-income securities in which the Fund may in-
vest. High yield corporate bonds and convertible bonds are the primary
focus of this activity. Such high risk securities, which are considered to
have speculative characteristics, include securities rated in the lowest
rating categories of Moody's Investors Service, Inc. ("Moody's") or Stan-
dard & Poor's Ratings Group ("Standard & Poor's"). These securities are
generally viewed as extremely speculative and may be in default with re-
spect to payment of principal or interest. The Fund intends to invest in
such securities only when, in the opinion of the Manager, investing in
these securities presents substantially reduced risks. It is anticipated
that the Fund's portfolio of corporate bonds will have an average maturity
of approximately eight years. For additional information concerning fixed-
income securities, see "Other Investment Policies" and the Appendix to the
SAI.
The Fund invests in stocks and corporate bonds to the extent that an ade-
quate supply of securities meeting the Fund's criteria are available for
purchase. Since the Fund's investments are wholly determined by the above
criteria, the Manager does not attempt to forecast economic trends, inter-
est rates, or the direction of the stock market. Forecasts of future earn-
ings of portfolio companies are a minor factor in the selection of securi-
ties. (See "Other Investment Policies.")
The Fund's value-oriented investment approach is expected to result in an
average holding period for securities of two to three years.
OTHER INVESTMENT POLICIES AND RISK FACTORS
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.
COVERED OPTION WRITING. From time to time, the Fund may write covered put
and call options on portfolio securities. The Fund could realize fees (re-
ferred to as "premiums") for granting the rights evidenced by the options.
However, in return for the premium, the Fund forfeits the right to any ap-
preciation in the value of the underlying security while the option is
outstanding. A put option embodies the right of its purchaser to compel
the writer of the option to purchase from the option holder an underlying
security at the specified price at any time during the option period. In
contrast, a call option embodies the right of its purchaser to compel the
writer of the option to sell the option holder an underlying security at a
specified price at any time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may suffer
a loss equal to the difference between the price at which the Fund is re-
quired to purchase the underlying security and its market value at the
time of the option exercise, less the premium received for writing the op-
tion. Upon the exercise of a call option written by the Fund, the Fund may
suffer a loss equal to the excess of the security's market value at the
time of the option exercise over the Fund's acquisition cost of the secu-
rity, less the premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or have the
present right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to pur-
chase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account,
cash, U.S. Government Securities or other high grade debt obligations hav-
ing a value at least equal to the exercise price of the underlying securi-
ties or (b) continue to own an equivalent number of puts of the same "se-
ries" (that is, puts on the same underlying security having the same exer-
cise prices and expiration dates as those written by the Fund), or an
equivalent number of puts of the same "class" (that is, puts on the same
underlying security) with exercise prices greater than those that it has
written (or, if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, it will deposit the difference
with the Fund's custodian in a segregated account).
The Fund may engage in a closing purchase transaction to realize a profit,
to prevent an underlying security from being called or put or, in the case
of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the out-
standing option's expiration). To effect a closing purchase transaction,
the Fund would purchase, prior to the holder's exercise of an option that
the Fund has written, an option of the same series as that on which the
Fund desires to terminate its obligation. The obligation of the Fund under
an option that it has written would be terminated by a closing purchase
transaction, but the Fund would not be deemed to own an option as the re-
sult of the transaction. There can be no assurance that the Fund will be
able to effect closing purchase transactions at a time when it wishes to
do so. To facilitate closing purchase transactions, however, the Fund will
ordinarily write options only if a secondary market for the options exists
on a national securities exchange or in the over-the-counter market.
FIXED INCOME SECURITIES. The Fund may invest in fixed-income securities
to achieve its investment objective. In periods of declining interest
rates, the Fund's yield (its income from portfolio investments over a
stated period of time) may tend to be higher than prevailing market rates,
and in periods of rising interest rates, the yield of the Fund may tend to
be lower. Also, when interest rates are falling, the inflow of net new
money to the Fund from the continuous sale of its shares will likely be
invested in portfolio instruments producing lower yields than the balance
of the Fund's portfolio, thereby reducing the yield of the Fund. In peri-
ods of rising interest rates, the opposite can be true. The net asset
value of the Fund investing in fixed-income securities also may change as
general levels of interest rates fluctuate. When interest rates increase,
the value of a portfolio of fixed-income securities can be expected to de-
cline. Conversely, when interest rates decline, the value of a portfolio
of fixed-income securities can be expected to increase.
FUTURES AND OPTIONS ON FUTURES. The Fund may enter into futures contracts
and purchase and write options on future contracts as hedges when deemed
advisable by the Manager. The Fund may purchase and sell financial futures
contracts, including futures for stock indexes, and purchase and write re-
lated options, that are traded on a United States exchange or board of
trade. These investments, if any, by the Fund will be made solely for the
purpose of hedging against changes in the value of its portfolio securi-
ties or securities which the Fund intends to purchase due to anticipated
changes in interest rates and market conditions, and when the transactions
are economically appropriate to the reduction of risks inherent in the
management of the Fund. The use of futures contracts and options on fu-
tures contracts as a hedging device involves several risks. There can be
no assurance that there will be a correlation between price movements in
the underlying securities, on the one hand, and price movements in the se-
curities which are the subject of the hedge, on the other hand. Positions
in futures contracts and options on futures contracts may be closed out
only on an exchange or board of trade that provides an active market for
them, and there can be no assurance that a liquid market will exist for
the contract or the option at any particular time. Losses incurred by
hedging transactions and the costs of these transactions will affect the
Fund's performance. Successful use of futures contracts by the Fund is
subject to the ability of the Manager to correctly predict movements in
the direction of interest rates. The Fund may not purchase or sell futures
contracts or purchase options on futures if, immediately thereafter, more
than 33 1/3% of its net assets would be hedged. In addition, the Fund may
not enter into futures and related options contracts for which aggregate
initial margin deposits and premiums exceed 5% of the fair market value of
the Fund's assets, after taking into account unrealized profits and unre-
alized losses on futures contracts into which it has entered.
ILLIQUID SECURITIES. The Fund will not knowingly invest more that 15% of
the value of its net assets in illiquid securities, including time depos-
its and repurchase agreements having maturities longer than seven days.
Securities that are readily marketable are not deemed illiquid for pur-
poses of this limitation (irrespective of any legal or contractual re-
strictions on resale). The Fund may invest in commercial obligations is-
sued in reliance on the so-called "private placement" exemption from reg-
istration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but which
can be sold to qualified institutional buyers in accordance with Rule 144A
under that Act ("Rule 144A securities"). Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold
to institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Sec-
tion 4(2) paper normally is resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment deal-
ers who make a market in the Section 4(2) paper, thus providing liquidity.
Rule 144A securities generally must be sold to other qualified institu-
tional buyers. Determinations as to the liquidity of investments in Sec-
tion 4(2) paper and Rule 144A securities will be made by the Board of
Trustees. The Board will consider availability of reliable price informa-
tion 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 per-
centage 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 buy-
ers become, for a time, uninterested in purchasing these securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and
comparable un-
rated securities (collectively referred to in this discussion as "low-
rated" securities ) will likely have some quality and protective charac-
teristics that, in the judgment of the rating organization, are outweighed
by large uncertainties or major risk exposures to adverse conditions; and
are predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obliga-
tion.
Bonds rated Ba by Moody's, sometimes referred to as "junk bonds," are
judged to have speculative elements and their future cannot be considered
as well assured; bonds rated B by Moody's generally are deemed to lack
characteristics of a desirable investment; and bonds rated Caa are consid-
ered by Moody's to be of poor standing and may be in default or there may
be present elements of danger with respect to the payment of principal or
interest. Bonds rated BB, B and CCC by Standard & Poor's are regarded, on
balance, as predominantly speculative with respect to capacity to pay in-
terest and repay principal with CCC indicating a higher degree of specula-
tion than BB or B.
While the market values of low-rated securities tend to react less to
fluctuations in interest rate levels than the market values of higher
rated securities, the market values of certain low-rated securities tend
to be more sensitive to individual corporate developments and changes in
economic conditions than higher-rated securities. In addition, low-rated
securities generally present a higher degree of credit risk. Issuers of
low-rated securities are often highly leveraged and may not have more tra-
ditional methods of financing available to them so that their ability to
service their debt obligations during an economic downturn or during sus-
tained periods of rising interest rates may be impaired. The risk of loss
due to default by such issuers is significantly greater because low-rated
securities generally are unsecured and frequently are subordinated to the
prior payment of senior indebtedness. The Fund may incur additional ex-
penses to the extent that it is required to seek recovery upon a default
in the payment of principal or interest on its portfolio holdings. The ex-
istence of limited markets for low-rated securities may diminish the
Fund's ability to obtain accurate market quotations for purposes of valu-
ing such securities and calculating its net asset value. Further informa-
tion regarding security ratings is contained in the SAI.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consis-
tent with its investment objective and policies and permissible under the
Investment Company Act of 1940 (the "1940 Act"). As a shareholder of an-
other investment company, the Fund would bear, along with other sharehold-
ers, its pro rata portion of the other investment company's expenses, in-
cluding advisory fees. These expenses would be in addition to the advisory
and other expenses that the Fund bears directly in connection with its own
operations.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement
trans-
actions in pursuit of its investment objective. A repurchase agreement in-
volves the purchase of a security by the Fund and a simultaneous agreement
(generally with a bank or broker-dealer) to repurchase that security from
the Fund at a specified price and date or upon demand. This technique of-
fers a method of earning income on idle cash. A risk associated with re-
purchase agreements is the failure of the seller to repurchase the securi-
ties as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the
open market. Repurchase agreements with a duration of more than seven days
are considered illiquid securities and are subject to the limit on illiq-
uid securities stated above.
SHORT-TERM SECURITIES. The Fund may invest in short-term securities such
as U.S. Government securities and other high-grade, short-term money mar-
ket instruments, including repurchase agreements, time deposits, certifi-
cates of deposit, bankers' acceptances and high-grade commercial paper for
temporary defensive purposes when the Manager determines that market con-
ditions so warrant. In addition, the Fund may invest up to 10% of its as-
sets in such securities on a regular basis to maintain liquidity for pur-
poses of redeeming shares and meeting other cash obligations of the Fund.
When the assets of the Fund are invested in short-term securities, the as-
sets will not be invested in a manner consistent with achieving its in-
vestment objective.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed put
and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the
index. (Examples of well-known stock indexes are the S&P 500 and the NYSE
Composite Index.) Options on stock indexes are similar to options on secu-
rities. However, because options on stock indexes do not involve the de-
livery of an underlying security, the option represents the holder's right
to obtain from the writer in cash a fixed multiple of the amount by which
the exercise price exceeds (in the case of a put) or is less than (in the
case of a call) the closing value of the underlying index on the exercise
date.
The advisability of using stock index options to hedge against the risk of
market-wide movements will depend on the extent of diversification of the
Fund's stock investments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing
or writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being
hedged correlate with price movements in the stock index selected. When
the Fund writes an option on a stock index, it will deposit cash or cash
equivalents or a combination of both in an amount equal to the market
value of the option, in a segregated account with the Fund's custodian,
and will maintain the account while the option is open.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure ad-
vantageous prices or yields, the Fund may purchase U.S. Government Securi-
ties on a when-issued basis or may purchase or sell securities for delayed
delivery. In such transactions, delivery of the securities occurs beyond
the normal settlement periods, but no payment or delivery is made by the
Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed deliv-
ery basis involves the risk that, as a result of an increase in yields
available in the market place, the value of the securities purchased will
decline prior to the settlement date. The sale of securities for delayed
delivery involves the risk that the prices available in the market on the
delivery date may be greater than those obtained in the sale transactions.
The Fund will establish a segregated account consisting of cash, U.S. Gov-
ernment Securities or other high-grade debt obligations in an amount equal
to the amounts of its when-issued and delayed delivery commitments.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation and not for short-term trading
profits, in the past the portfolio turnover rate of the Fund has exceeded
100% and may exceed 100% in the future. A portfolio turnover rate of 100%
would occur, for example, if all the securities held by the Fund were re-
placed once in a period of one year. In past years the Fund's rate of
portfolio turnover exceeded that of certain other mutual funds with the
same investment objective. A higher rate of portfolio turnover (100% or
greater) involves correspondingly greater brokerage commissions and other
expenses which must be borne directly by the Fund and, thus, indirectly by
its shareholders. In addition, a high rate of portfolio turnover may re-
sult in the realization of larger amounts of short-term capital gains
which, when distributed to the Fund's shareholders, are taxable to them as
ordinary income. (See "Distributions" and "Taxes.") Nevertheless, security
transactions for the Fund will be based only upon investment consider-
ations and will not be limited by any other considerations when the Man-
ager deems it appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority
of the Fund's outstanding Shares. The SAI describes all of the Fund's fun-
damental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without share-
holder approval. If the Fund's investment objective, policies and restric-
tions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current positions and needs.
In order to permit the sale of the Fund's Shares in certain states, the
Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of
the Fund, it may consider terminating sales of its Shares in the states
involved.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Investment Series may in the fu-
ture seek to achieve the Fund's investment objective by investing all of
the Fund's 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 Trustees determine it to be in the best interest of
the Fund and its shareholders. In making that determination, the Trustees
will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the Trustees will not approve an arrangement that
is likely to result in higher costs, no assurance is given that costs will
be materially reduced if this option is implemented.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy
way to do business with the Fund. By electing these services on your ap-
plication or by completing the appropriate forms, you may authorize:
* Investment by phone.
* Automatic monthly investments.
* Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment
manager from any loss, claim or expense you may incur as a result of their
acting on such instruction. The Fund will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These in-
clude personal identification procedures, recording of telephone conversa-
tions and providing written confirmation of each transaction. A failure on
the part of the Fund to employ such procedures may subject it to liability
for any loss due to unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours
(9 a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions
on how to: (1) request a current prospectus or information booklets about
The Dreyfus Family of Funds' investment portfolios and services, (2) lis-
ten to net asset values, yields and total return figures, and (3) talk
with a customer service representative during normal business hours. For
more information about direct access using a Touch-Tone phone, please con-
tact The Dreyfus Family of Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier is a wholly-owned sub-
sidiary of Institutional Administration Services, Inc., a provider of mu-
tual fund administration services, the parent company of which is Boston
Institutional Group, Inc. Premier also serves as Fund's sub-administrator
and, pursuant to a Sub-Administration Agreement, provides various adminis-
trative and corporate secretarial services to the Fund. Premier has estab-
lished various procedures for purchasing Class R and Investor Shares of
the Fund. Class R Shares are sold primarily to bank trust departments and
other financial service providers (including Mellon Bank and its affili-
ates) ("Banks") acting on behalf of customers having a qualified trust or
investment account or relationship at such institution. Investor Shares
are sold primarily to retail investors by Premier and by Agents that have
entered into a Shareholder Servicing and Sales Support Agreement with Pre-
mier. Once an investor has established an account, additional purchases
may, in certain cases, be made directly through the Fund's transfer agent.
If Shares of the Fund are held in an account at a Bank or with an Agent,
such Bank or Agent may require you to place all Fund purchase, exchange
and redemption orders through them. All Banks and Agents have agreed to
transmit your transaction requests to the Fund's transfer agent or to Pre-
mier. You may diversify your investments by choosing a combination of in-
vestment portfolios offered by The Dreyfus Family of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and
the account number. Orders to purchase Shares are effective on the day the
Fund receives your check or money order. (See "When Share Price is Deter-
mined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by call-
ing 1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account when you call with instructions. Investments
made by phone in any one account must be in an amount of at least $100 and
are effective two days after your call. (See "When Share Price is Deter-
mined.")
BY WIRE.
You may make your initial or subsequent investments in the Fund by wiring
funds. To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of Boston,
BOS SAFE DEP, Account Number 011001234, The Dreyfus Funds 080071.
(2) Be sure to specify on the wire:
(A) The Dreyfus Funds.
(B) The Fund name and the class of Shares of the Fund you are buying and
account number (if you have one).
(C) Your name.
(D) Your city and state.
In order for a wire purchase to be effective on the same day it is re-
ceived both the trading instructions and the wire must be received before
4 p.m., Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the
Fund to draw on your bank account regularly by paper or electronic draft.
Such investments must be in amounts of not less than $100 in any one ac-
count. You should inquire at your bank whether it will honor a preautho-
rized paper or electronic draft. Contact the Fund if your bank requires
additional documentation. Call 1-800-548-2868 or write The Dreyfus Family
of Funds, One Exchange Place, Boston, Massachusetts 02109 for more infor-
mation about the Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from
other sources (including government pension or social security payments).
Note that it may not be appropriate to Direct Deposit your entire paycheck
into the Fund because it has a fluctuating net asset value. Call 1-800-
548-2868 or write The Dreyfus Family of Funds, One Exchange Place, Boston,
Massachusetts 02109 for more information or a Direct Deposit authorization
form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may, at its discre-
tion, permit you to purchase Shares through an "in-kind" exchange of secu-
rities you hold. Any securities exchanged must meet the investment objec-
tive, policies and limitations of the Fund, must have a readily ascertain-
able 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 secu-
rities generally cannot be redeemed for fifteen days following the ex-
change 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 securi-
ties become the property of the Fund, along with the securities. Call
1-800-548-2868 or write The Dreyfus Family of Funds, One Exchange Place,
Boston, Massachusetts 02109 for more information about "in-kind" pur-
chases.
WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their net asset value ("NAV"). NAV is deter-
mined at the close of the New York Stock Exchange ("NYSE") on each day
that the NYSE is open (a "business day"). Investments and requests to ex-
change or redeem Shares received by the Fund before the close of regular
trading on the NYSE (usually 4 p.m., Eastern time) are effective on, and
will receive the price determined, that day (except investments made by
electronic funds transfer which are effective two business days after your
call). Investment, exchange and redemption requests received after the
close of the NYSE are effective on, and receive the first Share price de-
termined, the next business day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instruction
to the Fund, it may not be modified or canceled. The Fund reserves the
right to reject any application or investment. The Fund reserves the right
to make exceptions to the minimum initial investment and account minimum
amount from time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement
plans, and Uniform Transfers (Gifts) to Minors Act accounts, for which the
minimum initial investment is $500. For full-time or part-time employees
of Mellon Bank, the Manager or any of their affiliates or subsidiaries who
elect to have a portion of their pay directly deposited into an account in
the Fund, the minimum initial investment is $50. The Fund may suspend the
offering of Shares of any class of the Fund and reserves the right to vary
initial and subsequent investment minimums. Subsequent investments to pur-
chase additional Shares in the Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a
specified minimum, as a result of redemptions but not as a result of mar-
ket action, unless you have established an automatic monthly investment to
purchase additional Shares. The Fund reserves the right to change such
minimum from time to time. Any time the Shares of the Fund held in an ac-
count have a value of less than $1,000 ($500 for Uniform Gifts/Transfers
to Minors Acts accounts), a notification may be sent advising you of the
need to either make an investment to bring the value of the Shares held in
the account up to $1,000 ($500) or to establish an automatic monthly in-
vestment to purchase additional Shares. If the investment is not made or
the automatic monthly investment is not established within 60 days from
the date of notification, the Shares held in the account will be redeemed
and the proceeds from the redemption will be sent by check to your address
of record.
The automatic redemption of Shares will not apply to IRAs, custodial ac-
counts under Section 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("403(b) accounts") and other types of tax-deferred
retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain
other funds that are advised by the Manager and that were previously ad-
vised by Mellon Bank. As noted below, exchanges from any one fund may be
limited in any one calendar year. In addition, the Shares being exchanged
and the Shares of each fund being acquired must have a current value of at
least $100 and otherwise meet the minimum investment requirement of the
fund being acquired. Call the Investor Line for additional information and
a prospectus describing other investment portfolios offered by The Dreyfus
Family of Funds.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have autho-
rized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The
request should be signed by each person in whose name the Shares are reg-
istered. All signatures should be exactly as the name appears in the reg-
istration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new Shares being purchased must have a current value of
at least $100.
(2) Exchanges from any one fund account may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of Shares of a money market fund, the Shares of any of
the funds exchanged pursuant to an Automatic Withdrawal Program, and
to Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state of
residence.
(4) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchanges can be effected.
(5) Once you have telephoned or mailed your exchange request, it is irre-
vocable and may not be modified or canceled.
(6) An exchange is based on the next calculated net asset value per Share
of each fund after receipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code
and the regulations thereunder. (See "Taxes.")
(8) An exchange of the Fund's Shares is, for federal income tax purposes,
a sale of the Shares, on which you may realize a taxable gain or loss.
(9) If the request is made by a corporation, partnership, trust, fidu-
ciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given 60 days' notice prior to any material changes
in the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV.
(Before redeeming, please read "Additional Information About Redemp-
tions.") Your redemption proceeds may be delayed if you have owned your
Shares less than 10 days. (See "Redemption Proceeds.") The Fund imposes no
charges when Shares are redeemed. Agents or other institutions may charge
their clients a nominal fee for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone
request may not be modified or canceled. (Before calling, read "Additional
Information About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the fol-
lowing forms:
* A letter to The Dreyfus Family of Funds.
* An assignment form or stock power.
* An endorsement on the back of your negotiable stock certificate, if you
have one.
Once mailed to The Dreyfus Family of Funds at P.O. Box 9692, Providence,
Rhode Island 02940- 9830, the redemption request is irrevocable and may
not be modified or canceled. A letter of instruction should state the num-
ber of Shares or the dollar amount to be redeemed. The letter must include
your account number, and for redemptions in an amount in excess of
$25,000, a signature guarantee of each owner. The redemption request must
be signed by each person in whose name the Shares are registered; for ex-
ample, in the case of joint ownership, each owner must sign. All signa-
tures should be exactly as the name appears in the registration. If the
owner's name appears in the registration as John Robert Jones, he should
sign that way and not as John R. Jones. Signature guarantees can be ob-
tained from commercial banks, credit unions if authorized by state laws,
savings and loans institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other indus-
try recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough
Shares each month to provide you with a check for an amount which you
specify (with a minimum of $100). To set up an Automated Withdrawal Pro-
gram, call the Fund at 1-800-548-2868 for instructions. Only shareholders
with a Fund account balance of $10,000 or more may participate in this
program. Shares will be redeemed on the 15th day or 30th day of each month
or the next business day, and your check will be mailed the next day. If
your monthly checks exceed the dividends, interest and capital apprecia-
tion on your Shares, the payments will deplete your investment. Amounts
paid to you by Automated Withdrawals are not a return on your investment.
They are derived from the redemption of Shares in your account, and you
must report on your income tax return, any gains or losses that you real-
ize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be
signed by all owners.
When you make your first investment you may request that Automated With-
drawals be sent to an address other than the address of record. Thereaf-
ter, a request to send Automated Withdrawals to an address other than the
address of record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of
the Automated Withdrawal Program, by notice to the Fund in writing or by
telephone. Termination or change will become effective within five days
following receipt of your instruction. Your Automated Withdrawal Program
plan may begin any time after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not
later than seven days afterwards. When a redemption occurs shortly after a
recent purchase, the Fund may hold the redemption proceeds beyond seven
days but only until the purchase check clears, which may take up to 10
days or more. No dividend is paid on the redemption proceeds after the re-
demption and before the check is mailed. If you anticipate redemptions
soon after you purchase your Shares, you are advised to wire funds to
avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Pro-
ceeds from the redemption of the Fund's Shares will normally be transmit-
ted on the first business day, but not later than the seventh day, follow-
ing the date of redemption. Your bank usually will receive wired funds the
day they are transmitted. Electronically transferred funds will ordinarily
be received within two business days after transmission. Once the funds
are transmitted, the time of receipt and the availability of the funds are
not within the Fund's control. If your bank account changes, you must send
a new "voided" check preprinted with the bank registration with written
instructions signed by all owners (with their signatures guaranteed), in-
cluding tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption
can be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be accom-
panied by an IRS Form W4-P and a reason for withdrawal as specified by
the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
Certain of The Dreyfus Family of Funds' investment portfolios are avail-
able for your tax-deferred retirement plan. Call 1-800-548-2868 or write
The Dreyfus Family of Funds at P.O. Box 9692, Providence, Rhode Island
02940-9830 and request the appropriate forms for:
* IRAs.
* 403(b) accounts for employees of public school systems and non-profit
organizations.
* Profit sharing plans and pension plans for corporations and other em-
ployers.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF FUNDS'
RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to The Dreyfus Family of
Funds from another custodian. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 for
a request to transfer form. If you direct The Dreyfus Family of Funds to
transfer funds from an existing non-retirement Dreyfus Family of Funds ac-
count into a retirement account, the Shares in your non-retirement account
will be redeemed. The redemption proceeds will be invested in your Dreyfus
Family of Funds IRA or other tax-qualified retirement plan. The redemption
is a taxable event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV
for Investor and Class R Shares of the Fund is computed by adding with re-
spect to each class of Shares the value of all the class' investments,
cash, and other assets, deducting liabilities and dividing the result by
number of Shares of that class outstanding. The valuation of assets for
determining NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used. Se-
curities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board
of Trustees.
Pursuant to a determination by The Dreyfus/Laurel Investment Series' Board
of Trustees that such value represents fair value, debt securities with
maturities of 60 days or less held by the Fund are valued at amortized
cost. When a security is valued at amortized cost, it is valued at its
cost when purchased, and thereafter by assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuat-
ing interest rates on the market value of the instrument.
The NAV of each class of Shares of most of The Dreyfus Family of Funds'
investment portfolios (other than money market funds) is published in
leading newspapers daily. The yield of each class of Shares of most of The
Dreyfus Family of Funds' money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of the Fund
may also be obtained by calling The Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the total return on a class of
Shares. Total return figures are based on historical earnings and are not
intended to indicate future performance. The "total return" of a class of
shares of the Fund may be calculated on an average annual total return
basis or a cumulative total return basis. Average annual total return re-
fers to the average annual compounded rates of return on a class of Shares
over one-, five-, and ten-year periods or the life of the Fund (as stated
in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the invest-
ment, assuming the reinvestment of all dividends and capital gains distri-
butions. Cumulative total return reflects the total percentage change in
the value of the investment over the measuring period, again assuming the
reinvestment of all dividends and capital gains distributions.
Total return quotations will be computed separately for each class of the
Fund's Shares. Because of the difference in the fees and expenses borne by
Class R and Investor Shares of the Fund, the return on Class R Shares will
generally be higher than the return on Investor Shares. Any fees charged
by a Bank or Agent directly to its customers' account in connection with
investments in the Fund will not be included in calculations of total re-
turn. The Fund's Annual Report contains additional performance information
and is available upon request without charge from the Fund's distributor
or your Bank or Agent.
The Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings, the S&P 500, the Consumer Price Index, and the Dow
Jones Industrial Average. Performance rankings as reported in Changing
Times, Business Week, Institutional Investor, The Wall Street Journal, Mu-
tual Fund Forecaster, No Load Investor, Money Magazine, Morningstar Mutual
Fund Values, U.S. News and World Report, Forbes, Fortune, Barron's and
similar publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its Investor and Class R Shares' returns
in advertisements or in shareholder reports. The Fund may also advertise
non-standardized performance information, such as total return, for peri-
ods other than those required to be shown on cumulative performance data.
DISTRIBUTIONS
The Fund declares dividends from its net investment income and distributes
any net long-term capital gains on an annual basis. The Board of Trustees
may elect not to distribute capital gains in whole or in part to take ad-
vantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain distributions in
cash, your distributions will be automatically reinvested in additional
Shares of the Fund at the NAV. You may change the method of receiving dis-
tributions at any time by writing to the Fund. Checks which are sent to
shareholders who have requested distributions to be paid in cash and which
are subsequently returned by the United States Postal Service as not de-
liverable or which remain uncashed for six months or more will be rein-
vested in additional Fund Shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically rein-
vested in additional Fund Shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of Shares may be
greater or less per Share than those paid with respect to another class of
Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will not
begin to accrue dividends until the following business day. Redemption or-
ders effected on any particular day will receive all dividends declared
through the day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b) ac-
counts paid in cash only if you are at least 59 1/2 years old or are per-
manently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will reduce
each Share's NAV by the amount of the distribution. Shareholders are sub-
ject to taxes with respect to any such distribution. At any given time,
the value of the Fund's Shares includes the undistributed net gains, if
any, realized by the Fund on the sale of portfolio securities, and undis-
tributed dividends and interest received, less the Fund's expenses. Be-
cause such gains and income are included in the value of your Shares, when
they are distributed the value of your Shares is reduced by the amount of
the distribution. Accordingly, if your distribution is reinvested in addi-
tional Shares, the distribution has no effect on the value of your invest-
ment; while you own more Shares, the value of each Share has been reduced
by the amount of the distribution. Likewise, if you take your distribution
in cash, the value of your Shares immediately after the distribution plus
the cash received is equal to the value of the Shares immediately before
the distribution. For example, if you own a Fund Share that immediately
before a distribution has a value of $10, including $2 in undistributed
dividends and capital gains realized by the Fund during the year, and if
the $2 is distributed, the value of the Share will decline to $8. If the
$2 is reinvested at $8 per Share, you will receive .250 Shares, so that,
after the distribution, you will have 1.250 Shares at $8 per Share, or
$10, the same as before.
TAXES
The Fund intends to qualify for treatment as a regulated investment com-
pany under the Code so that it will be relieved of Federal income tax on
that part of its investment company taxable income (consisting generally
of taxable net investment income and net short-term capital gain) and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Fund of net capital gain, when designated as such,
are taxable to you as long-term capital gains, regardless of the length of
time you have owned your Shares.
All or a portion of the dividends paid by the Fund 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. cor-
porations. However, dividends received by a corporate shareholder and de-
ducted by it pursuant to the dividends-received deduction are subject in-
directly to the alternative minimum tax.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund Shares, even if
the value of your Shares is below your cost. If you purchase Shares
shortly before a taxable distribution you must pay income taxes on the
distribution, even though the value of your investment (plus cash re-
ceived, if any) remains the same. In addition, the Share price at the time
you purchase Shares may include unrealized gains in the securities held in
the Fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a capital gain distribution and will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV notifying
you of the status for federal income tax purposes of your distributions
for the preceding year.
Dividends paid by the Fund to qualified retirement plans ordinarily will
not be subject to taxation until the proceeds are distributed from the re-
tirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except
those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the partici-
pant reaches age 59 1/2 , generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribu-
tion from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the partic-
ipant reaches age 70 1/2 is less than the "minimum required distribution"
for that taxable year, an excise tax equal to 50% of the deficiency may be
imposed by the IRS. The administrator, trustee or custodian of such a re-
tirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified re-
tirement plan in excess of the amounts permitted by law may be subject to
an excise tax.
You must furnish the Fund with your taxpayer identification number ("TIN")
and state whether you are subject to withholding for prior under-
reporting, certified under penalties of perjury as prescribed by the Code
and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is re-
quired to withhold a portion of all dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other non-
corporate shareholders who do not provide the Fund with a correct TIN;
withholding from dividends and capital gain distributions also is required
for such shareholders who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of
its taxable ordinary income for that year and capital gain net income for
the one-year period ending on December 31 of that year, plus certain other
amounts. The Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax consider-
ations generally affecting the Fund and its shareholders; see the SAI for
a further discussion. There may be other Federal, state or local tax con-
siderations applicable to a particular investor. You therefore are urged
to consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the
Fund with a summary of its investments and performance. The Fund will send
you a confirmation statement after every transaction (except with regard
to the reinvestment of dividends and other distributions) that affect your
Fund account. In addition, an account statement will be mailed to you
quarterly. You may also request a statement of your account activity at
any time. Carefully review such confirmation statements and account state-
ments and notify the Fund immediately if there is an error. From time to
time, to reduce expenses, only one copy of the Fund's shareholder reports
(such as the Fund's Annual Report) may be mailed to your household. Please
call the Fund if you need additional copies.
No later than January 31 of each year, the Fund will send you the follow-
ing reports, which you may use in completing your federal income tax re-
turn:
Form 1099-DIV Reports taxable distributions (and returns of capital, if
any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year (for non- retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL INVESTMENT SERIES.
The Dreyfus/Laurel Investment Series offers Shares of beneficial interest
of separate investment portfolios with $.001 par value per share (each a
"fund"). The Boston Company Investment Series was organized as a Massachu-
setts business trust under the laws of the Commonwealth of Massachusetts
on May 26, 1988 and changed its name to The Laurel Investment Series, and
then to The Dreyfus/Laurel Investment Series on October 17, 1994. The
Dreyfus/Laurel Investment Series is registered with the SEC as an open-end
management investment company, commonly known as a mutual fund. The Trust-
ees have authorized Shares of the Fund to be issued in two classes--
Investor Shares and Class R Shares.
Each Share (regardless of class) has one vote. All Shares of a fund (and
classes thereof) vote together as a single class, except as to any matter
for which a separate vote of any fund or class is required by the 1940
Act, and except as to any matter which affects the interests of one or
more particular fund or classes, in which case only the shareholders of
the affected fund or classes are entitled to vote, each as a separate
class. At your written request, the Fund will issue negotiable stock cer-
tificates.
MANAGEMENT.
THE BOARD OF TRUSTEES. The business affairs of The Dreyfus/Laurel Invest-
ment Series are managed under the direction of its Trustees. The SAI con-
tains the names and general background information concerning the Trustees
and officers of The Dreyfus/Laurel Investment Series.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of November 30, 1994, the Manager managed or adminis-
tered approximately $71 billion in assets for more than 1.9 million inves-
tor accounts nationwide. The Manager is a wholly-owned subsidiary of Mel-
lon Bank (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258), the
Fund's prior investment manager. Pursuant to an Investment Management
Agreement, transferred from Mellon Bank to the Manager effective as of Oc-
tober 17, 1994, the Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Fund. As investment manager,
the Manager manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of 1.25% of the Fund's average
daily net assets less certain expenses described below. The Manager pays
all of the expenses of the Fund except brokerage, taxes, interest, fees
and expenses of the non-interested Trustees (including counsel fees) and
extraordinary expenses. Although the Manager does not pay for the fees and
expenses of the non-interested Trustees (including counsel fees), the Man-
ager is contractually required to reduce its investment management fee in
an amount equal to the Fund's allocable share of such expenses. In order
to compensate the Manager for paying virtually all of the Fund's expenses,
the Fund's investment management fee is higher than the investment advi-
sory fees paid by most investment companies. Most, if not all, such compa-
nies also pay for additional non-investment advisory expenses that are not
paid by such companies' investment adviser. From time to time, the Manager
may waive (either voluntarily or pursuant to applicable state limitations)
additional investment management fees payable by the Fund. For the period
from September 1, 1993 through April 3, 1994, the Fund paid its investment
adviser, The Boston Company Advisors, Inc. (an indirect wholly-owned sub-
sidiary of Mellon Bank Corporation), 0.00% (annualized) of the Fund's av-
erage daily net assets in investment advisory fees (net of fees waived and
expenses reminbursed) under the Fund's previous investment advisory con-
tract (such contract only covered the provision of investment advisory and
certain specified administrative services). For the period from April 4,
1994 through the fiscal year ended August 31, 1994, the Fund paid Mellon
Bank 1.25% (annualized) of the Fund's average daily net assets in invest-
ment management fees. For the fiscal year ended August 31, 1994, total op-
erating expenses (excluding Rule 12b-1 fees) (net of fees waived and ex-
penses reimbursed) of the Fund were 1.61% of the Fund's average daily net
assets for the Investor Shares. It is anticipated that the current total
operating expenses of the Fund (excluding Rule 12b-1 fees) will be approx-
imately 1.25% of the Fund's average daily net assets.
The Manager is authorized to allocate purchase and sale orders for portfo-
lio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with
the Manager or which have sold Shares of the Fund, if the Manager believes
that the quality of the transaction and the commission are comparable to
what they would be with other qualified brokerage firms. From time to
time, to the extent consistent with its investment objective, policies and
restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of June 30,
1994, Mellon Bank Corporation was the 24th largest bank holding company in
the United States in terms of total assets. Through its bank subsidiaries,
it operates 631 domestic retail banking locations including 432 branch of-
fices. Mellon Bank Corporation has 25 domestic representative offices.
There are international branches in Grand Cayman, British West Indies and
London, England, and two international representative offices in Tokyo,
Japan and Hong Kong. Mellon Bank has a banking subsidiary, Mellon Bank
Canada, in Toronto. Mellon Bank is a registered municipal securities
dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain se-
curities. The activities of Mellon Bank and the Manager with regard to the
Fund may raise issues under these provisions. However, Mellon Bank has
been advised by its counsel that these activities are consistent with
these statutory and regulatory obligations. For more information on the
Glass-Steagall Act of 1933, see "Federal Law Affecting Mellon Bank" in the
SAI.
Guy R. Scott is an Officer of Mellon Bank, a Senior Vice President of The
Boston Company Advisors, Inc., and a Senior Vice President and Equity
Portfolio Manager of The Boston Company Asset Management, Inc. Mr. Scott
is a portfolio manager at the Manager and has been employed by the Manager
since October 17, 1994. Mr. Scott is responsible for the Fund and for man-
aging over $280 million among other various institutional accounts. Mr.
Scott also served on the Equity Policy Group Committee. Previously, Mr.
Scott has also held a position as an Equity Portfolio Manager for Putnam
Advisory, where he was responsible for more than $1 billion in pension as-
sets. A Chartered Financial Analyst, Mr. Scott earned a B.S. in Economics
and an M.B.A. in Finance at the University of Wisconsin.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank acts as custodian and fund accountant, maintaining possession
of the Fund's investment securities and providing certain accounting and
related services.
The Shareholder Services Group, Inc., a subsidiary of First Data Corpora-
tion, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence,
Rhode Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the
Fund's sponsor and distributor. Premier is a registered broker-dealer with
principal offices at One Exchange Place, Boston, Massachusetts 02109. The
Dreyfus/Laurel Investment Series has entered into a distribution agreement
with Premier which provides that Premier has the exclusive right to dis-
tribute Shares of the Fund. Premier may pay service and/or distribution
fees to Agents that assist customers in purchasing and servicing of Shares
of the Fund. (See "Distribution Plan.")
DISTRIBUTION PLAN (INVESTOR SHARES ONLY).
Investor Shares are subject to a Distribution Plan ("Plan") adopted pursu-
ant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). Investor Shares of
the Fund may bear some of the cost of selling those Shares under the Plan.
The Plan allows the Fund to spend annually up to 0.25% of its average
daily net assets attributable to Investor Shares to compensate Dreyfus
Service Corporation, an affiliate of the Manager, for shareholder servic-
ing activities and Premier for shareholder servicing activities and for
activities or expenses primarily intended to result in the sale of Inves-
tor Shares of the Fund. The Plan allows Premier to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Selling Agreements ("Agreements") with Premier. Under the
Agreements, the Agents are obligated to provide distribution related ser-
vices with regard to the Fund and/or shareholder services to the Agent's
clients that own Investor Shares of the Fund.
The Fund and Premier may suspend or reduce payments under the Plan at any
time, and payments are subject to the continuation of the Fund's Plan and
the Agreements described above. From time to time, the Agents, Premier and
the Fund may agree to voluntarily reduce the maximum fees payable under
the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms gov-
erning Agreements with their Agents. An Agent entitled to receive compen-
sation for selling and servicing the Fund's Shares may receive different
compensation with respect to one class of shares over another.
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money.
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
PROSPECTUS
Dreyfus/Laurel Short-Term Bond Fund
Investor and Class R Shares
December 30, 1994
THE DREYFUS/LAUREL SHORT-TERM BOND FUND is a diversified income fund
seek-
ing to obtain a high level of current income, consistent with preservation
of capital, by investing in a broad range of fixed-income securities hav-
ing remaining maturities of five years or less.
THIS PROSPECTUS describes the Dreyfus/Laurel Short-Term Bond Fund (the
"Fund") of The Dreyfus/Laurel Investment Series (formerly The Laurel In-
vestment Series and prior thereto The Boston Company Investment Series), a
management investment company that is part of The Dreyfus Family of Funds.
This Prospectus describes two classes of shares--Investor Shares and Class
R Shares (collectively, the "Shares")--of the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional infor-
mation about the Fund is contained in a Statement of Additional Informa-
tion (the "SAI"), which has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request without charge by
calling or writing to The Dreyfus Family of Funds. The SAI bears the same
date as the Prospectus and is incorporated by reference in its entirety
into this Prospectus.
In addition to this Fund, The Dreyfus Family of Funds also offers other
funds that provide investment opportunities for you in the equity, fixed
income and money markets. For more information about these additional in-
vestment opportunities, call 1-800-548-2868.
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DE-
POSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT
RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE
"EXPENSE SUM-
MARY" SECTION OF THIS PROSPECTUS. THE FUND PAYS MELLON BANK,
N.A. ("MELLON
BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON
BANK OR AN
AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE
FUND, SUCH AS
CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE
FUND IS DIS-
TRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Expense 5
Financial Highlights 8
Investment Objective and Policies 10
Other Investment Policies and Risk Factors 10
HOW TO DO BUSINESS WITH US
Special Shareholder Services 16
Investor Line 17
How to Invest in the Fund 17
By Mail 18
By Telephone 18
By Wire 18
By Automatic Monthly Investments 18
By Direct Deposit 19
By In-Kind Purchases 19
When Share Price is Determined 19
Additional Information About Investments 20
How to Exchange Your Investment From One Fund to Another 20
By Telephone 21
By Mail 21
Additional Information About Exchanges 21
How to Redeem Shares 22
By Telephone 22
By Mail 22
By Automated Withdrawal Program 22
Redemption Proceeds 23
Additional Information About Redemptions 24
How To Use The Dreyfus Family of Funds in a Tax-Qualified
Retirement Plan 24
How to Transfer an Investment to a Dreyfus Family of Funds'
Retirement Plan 24
OTHER INFORMATION
Share Price 25
Performance Advertising 25
Distributions 26
Taxes 27
Other Services 29
Further Information About The Fund 29
The Dreyfus/Laurel Investment Series 29
Management 30
Distribution Plan (Investor Shares Only) 32
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE
FUND'S SAI INCOR-
PORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING
MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE DISTRIBU-
TOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
BE LAWFULLY
MADE.
EXPENSE SUMMARY
The purpose of the following table is to help you understand the various
costs and expenses that you, as a shareholder, will bear directly or indi-
rectly in connection with an investment in the Investor or Class R Shares
of the Fund. (See "Management.")
<TABLE>
<CAPTION>
Investor Class R
Shares Shares
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none
Maximum Sales Load Imposed on Reinvestments none none
Deferred Sales Load none none
Redemption Fee none none
Exchange Fee none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
Management Fee 0.55% 0.55%
12b-1 Fee 0.25% --
Other Expenses* 0.00% 0.00%
Total Fund Operating Expenses 0.80% 0.55%
EXAMPLES
You would pay the following on 1 year $8 $ 6
a $1,000 investment, assuming (1) a 3 years $26 $18
5% annual return and (2) redemption 5 years $44 $31
at the end of each time period: 10 years $99 $69
<FN>
* Does not include fees and expenses of the non-interested Trustees (in-
cluding counsel). The investment manager is contractually required to
reduce its Management Fee in an amount equal to the Fund's allocable
portion of such fees and expenses, which are estimated to be 0.02% of
the Fund's net assets. (See "Management.")
</TABLE>
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE
CONSIDERED A REPRE-
SENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
MORE OR LESS
THAN THOSE SHOWN.
The Fund understands that banks, securities brokers or dealers and other
financial institutions (including Mellon Bank and its affiliates) (collec-
tively "Agents") may charge fees to their clients who are owners of the
Fund's Investor Shares for various services provided in connection with a
client's account. These fees would be in addition to any amounts received
by an Agent under its Shareholder Servicing and Sales Support Agreements
("Agreements") with Premier Mutual Fund Services, Inc. ("Premier"). The
Agreement requires each Agent to disclose to its clients any compensation
payable to such Agent by Premier and any other compensation payable by the
client for various services provided in connection with its account.
Long-term shareholders of Investor Shares could pay more in Rule 12b-1
fees than the economic equivalent of the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc.
[This Page Intentionally Left Blank]
FINANCIAL HIGHLIGHTS
The table below is based upon a single Investor Share outstanding through-
out each fiscal year and should be read in conjunction with the financial
statements and related notes that appear in the Fund's Annual Report dated
August 31, 1994. The financial statements included in the Fund's Annual
Report
DREYFUS/LAUREL SHORT-TERM BOND FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR(1)
YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
1994##
<S> <C>
Net asset value, beginning of year $12.50
Income from investment operations:
Net investment income*** 0.63
Net realized and unrealized gain/(loss) on investments (0.62)
Total from investment operations 0.01
Less distributions:
Distributions from net investment income (0.64)
Distributions in excess of net investment income (0.02)
Total distributions (0.66)
Net asset value, end of year $11.85
Total return++ 0.06%
Ratios to average net assets/Supplemental data:
Net assets, end of year (in 000's) $2,273
Ratios of operating expenses to average net assets** 0.95%
Ratios of net investment income to average net assets 5.38%
Portfolio turnover rate 53%
<FN>
(1) Effective April 4, 1994 the Retail and Institutional classes of shares
were reclassified as a single class of shares known as the Investor
Shares. The amounts shown for the year ended August 31, 1994, were
calculated using the performance of a Retail Share outstanding from
September 1, 1993 to April 3, 1994, and the performance of an Investor
Share outstanding from April 4, 1994 to August 31, 1994. The Financial
Highlights for the year ended August 31,1993 and prior years are based
upon a Retail Share outstanding.
* The Fund commenced operations on October 18, 1988.
** Annualized expense ratios before waiver of fees and/or reimbursement
of expenses by investment adviser, transfer agent and custodian for
the years ended August 31, 1994, 1993, 1992, 1991, 1990 and the period
ended August 31, 1989 would have been 4.21%, 2.54%, 1.88%, 3.07%,
3.67%, and 1.54%, respectively.
*** Net investment income per share before waiver of fees and/or reim-
bursement of expenses by investment adviser, transfer agent and custo-
dian for the years ended August 31, 1994, 1993, 1992, 1991, 1990 and
the period ended August 31, 1989 would have been $0.25, $0.48, $0.63,
$0.57, $0.61 and $0.82, respectively.
</TABLE>
dated August 31, 1994 are incorporated by reference to the SAI and have
been audited by KPMG Peat Marwick LLP, independent accountants, whose re-
port appears in the Fund's Annual Report. The Fund did not offer Class R
Shares during the fiscal year ended August 31, 1994.
<TABLE>
<CAPTION>
1993+++ 1992 1991 1990 1989*
<S> <C> <C> <C> <C>
$12.64 $12.23 $11.82 $11.84 $12.00
0.68 0.75 0.82 0.93 0.86
(0.15) 0.41 0.41 (0.02) (0.17)
0.53 1.16 1.23 0.91 0.69
(0.67) (0.75) (0.82) (0.93) (0.85)
(0.00)# -- -- -- --
(0.67) (0.75) (0.82) (0.93) (0.85)
$12.50 $12.64 $12.23 $11.82 $11.84
4.34% 9.73% 10.79% 7.95% 5.97%
$3,477 $5,449 $3,895 $2,771 $3,374
0.99% 0.98% 0.99% 0.99% 1.14%+
5.29% 5.96% 6.90% 7.77% 8.07%+
6% 30% 70% 52% 232%
<FN>
+ Annualized.
++ Total return represents aggregate total return for the periods indi-
cated.
+++ Per share amounts have been calculated using the monthly average share
method,
which more appropriately presents the per share data for this period
since use of the undistributed income method does not accord with re-
sults of operations.
# Amount represents less than $0.01.
## Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager. From April 4, 1994 to October 16, 1994,
Mellon Bank served as the Fund's investment manager. Prior to April 4,
1994, The Boston Company Advisors, Inc. served as the Fund's invest-
ment adviser.
</TABLE>
DREYFUS/LAUREL SHORT-TERM BOND FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund is a diversified fund that seeks to obtain a high level of cur-
rent income, consistent with the preservation of capital by investing in a
broad range of fixed-income securities having remaining maturities of five
years or less.
The Fund will invest primarily in investment-grade fixed-income securities
of all types. Investment- grade fixed-income securities are securities
rated Baa or higher by Moody's Investors Service, Inc. ("Moody's") or BBB
or higher by Standard & Poor's Ratings Group ("Standard & Poor's"), and
unrated securities that are of equivalent quality in the opinion of the
Fund's investment manager, The Dreyfus Corporation (the "Manager"). Fixed-
income securities in the Fund's portfolio may include bonds, notes, U.S.
Government and government agency obligations, and money market securities,
including bank certificates of deposit and time deposits, bankers' accep-
tances, prime commercial paper, high-grade, short-term corporate obliga-
tions, and repurchase agreements with respect to these instruments. Secu-
rities rated Baa by Moody's or BBB by Standard & Poor's have speculative
characteristics and could be weakened in periods of economic distress.
Although the Fund will invest primarily in investment-grade, fixed-income
securities, a portion of its total assets, not to exceed 5%, may be in-
vested in lower quality securities, so long as they are consistent with
the Fund's objective of obtaining a high level of current income consis-
tent with the preservation of capital. Such securities may include bonds
rated as low as C by Moody's and by Standard & Poor's. For additional in-
formation concerning fixed-income securities, see "Other Investment Poli-
cies," and the Appendix to the SAI.
All securities in which the Fund invests have remaining maturities of five
years or less at the date of purchase. Under normal conditions, the Fund
expects to maintain an average-weighted portfolio maturity of three years
or less. The Fund expects to experience smaller fluctuations in net asset
value than other higher current income funds that maintain longer average-
weighted portfolio maturities.
OTHER INVESTMENT POLICIES AND RISK FACTORS
BANK CERTIFICATES OF DEPOSIT AND BANKERS ACCEPTANCES. The Fund
may invest
in U.S. dollar- denominated instruments of domestic banks, including their
branches located outside the United States, and of domestic branches of
foreign banks. In addition, the Fund may invest up to 10% of its assets in
certain U.S. dollar-denominated time deposits issued by foreign branches
of domestic banks. The foregoing investments may be made provided the bank
has capital, surplus and undivided profits (as of the date of its most re-
cently published annual financial statements) in excess of $100 million as
of the date of investment. The Fund may not invest more than 25% of its
assets in securities or obligations issued by banks.
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.
COVERED OPTION WRITING. From time to time, the Fund may write covered put
and call options on portfolio securities. The Fund could realize fees (re-
ferred to as "premiums") for granting the rights evidenced by the options.
However, in return for the premium, the Fund forfeits the right to any ap-
preciation in the value of the underlying security while the option is
outstanding. A put option embodies the right of its purchaser to compel
the writer of the option to purchase from the option holder an underlying
security at the specified price at any time during the option period. In
contrast, a call option embodies the right of its purchaser to compel the
writer of the option to sell the option holder an underlying security at a
specified price at any time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may suffer
a loss equal to the difference between the price at which the Fund is re-
quired to purchase the underlying security and its market value at the
time of the option exercise, less the premium received for writing the op-
tion. Upon the exercise of a call option written by the Fund, the Fund may
suffer a loss equal to the excess of the security's market value at the
time of the option exercise over the Fund's acquisition cost of the secu-
rity, less the premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or have the
present right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to pur-
chase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account,
cash, U.S. Government securities or other high grade debt obligations hav-
ing a value at least equal to the exercise price of the underlying securi-
ties or (b) continue to own an equivalent number of puts of the same "se-
ries" (that is, puts on the same underlying security having the same exer-
cise prices and expiration dates as those written by the Fund), or an
equivalent number of puts of the same "class" (that is, puts on the same
underlying security) with exercise prices greater than those that it has
written (or, if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, it will deposit the difference
with the Fund's custodian in a segregated account).
The Fund may engage in a closing purchase transaction to realize a profit,
to prevent an underlying security from being called or put or, in the case
of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the out-
standing option's expiration). To effect a closing purchase transaction,
the Fund would purchase, prior to the holder's exercise of an option that
the Fund has written, an option of the same series as that on which the
Fund desires to terminate its obligation. The obligation of the Fund under
an option that it has written would be terminated by a closing purchase
transaction, but the Fund would not be deemed to own an option as the re-
sult of the transaction. There can be no assurance that the Fund will be
able to effect closing purchase transactions at a time when it wishes to
do so. To facilitate closing purchase transactions, however, the Fund will
ordinarily write options only if a secondary market for the options exists
on a national securities exchange or in the over-the-counter market.
FIXED-INCOME SECURITIES. The Fund may invest in fixed-income securities
to achieve its investment objective. In periods of declining interest
rates, the Fund's yield (its income from portfolio investments over a
stated period of time) may tend to be higher than prevailing market rates,
and in periods of rising interest rates, the yield of the Fund may tend to
be lower. Also, when interest rates are falling, the inflow of net new
money to the Fund from the continuous sale of its shares will likely be
invested in portfolio instruments producing lower yields than the balance
of the Fund's portfolio, thereby reducing the yield of the Fund. In peri-
ods of rising interest rates, the opposite can be true. The net asset
value of a fund investing in fixed-income securities also may change as
general levels of interest rates fluctuate. When interest rates increase,
the value of a portfolio of fixed-income securities can be expected to de-
cline. Conversely, when interest rates decline, the value of a portfolio
of fixed-income securities can be expected to increase.
FUTURES AND OPTIONS ON FUTURES. The Fund may enter into futures contracts
and purchase and write options on future contracts as hedges when deemed
advisable by the Manager. The Fund may purchase and sell financial futures
contracts, including futures for stock indexes, and purchase and write re-
lated options, that are traded on a United States exchange or board of
trade. These investments, if any, by the Fund will be made solely for the
purpose of hedging against changes in the value of its portfolio securi-
ties or securities which the Fund intends to purchase due to anticipated
changes in interest rates and market conditions, and when the transactions
are economically appropriate to the reduction of risks inherent in the
management of the Fund. The use of futures contracts and options on fu-
tures contracts as a hedging device involves several risks. There can be
no assurance that there will be a correlation between price movements in
the underlying securities, on the one hand, and price movements in the se-
curities which are the subject of the hedge, on the other hand. Positions
in futures contracts and options on futures contracts may be closed out
only on an exchange or board of trade that provides an active market for
them, and there can be no assurance that a liquid market will exist for
the contract or the option at any particular time. Losses incurred by
hedging transactions and the costs of these transactions will affect the
Fund's performance. Successful use of futures contracts by the Fund is
subject to the ability of the Manager to correctly predict movements in
the direction of interest rates. The Fund may not purchase or sell futures
contracts or purchase options on futures if, immediately thereafter, more
than 33 1/3% of its net assets would be hedged. In addition, the Fund may
not enter into futures and related options contracts for which aggregate
initial margin deposits and premiums exceed 5% of the fair market value of
the Fund's assets, after taking into account unrealized profits and unre-
alized losses on futures contracts into which it has entered.
ILLIQUID SECURITIES. The Fund will not knowingly invest more that 15% of
the value of its net assets in illiquid securities, including time depos-
its and repurchase agreements having maturities longer than seven days.
Securities that are readily marketable are not deemed illiquid for pur-
poses of this limitation (irrespective of any legal or contractual re-
strictions on resale). The Fund may invest in commercial obligations is-
sued in reliance on the so-called "private placement" exemption from reg-
istration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but which
can be sold to qualified institutional buyers in accordance with Rule 144A
under that Act ("Rule 144A securities"). Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold
to institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Sec-
tion 4(2) paper normally is resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment deal-
ers who make a market in the Section 4(2) paper, thus providing liquidity.
Rule 144A securities generally must be sold to other qualified institu-
tional buyers. Determinations as to the liquidity of investments in Sec-
tion 4(2) paper and Rule 144A securities will be made by the Board of
Trustees. The Board will consider availability of reliable price informa-
tion 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 per-
centage 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 tot he extent that qualified institutional buy-
ers become, for a time, uninterested in purchasing these securities.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund may lend
portfolio securities to brokers, dealers and other financial organiza-
tions. Such loans will not exceed 33 1/3 % of the Fund's total assets,
taken at value. Loans of portfolio securities by the Fund will be collat-
eralized by cash, letters of credit or securities issued or guaranteed by
the U.S. Government or its agencies which will be maintained at all times
in an amount equal to at least 100% of the current market value of the
loaned securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. The Fund may
invest in low-
rated and comparable unrated securities. Low-rated and comparable unrated
securities (collectively referred to in this discussion as "low-rated" se-
curities) will likely have some quality and protective characteristics
that, in the judgment of the rating organization, are outweighed by large
uncertainties or major risk exposures to adverse conditions; and are pre-
dominantly speculative with respect to the issuer's capacity to pay inter-
est and repay principal in accordance with the terms of the obligation.
Further information regarding security ratings is contained in the SAI.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consis-
tent with its investment objective and policies and permissible under the
Investment Company Act of 1940 (the "1940 Act"). As a shareholder of an-
other investment company, the Fund would bear, along with other sharehold-
ers, its pro rata portion of the other investment company's expenses, in-
cluding advisory fees. These expenses would be in addition to the advisory
and other expenses that the Fund bear directly in connection with its own
operations.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement
trans-
actions in pursuit of its investment objective. A repurchase agreement in-
volves the purchase of a security by the Fund and a simultaneous agreement
(generally with a bank or broker-dealer) to repurchase that security from
the Fund at a specified price and date or upon demand. This technique of-
fers a method of earning income on idle cash. A risk associated with re-
purchase agreements is the failure of the seller to repurchase the securi-
ties as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the
open market. Repurchase agreements with a duration of more than seven days
are considered illiquid securities and are subject to the limit on illiq-
uid securities stated above.
SHORT-TERM SECURITIES. The Fund may invest in short-term securities such
as U.S. Government securities and other high-grade, short-term money mar-
ket instruments, including repurchase agreements, time deposits, certifi-
cates of deposit, bankers' acceptances and high-grade commercial paper for
temporary defensive purposes when the Manager determines that market con-
ditions so warrant. In addition, the Fund may invest up to 10% of its as-
sets in such securities on a regular basis to maintain liquidity for pur-
poses of redeeming shares and meeting other cash obligations of the Fund.
The Fund may also invest in these securities for other purposes consistent
with achieving its investment objective.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed put
and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the
index. (Examples of well-known stock indexes are the Standard & Poor's 500
Composite Stock Price Index and the NYSE Composite Index.) Options on
stock indexes are similar to options on securities. However, because op-
tions on stock indexes do not involve the delivery of an underlying secu-
rity, the option represents the holder's right to obtain from the writer
in cash a fixed multiple of the amount by which the exercise price exceeds
(in the case of a put) or is less than (in the case of a call) the closing
value of the underlying index on the exercise date.
The advisability of using stock index options to hedge against the risk of
market-wide movements will depend on the extent of diversification of the
Fund's stock investments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing
or writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being
hedged correlate with price movements in the stock index selected.
When the Fund writes an option on a stock index, it will deposit cash or
cash equivalents or a combination of both in an amount equal to the market
value of the option, in a segregated account with the Fund's custodian,
and will maintain the account while the option is open.
U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations issued or
guaranteed as to both principal and interest by the U.S. Government or
backed by the full faith and credit of the United States. In addition to
direct obligations of the U.S. Treasury, these include securities issued
or guaranteed by the Federal Housing Administration, Farmers Home Adminis-
tration, Export-Import Bank of the United States, Small Business Adminis-
tration, Government National Mortgage Association, Federal National Mort-
gage Association, General Services Administration and Maritime Administra-
tion. Investments may also be made in U.S. Government securities that do
not carry the full faith and credit guarantee, such as those issued by the
Federal National Mortgage Association, the Federal Home Loan Mortgage As-
sociation, or other instrumentalities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure ad-
vantageous prices or yields, the Fund may purchase U.S. Government securi-
ties on a when-issued basis or may purchase or sell securities for delayed
delivery. In such transactions, delivery of the securities occurs beyond
the normal settlement periods, but no payment or delivery is made by the
Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed deliv-
ery basis involves the risk that, as a result of an increase in yields
available in the market- place, the value of the securities purchased will
decline prior to the settlement date. The sale of securities for delayed
delivery involves the risk that the prices available in the market on the
delivery date may be greater than those obtained in the sale transaction.
The Fund will establish a segregated account consisting of cash, U.S. Gov-
ernment securities or other high-grade debt obligations in an amount equal
to the amounts of its when-issued and delayed delivery commitments.
PORTFOLIO TURNOVER. While securities are purchased for the Fund for a
high level of current income and not for short-term trading profits, in
the past the portfolio turnover rate of the Fund has exceeded 100% and may
exceed 100% in the future. A portfolio turnover rate of 100% would occur,
for example, if all these securities held by the Fund were replaced once
in a period of one year. In past years the Fund's rate of portfolio turn-
over exceeded that of certain other mutual funds with the same investment
objective. A higher rate of portfolio turnover involves correspondingly
greater brokerage commissions and other expenses which must be borne di-
rectly 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 which, when distributed to the Fund's
shareholders, are taxable to them as ordinary income. (See "Distributions"
and "Taxes.") Nevertheless, security transactions for the Fund will be
based only upon investment considerations and will not be limited by any
other considerations when the Manager deems it appropriate to make changes
in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority
of the Fund's outstanding Shares. The SAI describes all of the Fund's fun-
damental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without share-
holder approval. If the Fund's investment objective, policies, restric-
tions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's Shares in certain states, the
Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of
the Fund, it may consider terminating sales of its Shares in the states
involved.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Investment Series may in the fu-
ture seek to achieve the Fund's investment objective by investing all of
the Fund's 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 Trustees determine it to be in the best interest of
the Fund and its shareholders. In making that determination, the Trustees
will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the trustees will not approve an arrangement that
is likely to result in higher costs, no assurance is given that costs will
be materially reduced if this option is implemented.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy
way to do business with the Fund. By electing these services on your ap-
plication or by completing the appropriate forms, you may authorize:
* Investment by phone.
* Automatic monthly investments.
* Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment
manager from any loss, claim or expense you may incur as a result of their
acting on such instruction. The Fund will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These in-
clude personal identification procedures, recording of telephone conversa-
tions and providing written confirmation of each transaction. A failure on
the part of the Fund to employ such procedures may subject it to liability
for any loss due to unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours
(9 a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions
on how to: (1) request a current prospectus or information booklets about
The Dreyfus Family of Funds' investment portfolios and services, (2) lis-
ten to net asset values, yields and total return figures, and (3) talk
with a customer service representative during normal business hours. For
more information about direct access using a Touch-Tone phone, please con-
tact The Dreyfus Family of Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier is a wholly-owned sub-
sidiary of Institutional Administration Services, Inc., a provider of mu-
tual fund administration services, the parent company of which is Boston
Institutional Group, Inc. Premier also serves as the Fund's sub-
administrator and, pursuant to a Sub-Administration Agreement, provides
various administrative and corporate secretarial services to the Fund.
Premier has established various procedures for purchasing Class R and In-
vestor Shares of the Fund. Class R Shares are sold primarily to bank trust
departments and other financial service providers (including Mellon Bank
and its affiliates) ("Banks") acting on behalf of customers having a qual-
ified trust investment account or relationship at such institution. Inves-
tor Shares are sold primarily to retail investors by Premier and by Agents
that have entered into a Shareholder Servicing and Sales Support Agreement
with Premier. Once an investor has established an account, additional pur-
chases may, in certain cases, be made directly through the Fund's transfer
agent. If Shares of the Fund are held in an account at a Bank or with an
Agent, such Bank or Agent may require you to place all Fund purchase, ex-
change and redemption orders through them. All Banks and Agents have
agreed to transmit your transaction requests to the Fund's transfer agent
or to Premier. You may diversify your investments by choosing a combina-
tion of investment portfolios offered by The Dreyfus Family of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and
the account number. Orders to purchase Shares are effective on the day the
Fund receives your check or money order. (See "When Share Price is Deter-
mined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by call-
ing 1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account when you call with instructions. Investments
made by phone in any one account must be in an amount of at least $100 and
are effective two days after your call. (See "When Share Price is Deter-
mined.")
BY WIRE.
You may make your initial or subsequent investments in the Fund by wiring
funds. To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of Boston,
BOS SAFE DEP, Account Number 011001234, The Dreyfus Funds 080071.
(2) Be sure to specify on the wire:
(A) The Dreyfus Funds.
(B) The Fund name and the class of Shares of the Fund you are buying and
account number (if you have one).
(C) Your name.
(D) Your city and state.
In order for a wire purchase to be effective on the same day it is re-
ceived both the trading instructions and the wire must be received before
4 p.m., Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the
Fund to draw on your bank account regularly by paper or electronic draft.
Such investments must be in amounts of not less than $100 in any one ac-
count. You should inquire at your bank whether it will honor a preautho-
rized paper or electronic draft. Contact the Fund if your bank requires
additional documentation. Call 1-800-548-2868 or write The Dreyfus Family
of Funds, One Exchange Place, Boston, Massachusetts 02109 for more infor-
mation about the Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from
other sources (including government pension or social security payments).
Note that it may not be appropriate to Direct Deposit your entire paycheck
into the Fund because it has a fluctuating net asset value. Call 1-800-
548-2868 or write The Dreyfus Family of Funds, One Exchange Place, Boston,
Massachusetts 02109 for more information or a Direct Deposit authorization
form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may, at its discre-
tion, permit you to purchase Shares through an "in-kind" exchange of secu-
rities you hold. Any securities exchanged must meet the investment objec-
tive, policies and limitations of the Fund, must have a readily ascertain-
able 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 secu-
rities generally cannot be redeemed for fifteen days following the ex-
change 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 securi-
ties become the property of the Fund, along with the securities. Call
1-800-548-2868 or write The Dreyfus Family of Funds, One Exchange Place,
Boston, Massachusetts 02109 for more information about "in-kind" pur-
chases.
WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their net asset value ("NAV"). NAV is deter-
mined at the close of the New York Stock Exchange ("NYSE") on each day
that the NYSE is open (a "business day"). Investments and requests to ex-
change or redeem Shares received by the Fund before the close of regular
trading on the NYSE (usually 4 p.m., Eastern time) are effective on, and
will receive the price determined, that day (except investments made by
electronic funds transfer which are effective two business days after your
call). Investment, exchange or redemption requests received after the
close of the NYSE are effective on, and receive the first Share price de-
termined, the next business day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instruction
to the Fund, it may not be modified or canceled. The Fund reserves the
right to reject any application or investment. The Fund reserves the right
to make exceptions to the minimum initial investment and account minimum
amount from time to time.
The minimum initial investment to establish a new account in a Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement
plans, and Uniform Transfers (Gifts) to Minors Act accounts, for which the
minimum initial investment is $500. For full-time or part-time employees
of Mellon Bank, the Manager or any of their affiliates or subsidiaries who
elect to have a portion of their pay directly deposited into an account in
the Fund, the minimum initial investment is $50. The Fund may suspend the
offering of Shares of any class of the Fund and reserves the right to vary
initial and subsequent investment minimums. Subsequent investments to pur-
chase additional Shares in the Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a
specified minimum, as a result of redemptions but not as a result of mar-
ket action, unless you have established an automatic monthly investment to
purchase additional Shares. The Fund reserves the right to change such
minimum from time to time. Any time the Shares of the Fund held in an ac-
count have a value of less than $1,000 ($500 for Uniform Gifts/Transfers
to Minors Acts accounts), a notification may be sent advising you of the
need to either make an investment to bring the value of the Shares held in
the account up to $1,000 ($500) or to establish an automatic monthly in-
vestment to purchase additional Shares. If the investment is not made or
the automatic monthly investment is not established within 60 days from
the date of notification, the Shares held in the account will be redeemed
and the proceeds from the redemption will be sent by check to your address
of record.
The automatic redemption of Shares will not apply to IRAs, custodial ac-
counts under Section 403(b) of the Internal Revenue Service of 1986, as
amended (the "Code") ("403(b) accounts") and other types of tax-deferred
retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain
other funds that are advised by the Manager and that were previously ad-
vised by Mellon Bank. As noted below, exchanges from any one fund may be
limited in any one calendar year. In addition, the Shares being exchanged
and the Shares of each fund being acquired must have a current value of at
least $100 and otherwise meet the minimum investment requirement of the
fund being acquired. Call the Investor Line for additional information and
a prospectus describing other investment portfolios offered by The Dreyfus
Family of Funds.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have autho-
rized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The
request should be signed by each person in whose name the Shares are reg-
istered. All signatures should be exactly as the name appears in the reg-
istration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new Shares being purchased must have a current value of
at least $100.
(2) Exchanges from any one fund account may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of Shares of a money market fund, the Shares of any of
the funds exchanged pursuant to an Automatic Withdrawal Program, and
to Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state of
residence.
(4) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchanges can be effected.
(5) Once you have telephoned or mailed your exchange request, it is irre-
vocable and may not be modified or canceled.
(6) An exchange is based on the next calculated net asset value per Share
of each fund after receipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code
and the regulations thereunder. (See "Taxes.")
(8) An exchange of the Fund's Shares is, for federal income tax purposes,
a sale of the Shares, on which you may realize a taxable gain or loss.
(9) If the request is made by a corporation, partnership, trust, fidu-
ciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given 60 days' notice prior to any material changes
in the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV.
(Before redeeming, please read "Additional Information About Redemp-
tions.") Your redemption proceeds may be delayed if you have owned your
Shares less than 10 days. (See "Redemption Proceeds.") The Fund imposes no
charges when Shares are redeemed. Agents or other institutions may charge
their clients a nominal fee for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone
request may not be modified or canceled. (Before calling, read "Additional
Information About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the fol-
lowing forms:
* A letter to The Dreyfus Family of Funds.
* An assignment form or stock power.
* An endorsement on the back of your negotiable stock certificate, if you
have one.
Once mailed to The Dreyfus Family of Funds at P.O. Box 9692, Providence,
Rhode Island 02940- 9830, the redemption request is irrevocable and may
not be modified or canceled. A letter of instruction should state the num-
ber of Shares or the dollar amount to be redeemed. The letter must include
your account number, and for redemptions in an amount in excess of
$25,000, a signature guarantee of each owner. The redemption request must
be signed by each person in whose name the Shares are registered; for ex-
ample, in the case of joint ownership, each owner must sign. All signa-
tures should be exactly as the name appears in the registration. If the
owner's name appears in the registration as John Robert Jones, he should
sign that way and not as John R. Jones. Signature guarantees can be ob-
tained from commercial banks, credit unions if authorized by state laws,
savings and loan institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other indus-
try recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough
Shares each month to provide you with a check for an amount which you
specify (with a minimum of $100). To set up an Automated Withdrawal Pro-
gram, call the Fund at 1-800-548-2868 for instructions. Only shareholders
with a Fund account balance of $10,000 or more may participate in this
program. Shares will be redeemed on the 15th day or 30th day of each month
or the next business day, and your check will be mailed the next day. If
your monthly checks exceed the dividends, interest and capital apprecia-
tion on your Shares, the payments will deplete your investment. Amounts
paid to you by Automated Withdrawals are not a return on your investment.
They are derived from the redemption of Shares in your account, and you
must report on your income tax return, any gains or losses that you real-
ize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be
signed by all owners.
When you make your first investment you may request that Automated With-
drawals be sent to an address other than the address of record. Thereaf-
ter, a request to send Automated Withdrawals to an address other than the
address of record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of
the Automated Withdrawal Program, by notice to the Fund in writing or by
telephone. Termination or change will become effective within five days
following receipt of your instruction. Your Automated Withdrawal Program
plan may begin any time after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not
later than seven days afterwards. When a redemption occurs shortly after a
recent purchase, the Fund may hold the redemption proceeds beyond seven
days but only until the purchase check clears, which may take up to 10
days or more. No dividend is paid on the redemption proceeds after the re-
demption and before the check is mailed. If you anticipate redemptions
soon after you purchase your Shares, you are advised to wire funds to
avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Pro-
ceeds from the redemption of the Fund's Shares will normally be transmit-
ted on the first business day, but not later than the seventh day, follow-
ing the date of redemption. Your bank usually will receive wired funds the
day they are transmitted. Electronically transferred funds will ordinarily
be received within two business days after transmission. Once the funds
are transmitted, the time of receipt and the availability of the funds are
not within the Fund's control. If your bank account changes, you must send
a new "voided" check preprinted with the bank registration with written
instructions signed by all owners (with their signatures guaranteed), in-
cluding tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption
can be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be accom-
panied by an IRS Form W4-P and a reason for withdrawal as specified by
the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
Certain of The Dreyfus Family of Funds' investment portfolios are avail-
able for your tax-deferred retirement plan. Call 1-800-548-2868 or write
The Dreyfus Family of Funds at P.O. Box 9692, Providence, Rhode Island
02940-9830 and request the appropriate forms for:
* IRAs.
* 403(b) accounts for employees of public school systems and non-profit
organizations.
* Profit sharing plans and pension plans for corporations and other em-
ployers.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF FUNDS'
RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to The Dreyfus Family of
Funds from another custodian. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 for
a request to transfer form. If you direct The Dreyfus Family of Funds to
transfer funds from an existing non-retirement Dreyfus Family of Funds ac-
count into a retirement account, the Shares in your non-retirement account
will be redeemed. The redemption proceeds will be invested in your Dreyfus
Family of Funds IRA or other tax-qualified retirement plan. The redemption
is a taxable event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV
for Investor and Class R Shares of the Fund is computed by adding with re-
spect to each class of Shares the value of all the class' investments,
cash and other assets, deducting liabilities and dividing the result by
number of Shares of that class outstanding. The valuation of assets for
determining NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used. Se-
curities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board
of Trustees.
Pursuant to a determination by The Dreyfus/Laurel Investment Series' Board
of Trustees that such value represents fair value, debt securities with
maturities of 60 days or less held by the Fund are valued at amortized
cost. When a security is valued at amortized cost, it is valued at its
cost when purchased, and thereafter by assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuat-
ing interest rates on the market value of the instrument.
The NAV of each class of Shares of most of The Dreyfus Family of Funds'
investment portfolios (other than money market funds) is published in
leading newspapers daily. The yield of each class of Shares of most of The
Dreyfus Family of Funds' money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of the Fund
may also be obtained by calling The Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the yield and total return on a
class of Shares. Total return and yield figures are based on historical
earnings and are not intended to indicate future performance. The "total
return" of a class of Shares of the Fund may be calculated on an average
annual total return basis or a cumulative total return basis. Average an-
nual total return refers to the average annual compounded rates of return
on a class of Shares over one-, five-, and ten-year periods or the life of
the Fund (as stated in the advertisement) that would equate an initial
amount invested at the beginning of a stated period to the ending redeem-
able value of the investment, assuming the reinvestment of all dividends
and capital gains distributions. Cumulative total return reflects the
total percentage change in the value of the investment over the measuring
period, again assuming the reinvestment of all dividends and capital gains
distributions.
The Fund's "yield" is calculated by dividing a class of Shares' annualized
net investment income per Share during a recent 30-day (or one month) pe-
riod by the maximum public offering price per class of such Share on the
last day of that period. Because yields fluctuate, yield data cannot nec-
essarily be used to compare an investment in a class of Shares with bank
deposits, savings accounts, and similar investment alternatives which
often provide an agreed-upon or guaranteed fixed yield for a stated period
of time.
Total return and yield quotations will be computed separately for each
class of the Fund's Shares. Because of the difference in the fees and ex-
penses borne by Class R and Investor Shares of the Fund, the return and
yield on Class R Shares will generally be higher than the return and yield
on Investor Shares. Any fees charged by a Bank or Agent directly to its
customers' account in connection with investments in a Fund will not be
included in calculations of total return or yield. The Fund's Annual Re-
port contains additional performance information and is available upon re-
quest without charge from the Fund's distributor or your Bank or Agent.
The Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings. Performance rankings as reported in Changing
Times, Business Week, Institutional Investor, The Wall Street Journal, Mu-
tual Fund Forecaster, No Load Investor, Money Magazine, Morningstar Mutual
Fund Values, U.S. News and World Report, Forbes, Fortune, Barron's and
similar publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its Investor and Class R Shares' returns
and yields in advertisements or in shareholder reports. The Fund may also
advertise non-standardized performance information, such as total return,
for periods other than those required to be shown on cumulative perfor-
mance data.
DISTRIBUTIONS
The Fund declares daily and pays monthly (on the first business day of the
following month) dividends from its net investment income, if any. The
Fund distributes any net long-term capital gains on an annual basis. The
Board of Trustees may elect not to distribute capital gains in whole or in
part to take advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain distributions in
cash, your distributions will be automatically reinvested in additional
Shares of the Fund at the NAV. You may change the method of receiving dis-
tributions at any time by writing to the Fund. Checks which are sent to
shareholders who have requested distributions to be paid in cash and which
are subsequently returned by the United States Postal Service as not de-
liverable or which remain uncashed for six months or more will be rein-
vested in additional Fund Shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically rein-
vested in additional Fund Shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of Shares may be
greater or less per Share than those paid with respect to another class of
Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will not
begin to accrue dividends until the following business day. Redemption or-
ders effected on any particular day will receive all dividends declared
through the day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b) ac-
counts paid in cash only if you are at least 59 1/2 years old or are per-
manently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will reduce
each Share's NAV by the amount of the distribution. Shareholders are sub-
ject to taxes with respect to any such distribution. At any given time,
the value of the Fund's Shares includes the undistributed net gains, if
any, realized by the Fund on the sale of portfolio securities, and undis-
tributed dividends and interest received, less the Fund's expenses. Be-
cause such gains and income are included in the value of your Shares, when
they are distributed the value of your Shares is reduced by the amount of
the distribution. Accordingly, if your distribution is reinvested in addi-
tional Shares, the distribution has no effect on the value of your invest-
ment; while you own more Shares, the value of each Share has been reduced
by the amount of the distribution. Likewise, if you take your distribution
in cash, the value of your Shares immediately after the distribution plus
the cash received is equal to the value of the Shares immediately before
the distribution. For example, if you own a Fund Share that immediately
before a distribution has a value of $10, including $2 in undistributed
dividends and capital gains realized by the Fund during the year, and if
the $2 is distributed, the value of the Share will decline to $8. If the
$2 is reinvested at $8 per Share, you will receive .250 Shares, so that,
after the distribution, you will have 1.250 Shares at $8 per Share, or
$10, the same as before.
TAXES
The Fund intends to qualify for treatment as a regulated investment com-
pany under the Code so that it will be relieved of Federal income tax on
that part of its investment company taxable income (consisting generally
of taxable net investment income and net short-term capital gain) and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Fund of net capital gain, when designated as such,
are taxable to you as long-term capital gains, regardless of the length of
time you have owned your Shares.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund Shares, even if
the value of your Shares is below your cost. If you purchase Shares
shortly before a taxable distribution you must pay income taxes on the
distribution, even though the value of your investment (plus cash re-
ceived, if any) remains the same. In addition, the Share price at the time
you purchase Shares may include unrealized gains in the securities held in
the Fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a capital gain distribution and will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV notifying
you of the status for Federal income tax purposes of your distributions
for the preceding year.
Dividends paid by the Fund to qualified retirement plans ordinarily will
not be subject to taxation until the proceeds are distributed from the re-
tirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except
those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the partici-
pant reaches age 59 1/2 , generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribu-
tion from such a retirement plan (other certain governmental or church
plans) for any taxable year following the year in which the participant
reaches age 70 1/2 is less than the "minimum required distribution" for
that taxable year, an excise tax equal to 50% of the deficiency may be im-
posed by the IRS. The administrator, trustee or custodian of such a re-
tirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified re-
tirement plan in excess of the amounts permitted by law may be subject to
an excise tax.
You must furnish the Fund with your taxpayer identification number ("TIN")
and state whether you are subject to withholding for prior under-
reporting, certified under penalties of perjury as prescribed by the Code
and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is re-
quired to withhold a portion of all dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other non-
corporate shareholders who do not provide the Fund with a correct TIN;
withholding from dividends and capital gain distributions also is required
for such shareholders who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of
its taxable ordinary income for that year and capital gain net income for
the one-year period ending on December 31 of that year, plus certain other
amounts. The Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax consider-
ations generally affecting the Fund and its shareholders; see the SAI for
a further discussion. There may be other Federal, state or local tax con-
siderations applicable to a particular investor. You therefore are urged
to consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the
Fund with a summary of its investments and performance. The Fund will send
you a confirmation statement after every transaction (except with regard
to the reinvestment of dividends and other distributions) that affect your
Fund account. In addition, an account statement will be mailed to you
quarterly or monthly depending on the Fund's reporting schedule. You may
also request a statement of your account activity at any time. Carefully
review such confirmation statements and account statements and notify the
Fund immediately if there is an error. From time to time, to reduce ex-
penses, only one copy of the Fund's shareholder reports (such as the
Fund's Annual Report) may be mailed to your household. Please call the
Fund if you need additional copies.
No later than January 31 of each year, the Fund will send you the follow-
ing reports, which you may use in completing your federal income tax re-
turn:
Form 1099-DIV Reports taxable distributions (and returns of capital, if
any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year (for non- retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL INVESTMENT SERIES.
The Dreyfus/Laurel Investment Series offers Shares of beneficial interest
of separate investment portfolios with $.001 par value per share (each a
"fund"). The Boston Company Investment Series was organized as a Massachu-
setts business trust under the laws of the Commonwealth of Massachusetts
on May 26, 1988 and changed its named to The Laurel Investment Series, and
then to The Dreyfus/Laurel Investment Series on October 17, 1994. The
Dreyfus/Laurel Investment Series is registered with the SEC as an open-end
management investment company, commonly known as a mutual fund. The Trust-
ees have authorized Shares of the Fund to be issued in two classes--
Investor Shares and Class R Shares.
Each Share (regardless of class) has one vote. All Shares of a fund (and
classes thereof) vote together as a single class, except as to any matter
for which a separate vote of any fund or class is required by the 1940
Act, and except as to any matter which affects the interests of one or
more particular funds or classes, in which case only the shareholders of
the affected fund or classes are entitled to vote, each as a separate
class. At your written request, the Fund will issue negotiable stock cer-
tificates.
MANAGEMENT.
THE BOARD OF TRUSTEES. The business affairs of The Dreyfus/Laurel Invest-
ment Series are managed under the direction of its Trustees. The SAI con-
tains the names and general background information concerning the Trustees
and officers of The Dreyfus/Laurel Investment Series.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of November 30, 1994, the Manager managed or adminis-
tered approximately $71 billion in assets for more than 1.9 million inves-
tor accounts nationwide. The Manager is a wholly-owned subsidiary of Mel-
lon Bank (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258), the
Fund's prior investment manager. Pursuant to an Investment Management
Agreement, transferred from Mellon Bank to the Manager effective as of Oc-
tober 17, 1994, the Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Fund. As investment manager,
the Manager manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of .55% of the Fund's average
daily net assets less certain expenses described below. The Manager pays
all of the expenses of the Fund except brokerage, taxes, interest, fees
and expenses of the non-interested Trustees (including counsel fees) and
extraordinary expenses. Although the Manager does not pay for the fees and
expenses of the non-interested Trustees (including counsel fees), the Man-
ager is contractually required to reduce its investment management fee in
an amount equal to the Fund's allocable share of such expenses. In order
to compensate the Manager for paying virtually all of the Fund's expenses,
the Fund's investment management fee is higher than the investment advi-
sory fees paid by most investment companies. Most, if not all, such compa-
nies also pay for additional non-investment advisory expenses that are not
paid by such companies' investment adviser. From time to time, the Manager
may waive (either voluntarily or pursuant to applicable state limitations)
additional investment management fees payable by the Fund. For the period
from September 1, 1993 through April 3, 1994, the Fund paid its investment
adviser, The Boston Company Advisors, Inc. (an indirect wholly-owned sub-
sidiary of Mellon Bank Corporation), 0.00% (annualized) of the Fund's av-
erage daily net assets in investment advisory fees (net of fees waived and
expenses reimbursed) under the Fund's previous investment advisory con-
tract (such contract only covered the provision of investment advisory and
certain specified administrative services). For the period from April 4,
1994 through the fiscal year ended August 31, 1994, the Fund paid Mellon
Bank .55% (annualized) of the Fund's average daily net assets in invest-
ment management fees. For the fiscal year ended August 31, 1994, total op-
erating expenses (excluding Rule 12b-1 fees) (net of fees waived and ex-
penses reimbursed) of the Fund were 0.78% of the Fund's average daily net
assets for the Investor Shares. It is anticipated that the current total
operating expenses of the Fund (excluding Rule 12b-1 fees) will be approx-
imately .55% of the Fund's average daily net assets.
The Manager is authorized to allocate purchase and sale orders for portfo-
lio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with
the Manager or which have sold Shares of the Fund, if the Manager believes
that the quality of the transaction and the commission are comparable to
what they would be with other qualified brokerage firms. From time to
time, to the extent consistent with its investment objective, policies and
restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of June 30,
1994, Mellon Bank Corporation was the 24th largest bank holding company in
the United States in terms of total assets. Through its bank subsidiaries,
it operates 631 domestic retail banking locations including 432 branch of-
fices. Mellon Bank Corporation has 25 domestic representative offices.
There are international branches in Grand Cayman, British West Indies and
London, England, and two international representative offices in Tokyo,
Japan and Hong Kong. Mellon Bank has a banking subsidiary, Mellon Bank
Canada, in Toronto. Mellon Bank is a registered municipal securities
dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain se-
curities. The activities of Mellon Bank and the Manager with regard to the
Fund may raise issues under these provisions. However, Mellon Bank has
been advised by its counsel that these activities are consistent with
these statutory and regulatory obligations. For more information on the
Glass-Steagall Act of 1933, see "Federal Law Affecting Mellon Bank" in the
SAI.
Roberta Shea, an Officer of Mellon Bank and a Vice President of The Boston
Company Advisors, Inc., is the portfolio manager for the Fund. Ms. Shea is
a portfolio manager at the Manager and has been employed by the Manager
since October 17, 1994. Ms. Shea manages money market instruments, includ-
ing U.S. Treasury bills, for several major corporations and investment
firms. Ms. Shea has also served as a Treasury analyst and as a Federal
Funds trader. A Holy Cross graduate, she has been with The Boston Company
since 1984.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank also serves as custodian and fund accountant, maintaining pos-
session of the Fund's investment securities and provides certain account-
ing and related services.
The Shareholder Services Group, Inc., a subsidiary of First Data Corpora-
tion, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence,
Rhode Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the
Fund's sponsor and distributor. Premier is a registered broker-dealer with
principal offices at One Exchange Place, Boston, Massachusetts 02109. The
Dreyfus/Laurel Investment Series has entered into a distribution agreement
with Premier which provides that Premier has the exclusive right to dis-
tribute Shares of the Fund. Premier may pay service and/or distribution
fees to Agents that assist customers in purchasing and servicing of Shares
of the Fund. (See "Distribution Plan.")
DISTRIBUTION PLAN (INVESTOR SHARES ONLY).
Investor Shares are subject to a Distribution Plan ("Plan") adopted pursu-
ant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). Investor Shares of
the Fund may bear some of the cost of selling those Shares under the Plan.
The Plan allows the Fund to spend annually up to 0.25% of its average
daily net assets attributable to Investor Shares to compensate Dreyfus
Service Corporation, an affiliate of the Manager, for shareholder servic-
ing activities and Premier for shareholder servicing activities and for
activities or expenses primarily intended to result in the sale of Inves-
tor Shares of the Fund. The Plan allows Premier to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Selling Agreements ("Agreements") with Premier. Under the
Agreements, the Agents are obligated to provide distribution related ser-
vices with regard to the Fund and/or shareholder services to the Agent's
clients that own Investor Shares of the Fund.
The Fund and Premier may suspend or reduce payments under the Plan at any
time, and payments are subject to the continuation of the Fund's Plan and
the Agreements described above. From time to time, the Agents, Premier and
the Fund may agree to voluntarily reduce the maximum fees payable under
the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms gov-
erning Agreements with their Agents. An Agent entitled to receive compen-
sation for selling and servicing the Fund's Shares may receive different
compensation with respect to one class of shares over another.
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money.
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
Dreyfus/Laurel International Fund
Investor and Class R Shares
December 30, 1994
The Dreyfus/Laurel International Fund is a diversified
equity fund seeking long-term growth in capital by investing in
companies located outside the United States. Current income from
dividends, interest, and other sources is a secondary objective.
The Fund seeks to achieve its investment objectives through
investments in common stocks and securities convertible into
common stocks.
This Prospectus describes the Dreyfus/Laurel
International Fund (the "Fund") of The Dreyfus/Laurel Investment
Series (formerly The Laurel Investment Series and prior thereto
The Boston Company Investment Series), a management investment
company that is part of The Dreyfus Family of Funds. This
Prospectus describes two classes of shares--Investor Shares and
Class R Shares (collectively, the "Shares")--of the Fund.
This Prospectus sets forth concisely the information
about the Fund that a prospective purchaser should consider
before investing. Investors should read this Prospectus and
retain it for future reference. Additional information about the
Fund is contained in a Statement of Additional Information (the
"SAI"), which has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request without
charge by calling or writing to The Dreyfus Family of Funds. The
SAI bears the same date as the Prospectus and is incorporated by
reference in its entirety into this Prospectus.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. ALL MUTUAL FUND SHARES
INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN
THE "EXPENSE SUMMARY" SECTION OF THIS PROSPECTUS. THE FUND PAYS
MELLON BANK, N.A. ("MELLON BANK") OR ITS AFFILIATES TO BE ITS
INVESTMENT MANAGER. MELLON BANK OR AN AFFILIATE MAY BE PAID FOR
PERFORMING OTHER SERVICES FOR THE FUND, SUCH AS CUSTODIAN,
TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
In addition to this Fund, The Dreyfus Family of Funds
also offers other funds that provide investment opportunities for
you in the equity, fixed income and money markets. For more
information about these additional investment opportunities, call
1-800-548-2868
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
For Purchase, Redemption
and Performance Information call:
1-800-548-2868
TABLE OF CONTENTS
Page
Expense Summary 3
Financial Highlights 5
Investment Objectives and Policies 6
HOW TO DO BUSINESS WITH US:
Special Shareholder Services 6
Investor Line 6
How to Invest in the Fund 7
By Mail 7
By Telephone 7
By Wire 7
By Automatic Monthly Investments 8
By Direct Deposit 8
By In-Kind Purchases 8
When Share Price is Determined 8
Additional Information About Investments 8
How to Exchange Your Investment From One Fund to Another 9
By Telephone 9
By Mail 9
Additional Information About Exchanges 9
How to Redeem Shares 10
By Telephone 10
By Mail 10
By Automated Withdrawal Program 11
Redemption Proceeds 11
Additional Information About Redemptions 12
How To Use The Dreyfus Family of Funds in a Tax-Qualified Retirement Plan
12
How to transfer an Investment to a Dreyfus Family of Funds' Retirement Plan
12
OTHER INFORMATION:
Share Price 12
Performance Advertising 13
Distributions 14
Taxes 15
Other Services 16
Further Information About The Fund 16
The Dreyfus/Laurel Investment Series 16
Management 17
Other Investment Policies 18
Distribution Plan (Investor Shares only) 23
No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in the Fund's SAI
incorporated herein by reference, in connection with the offering made by this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Fund or its distributor. This
Prospectus does not constitute an offering by the Fund or by the distributor
in any jurisdiction in which such offering may not be lawfully made.
EXPENSE SUMMARY
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear directly or
indirectly in connection with an investment in the Investor or Class R Shares
of the Fund. (See "Management").
Dreyfus/Laurel International Fund Investor Class R
Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none
Maximum Sales Load Imposed on Reinvestments none none
Deferred Sales Load none none
Redemption Fee none none
Exchange Fee none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fee 1.50% 1.50%
12b-1 Fee 0.25% 0.00%
Other Expenses 0.00% 0.00%
Total Fund Operating Expenses 1.75% 0.50%
EXAMPLES: Investor Class R
Shares Shares
You would pay the 1 year $18 $15
following on a $1,000 3 years $55 $47
investment, assuming 5 years $95 $82
(1) a 5% annual return 10 years $206 $179
and (2) redemption at
the end of each time
period:
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR
LESS THAN THOSE SHOWN.
The Fund understands that banks, securities brokers or dealers and other
financial institutions (including Mellon Bank and its affiliates)
(collectively "Agents") may charge fees to their clients who are owners of the
Fund's Investor Shares for various services provided in connection with a
client's account. These fees would be in addition to any amounts received by
an Agent under its Shareholder Servicing and Sales Support Agreements
("Agreements") with Premier Mutual Fund Services, Inc. ("Premier"). The
Agreement requires each Agent to disclose to its clients any compensation
payable to such Agent by Premier and any other compensation payable by the
client for various services provided in connection with its account.
Long-term shareholders of Investor Shares could pay more in Rule 12b-1
fees than the economic equivalent of the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc.
FINANCIAL HIGHLIGHTS
The table below is based upon a single Investor Share outstanding
throughout each fiscal year and should be read in conjunction with the
financial statements and related notes that appear in the Fund's Annual
Report dated August 31, 1994. The financial statements included in the
Fund's Annual Report dated August 31, 1994 are incorporated by reference
in the SAI and have been audited by KPMG Peat Marwick, LLP,independent
accountants, whose report appears in the Fund's Annual Report. The Fund
did not offer Class R Shares during the fiscal year ended August 31, 1994.
Financial Highlights
DREYFUS/LAUREL INTERNATIONAL FUND(1)
For an Investor Share outstanding throughout each period.
Year
Ended
8/31/94
#(1)
Year
Ended
8/31/93
#
Year
Ended
8/31/92
Year
Ended
8/31/9
1
Year
Ended
8/31/9
0
Perio
d
Ended
8/31/
89**
Net asset value, beginning of
period
$12.76
$10.93
$11.25
$12.25
$12.98
$12.0
0
Income from investment operations:
Net investment income
0.10***
0.05***
0.03***
0.12
0.19
0.12
Net realized and unrealized
gain/(loss) on investments
1.13
1.78
(0.14)
(0.73)
(0.65)
0.89
Total from investment operations
1.23
1.83
(0.11)
(0.61)
(0.46)
1.01
Less Distributions:
Distributions to shareholders
from:
Dividends from net investment
income
- -
- -
(0.07)
(0.17)
(0.18)
(0.03
)
Distributions from net realized
capital gains
-
-
(0.14)
(0.22)
(0.09)
- -
Total distributions
-
-
(0.21)
(0.39)
(0.27)
(0.03
)
Net asset value, end of period
$13.99
$12.76
$10.93
$11.25
$12.25
$12.9
8
Total return+++
9.64%
16.74%
(1.05%)
(4.88%
)
(3.69%
)
8.40%
Ratios to average net
assets/supplemental Data:
Net assets, end of period = (in
000's)
$5,793
$3,399
$11,435
$29,70
6
$31,37
2
$24,6
99
Ratio of operation expenses to
average net assets
1.84%**
1.79%**
++
1.87%**
1.63%
1.63%
1.76%
+
Ratio of net investment income to
averagenet assets
0.74%
0.46%
0.24%
0.97%
1.50%
1.52%
+
Portfolio turnover rate
114%
202%
110%
145%
28%
47%
INVESTMENT OBJECTIVES AND POLICIES
The Fund seeks long-term growth in capital by investing in
companies located outside the United States. Current income from
dividends, interest, and other sources is a secondary objective. The
Fund is a diversified fund that seeks to achieve its investment
objectives by investing in common stocks and securities convertible into
common stocks of companies located outside the United States.
The Fund places major emphasis on countries that are considered to
have above average potential for long-term economic growth. In general,
the Fund's investments are expected to be broadly diversified over a
number of countries including, but not limited to, Australia, Canada,
France, Germany, Hong Kong, Italy, Japan, the Netherlands,
Singapore/Malaysia, Spain, Sweden, Switzerland, and the United Kingdom.
Within countries, equity investments are expected to be broadly
diversified to spread risk and to provide representation of the growth
potential of the country. Selection of securities is designed to include
participation in economic and industrial sectors which are important to
the growth of the country. Within countries, the Fund invests primarily
in major established companies which are listed and traded on principal
exchanges. The Fund will not invest more than 35% of its total assets in
any one country. For additional information concerning investments in
foreign securities including risks, certain foreign currency
transactions and the Fund's temporary defensive strategy see "Other
Investment Policies", pages18-23.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to
provide an easy way to do business with the Fund. By electing these
services on your application or by completing the appropriate forms, you
may authorize:
Investment by phone.
Automatic monthly investments.
Exchanges or redemptions by phone.
By electing the service which enables you to exchange and
redeem by phone, you agree to indemnify the Fund, its transfer agent and
its investment manager from any loss, claim or expense you may incur as
a result of their acting on such instruction. The Fund will employ
reasonable procedures to confirm that instructions communicated by
telephone are genuine. These include personal identification
procedures, recording of telephone conversations and providing written
confirmation of each transaction. A failure on the part of the Fund to
employ such procedures may subject it to liability for any loss due to
unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our
Investor Line at 1-800-548-2868. If you call on a rotary phone during
normal business hours (9 a.m. to 5 p.m., Eastern time), you will reach a
Dreyfus Family of Funds operator. If you call on a Touch-Tone phone,
you will receive instructions on how to: (1) request a current
prospectus or information booklets about The Dreyfus Family of Funds'
investment portfolios and services, (2) listen to net asset values,
yields and total return figures, and (3) talk with a customer service
representative during normal business hours. For more information about
direct access using a Touch-Tone phone, please contact The Dreyfus
Family of Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier is a wholly-
owned subsidiary of Institutional Administration Services, Inc., a
provider of mutual fund administration services, the parent company of
which is Boston Institutional Group, Inc. Premier also serves as the
Fund's sub-administrator and, pursuant to a Sub-Administration
Agreement, provides various administrative and corporate secretarial
services to the Fund. Premier has established various procedures for
purchasing Class R and Investor Shares of the Fund. Class R Shares are
sold primarily to bank trust departments and other financial service
providers (including Mellon Bank and its affiliates) ("Banks") acting on
behalf of customers having a qualified trust investment account or
relationship at such institution. Investor Shares are sold primarily to
retail investors by Premier and Agents that have entered into a
Shareholder Servicing and Sales Support Agreement with Premier. Once an
investor has established an account, additional purchases may, in
certain cases, be made directly through the Fund's transfer agent. If
Shares of the Fund are held in an account at a Bank or with an Agent,
such Bank or Agent may require you to place all Fund purchase, exchange
and redemption orders through them. All Banks and Agents have agreed to
transmit your transaction requests to the Fund's transfer agent or to
Premier. You may diversify your investments by choosing a combination
of investment portfolios offered by The Dreyfus Family of Funds.
You may invest in the following ways:
By Mail. Send your application and check or money order to The
Dreyfus Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-
9830. Checks must be payable in U.S. dollars and drawn on U.S. banks.
When making subsequent investments, enclose your check with the return
remittance portion of the confirmation of your previous investment. If
the remittance portion is not available, indicate on your check or a
separate piece of paper your name, address, the Fund and class of Shares
of the Fund that you are buying and the account number. Orders to
purchase Shares are effective on the day the Fund receives your check or
money order. (See "When Share Price is Determined." )
By Telephone. Once your account is open, you may make
investments by telephone by calling
1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account when you call with instructions. Investments
made by phone in any one account must be in an amount of at least $100
and are effective two days after your call. (See "When Share Price is
Determined.")</r.>
By Wire.
You may make your initial or subsequent investments
in the Fund by wiring funds. To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of
Boston, BOS SAFE DEP, Account No. 01001234, The Dreyfus Funds 080071.
(2) Be sure to specify on the wire:
(a) The Dreyfus Funds.
(b) The Fund name and the class of Shares of the Fund you are buying
and account number (if you have one).
(c) Your name.
(d) Your city and state.
In order for a wire purchase to be effective on the same day it is
received both the trading instructions and the wire must be received
before 4 p.m., Eastern time. (See "When Share Price is
Determined.")
By Automatic Monthly Investments. Once your account is open,
you may make investments automatically by electing the Automatic
Investment Program, the service authorizing the Fund to draw on your
bank account regularly by paper or electronic draft. Such investments
must be in amounts of not less than $100 in any one account. You should
inquire at your bank whether it will honor a preauthorized paper or
electronic draft. Contact the Fund if your bank requires additional
documentation. Call 1-800-548-2868 or write The Dreyfus Family of
Funds, One Exchange Place, Boston, Massachusetts 02109 for more
information about the Automatic Investment Program.
By Direct Deposit. If your employer offers Direct Deposit, you
may arrange to automatically purchase Shares of the Fund (minimum $100)
each pay period. Direct Deposit investing may also be available to
persons receiving regular payments from other sources (including
government pension or social security payments). Note that it may not
be appropriate to Direct Deposit your entire paycheck into the Fund
because it has a fluctuating net asset value. Call 1-800-548-2868 or
write The Dreyfus Family of Funds, One Exchange Place, Boston,
Massachusetts 02109 for more information or a Direct Deposit
authorization form.
By In-Kind Purchases. If the following conditions are
satisfied, the Fund may, at its discretion, permit you to purchase
Shares through an "in-kind" exchange of securities you hold. Any
securities exchanged must meet the investment objectives, 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. Call 1-800-548-2868 or write The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830 for
more information about "in-kind" purchases.
When Share Price is Determined. The price of your Shares is
their net asset value ("NAV"). NAV is determined at the close of the
New York Stock Exchange ("NYSE") on each day that the NYSE is open (a
"business day"). Investments and requests to exchange or redeem Shares
received by the Fund before the close of regular trading on the NYSE
(usually 4 p.m., Eastern time) are effective on, and will receive the
price determined on that day (except investments made by electronic
funds transfer which are effective two business days after your call).
Investment, exchange or redemption requests received after the close of
the NYSE are effective on, and receive the Share price determined on the
next business day.
Additional Information About Investments. Once you have mailed
or otherwise transmitted your investment instruction to the Fund, it may
not be modified or canceled. The Fund reserves the right to reject any
application or investment. The Fund reserves the right to make
exceptions to the minimum initial investment and account minimum amount
from time to time.
The minimum initial investment to establish a new account in a
Fund is $1,000, except for Individual Retirement Accounts ("IRAs"),
retirement plans, and Uniform Transfers (Gifts) to Minors Act accounts,
for which the minimum initial investment is $500. For full-time or
part-time employees of Mellon Bank, The Dreyfus Corporation (the
"Manager") or any of their affiliates or subsidiaries who elect to have
a portion of their pay directly deposited into an account in the Fund,
the minimum initial investment is $50. The Fund may suspend the
offering of Shares of any class of the Fund and reserves the right to
vary initial and subsequent investment minimums. Subsequent investments
to purchase additional Shares in the Fund must be in an amount of $100
or more.
The Fund intends, upon 60 days' prior notice, to involuntarily
redeem shares in any account if the total value of the Shares is less
than a specified minimum as a result of redemptions but not as a result
of market action, unless you have established an automatic monthly
investment to purchase additional Shares. The Fund reserves the right
to change such minimum from time to time. Any time the Shares of the
Fund held in an account have a value of less than $1,000 ($500 for
Uniform Gifts/Transfers to Minors Acts accounts), a notification may be
sent advising you of the need to either make an investment to bring the
value of the Shares held in the account up to $1,000 ($500) or to
establish an automatic monthly investment to purchase additional Shares.
If the investment is not made or the automatic monthly investment is not
established within 60 days from the date of notification, the Shares
held in the account will be redeemed and the proceeds from the
redemption will be sent by check to your address of record.
The automatic redemption of Shares will not apply to IRAs,
custodial accounts under Section 403(b) of the Internal Revenue Service
of 1986, as amended (the "Code") ("403(b) accounts") and other types of
tax-deferred retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for Shares of the same class
of certain other funds that are advised by the Manager and that were
previously advised by Mellon Bank. As noted below, exchanges from any
one fund may be limited in any one calendar year. In addition, the
Shares being exchanged and the Shares of each fund being acquired must
have a current value of at least $100 and otherwise meet the minimum
investment requirement of the fund being acquired. Call the Investor
Line for additional information and a prospectus describing other
investment portfolios offered by The Dreyfus Family of Funds.
By Telephone. You may exchange your Shares by calling 1-800-
548-2868 if you have authorized the Fund to accept telephone
instructions
By Mail. You may direct the Fund to exchange your Shares by
writing to The Dreyfus Family of Funds, P.O. Box 9692, Providence, Rhode
Island 02940-9830. The request should be signed by each person in whose
name the Shares are registered. All signatures should be exactly as the
name appears in the registration; for example, if an owner's name is
registered as John Robert Jones, he should sign that way and not as John
R. Jones.
Additional Information About Exchanges.
(1) In an exchange from one account to another account, the Shares
being sold and the new Shares being purchased must have a current value
of at least $100.
(2) Exchanges from any one fund may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of Shares of a money market fund, the Shares of any of the
funds exchanged pursuant to an Automatic Withdrawal Program, and to
Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state
of residence.
(4) If the Shares are represented by a negotiable stock certificate,
the certificate must be returned before the exchange can be effected.
(5) Once you have telephoned or mailed your exchange request, it is
irrevocable and may not be modified or canceled.
(6) An exchange is based on the next calculated net asset value per
Share of each fund after receipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund
with your tax identification number, certified as prescribed by the Code
and the regulations thereunder. (See "Taxes." )
(8) An exchange of the Fund's Shares is, for federal income tax
purposes, a sale of the Shares, on which you may realize a taxable gain
or loss.
(9) If the request is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given 60 days' notice prior to any material
changes in the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at
their NAV. (Before redeeming, please read "Additional Information About
Redemptions) Your redemption proceeds may be delayed if you have owned
your Shares less than 10 days. (See "Redemption Proceeds.") The Fund
imposes no charges when Shares are redeemed. Agents or other
institutions may charge their clients a nominal fee for effecting
redemptions of Fund Shares.
By Telephone. If you have authorized the Fund to accept telephone
instructions, you may redeem your Shares by calling 1-800-548-2868.
Once made, your telephone request may not be modified or canceled.
(Before calling, read "Additional Information About Redemptions," and
"When Share Price is Determined.")
By Mail. Your written instructions to redeem Shares may be in any
one of the following forms:
A letter to The Dreyfus Family of Funds.
An assignment form or stock power.
An endorsement on the back of your negotiable stock certificate,
if you have one.
Once mailed to The Dreyfus Family of Funds, P.O. Box 9692,
Providence, Rhode Island 02940-9830, the redemption request is
irrevocable and may not be modified or canceled. A letter of
instruction should state the number of Shares or the dollar amount to be
redeemed. The letter must include your account number, and for
redemptions in an amount in excess of $25,000, a signature guarantee of
each owner. The redemption request must be signed by each person in
whose name the Shares are registered; for example, in the case of joint
ownership, each owner must sign. All signatures should be exactly as
the name appears in the registration. If the owner's name appears in
the registration as John Robert Jones, he should sign that way and not
as John R. Jones. Signature guarantees can be obtained from commercial
banks, credit unions if authorized by state laws, savings and loan
institutions, trust companies, members of a recognized stock exchange,
or from other eligible guarantors who are members of the Securities
Transfer Agents Medallion Program ("STAMP") or any other industry
recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions")
By Automated Withdrawal Program. The Fund's Automated
Withdrawal Program automatically redeems enough Shares each month to
provide you with a check for an amount which you specify (with a minimum
of $100). To set up an Automated Withdrawal Program, call the Fund at
1-800-548-2868 for instructions. Only shareholders with a Fund account
balance of $10,000 or more may participate in this program. Shares will
be redeemed on the 15th day or 30th day of each month or the next
business day, and your check will be mailed the next day. If your
monthly checks exceed the dividends, interest and capital appreciation
on your Shares, the payments will deplete your investment. Amounts paid
to you by Automated Withdrawals are not a return on your investment.
They are derived from the redemption of Shares in your account, and you
must report on your income tax return, any gains or losses that you
realize.
You may specify an Automated Withdrawal Program when you make your
first investment. If you would like to establish an Automated
Withdrawal Program thereafter, the request for the Automated Withdrawal
Program must be signed by all owners.
When you make your first investment you may request that Automated
Withdrawals be sent to an address other than the address of record.
Thereafter, a request to send Automated Withdrawals to an address other
than the address of record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any
time, upon notice to you, and you likewise may terminate it or change
the amount of the Automated Withdrawal Program, by notice to the Fund in
writing or by telephone. Termination or change will become effective
within five days following receipt of your instruction. Your Automated
Withdrawal Program plan may begin any time after you have owned your
Shares for 10 days.
Redemption Proceeds. Redemption proceeds may be sent to you:
By Mail. If your redemption check is mailed, it is usually
mailed by the second business day after receipt of your redemption
request, but not later than seven days afterwards. When a redemption
occurs shortly after a recent purchase, the Fund may hold the redemption
proceeds beyond seven days but only until the purchase check clears,
which may take up to 10 days or more. No dividend is paid on the
redemption proceeds after the redemption and before the check is mailed.
If you anticipate redemptions soon after you purchase your Shares, you
are advised to wire funds to avoid delay.
By Wire and Electronic Funds Transfer. You may authorize the Fund
to transmit redemption proceeds by wire or electronic funds transfer.
Proceeds from the redemption of the Fund's Shares will normally be
transmitted on the first business day, but not later than the seventh
day, following the date of redemption. Your bank usually will receive
wired funds the day they are transmitted. Electronically transferred
funds will ordinarily be received within two business days after
transmission. Once the funds are transmitted, the time of receipt and
the availability of the funds are not within the Fund's control. If
your bank account changes, you must send a new "voided" check preprinted
with the bank registration with written instructions signed by all
owners (with their signatures guaranteed), including tax identification
number.
Additional Information About Redemptions.
(1) Redemptions specifying a certain date or price cannot be
accepted and will be returned.
(2) If the Shares being redeemed are represented by a negotiable
stock certificate, the certificate must be returned before the
redemption can be effected.
(3) All redemptions are made and the price is determined on the
day when all documentation is received in good order.
(4) If the request to redeem is made by a corporation,
partnership, trust, fiduciary, agent, estate, guardian, pension plan,
profit sharing plan, or unincorporated association, the Fund may require
evidence satisfactory to it of the authority of the individual signing
the request. Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be
accompanied by an IRS Form W4-P and a reason for withdrawal as
specified by the Internal Revenue Service.
,HOW TO USE THE DREYFUS FAMILY OF FUNDS IN
A TAX-QUALIFIED RETIREMENT PLAN
Certain of The Dreyfus Family of Funds' investment portfolios are
available for your tax-deferred retirement plan. Call 1-800-548-2868 or
write The Dreyfus Family of Funds, P.O. Box 9692, Providence, Rhode
Island 02940-9830 and request the appropriate forms for:</r.
IRAs.
403(b) accounts for employees of public school systems and non-
profit organizations.
Profit sharing plans and pension plans for corporations and other
employers.
How to Transfer an Investment to a Dreyfus Family of Funds'
Retirement Plan. It is easy to transfer your tax-deferred plan to The
Dreyfus Family of Funds from another custodian. Call 1-800-548-2868 or
write The Dreyfus Family of Funds. P.O. Box 9692, Providence, Rhode
Island 02940-9830 for a request to transfer form. If you direct The
Dreyfus Family of Funds to transfer funds from an existing non-
retirement Dreyfus Family of Funds account into a retirement account,
the Shares in your non-retirement account will be redeemed. The
redemption proceeds will be invested in your Dreyfus Family of Funds IRA
or other tax-qualified retirement plan. The redemption is a taxable
event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's net asset value (NAV) refers to the
worth of one Share. The NAV for Investor and Class R Shares of the Fund
is computed by adding with respect to each class of Shares the value of
all the class' investments, cash, and other assets, deducting
liabilities and dividing the result by number of Shares of that class
outstanding. The valuation of assets for determining NAV for the Fund
may be summarized as follows:
The portfolio securities of the Fund, except as otherwise noted,
listed or traded on a stock exchange, are valued at the latest sale
price. If no sale is reported, the mean of the latest bid and asked
prices is used. Securities traded over-the-counter are priced at the
mean of the latest bid and asked prices but will be valued at the last
sale price if required by regulations of the SEC. When market
quotations are not readily available, securities and other assets are
valued at fair value as determined in good faith in accordance with
procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established
by the Board of Trustees.
Pursuant to a determination by The Dreyfus/Laurel Investment
Series' Board of Trustees that such value represents fair value, debt
securities with maturities of 60 days or less held by the Fund are
valued at amortized cost. When a security is valued at amortized cost,
it is valued at its cost when purchased, and thereafter by assuming a
constant amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value of the
instrument.
The NAV of each class of Shares of most of The Dreyfus Family of
Funds' investment portfolios (other than money market funds) is
published in leading newspapers daily. The yield of each class of
Shares of most of The Dreyfus Family of Funds' money market funds is
published weekly in leading financial publications and in many local
newspapers. The NAV of the Fund may also be obtained by calling The
Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the yield and total
return on a class of Shares. Total return and yield figures are based
on historical earnings and are not intended to indicate future
performance. The "total return" of a class of Shares of the Fund may be
calculated on an average annual total return basis or a cumulative total
return basis. Average annual total return refers to the average annual
compounded rates of return on a class of Shares over one-, five-, and
ten-year periods or the life of the Fund (as stated in the
advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the
investment, assuming the reinvestment of all dividends and capital gains
distributions. Cumulative total return reflects the total percentage
change in the value of the investment over the measuring period, again
assuming the reinvestment of all dividends and capital gains
distributions.
The Fund's "yield" is calculated by dividing a class of Shares'
annualized net investment income per Share during a recent 30-day (or
one month) period by the maximum public offering price per class of such
Share on the last day of that period. Because yields fluctuate, yield
data cannot necessarily be used to compare an investment in a class of
Shares with bank deposits, savings accounts, and similar investment
alternatives which often provide an agreed-upon or guaranteed fixed
yield for a stated period of time.
Total return and yield quotations will be computed separately for
each class of the Fund's Shares. Because of the difference in the fees
and expenses borne by Class R and Investor Shares of the Fund, the
return and yield on Class R Shares will generally be higher than the
return and yield on Investor Shares. Any fees charged by a Bank or
Agent directly to its customers' account in connection with investments
in the Fund will not be included in calculations of total return or
yields. The Fund's Annual Report contains additional performance
information and is available upon request without charge from the Fund's
distributor or your Bank or Agent.
The Fund may compare the performance of its Investor and Class R
Shares with various industry standards of performance including Lipper
Analytical Services, Inc. ratings, and the Fund may also compare a
Shares' performance with Standard & Poor's 500 Composite Stock Price
Index, the Consumer Price Index, and the Dow Jones Industrial Average.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster,
No Load Investor, Money Magazine, Morningstar Mutual Fund Values, U.S.
News and World Report, Forbes, Fortune, Barron's and similar
publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its Investor and Class R Shares' returns
and yields in advertisements or in shareholder reports. . The Fund may
also advertise non-standardized performance information, such as total
return, for periods other than those required to be shown on cumulative
performance data.
DISTRIBUTIONS
The Fund declares and pays dividends from its net investment income
semi-annually. The Fund distributes any net long-term capital gains on
an annual basis. The Board of Trustees may elect not to distribute
capital gains in whole or in part to take advantage of capital loss
carryovers.
Unless you choose to receive dividend and/or capital gain
distributions in cash, your distributions will be automatically
reinvested in additional Shares of the Fund at the NAV. You may change
the method of receiving distributions at any time by writing to the
Fund. Checks which are sent to shareholders who have requested
distributions to be paid in cash and which are subsequently returned by
the United States Postal Service as not deliverable or which remain
uncashed for six months or more will be reinvested in additional Fund
Shares in the shareholder's account at the then current NAV. Subsequent
Fund distributions will be automatically reinvested in additional Fund
Shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of Shares
may be greater or less per Share than those paid with respect to another
class of Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV
will not begin to accrue dividends until the following business day.
Redemption orders effected on any particular day will receive all
dividends declared through the day of redemption.
You may elect to have distributions on Shares held in IRAs and
403(b) accounts paid in cash only if you are at least 59 1/2 years old or
are permanently and totally disabled. Distribution checks normally are
mailed within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund
will reduce each Share's NAV by the amount of the distribution.
Shareholders are subject to taxes with respect to any such distribution.
At any given time, the value of the Fund's Shares includes the
undistributed net gains, if any, realized by the Fund on the sale of
portfolio securities, and undistributed dividends and interest received,
less the Fund's expenses. Because such gains and income are included in
the value of your Shares, when they are distributed the value of your
Shares is reduced by the amount of the distribution. Accordingly, if
your distribution is reinvested in additional Shares, the distribution
has no effect on the value of your investment; while you own more
Shares, the value of each Share has been reduced by the amount of the
distribution. Likewise, if you take your distribution in cash, the
value of your Shares immediately after the distribution plus the cash
received is equal to the value of the Shares immediately before the
distribution. For example, if you own a Fund Share that immediately
before a distribution has a value of $10, including $2 in undistributed
dividends and capital gains realized by the Fund during the year, and if
the $2 is distributed, the value of the Share will decline to $8. If
the $2 is reinvested at $8 per Share, you will receive .250 Shares, so
that, after the distribution, you will have 1.250 Shares at $8 per
Share, or $10, the same as before.
TAXES
The Fund intends to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of Federal
income tax on that part of its investment company taxable income
(consisting generally of taxable net investment income, net short-term
capital gain and net gains from certain foreign currency transactions)
and net capital gain (the excess of net long-term capital gain over net
short-term capital loss) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are
taxable to you as ordinary income, to the extent of the Fund's earnings
and profits. Distributions by a Fund of net capital gain, when
designated as such, are taxable to you as long-term capital gains,
regardless of the length of time you have owned your Shares.
All or a portion of the dividends paid by the Fund 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. No
dividends paid by the Fund are expected to be eligible for this
deduction.
Dividends and other distributions are taxable to you regardless of
whether they are received in cash or reinvested in additional Fund
Shares, even if the value of your Shares is below your cost. If you
purchase Shares shortly before a taxable distribution you must pay
income taxes on the distribution, even though the value of your
investment (plus cash received, if any) remains the same. In addition,
the Share price at the time you purchase Shares may include unrealized
gains in the securities held in the Fund. If these portfolio securities
are subsequently sold and the gains are realized, they will, to the
extent not offset by capital losses, be paid to you as a capital gain
distribution and will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV
notifying you of the status for federal income tax purposes of your
distributions for the preceding year.
Dividends paid by the Fund to qualified retirement plans
ordinarily will not be subject to taxation until the proceeds are
distributed from the retirement plans. The Fund will not report to the
IRS dividends paid to such plans. Generally, distributions from
qualified retirement plans, except those representing returns of non-
deductible contributions thereto, will be taxable as ordinary income
and, if made prior to the time the participant reaches age 591/2,
generally will be subject to an additional tax equal to 10% of the
taxable portion of the distribution. If the distribution from such a
retirement plan (other than certain governmental or church plans) for
any taxable year following the year in which the participant reaches age
701/2 is less than the "minimum required distribution" for that taxable
year, an excise tax equal to 50% of the deficiency may be imposed by the
IRS. The administrator, trustee or custodian of such a retirement plan
will be responsible for reporting such distributions from such plans to
the IRS. Moreover, certain contributions to a qualified retirement plan
in excess of the amounts permitted by law may be subject to an excise
tax.
You must furnish the Fund with your taxpayer identification number
("TIN") and state whether you are subject to withholding for prior
under-reporting, certified under penalties of perjury as prescribed by
the Code and the regulations thereunder. Unless previously furnished,
investments received without such a certification will be returned. The
Fund is required to withhold a portion of all dividends, capital gain
distributions and redemption proceeds payable to any individuals and
certain other non-corporate shareholders who do not provide the Fund
with a correct TIN; withholding from dividends and capital gain
distributions also is required for such shareholders who otherwise are
subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the
extent it fails to distribute by the end of any calendar year
substantially all of its taxable ordinary income for that year and
capital gain net income for the one-year period ending on December 31 of
that year, plus certain other amounts. The Fund expects to make such
distributions as are necessary to avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax
considerations generally affecting the Fund and its shareholders; see
the SAI for a further discussion. There may be other federal, state or
local tax considerations applicable to a particular investor. You
therefore are urged to consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements
of the Fund with a summary of its investments and performance. The Fund
will send you a confirmation statement after every transaction (except
with regard to the reinvestment of dividends and other distributions)
that affect your Fund accounts. In addition, an account statement will
be mailed to you quarterly or monthly depending on the Fund's reporting
schedule. You may also request a statement of your account activity at
any time. Carefully review such confirmation statements and account
statements and notify the Fund immediately if there is an error. From
time to time, to reduce expenses, only one copy of a Fund's shareholder
reports (such as a Fund's Annual Report) may be mailed to your
household. Please call the Fund if you need additional copies.
No later than January 31 of each year, the Fund will send you the
following reports, which you may use in completing your federal income
tax return:
Form 1099-DIV Reports taxable distributions (and returns of capital,
if any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year (for non-retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form
5498, which reports contributions to your IRA for the previous calendar
year. In addition, the Fund may send you other relevant tax-related
forms.
FURTHER INFORMATION ABOUT THE FUND
The Dreyfus/Laurel Investment Series. The Dreyfus/Laurel
Investment Series offers Shares of beneficial interest of separate
investment portfolios with $.001 par value per share (each a "fund").
The Boston Company Investment Series was organized as a Massachusetts
business trust under the laws of the Commonwealth of Massachusetts on
May 26, 1988 and changed its name to The Laurel Investment Series, and
then to The Dreyfus/Laurel Infestment Series on October 17, 1994. The
Dreyfus/Laurel Investment Series is registered with the SEC as an open-
end management investment company, commonly known as a mutual fund. The
Trustees have authorized Shares of the Fund to be issued in two classes-
- -Investor Shares and Class R Shares.
Each Share (regardless of class) has one vote. All Shares of a
fund (and classes thereof) vote together as a single class, except as to
any matter for which a separate vote of any fund or class is required by
the Investment Company Act of 1940 (the "1940 Act"), and except as to
any matter which affects the interests of one or more particular fund or
classes, in which case only the shareholders of the affected fund or
classes are entitled to vote, each as a separate class. At your written
request, the Fund will issue negotiable stock certificates.
Management. The Board of Trustees. The business affairs of The
Dreyfus/Laurel Investment Series are managed under the direction of its
Trustees. The SAI contains the names and general background information
concerning the Trustees and officers of The Dreyfus/Laurel Investment
Series.
Investment Manager. The Manager is located at 200 Park Avenue,
New York, New York 10166. As of November 30, 1994, the Manager managed
or administered approximately $71 billion in assets for more than 1.9
million investor accounts nationwide. The Manager is a wholly-owned
subsidiary of Mellon Bank, N.A. (One Mellon Bank Center, Pittsburgh, PA
15258), the Fund's prior investment manager. Pursuant to an Investment
Management Agreement, transferred from Mellon Bank to the Manager
effective as of October 17, 1994, the Manager provides, or arranges for
one or more third parties to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to
the Fund. As investment manager, the Manager manages the Fund by making
investment decisions based on the Fund's investment objectives, policies
and restrictions.
Under the Investment Management Agreement, the Fund pays a fee
computed daily, and paid monthly, at the annual rate of 1.50% of the
Fund's average daily net assets less certain expenses described below.
The Manager pays all of the expenses of the Fund except brokerage,
taxes, interest, fees and expenses of the non-interested Trustees
(including counsel fees) and extraordinary expenses. Although the
Manager does not pay for the fees and expenses of the non-interested
Trustees (including counsel fees), the Manager is contractually required
to reduce its investment management fee in an amount equal to a Fund's
allocable share of such expenses. In order to compensate the Manager
for paying virtually all of the Fund's expenses, the Fund's investment
management fee is higher than the investment advisory fees paid by most
investment companies. Most, if not all, such companies also pay for
additional non-investment advisory expenses that are not paid by such
companies' investment adviser. From time to time, the Manager may waive
(either voluntarily or pursuant to applicable state limitations)
additional investment management fees payable by the Fund. For the
period from September 1, 1993 through April 3, 1994, the Fund paid its
investment adviser, The Boston Company Advisors, Inc., (an indirect
wholly-owned subsidiary of Mellon Bank Corporation), 0.00% (annualized)
of the Fund's average daily net assets in investment advisory fees (net
of fees waived and expenses reimbursed) under the Fund's previous
investment advisory contract (such contract only covered the provision
of investment advisory and certain specified administrative services).
For the period from April 4, 1994 through the fiscal year ended August
31, 1994, the Fund paid Mellon Bank 1.50% (annualized) of the Fund's
average daily net assets in investment management fees. For the fiscal
year ended August 31, 1994, total operating expenses (excluding Rule
12b-1 fees) (net of fees waived and expenses reimbursed) of the Fund
were 1.66% of the Fund's average daily net assets for the Investor
Shares. It is anticipated that the current total operating expenses of
the Fund (excluding Rule 12b-1 fees) will be approximately 1.50%, of the
Fund's average daily net assets.
The Manager is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in
the case of agency transactions, financial institutions which are
affiliated with the Manager or which have sold Shares of the Fund, if
the Manager believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified
brokerage firms. From time to time, to the extent consistent with its
investment objectives, policies and restrictions, the Fund may invest in
securities of companies with which Mellon Bank has a lending
relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of
June 30, 1994 Mellon Bank Corporation was the 24th largest bank holding
company in the United States in terms of total assets. Through its bank
subsidiaries, it operates 631 domestic retail banking locations
including 432 branch offices. Mellon Bank Corporation has 25 domestic
representative offices. There are international branches in Grand
Cayman, British West Indies, London, England, and two international
representative offices in Tokyo, Japan and Hong Kong. Mellon Bank has a
banking subsidiary, Mellon Bank Canada, in Toronto. Mellon Bank is a
registered municipal securities dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from
engaging in the business of issuing, underwriting, selling or
distributing certain securities. The activities of Mellon Bank and the
Manager with regard to the Fund may raise issues under these provisions.
However, Mellon Bank has been advised by its counsel that these
activities are consistent with these statutory and regulatory
obligations. For more information on the Glass-Steagall Act of 1933,
see "Federal Law Affecting Mellon Bank" in the SAI.
Sandor Cseh, an officer of Mellon Bank and a Senior Vice President
of The Boston Company Asset Management, Inc., is the portfolio manager
for the Fund. Mr. Cseh is a portfolio manager at the Manager and has
been employed by the Manager since October 17, 1994. Mr. Cseh manages
the international equity group and serves as the Director of
International Investments. Mr. Cseh was President of Cseh International
& Associates Inc., the international money management division of
Cashman, Farrell & Associates, and was a security analyst with several
banks before joining The Boston Company. Mr. Cseh holds a Bachelor of
Science degree in finance from the University of Delaware, and is a
Chartered Financial Analyst.
D. Kirk Henry, an officer of Mellon Bank and a Vice President of
The Boston Company Asset Management, Inc., serves as an international
equity portfolio manager of the Fund. Mr. Henry is a portfolio manager
at the Manager and has been employed by the Manager since October 17,
1994. Mr. Henry was an Executive Vice President at Cseh International &
Associates Inc. and an international portfolio manager at Provident
Capital Management, Inc. before joining The Boston Company. Mr. Henry
holds a Bachelor of Arts degree from Stanford University, and received a
Masters of Business Administration in accounting/finance from the
University of Chicago. He is also a Chartered Financial Analyst.
Other Service Providers. Under a Custody and Fund Accounting Agreement,
Mellon Bank acts as custodian and fund accountant maintaining possession
of the Fund's investment securities and providing certain accounting and
related services.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation ("FDC"), serves as transfer agent ("Transfer Agent") for the
Fund's Shares. The Transfer Agent is located at One American Express
Plaza, Providence, Rhode Island 02903.
Shares of the Funds are sold on a continuous basis by Premier, as
the Fund's sponsor and distributor. Premier is a registered broker-
dealer with principal offices at One Exchange Place, Boston,
Massachusetts 02109. The Dreyfus/Laurel Investment Series has entered
into a distribution agreement with Premier which provides that Premier
has the exclusive right to distribute Shares of the Funds. Premier may
pay service and/or distribution fees to Agents that assist customers in
purchasing and servicing of Shares of the Fund. (See "Distribution
Plan")
Other Investment Policies.
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.
Covered Option Writing. From time to time, the Fund may write
covered put and call options on portfolio securities. The Fund could
realize fees (referred to as "premiums") for granting the rights
evidenced by the options. However, in return for the premium, the Fund
forfeits the right to any appreciation in the value of the underlying
security while the option is outstanding. A put option embodies the
right of its purchaser to compel the writer of the option to purchase
from the option holder an underlying security at the specified price at
any time during the option period. In contrast, a call option embodies
the right of its purchaser to compel the writer of the option to sell
the option holder an underlying security at a specified price at any
time during the option period.
Upon the exercise of a put option written by the Fund, the Fund
may suffer a loss equal to the difference between the price at which the
Fund is required to purchase the underlying security and its market
value at the time of the option exercise, less the premium received for
writing the option. Upon the exercise of a call option written by the
Fund, the Fund may suffer a loss equal to the excess of the security's
market value at the time of the option exercise over the Fund's
acquisition cost of the security, less the premium received for writing
the option.
Whenever the Fund writes a call option it will continue to own or
have the present right to acquire the underlying security for as long as
it remains obligated as the writer of the option. To support its
obligation to purchase the underlying security if a put option is
exercised, the Fund will either (a) deposit with the Fund's custodian in
a segregated account, cash, U.S. Government securities or other high
grade debt obligations having a value at least equal to the exercise
price of the underlying securities or (b) continue to own an equivalent
number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates
as those written by the Fund), or an equivalent number of puts of the
same "class" (that is, puts on the same underlying security) with
exercise prices greater than those that it has written (or, if the
exercise prices of the puts it holds are less than the exercise prices
of those it has written, it will deposit the difference with the Fund's
custodian in a segregated account).
The Fund may engage in a closing purchase transaction to realize a
profit, to prevent an underlying security from being called or put or,
in the case of a call option, to unfreeze an underlying security
(thereby permitting its sale or the writing of a new option on the
security prior to the outstanding option's expiration). To effect a
closing purchase transaction, the Fund would purchase, prior to the
holder's exercise of an option that the Fund has written, an option of
the same series as that on which the Fund desires to terminate its
obligation. The obligation of the Fund under an option that it has
written would be terminated by a closing purchase transaction, but the
Fund would not be deemed to own an option as the result of the
transaction. There can be no assurance that the Fund will be able to
effect closing purchase transactions at a time when it wishes to do so.
To facilitate closing purchase transactions, however, the Fund will
ordinarily write options only if a secondary market for the options
exists on a national securities exchange or in the over-the-counter
market.
Currency Transactions. The Fund may engage in currency exchange
transactions in order to protect against uncertainty in the level or
future exchange rates on securities denominated in foreign currencies.
The Fund will conduct its currency exchange transactions either on a
spot (i.e., cash) basis at the rate prevailing in the currency exchange
market, or through entering into forward contracts to purchase or sell
currencies. The Fund's dealings in forward currency exchange contracts
will be limited to hedging involving either specific transactions or
aggregate portfolio positions. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract.
These contracts are entered into in the interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. Although such transactions are intended to minimize the
risk of loss due to a decline in the value of the hedged currency, at
the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
Fixed-Income Securities Strategies. The Fund may invest in fixed-
income securities to achieve its investment objectives. In periods of
declining interest rates, the Fund's yield (its income from portfolio
investments over a stated period of time) may tend to be higher than
prevailing market rates, and in periods of rising interest rates, the
yield of the Fund may tend to be lower. Also, when interest rates are
falling, the inflow of net new money to the Fund from the continuous
sale of its shares will likely be invested in portfolio instruments
producing lower yields than the balance of the Fund's portfolio, thereby
reducing the yield of the Fund. In periods of rising interest rates, the
opposite can be true. The NAV of a fund investing in fixed-income
securities also may change as general levels of interest rates
fluctuate. When interest rates increase, the value of a portfolio of
fixed-income securities can be expected to decline. Conversely, when
interest rates decline, the value of a portfolio of fixed-income
securities can be expected to increase.
Foreign Securities. The Fund may invest in securities of non-U.S. issuers
directly or in the form of American Depository Receipts ("ADRs"),
European Depository Receipts ("EDRs") or similar securities
representing interests in the common stock of foreign issuers. ADRs are
receipts, typically issued by a U.S.
bank or trust company, which evidence ownership of underlying securities
issued by a foreign corporation.
EDRs are receipts issued in Europe which evidence a similar ownership
arrangement. Generally, ADRs, in
registered form, are designed for use in the U.S. securities markets and
EDRs are designed for use in
European securities markets. The underlying securities are not always
denominated in the same currency as
the ADRs or EDRs. Although investment in the form of ADRs or EDRs
facilitates trading in foreign
securities, it does not mitigate the risks associated with investing
in foreign securities.
Investments in foreign securities incur higher costs than investments
in U.S. securities, including
higher costs in making securities transactions as well as foreign
government taxes which may reduce the
investment return of the Fund. In addition, foreign investments may
include additional risks associated
with currency exchange rates, less complete financial information about
individual companies, less market
liquidity, and political instability.
Although the Fund may invest in securities denominated in foreign
currencies, the Fund values its
securities and other assets in U.S. dollars. As a result, the NAV
of the Fund's Shares generally will
fluctuate with U.S. dollar exchange rates as well as with price changes
of the Fund's securities in the
various local markets and currencies. Thus, an increase in the value of
the U.S. dollar compared to the
currencies in which the Fund makes its investments could reduce the
effect of increases and magnify the
effect of decreases in the price of the Fund's securities in their
local markets. Conversely, a decrease in the
value of the U.S. dollars will have the opposite effect of magnifying
the effect of increases and reducing
the effect of decreases in the prices of the Fund's exchange-rate
developments. In addition to favorable and
unfavorable currency exchange-rate developments, the Fund is subject
to the possible imposition of
exchange control regulations or currency blockages.
Futures And Options On Futures. The Fund may enter into futures
contracts and purchase and write options on future contracts as hedges
when deemed advisable by the Manager. The Fund may purchase and sell
financial futures contracts, including futures for stock indexes, and
purchase and write related options, that are traded on a United States
exchange or board of trade. These investments, if any, by the Fund will
be made solely for the purpose of hedging against changes in the value
of its portfolio securities or securities which the Fund intends to
purchase due to anticipated changes in interest rates and market
conditions, and when the transactions are economically appropriate to
the reduction of risks inherent in the management of the Fund. The use
of futures contracts and options on futures contracts as a hedging
device involves several risks. There can be no assurance that there will
be a correlation between price movements in the underlying securities,
on the one hand, and price movements in the securities which are the
subject of the hedge, on the other hand. Positions in futures contracts
and options on futures contracts may be closed out only on an exchange
or board of trade that provides an active market for them, and there can
be no assurance that a liquid market will exist for the contract or the
option at any particular time. Losses incurred by hedging transactions
and the costs of these transactions will affect the Fund's performance.
Successful use of futures contracts by the Fund is subject to the
ability of the Manager to correctly predict movements in the direction
of interest rates. The Fund may not purchase or sell futures contracts
or purchase options on futures if, immediately thereafter, more than 33
1/3% of its net assets would be hedged. In addition, the Fund may not
enter into futures and related options contracts for which aggregate
initial margin deposits and premiums exceed 5% of the fair market value
of the Fund's assets, after taking into account unrealized profits and
unrealized losses on futures contracts into which it has entered.
Illiquid Securities. The Fund will not knowingly invest more that
15% of the value of its net assets in illiquid securities, including
time deposits and repurchase agreements having maturities longer than
seven days. Securities that have readily available market quotations
are not deemed illiquid for purposes of this limitation (irrespective of
any legal or contractual restrictions on resale.) The Fund may invest
in commercial obligations issued in reliance on the so-called "private
placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended ("Section 4(2) paper"). The Fund may
also purchase securities that are not registered under the Securities
Act of 1933, as amended, but which can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule
144A securities"). Section 4(2) paper is restricted as to disposition
under the federal securities laws, and generally is sold to
institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) paper normally is resold to other
institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in the Section 4(2)
paper, thus providing liquidity. Rule 144A securities generally must be
sold to other qualified institutional buyers. Determinations as to the
liquidity of investments in Section 4(2) paper and Rule 144A securities
will be made by the Board of Trustees. The Board 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.
Lending Of Portfolio Securities From time to time, the Fund may
lend portfolio securities to brokers, dealers and other financial
organizations. Such loans will not exceed 33 1/3% of the Fund's total
assets, taken at value. Loans of portfolio securities by the Fund will
be collateralized by cash, letters of credit or securities issued or
guaranteed by the U.S. Government or its agencies which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities.
Other Investment Companies. The Fund may invest in securities
issued by other investment companies to the extent that such investments
are consistent with its investment objectives and policies and
permissible under the 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 bear directly in connection with its own
operations.
Repurchase Agreements. The Fund may engage in repurchase
agreement transactions in pursuit of its investment objectives. A
repurchase agreement involves the purchase of a security by the Fund and
a simultaneous agreement (generally with a bank or broker-dealer) to
repurchase that security from the Fund at a specified price and date or
upon demand. This technique offers a method of earning income on idle
cash. A risk associated with repurchase agreements is the failure of
the seller to repurchase the securities as agreed, which may cause the
Fund to suffer a loss if the market value of such securities declines
before they can be liquidated on the open market. Repurchase agreements
with a duration of more than seven days are considered illiquid
securities and are subject to the limit on illiquid securities stated
above.
Short-Term Securities The Fund may invest in short-term
securities such as U.S. Government securities and other high-grade,
short-term money market instruments, including repurchase agreements,
time deposits, certificates of deposit, bankers' acceptances and high-
grade commercial paper for temporary defensive purposes when the Manager
determines that market conditions so warrant. In addition, the Fund may
invest up to 10% of its assets in such securities on a regular basis to
maintain liquidity for purposes of redeeming shares and meeting other
cash obligations of the Fund. The Fund may also invest in these
securities for other purposes consistent with achieving its investment
objectives.
Stock Index Options. The Fund may purchase and write exchange-
listed put and call options on stock indexes to hedge against risks of
market-wide price movements. A stock index measures the movement of a
certain group of stocks by assigning relative values to the common
stocks included in the index. (Examples of well-known stock indexes are
the Standard & Poor's 500 Composite Stock Price Index and the NYSE
Composite Index). Options on stock indexes are similar to options on
securities. However, because options on stock indexes do not involve the
delivery of an underlying security, the option represents the holder's
right to obtain from the writer in cash a fixed multiple of the amount
by which the exercise price exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the underlying index
on the exercise date.
The advisability of using stock index options to hedge against the
risk of market-wide movements will depend on the extent of
diversification of the Fund's stock investments and the sensitivity of
its stock investments to factors influencing the underlying index. The
effectiveness of purchasing or writing stock index options as a hedging
technique will depend upon the extent to which price movements in the
portion of the portfolio being hedged correlate with price movements in
the stock index selected.
When the Fund writes an option on a stock index, it will deposit
cash or cash equivalents or a combination of both in an amount equal to
the market value of the option, in a segregated account with the Fund's
custodian, and will maintain the account while the option is open.
U.S. Government Securities. The Fund may invest in obligations
issued or guaranteed as to both principal and interest by the U.S.
Government or backed by the full faith and credit of the United States.
In addition to direct obligations of the U.S. Treasury, these include
securities issued or guaranteed by the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States,
Small Business Administration, Government National Mortgage Association,
Federal National Mortgage Association, General Services Administration
and Maritime Administration. Investments may also be made in U.S.
Government securities that do not carry the full faith and credit
guarantee, such as those issued by the Federal National Mortgage
Association, the Federal Home Loan Mortgage Association, or other
instrumentalities
When Issued Securities And Delayed Delivery Transactions. To
secure advantageous prices or yields, the Fund may purchase U.S.
Government securities on a when-issued basis or may purchase or sell
securities for delayed delivery. In such transactions, delivery of the
securities occurs beyond the normal settlement periods, but no payment
or delivery is made by the Fund prior to the actual delivery or payment
by the other party to the transaction. The purchase of securities on a
when-issued or delayed delivery basis involves the risk that, as a
result of an increase in yields available in the market place, the value
of the securities purchased will decline prior to the settlement date.
The sale of securities for delayed delivery involves the risk that the
prices available in the market on the delivery date may be greater than
those obtained in the sale transactions. The Fund will establish a
segregated account consisting of cash, U.S. Government securities or
other high-grade debt obligations in an amount equal to the amounts of
its when-issued and delayed delivery commitments.
Portfolio Turnover. While securities are purchased for the Fund
on the basis of potential for capital appreciation, in the past the
portfolio turnover rate of the Fund has exceeded 100% and may exceed
100% in the future. A portfolio turnover rate of 100% would occur, for
example, if all these securities held by the Fund were replaced once in
a period of one year. In past years the Fund's rate of portfolio
turnover exceeded that of certain other mutual funds with the same
investment objective. A higher rate of portfolio turnover involves
correspondingly greater brokerage commissions and other expenses which
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 which,
when distributed to the Fund's shareholders, are taxable to them as
ordinary income. (See "Distributions" and "Taxes.") Nevertheless,
security transactions for the Fund will be based only upon investment
considerations and will not be limited by any other considerations when
the Manager deems it appropriate to make changes in the Fund's
assets.
Limiting Investment Risks. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental
policy and may not be changed without the affirmative vote of the
holders of a majority of the Fund's outstanding Shares. The SAI
describes all of the Fund's fundamental and non-fundamental
restrictions.
The investment objectives, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed
without shareholder approval. If the Fund's investment objectives,
policies, restrictions, practices or procedures change, shareholders
should consider whether the Fund remains an appropriate investment in
light of their then current position and needs.
In order to permit the sale of the Fund's Shares in certain
states, the Fund may make commitments more restrictive than the
investment policies and restrictions described in this Prospectus and
the SAI. Should the Fund determine that any such commitment is no
longer in the best interests of the Fund, it may consider terminating
sales of its Shares in the states involved.
Master/Feeder Option. The Dreyfus/Laurel Investment Series may
in the future seek to achieve the Fund's investment objectives by
investing all of the Fund's assets in another investment company having
the same investment objectives 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 Trustees
determine it to be in the best interest of the Fund and its
shareholders. In making that determination, the Trustees will consider,
among other things, the benefits to shareholders and/or the opportunity
to reduce costs and achieve operational efficiencies. Although the Fund
believes that the Trustees will not approve an arrangement that is
likely to result in higher costs, no assurance is given that costs will
be materially reduced if this option is implemented.
Distribution Plan (Investor Shares Only). Investor Shares are
subject to a Distribution Plan ("Plan") adopted pursuant to Rule 12b-1
under the 1940 Act ("Rule 12b-1"). The Investor Shares of the Fund may
bear some of the cost of selling those Shares under the Plan. The Plan
allows the Fund to spend annually up to 0.25% of its average daily net
assets attributable to Investor Shares to compensate Dreyfus Service
Corporation, an affiliate of the Manager, for shareholder servicing
activities and Premier for shareholder servicing activities and for
activities or expenses primarily intended to result in the sale of
Investor Shares of the Fund. The Plan allows Premier to make payments
from the Rule 12b-1 fees it collects from the Fund to compensate Agents
that have entered into Selling Agreements ("Agreements") with Premier.
Under the Agreements, the Agents are obligated to provide distribution
related services with regard to the Fund and or shareholder services to
the Agent's clients that own Investor Shares of the Fund.
The Fund and Premier may suspend or reduce payments under the Plan
at any time, and payments are subject to the continuation of the Fund's
Plan and the Agreements described above. From time to time, the Agents,
Premier and the Fund may agree to voluntarily reduce the maximum fees
payable under the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the
terms governing Agreements with their Agents. An Agent entitled to
receive compensation for selling and servicing the Fund's Shares may
receive different compensation with respect to one class of Shares over
another.
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money
TO INVEST, REDEEM AND EXCHANGE
1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
tbc\tbclaure\merger\prospect\intfnd3
STATEMENT OF ADDITIONAL INFORMATION
December 30, 1994
THE DREYFUS/LAUREL INVESTMENT SERIES
(formerly The Laurel Investment Series)
200 Park Avenue
New York, New York 10166
For Information Call 1-800-548-2868
This Statement of Additional Information expands upon and supplements
the information contained in and should be read in conjunction with each
of the following prospectuses of The Dreyfus/Laurel Investment Series
(the "Trust") dated December 30, 1994 (referred to herein individually
as the "Prospectus" and jointly as the "Prospectuses"): the
Prospectuses describing the Class R and Investor shares of the
Dreyfus/Laurel International Fund, the Dreyfus/Laurel Short-Term Bond
Fund and the Dreyfus/Laurel Contrarian Fund. Each Prospectus may be
obtained by writing or calling the Trust at the address or telephone
number set forth above.
This Statement of Additional Information, though not in itself a
Prospectus, is incorporated by reference into the Prospectuses in its
entirety. As used in this Statement of Additional Information, the term
"Fund" refers to each of the International, Contrarian and Short-Term
Bond Funds. Each Fund's Annual Report for the fiscal year ended August
31, 1994 accompanies this Statement of Additional Information, and each
Fund's financial statements and related notes contained therein are
incorporated by reference into this Statement of Additional
Information.
CONTENTS Page
General Information 3
Management of the Trust 3
Investment Policies 8
(see also in the Prospectus "Investment Objectives and Policies")
Purchase of Shares
(see also in the Prospectus "How to Invest") 24
Custodian and Fund Accountant 26
Transfer and Dividend Disbursing Agent 26
Redemption of Shares
(see also in the Prospectus "How to Redeem Shares") 26
Valuation of Shares 27
Performance Data 28
Taxes 31
Description of the Trust
(see also the cover of the Prospectus) 35
Controlling Shareholders 36
Financial Statements 36
Appendix - Information About Securities Ratings 36
GENERAL INFORMATION
The Trust's name was changed from The Laurel Investment Series to The
Dreyfus/Laurel Investment Series effective October 17, 1994. The names
of the Funds also were changed as follows effective October 17, 1994:
Laurel Short-Term Bond Fund to Dreyfus/Laurel Short-Term Bond Fund (the
"Short-Term Bond Fund"); Laurel International Fund to Dreyfus/Laurel
International Fund (the "International Fund"); and Laurel Contrarian
Fund to Dreyfus/Laurel Contrarian Fund (the "Contrarian Fund").
At a meeting held on December 20, 1994, the Board of Trustees
approved, subject to shareholder approval, an Agreement and Plan of
Reorganization providing for the transfer of assets of the International
Fund to the Dreyfus International Equity Allocation Fund of The
Dreyfus/Laurel Funds, Inc., in a tax free exchange for shares of common
stock of the Dreyfus International Equity Allocation Fund and the
assumption by the Dreyfus International Equity Allocation Fund of stated
liabilities of the International Fund, the distribution of shares of the
Dreyfus International Equity Allocation Fund to International Fund
shareholders and the subsequent termination of the International Fund
(the "Reorganization"). It is currently contemplated that a special
meeting of the International Fund's shareholders will be held early in
the second quarter of 1995 to consider the Reorganization. A Proxy
Statement/Prospectus with respect to the proposed Reorganization will be
mailed to International Fund shareholders prior thereto. The Proxy
Statement/Prospectus will describe the Dreyfus International Equity
Allocation Fund and other matters.
MANAGEMENT OF THE TRUST
The organizations that provide services to the Trust -- namely, The
Dreyfus Corporation ("Dreyfus") as investment manager (the "Manager");
Mellon Bank, N.A. ("Mellon Bank") as custodian and fund accountant;
Premier Mutual Fund Services, Inc. ("Premier") as distributor and sub-
administrator; and The Shareholder Services Group, Inc. ("TSSG"), a
subsidiary of First Data Corporation ("FDC"), as transfer agent -- and
the functions they perform for the Trust are discussed in the
Prospectuses and in this Statement of Additional Information.
Trustees and Officers
The Trustees and executive officers of the Trust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Each Trustee who
is an "interested person" of the Trust as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), is indicated by an
asterisk. Each of the Trustees also serves as a Trustee of The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free Municipal
Funds and as a Director of The Dreyfus/Laurel Funds, Inc. (collectively
"The Dreyfus/Laurel Fund Family").
o + RUTH MARIE ADAMS. Trustee of the Trust; Professor of
English and Vice President Emeritus, Dartmouth College; Senator, United
Chapters of Phi Beta Kappa; Trustee, Woods Hole Oceanographic
Institution. Address: 1026 Kendal Lyme Road, Hanover, New Hampshire
03755.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
o + FRANCIS P. BRENNAN. Chairman of the Board of Trustees and
Assistant Treasurer of the Trust; Director and Chairman, Massachusetts
Business Development Corp.; Director, Boston Mutual Insurance Company;
Director and Vice Chairman of the Board, Home Owners Federal Savings and
Loan (prior to May 1990). Address: Massachusetts Business Development
Corp., One Liberty Square, Boston, Massachusetts 02109.
o + JAMES M. FITZGIBBONS. Trustee of the Trust; President and
Director, Amoskeag Company; Chairman, Howes Leather Company, Inc.;
Director, Fiduciary Trust Company; Chairman, CEO and Director,
Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance Company:
Director, Barrett Resources, Inc. Address: 40 Norfolk Road, Brookline,
Massachusetts 02167.
o* J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith,
Shaw & McClay (law firm). Address: 204 Woodcock Drive, Pittsburgh, PA
15215.
o+ ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Calgon Carbon
Corporation; Director, Medalist Corporation 1992-93; Chairman of the
Board and Director, Rexene Corporation; Director, National Picture Frame
Corporation; Director, Chairman of the Board, Tetra Corporation 1991-
1993. From 1988-1989, Director, Rexene Corporation. Address: Way
Hallow Road and Woodland Road, Sewickley, PA 15143.
o+ KENNETH A. HIMMEL. Trustee of the Trust; 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. and Florida Hospitality Group;
Managing Partner, Himmel/MKDG, Franklin Federal Partners, Reston Town
Center Associates and Grill 23 & Bar. Address: Himmel/MKDG, 101
Federal Street, 22nd Floor, Boston, Massachusetts 02110.
o+ ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant.
Address: 1817 Foxcroft Lane, Allison Park, PA 15101.
o+ STEPHEN J. LOCKWOOD. Trustee of the Trust; President and CEO, LDG
Management Company Inc,; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc., and Medical Reinsurance Underwriters Inc. Address: 401
Edgewater Place, Wakefield, Massachusetts 01880.
o+ ROBERT D. MCBRIDE. Trustee of the Trust; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. From 1983-1991,
Director, SMS/Concast, Inc. Address: 15 Waverly Lane, Grosse Pointe
Farms, MI 48236.
o+ JOHN L. PROPST. Trustee of the Trust; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Address: 5521 Dunmoyle Street, Pittsburgh,
PA 15217.
____________________________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee
o+ JOHN L. SCIULLO. Trustee of the Trust; Dean Emeritus and Professor
of Law, Duquesne University School of Law; Director, Urban
Redevelopment Authority of
Pittsburgh; Prior to 1993, Dean and Professor of Law, Duquesne
University School
of Law. Address: 336 Gross Street, Pittsburgh, PA 15224.
o+ ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson
Ventures, Inc., prior to February, 1993; Real Estate Development Project
Manager and Vice President, The Gunwyn Company. Address: 25 Braddock
Park, Boston, Massachusetts 02116-5816.
RICHARD W. HEALEY. Vice President of the Trust, The
Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfufus/Laurel Funds
Trust and the Dreyfus/Laurel Funds, Inc. (since March 1994); Funds
Distributor, Senior Vice President (since March 1993); Calvert Group,
Vice President of Marketing (1989 to March 1993); Fidelity Investments,
(prior to 1989). Address: One Exchange Place, Boston, MA 02109.
# MARIE E. CONNOLLY. President and Treasurer of the Trust,
The Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Funds, Inc. (since September
1994); Vice President of the Trust, The Dreyfus/Laurel Tax-Free
Municipal Funds, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Funds, Inc. (March 1994 to September 1994);
President, Funds Distributor, Inc. (since 1992); Treasurer, Funds
Distributor, Inc. (July 1993 to April 1994); COO, Funds
Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services, Inc. (since April 1994); Senior
Vice President and Director of Financial Administration, The
Boston Company Advisors, Inc. (December 1988 to May 1993).
Address: One Exchange Place, Boston, MA 02109.
# FREDERICK C. DEY. Vice President of the Trust, The
Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Funds, Inc. (since September 1994);
Senior Vice President, Premier Mutual Fund Services, Inc. (since
August 1994); Vice President, Funds Distributor, Inc. (since
August 1994); Fundraising Manager, Swim Across America (October
1993 to August 1994); General Manager, Spring Industries (August
1988 to October 1993). Address: Premier Mutual Fund Services,
Inc., 200 Park Avenue, New York, NY 10166.
# ERIC B. FISCHMAN. Vice President of the Trust, The
Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Funds, Inc. (since September 1994);
Vice President and Associate General Counsel, Premier Mutual Fund
Services, Inc. (since August 1994); Vice President and Associate
General Counsel, Funds Distributor, Inc. (since August 1994);
Staff Attorney, Federal Reserve Board (September 1992 to June
1994); Summer Associate, Venture Economics (May 1991 to September
1991); Summer Associate, Suffolk County District Attorney (June
1990 to August 1990). Address: Premier Mutual Fund Services,
Inc., 200 Park Avenue, New York, NY 10166.
JOHN E. PELLETIER. Vice President and Secretary of the
Trust, The Dreyfus/Laurel Tax-Free Municipal Funds, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Funds, Inc.
(since September 1994); Senior Vice President, General Counsel
and Secretary, Funds Distributor, Inc. (since April 1994); Senior
Vice President, General Counsel and Secretary, Premier Mutual
Fund Services, Inc. (since August 1994); Counsel, The Boston
Company Advisors, Inc. (February 1992 to March 1994); Associate,
Ropes & Gray (August 1990 to February 1992); Associate, Sidley &
Austin (June 1989 to August 1990). Address: One Exchange Place,
Boston, MA 02109.
________________________________
*" Interested person" of The Dreyfus/Laurel Investment Series, as
defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by The Dreyfus Corporation.
The officers and Trustees of the Trust as a group owned
beneficially less than 1% of the total shares of each Fund outstanding
as of December 28, 1994.
No officer or employee of Premier (or of any parent or
subsidiary thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or
employee of Dreyfus or Mellon Bank (or of any parent or subsidiary
thereof) serves as an officer or Trustee of the Trust. The
Dreyfus/Laurel Fund Family pays each Trustee/Director who is not an
officer or employee of Premier or any of its affiliates $27,000 per
annum (and an additional $75,000 for the Chairman of the Board of
Directors/Trustees of The Dreyfus/Laurel Fund Family). In addition The
Dreyfus/Laurel Fund Family pays each Trustee/Director $1,000 per joint
Dreyfus/Laurel Fund Family meeting attended, plus $750 per joint
Dreyfus/Laurel Fund Family Audit Committee meeting attended, and
reimburses each Trustee/Director for travel and out-of-pocket expenses.
For the fiscal year ended August 31, 1994, such fees for meetings and
expenses totaled $18,681.
Advisory Services
The Dreyfus Corporation ("Dreyfus") serves as the investment
manager (the "Manager") for the Funds pursuant to an Investment
Management Agreement with the Trust dated April 4, 1994 (the "Management
Agreement"), transferred from Mellon Bank, N.A. (One Mellon Bank Center,
Pittsburgh, PA 15258), 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 each Fund. As Manager, Dreyfus manages each
Fund by making investment decisions based on such Fund's investment
objective, policies and restrictions. For these services, each Fund
pays a fee to Dreyfus at the rates stated in the Prospectus.
The Management Agreement will continue from year to year
provided that a majority of the Trustees who are not interested persons
of the Trust and either a majority of all Trustees or a majority of the
shareholders of each Fund approve the continuance.
Prior to May 21, 1993, The Boston Company Advisors, Inc.
("Boston Advisors") served as investment adviser to each Fund pursuant
to a written agreement, which was last approved by the Trustees,
including a majority of the Trustees who are not "interested persons" of
the Trust, on July 22, 1992. From May 21, 1993, through April 4, 1994,
Boston Advisors served as investment adviser to each Fund pursuant to a
written agreement ("Boston Advisors Agreement"), which was last approved
by the Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust, on July 21, 1993 and approved by the
shareholders of each Fund of the Trust on December 31, 1993. The Boston
Advisors Agreement became effective on May 21, 1993, upon the
consummation of the sale of Boston Group Holdings, Inc., the parent
company of The Boston Company, Inc. ("TBC"), to Mellon Bank Corporation.
Mellon Bank later served as investment manager to each Fund pursuant to
a written agreement ("Mellon Agreement"), which was last approved by the
Trustees, including a majority of the Trustees who are not "interested
person" of the Trust or Mellon Bank, on November 22, 1993, (subject to
shareholder approval) and approved by the shareholders of each Fund of
the trust on March 14 and March 29, 1994. The Mellon Agreement became
effective on April 4, 1994. Boston Advisors is a wholly-owned
subsidiary of TBC, a financial services holding company. TBC is in turn
a wholly-owned subsidiary of Mellon. As stated above, Dreyfus, a
wholly-owned subsidiary of Mellon Bank, is the current Investment
Manager pursuant to a written agreement ("Management Agreement"), which
was last approved by the Trustees on October 17, 1994.
The current Management Agreement provides for a "unitary fee."
Under the unitary fee structure, Dreyfus pays all expenses of each Fund
except: (i) brokerage commissions, (ii) taxes, interest, fees and
expenses of the non-interested Trustees (including counsel expenses),
and extraordinary expenses (which are expected to be minimal), and (iii)
the Rule 12b-1 fees described in this Statement of Additional
Information. Under the unitary fee, Dreyfus provides investment
advisory services and provides or arranges for the provision by one or
more parties, of sub-investment advisory, administrative, custody, fund
accounting and transfer agency services to the Funds. For the provision
of such services directly, or through one or more third parties, Dreyfus
receives as full compensation for all services and facilities provided
by it, a fee computed daily and paid monthly at the annual rate set
forth in each Fund's Prospectus, applied to the average daily net assets
of a Fund's investment portfolio, less the accrued fees and expenses
(including counsel fees) of the non-interested Trustees of the Trust.
Previously the payments to the Investment Manager covered merely the
provision of investment advisory services (and payment for sub-advisory
services, as applicable) and certain specified administrative services.
Under this previous arrangement, each Fund also paid for additional non-
investment advisory expenses, such as custody and transfer agency
services, that were not paid by the investment adviser.
Effective July 31, 1994, the sub-investment advisory agreement
(the "Sub-Advisory Agreement" between PanAgora Asset Management, Inc.
("PanAgora") and the Fund and Mellon Bank was terminated and PanAgora
ceased providing sub-advisory services to the International Fund. Prior
to July 31, 1994, PanAgora served as sub-investment adviser to the
International Fund pursuant to the Sub-Advisory Agreement, which was
approved by the Board of Trustees, including a majority of the Trustees
who are not "interested persons" of the Trust or PanAgora on November
22, 1993 (subject to shareholder approval), and by the shareholders of
the International Fund on March 14, 1994.
The following table shows the fees paid by each Fund to Boston
Advisors or Mellon Bank (and any fee waivers during the fiscal years
ended 1992, 1993 and 1994).
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1994(2) 1993 1992
Fee Fees Waived Fee Fees Waived(1) Fees Fees Waived(1)
International Fund $60,559 $27,471 $103,094 $103,094 $234,236 --
Contrarian Fund $39,820 $23,862 $30,566 $30,566 $ 25,040 $25,040
Short-Term Bond Fund $14,203 $ 9,060 $25,503 $25,503 $ 23,997 $23,997
</TABLE>
(1) Boston Advisors waived all or a portion of its fees and/or
reimbursed expenses of the Funds from time to time in order to increase
each Fund's net income available for distribution to shareholders.
(2) For the period from April 4, 1994 until the Fund's fiscal year end,
Mellon Bank served as investment manager.
The following table shows the fees paid by Boston Advisors or Mellon
Bank to PanAgora in sub-investment advisory fees for the fiscal years
ended 1992, 1993 and the period from September 1, 1993 to July 31, 1994.
1994 1993 1992
Fee Fee Fee
International Fund $35,213 $28,457 $184,630
Dreyfus has agreed that if in any fiscal year the aggregate
expenses of any Fund of the Trust (including fees pursuant to the
Management Agreement, but excluding interest, brokerage expenses, taxes
and extraordinary items) exceed the expense limitation of any state, it
will reduce their management fees by the amount of such excess expense.
Such a fee reduction, if any, will be reconciled on a monthly basis. To
the extent these state regulations permit the exclusion of distribution
expenses (see "Distribution Plan" below), the Trust will exclude such
expenses in determining whether any reduction obligation exists. The
most restrictive state expense limitation applicable to any Fund
requires a reduction of fees in any year that such expenses exceed 2.5%
of the first $30 million of average net assets, 2.0% of the next $70
million average net assets and 1.5% of the remaining average net assets.
A number of factors, including the size of each Fund, will determine
which of these restrictions will be applicable to a Fund at any given
time.
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 in informing its customers
of, and performing, investment and redemption services in connection
with a Fund, and in providing services to a Fund as custodian and fund
accountant, as well as Dreyfus' investment advisory activities, may
raise issues under these provisions. Mellon Bank has been advised by
its counsel that its activities contemplated under this arrangement are
consistent with Mellon Bank's 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 or 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 any Fund. If Mellon Bank
or Dreyfus were prohibited from serving a Fund in any of its present
capacities, the Trustees would seek alternative provider(s) of such
services.
Counsel and Auditors
Kirkpatrick & Lockhart, 1800 M Street, N.W., South Lobby - 9th Floor,
Washington, D.C., 20036-5891, serves as legal counsel to the Trust.
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh,
Pennsylvania 15218, was appointed by the Fund's Board of Trustees to
serve as each Fund's independent auditors for the year ending August 31,
1994, providing audit services including (1) examination of the annual
financial statements and limited review of unaudited semiannual
financial statements, (2) assistance, review and consultation in
connection with the SEC and (3) review of the annual federal income tax
return and the Pennsylvania excise tax return filed on behalf of each
Fund.
INVESTMENT POLICIES
The Prospectuses discuss the investment objectives of each Fund and the
policies it employs to achieve those objectives. The following
discussion supplements the description of the Funds' investment policies
in the Prospectuses.
Foreign Securities
The International Fund will invest in securities of foreign issuers,
including investments 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, reevaluation of currencies,
future political and economic developments and the possible imposition
of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning
issuers and the fact that foreign issuers are not generally subject to
uniform accounting, auditing and financial reporting standards or to
other regulatory practices and requirements comparable to those
applicable to domestic issuers. Moreover, securities of many foreign
issuers may be less liquid and their prices more volatile than those of
securities 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.
Currency Transactions
The International Fund may engage in currency exchange transactions as a
means of managing certain risks associated with purchasing and selling
securities denominated in foreign securities. Generally, the currency
exchange transactions of the Fund will be conducted on a spot (i.e.,
cash) basis at the spot rate for purchasing or selling currency
prevailing in the currency exchange market. This rate under normal
market conditions differs from the prevailing exchange rate in an amount
generally less than 0.1% due to the cost of converting from one currency
to another. The Fund also may deal in forward exchanges between
currencies of the different countries in which it invests as a hedge
against possible variations in the exchange rates between these
currencies. This is accomplished through contractual agreements to
purchase or sell a specified currency at a specified future date and
price set at the time of the contract.
Dealings in forward currency exchanges by the Fund are limited to
hedging involving either specific transactions or aggregate portfolio
positions. Transaction hedging is the purchase or sale of foreign
currency with respect to specific receivables or payables of the Fund
generally arising in connection with the purchase or sale of its
portfolio securities. Position hedging is the sale of foreign currency
with respect to portfolio security positions denominated or quoted in
such currency. The Fund will not speculate in forward currency
exchanges. The Fund may position hedge with respect to a particular
currency to an extent greater than the aggregate market value (at the
time of making such sale) of the securities held in its portfolio
denominated or quoted in or currently convertible into that particular
currency. If the Fund enters into a position hedging transaction, its
custodian or sub-custodian bank will place cash or readily marketable
securities in a segregated account of the Fund in an amount equal to the
value of the Fund's total assets committed to the consummation of such
forward contract. If the value of the securities placed in the
segregated account declines, additional cash or securities will be
placed in the account so that the value of the account will equal the
amount of the Fund's commitment with respect to such contracts. The
Fund will not attempt to hedge all of its foreign portfolio positions
and will enter into such transactions only to the extent, if any, deemed
appropriate by Dreyfus. The Fund will not enter into a position hedging
commitment if, as a result thereof, the Fund would have more than 15% of
the value of its total assets committed to such contracts. The Fund
will not enter into a forward contract with a term of more than one
year.
It may not be possible for the Fund to hedge against a devaluation that
is so generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it anticipates.
The cost to the Fund of engaging in currency transactions varies with
such factors as the currency involved, the length of the contract period
and the market conditions then prevailing. Since transactions in
currency exchanges are usually conducted on a principal basis, no fees
or commissions are involved.
At or before the maturity of a forward contract, the Fund may either
sell a portfolio security and make delivery of the currency, or it may
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of
the currency. If the Fund retains the portfolio security and engages in
an offsetting transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices.
If the Fund engages in an offsetting transaction, it may subsequently
enter into a new forward contract to sell the currency. Should forward
prices decline during the period between the Fund's entering into a
forward contract for the sale of a currency and the date it enters into
an offsetting contract for the purchase of the currency, the Fund will
realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, the Fund will suffer a loss to the
extent the price of the currency it has agreed to purchase exceeds the
price of the currency it has agreed to sell.
The use of forward currency contracts by the Fund will be limited to
the transactions described above. The Fund is not required to enter
into such transactions with regard to its portfolio securities,
regardless of currency denomination, and will not do so unless deemed
appropriate by Dreyfus. The use of forward currency contracts does not
eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange which can be achieved at some
future point in time. In addition, although forward currency contracts
tend to minimize the risk of loss due to a decline in the value of the
hedged currency, they also tend to limit any potential gain which might
result should the value of the currency increase.
Because the Fund invests in foreign securities, the Fund will hold from
time to time various foreign currencies pending its investment in
foreign securities or conversion into U.S. dollars. Although the Fund
values its assets daily in terms of U.S. dollars, it does not convert
its holdings of foreign currencies into U.S. dollars on a daily basis.
When converting foreign currencies to U.S. dollars, the Fund may incur
costs of currency conversion. A foreign exchange dealer does not charge
a fee for conversion, but it does realize a profit based on the
difference, which is known as the spread, between the prices at which
the dealer is buying and selling various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
U.S. Government Securities
The Short-Term Bond Fund, to the extent described in its Prospectus,
may invest in U.S. Government Securities that are direct obligations of
the U.S. Treasury, or that are issued by agencies and instrumentalities
of the U.S. Government and supported by the full faith and credit of the
U.S. Government. These include Treasury notes, bills and bonds and
securities issued by the Government National Mortgage Association
("GNMA"), the Federal Housing Administration, the Department of Housing
and Urban Development, the Export-Import Bank, the Farmers Home
Administration, the General Services Administration, the Maritime
Administration and the Small Business Administration. Investments may
also be made in U.S. Government Securities that are not supported by the
full faith and credit of the U.S. Government. These include securities
issued by the Federal National Mortgage Association ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home Loan
Banks, Tennessee Valley Authority, Student Loan Marketing Association
and District of Columbia Armory Board. Because the U.S. Government is
not obligated by law to provide support to an instrumentality it
sponsors, the Fund will invest in obligations issued by such an
instrumentality only when Dreyfus determines that the credit risk with
respect to the instrumentality does not make its securities unsuitable
for investment by such Fund.
The Fund may write covered call and put options on U.S. Government
Securities. Currently, options are traded only on U.S. Treasury
obligations and on GNMA, FNMA and FHLMC securities. If the Fund writes
covered call options on mortgage-backed securities issued by GNMA, FNMA
and FHLMC, the mortgage-backed securities that it holds as cover may,
because of scheduled amortization or unscheduled prepayments, cease to
be sufficient cover. If this occurs, the Fund will compensate for the
decline in the value of the cover by purchasing an appropriate
additional amount of mortgage-backed securities. Options on portfolio
securities are discussed in more detail under "Options on Securities"
below.
Bank Obligations
When, in Dreyfus' opinion, a "defensive" investment posture is
warranted, the Funds may invest temporarily and without limitation in
high-grade, short-term money-market instruments, including certificates
of deposit, time deposits, and bankers' acceptances. No Fund may invest
25% or more of its gross assets in securities or obligations issued by
banks.
Certificates of deposit ("CDs") are short-term negotiable obligations of
commercial banks; time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at
stated interest rates; and bankers' acceptances are time drafts drawn on
commercial banks by borrowers usually in connection with international
transactions.
Domestic commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to be
members of the Federal Reserve System and to be insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks organized
under state law are supervised and examined by state banking authorities
but are members of the Federal Reserve System only if they elect to
join. In addition, all banks whose certificates of deposit may be
purchased by the Trust are insured by the FDIC and are subject to
Federal examination and to a substantial body of Federal law and
regulation. As a result of governmental regulations, domestic branches
of domestic banks are, among other things, generally required to
maintain specified levels of reserves, and are subject to other
supervision and regulations designed to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by
governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may
be affected by governmental action in the country of domicile of the
branch (generally referred to as sovereign risk). Examples of such
action would be the imposition of currency controls, interest
limitations, seizure of assets, or the declaration of a moratorium.
Evidence of ownership of portfolio securities may be held outside of the
United States, and the Trust may be subject to the risks associated
with the holdings of such property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal and
state regulation as well as by governmental action in the countries in
which the foreign bank has its head office. In addition, there may be
less publicly available information
about a domestic branch of a foreign bank than about a domestic bank.
Dreyfus will carefully consider these factors in making such
investments.
When-Issued Securities and Delayed-Delivery Transactions
To secure an advantageous price or yield, the Funds may purchase U.S.
Government Securities on a when-issued basis and purchase or sell U.S.
Government Securities for delayed-delivery. The Funds will enter into
such transactions for the purpose of acquiring portfolio securities and
not for the purpose of leverage. Delivery of the securities in such
cases occurs beyond the normal settlement periods, but no payment or
delivery is made by a Fund prior to the reciprocal delivery or payment
by the other party to the transaction and no income accrues prior to
delivery. In entering into a when-issued or delayed-delivery
transaction, the Funds will rely on the other party to consummate the
transaction and may be disadvantaged if the other party fails to do so.
U.S. Government Securities are normally subject to changes in value
based upon changes, real or anticipated, in the level of interest rates
and the public's perception of the creditworthiness of the issuers. In
general, U.S. Government Securities tend to appreciate when interest
rates decline and depreciate when interest rates rise. Purchasing these
securities on a when-issued or delayed-delivery basis, therefore, can
involve the risk that the yields available in the market when delivery
takes place may actually be higher than those obtained in the
transaction itself. Similarly, the sale of U.S. Government Securities
for delayed delivery can involve the risk that the prices available in
the market when the delivery is made may actually be higher than those
obtained in the transaction itself. In the case of the purchase by a
Fund of when-issued or delayed-delivery securities, a segregated account
in the name of the Fund consisting of cash or liquid high grade debt
securities equal to the amount of the when-issued or delayed-delivery
commitments will be established at the Fund's custodian. For the purpose
of determining the adequacy of the securities in the accounts, the
deposited securities will be valued at market or fair value. If the
market or fair value of the securities declines, additional cash or
securities will be placed in the account daily so that the value of the
account will equal the amount of such commitments by the Fund. On the
settlement date, the Fund will meet its obligations from then-available
cash flow, the sale of securities held in the segregated account, the
sale of other securities or, although it would not normally expect to do
so, from the sale of the when-issued or delayed-delivery securities
themselves (which may have a greater or lesser value than the Fund's
payment obligations).
Low-Rated Securities
The Contrarian Fund and the Short-Term Bond Fund may invest in low-rated
and comparable unrated securities. A recession could disrupt the market
for such securities and adversely affect the value of such securities.
Any such economic downturn also could adversely affect the ability of
the issuers of such securities to repay principal and pay interest
thereon.
The ratings of Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Group ("S&P") generally represent the opinions
of those organizations as to the quality of the securities that they
rate. Such ratings, however, are relative and subjective, are not
absolute standards of quality and do not evaluate the market risk of the
securities. Although Dreyfus uses these ratings as a criterion for the
selection of securities for the Funds, Dreyfus also relies on its
independent analysis to evaluate potential investments for the Funds.
The Funds' achievement of their investment objectives may be more
dependent on this internal credit analysis of low-rated and unrated
securities than would be the case for a portfolio of higher-rated
securities.
Subsequent to its purchase by the Funds, an issue of securities may
cease to be rated or its rating may be reduced below the minimum
required for purchase by the Funds. In addition, it is possible that
Moody's and S&P might not timely change their ratings of a particular
issue to reflect subsequent events. None of these events will require
the sale of the securities by the Funds, although Dreyfus will consider
these events in determining whether the Funds should continue to hold
the securities. To the extent that the ratings given by Moody's or S&P
for securities may change as a result of changes in the rating system or
due to a corporate reorganization of Moody's, and/or S&P, Dreyfus will
attempt to use comparable ratings as standards for its investments in
accordance with the investment objectives and policies of the Funds.
Lending of Portfolio Securities
As stated in the Prospectuses, each of the Funds other than the
Contrarian Fund may lend securities from its portfolio to brokers,
dealers and other financial organizations. Such loans, if and when
made, may not exceed 33 1/3% of such Fund's total assets, taken at
value. The Funds may not lend portfolio securities to its affiliates
without specific authorization from the Securities and Exchange
Commission (the "SEC"). Loans of portfolio securities by the Funds will
be collateralized by cash, letters of credit or securities issued or
guaranteed by the U.S. Government or its agencies which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. From time to time, the
Funds may return a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a third
party, which is unaffiliated with the Funds or acting as a "finder."
By lending portfolio securities, the Funds can increase their income by
continuing to receive interest on the loaned securities, as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when U.S.
Government Securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever portfolio securities are
loaned: (1) the Funds must receive at least 100% cash collateral or
equivalent securities from the borrower; (2) the borrower must increase
such collateral whenever the market value of the securities rises above
the level of such collateral; (3) the Funds must be able to terminate
the loan at any time; (4) the Funds must receive reasonable interest on
the loaned securities and any increase in market value; (5) the Funds
may pay only reasonable custodian fees in connection with the loan; and
(6) voting rights on the loaned securities may pass to the borrower;
however, if a material event adversely affecting the investment occurs,
the Trust's Trustees must terminate the loan and regain the right to
vote the securities. The risks in lending portfolio securities, as well
as with other extensions of secured credit, consist of possible delays
in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by Dreyfus to be of
good standing and will not be made unless, in the judgment of Dreyfus,
the consideration to be earned from such loans would justify the risk.
Options on Securities
The Funds have the ability to write covered put and call options on
their portfolio securities as part of their investment strategies. The
principal reason for writing covered call options on a security is to
attempt to realize, through the receipt of premiums, a greater return
than would be realized on the security alone. In return for a premium,
the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike
price for the life of the option (or until a closing purchase
transaction can be effected). Nevertheless, the call writer retains the
risk of a decline in the price of the underlying security. Similarly,
the principal reason for writing covered put options is to realize
income in the form of premiums. The writer of a covered put option
accepts the risk of a decline in the price of the underlying security.
The size of the premiums that a Fund may receive may be adversely
affected as new or existing institutions, including other investment
companies, engage in or increase their option-writing activities.
The Funds with option-writing authority will write only covered options.
Accordingly, whenever a Fund writes a call option it will continue to
own or have the present right to acquire the underlying security for as
long as it remains obligated as the writer of the option. To support
its obligation to purchase the underlying security if a put option is
exercised, whenever a Fund writes a put option it will either (a)
deposit with the Fund's custodian in a segregated account, cash, U.S.
Government Securities or other high grade debt obligations having a
value equal to or greater than the exercise price of the underlying
securities or (b) continue to own an equivalent number of puts of the
same "series" (that is, puts on the same underlying security having the
same exercise prices and expiration dates as those written by the Fund),
or an equivalent number of puts of the same "class" (that is, puts on
the same underlying security) with exercise prices greater than those
that it has written (or, if the exercise prices of the puts it holds are
less than the exercise prices of those it has written, it will deposit
the difference with the Fund's custodian in a segregated account).
Options written by the Funds will normally have expiration dates between
one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the
underlying securities at the times the options are written. In the case
of call options, these exercise prices are referred to as "in-the-
money", "at-the-money" and "out-of-the-money", respectively.
A Fund may write (a) in-the-money call options when Dreyfus expects
that the price of the underlying security will remain flat or decline
moderately during the option period, (b) at-the-money call options when
Dreyfus expects that the price of the underlying security will remain
flat or advance moderately during the option period and (c) out-of-the-
money call options when Dreyfus expects that the premiums received from
writing the call option, plus the appreciation in market price of the
underlying security up to the exercise price, will be greater than the
appreciation in the price of the underlying security alone. In any of
the preceding situations, if the market price of the underlying security
declines and the security is sold at this lower price, the amount of any
realized loss will be offset wholly or in part by the premium received.
Out-of-the-money, at-the-money and in-the-money put options (the reverse
of call options as to the relation of exercise price to market price)
may be utilized in the same market environments that such call options
are used in equivalent transactions.
So long as the obligation of a Fund as the writer of an option
continues, the Fund may be assigned an exercise notice by the broker-
dealer through which the option was sold, requiring it to deliver, in
the case of a call, or take delivery of, in the case of a put, the
underlying security against payment of the exercise price. This
obligation terminates when the option expires or the Fund effects a
closing purchase transaction. A Fund can no longer effect a closing
purchase transaction with respect to an option once it has been assigned
an exercise notice. To secure its obligation to deliver the underlying
security when it writes a call option, or to pay for the underlying
security when it writes a put option, a Fund will be required to deposit
in escrow the underlying security or other assets in accordance with the
rules of the Options Clearing Corporation (the "Clearing Corporation")
and the securities exchange on which the option is written.
An option position may be closed out only where there exists a secondary
market for an option of the same series on a recognized national
securities exchange or in the over-the-counter market. In light of this
fact and current trading conditions, the Funds expect to write only call
or put options issued by the Clearing Corporation. The Funds expect to
write options on national securities exchanges and in the over-the-
counter market.
The Funds may realize a profit or loss upon entering into a closing
transaction. In cases in which a Fund has written an option, it will
realize a profit if the cost of the closing purchase transaction is less
than the premium received upon writing the original option and will
incur a loss if the cost of the closing purchase transaction exceeds the
premium received upon writing the original option.
Although the Funds will generally write only those options for which
Dreyfus believes there is an active secondary market so as to facilitate
closing transactions, 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, have at times rendered certain of the
facilities of national securities exchanges inadequate and resulted in
the institution of special procedures, such as trading rotations,
restrictions on certain types of orders 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, a 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.
Securities exchanges have established limitations governing the
maximum number of calls and puts of each class which may be held or
written, or exercised within certain time periods, by an investor or
group of investors acting in concert (regardless of whether the options
are written on the same or different national securities exchanges or
are held, written or exercised in one or more accounts or through one or
more brokers). It is possible that the Funds and other clients of
Dreyfus and certain of their affiliates may be considered to be such a
group. A securities exchange may order the liquidation of positions
found to be in violation of these limits and it may impose certain other
sanctions. At the date of this Statement of Additional Information, the
position and exercise limits for common stocks were 3,000, 5,500 or
8,000 options per stock (i.e., options representing 300,000, 550,000 or
800,000 shares), depending on various factors relating to the underlying
security. Dollar amount limits apply to U.S. Government Securities.
These limits may restrict the number of options a Fund will be able to
purchase on a particular security.
In the case of options written by a Fund that are deemed covered by
virtue of the Fund's holding convertible or exchangeable preferred stock
or debt securities, the time required to convert or exchange and obtain
physical delivery of the underlying common stocks with respect to which
the Fund has written options may exceed the time within which the Fund
must make delivery in accordance with an exercise notice. In these
instances, a Fund may purchase or temporarily borrow the underlying
securities for purposes of physical delivery. By so doing, the Fund
will not bear any market risk, since the Fund will have the absolute
right to receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but the Fund may incur
additional transaction costs or interest expenses in connection with any
such purchase or borrowing.
Although Dreyfus will attempt to take appropriate measures to
minimize the risks relating to a Fund's writing of put and call options,
there can be no assurance that a Fund will succeed in its option-writing
program.
Stock Index Options
The Funds have the authority to purchase and write put and call options
on stock indexes listed on national securities exchanges to hedge their
portfolios. A stock index fluctuates with changes in the market values
of the stocks included in the index. Some stock index options are based
on a broad market index such as the New York Stock Exchange Composite
index, or on a narrower market index such as the Standard & Poor's 100.
Indexes are also based on an industry or market segment such as the
American Stock Exchange Oil and Gas Index or the Computer and Business
Equipment Index.
Options on stock indexes are similar to options on stock except that (a)
the expiration cycles of stock index options are monthly, while those of
stock options are currently quarterly, and (b) the delivery requirements
are different. Instead of giving the right to take or make delivery of
stock at a specified price, an option on a stock index gives the holder
the right to receive a cash "exercise settlement amount" equal to (i)
the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of exercise,
multiplied by (ii) a fixed "index multiplier". Receipt of this cash
amount will depend upon the closing level of the stock index upon which
the option is based being greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the option. The
amount of cash received will be equal to such difference between the
closing price of the index and the exercise price of the option
expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make
delivery of this amount. The writer may offset its position in stock
index options prior to expiration by entering into a closing transaction
on an exchange or it may let the option expire unexercised.
he effectiveness of purchasing or writing stock index options as a
hedging technique will depend upon the extent to which price movements
in the portion of a securities portfolio being hedged correlate with
price movements of the stock index selected. Because the value of an
index option depends upon movements in the level of the index rather
than the price of a particular stock, whether a Fund will realize a gain
or loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or,
in the case of certain indexes, in an industry or market segment, rather
than movements in the price of a particular stock. Thus, successful use
by a Fund of options on stock indexes will be subject to Dreyfus'
ability to predict correctly movements in the direction of the stock
market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual
stocks, and there can be no assurance that a Fund will be successful in
its use of stock index options.
A Fund will engage in stock index options transactions only when
determined by Dreyfus to be consistent with the Fund's efforts to
control risk. There can be no assurance that such judgment will be
accurate or that the use of these portfolio strategies will be
successful. When a Fund writes an option on a stock index, the Fund
will establish a segregated account with the Fund's custodian in an
amount equal to the market value of the option and will maintain the
account while the option is open.
Futures Activities
The Funds may invest in futures contracts and options on futures
contracts that are traded on a United States exchange or board of trade.
These investments may be made by a Fund solely for the purpose of
hedging against changes in the value of its portfolio securities or of
securities in which the Fund intends to invest due to anticipated
changes in interest rates and market conditions, and when the
transactions are economically appropriate to the reduction of risks
inherent in the management of the Fund. The Funds will not purchase or
sell futures contracts or purchase options on futures if, immediately
thereafter, more than 33 1/3% of its net assets would be hedged. In
addition, the Funds will not enter into futures and options contracts
for which aggregate initial margin deposits and premiums exceed 5% of
the fair market value of its assets, after taking into account
unrealized profits and unrealized losses on futures contracts into which
it has entered. See "Taxes" below.
Futures Contracts. The purpose of the acquisition or sale of a futures
contract by a Fund is to protect the Fund from fluctuations in rates on
securities without actually buying or selling the securities. Of
course, since the value of portfolio securities will far exceed the
value of the futures contracts sold by the Fund, an increase in the
value of the futures contracts could only mitigate--but not totally
offset--the decline in the value of the portfolio.
No consideration is paid or received by the Fund upon the purchase or
sale of a futures contract. Initially, the Fund will be required to
deposit with the broker an amount of cash or cash equivalents equal to
approximately 1% to 10% of the contract amount (this amount is subject
to change by the board of trade on which the contract is traded and
members of such board of trade may charge a higher amount). This amount
is known as "initial margin" and is in the nature of a performance bond
or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker, will be made daily as the
price of securities underlying the futures contract fluctuates, making
the long and short positions in the futures contract more or less
valuable, a process known as "marking-to-market." In addition, when the
Fund purchases a futures contract, it must deposit into a segregated
account with its custodian an amount of cash or cash equivalents equal
to the total market value of such futures contract, less the amount of
initial margin for the contract. At any time prior to the expiration of
a futures contract, the Fund may elect to close the position by taking
an opposite position, which will operate to terminate the Fund's
existing position in the contract.
There are several risks in connection with the use of futures
contracts as a hedging device. Successful use of futures contracts by
the Fund is subject to the ability Dreyfus to correctly predict
movements in the direction of interest rates. These predictions involve
skills and techniques that may be different from those involved in the
management of the Fund. In addition, there can be no assurance that
there will be a correlation between movements in the price of the
underlying securities and movements in the price of the securities which
are the subject of the hedge. A decision of whether, when and how to
hedge involves the exercise of skill and judgment, and even a well-
conceived hedge may be unsuccessful to some degree because of market
behavior or unexpected trends in interest rates.
Positions in futures contracts may be closed out only on the exchange on
which they were entered into (or through a linked exchange ) and no
secondary market exists for those contracts. In addition, although the
Funds intend to purchase or sell futures contracts only if there is an
active market for such contracts, there is no assurance that a liquid
market will exist for the contracts at any particular time. Most
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once
the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit. It is possible that
futures contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures
trades to substantial losses. In such event, and in the event of
adverse price movements, the Fund would be required to make daily cash
payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may
partially or completely offset losses on the futures contract. As
described above, however, no assurance can be given that the price of
the securities being hedged will correlate with the price movements in a
futures contract and thus provide an offset to losses on the futures
contract.
If a Fund has hedged against the possibility of an increase in interest
rates adversely affecting the value of securities held in its portfolio
and rates decrease instead, the Fund will lose part or all of the
benefit of the increased value of securities which it has hedged because
it will have offsetting losses in its futures positions. In addition,
in such situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily variation margin requirements at a time
when it may be disadvantageous to do so. These sales of securities may,
but will not necessarily, be at increased prices which reflect the
decline in interest rates.
Options on Financial Futures Contracts. A financial futures contract
provides for the future sale by one party and the purchase by the other
party of a certain amount of a specific financial instrument at a
specified price, date, time and place.
The Funds may purchase and write put and call options on financial
futures contracts that are traded on a United States exchange or board
of trade as a hedge against changes in the value of securities which the
Fund intends to purchase due to anticipated changes in interest rates
and market conditions and may enter into closing transactions with
respect to such options to terminate existing positions. There is no
guarantee that such closing transactions can be effected.
An option on a financial futures contract, as contrasted with the direct
investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in a financial futures
contract at a specified exercise price at any time prior to the
expiration date of the option. The potential loss related to the
purchase of an option on financial futures contracts is limited to the
premium paid for the option (plus transaction costs). Because the value
of the option is fixed at the point of sale, there are no daily cash
payments to reflect changes in the value of the underlying contract;
however, the value of the option does change daily and that change would
be reflected in the net asset value of the Funds.
In addition to the risks that apply to all options transactions,
there are several risks relating to options on financial futures
contracts. These risks include the lack of assurance of a perfect
correlation between price movements in the options on financial futures,
on the one hand, and price movements in the portfolio securities that
are the subject of the hedge, on the other hand. The ability to
establish and close out positions on such options will be subject to
the existence of a liquid market, and there can be no assurance that
such a market will be maintained or that closing transactions will be
effected. In addition, there are risks specific to writing (as compared
to purchasing) such options. While the Funds' risk of loss with respect
to purchased put and call options on financial futures contracts is
limited to the premium paid for the option (plus transaction costs),
when a Fund writes such an option it is obligated to a broker for the
payment of initial and variation margin. In addition, the purchase of
put or call options will be based upon predictions as to anticipated
market trends by Dreyfus which could prove to be incorrect. When a Fund
writes a call option or a put option, it will be required to deposit
initial margin and variation margin pursuant to brokers' requirements
similar to those applicable to financial futures contracts. In
addition, net option premiums received for writing options will be
included as initial margin deposits.
Portfolio Turnover
While a Fund does not intend to trade in securities for short-term
profits, a Fund will not consider portfolio turnover rate a limiting
factor in making investment decisions. Higher portfolio turnover rates
can result in corresponding increases in brokerage commissions. In
addition, to the extent a Fund realizes short-term gains as a result of
more portfolio transactions, such gains would be taxable to shareholders
at ordinary income tax rates.
A Fund may experience high portfolio turnover due to frequent
redemptions and exchanges. In addition to the results described above,
a high portfolio turnover rate will increase the risk that a Fund may
fail to qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended. Failure to so qualify
would cause the Fund's net investment income and capital gain net income
to become subject to Federal income tax at corporate rates. For a
discussion of state requirements for qualification and regulated
investment companies under Subchapter M and the effect of high portfolio
turnover on such qualification, see "Taxes".
The portfolio turnover rates for the 1993 and 1994 fiscal years
for the International Fund were 202% and 114%, respectively; for the
Contrarian Fund, 39% and 65%, respectively; and for the Short-Term Bond
Fund, 6% and 53%, respectively.
Investment Restrictions
The following are fundamental investment restrictions of each Fund.
Each Fund of the Trust may not:
1 Purchase any securities which would cause 25% or more of the value
of a Fund's total assets at the time of such purchase to be invested in
the securities of one or more issuers conducting their principal
activities in the same industry. (For purposes of this limitation, U.S.
Government Securities and state or municipal governments and their
political subdivisions are not considered members of any industry. In
addition, this limitation does not apply to investments of domestic
banks, including U.S. branches of foreign banks and foreign branches of
U.S. banks.)
2. Borrow money or issue senior securities as defined in the 1940 Act
except that (a) a 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)
a Fund may issue multiple Classes of shares. The purchase or sale of
futures contracts and related options shall not be considered to involve
the borrowing of money or issuance of senior securities.
3. Make loans or lend securities, if as a result thereof more than
one-third the Fund's total assets would be subject to all such loans.
For purposes of this restriction debt instruments and repurchase
agreements shall not be treated as loans.
4. 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.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
a 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. Purchase or sell commodities except that each Fund may enter into
futures contracts and related options, forward currency contracts and
other similar instruments.
7. Purchase with respect to 75% of a 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 a Fund's total assets would be invested in the securities of
that issuer, or (b) a Fund would hold more than 10% of the outstanding
voting securities of that issuer.
8. Each Fund of the Trust may, notwithstanding any other fundamental
investment policy or restriction, invest all of its investable assets in
securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies, and
restrictions as the Fund.
The following are non-fundamental investment restrictions of each
Fund of the Trust:
1. The Trust will not purchase or retain the securities of any issuer
if the officers, directors or Trustees of the Trust, its advisers, or
managers owning beneficially more than one half of one percent of the
securities of each issuer together own beneficially more than five
percent of such securities.
2. No Fund will purchase securities of issuers (other than securities
issued or guaranteed by domestic or foreign governments or political
subdivisions thereof), including their predecessors, that have been in
operation for less than three years, if by reason thereof the value of
such Fund's investment in securities would exceed 5% of such Fund's
total assets. For purposes of this limitation, sponsors, general
partners, guarantors and originators of underlying assets may be treated
as the issuer of a security.
3. No Fund will purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such Classes of securities will exceed 5% of its total
assets except that: (a) this restriction shall not apply to standby
commitments, and (b) this restriction shall not apply to a Fund's
transactions in futures contracts and related options.
4. No Fund will purchase warrants if at the time of such purchase:
(a) more than 5% of the value of such Fund's assets would be invested in
warrants, or (b) more than 2% of the value of the Fund's assets would be
invested in warrants that are not listed on the New York or American
Stock Exchange (for purposes of this limitation, warrants acquired by a
Fund in units or attached to securities will be deemed to have no
value).
5. No Fund, will 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 restriction, 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
Trustees, or its delegate determines that such securities are liquid,
based upon the trading markets for the specific security.
6. No Fund may 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.
7. No Fund will purchase oil, gas or mineral leases (a Fund may,
however, purchase and sell the securities of companies engaged in the
exploration, development, production, refining, transporting and
marketing of oil, gas or minerals).
8. No Fund shall sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
9. No Fund shall purchase securities on margin, except that a Fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
10. No Fund shall purchase any security while borrowing 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.
Each of the foregoing restrictions applies to each Fund unless
otherwise indicated. Under the 1940 Act, a fundamental policy may not
be changed without the vote of a majority of the outstanding voting
securities of such Fund, as defined in the 1940 Act. "Majority" means
the lesser of (1) 67% or more of the shares present at a shareholders'
meeting, if the holders of more than 50% of the outstanding shares of
such Fund are present or represented by proxy, or (2) more than 50% of
the outstanding shares of the Trust. Non-fundamental investment
restrictions may be changed by vote of a majority of the Trust's Board
of Trustees at any time.
In order to permit the sale of the Funds' shares in certain
states, the Trust may make commitments more restrictive than the
investment restrictions described above. In this regard, the Trust has
given a representation that investments will not be made in oil, gas or
other mineral leases. Should the Trust determine that any such
commitment is no longer in the best interests of the Trust and its
shareholders, it will revoke the commitment by terminating sales of its
shares in the state involved. In addition, the Funds have undertaken
not to invest in warrants (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if, as
a result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of the Fund's net assets or if, as a result, more
than 2% of the Fund's net assets would be invested in warrants not
listed on the American Stock Exchange ("AMEX") or the New York Stock
Exchange ("NYSE"). Further, the Funds have given a representation that
investments will not be made in real estate limited partnerships.
Should the Trust determine that any such commitment is no longer in the
best interests of the Trust and its shareholders, it will revoke the
commitment by terminating sales of its shares in the state involved.
Portfolio Transactions
Decisions to buy and sell securities for the Funds are made by
Dreyfus subject to the overall supervision of the Trustees of the Trust.
Portfolio transactions for the Trust are effected by or under the
direction of Dreyfus. The same personnel are also in charge of
portfolio transactions for other accounts of other subsidiaries and
affiliates of Dreyfus.
Although investment decisions for the Funds are made independently from
those of the other accounts managed by Dreyfus, investments of the type
a Fund may make may also be made by those other accounts. When a Fund
and one or more other accounts managed Dreyfus are prepared to invest
in, or desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by
Dreyfus to be equitable to each. In some cases, this procedure may
adversely affect the price paid or received by a Fund or the size of the
position obtained or disposed of by a Fund. In other cases, however, it
is believed that coordination and the ability to participate in volume
transactions will be to the benefit of the Funds.
Transactions on U.S. and some foreign stock exchanges on behalf of the
Funds involve the payment of negotiated brokerage commissions. On
exchanges on which commissions are negotiated, the cost of transactions
may vary among different brokers. On most foreign exchanges,
commissions are generally fixed. There is generally no stated
commission in the case of securities traded in the over-the-counter
markets, but the price of those securities includes an undisclosed
commission or mark-up. The cost of securities purchased from
underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down. U.S. Government Securities are
generally purchased from underwriters or dealers, although certain
newly-issued U.S. Government Securities may be purchased directly from
the U.S. Treasury or from the issuing agency or instrumentality.
In executing portfolio transactions and selecting brokers or dealers,
Dreyfus seeks the most favorable execution and price available. The
Management Agreement provides that, in assessing the best overall terms
available for any transaction, Dreyfus shall consider factors it deems
relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, for
the specific transaction and on a continuing basis. In addition, the
Management Agreement authorizes Dreyfus, in selecting brokers or dealers
to execute a particular transaction and in evaluating the best overall
terms available, to consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934) provided to the Trust and/or other accounts over which Dreyfus
or an affiliate exercises investment discretion.
The Trustees will periodically review the brokerage commissions paid by
the Trust to determine if the commissions paid over representative
periods of time were fair and reasonable in relation to the benefits
inuring to each Fund. It is possible that certain of the services
received will primarily benefit one or more other accounts for which
investment discretion is exercised, or a Fund other than that for which
the transaction was executed. Conversely, the Trust or any given Fund
may be the primary beneficiary of the service received as a result of
portfolio transactions effected for such other accounts or Funds. The
fee of Dreyfus under the Management Agreement is not reduced by reason
of receipt of such brokerage and research services.
The Trustees of the Trust have determined that portfolio transactions
for the Funds may be executed through affiliated broker-dealers of
Dreyfus if, in the judgment of Dreyfus, the use of an affiliated broker
is likely to result in prices and execution that are fair and reasonable
and are at least as favorable as those of other affiliated broker-
dealers and if, in such transactions, the affiliated broker-dealer
charges the Funds a rate consistent with that charged to comparable
unaffiliated customers in similar transactions. Affiliated broker-
dealers will not participate in brokerage commissions given by a Fund to
other brokers or dealers. In addition, pursuant to an exemption granted
by the SEC, the Funds may engage in transactions involving certain money
market instruments with particular affiliates acting as principal.
Over-the-counter purchases and sales are transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere.
For the fiscal years ended 1992, 1993 and 1994, the Short-Term Bond
Fund paid no brokerage commissions. The following table sets forth
certain information regarding the Funds' payments of brokerage
commissions for the fiscal years ended August 31, 1992, 1993 and 1994:
International Contrarian
Fund Fund
Total
Brokerage 1992 $173,021 $ 5,160
1993 $ 88,147* $ 3,242
1994 $ 25.038 $ 6.776
* The decrease in total brokerage amount for the International Fund
was due to increased trading with futures contracts.
For the 1992, 1993 and 1994 fiscal years, brokerage commissions of
$260, $0 and $220, respectively, were paid to Boston Institutional
Services, Inc. ("BISI") by the Contrarian Fund. The percentage of total
brokerage commissions paid to BISI for the 1992, 1993 and 1994 fiscal
years by the Contrarian Fund were 5.04%, 0% and 3.25%, respectively. No
brokerage commissions during the 1992, 1993 and 1994 fiscal years were
paid to Lehman Brothers.
PURCHASE 0F SHARES
Shares of the Trust are distributed on a best effort basis by Premier
in those states where shares of the Trust are qualified for sale and
Premier is registered. Shares of the Trust are offered to the public on
a continuous basis and are sold without a front-end sales load.
The Distributor; Sub-Administrator. Premier Mutual Fund Services,
Inc., One Exchange Place, Boston, Massachusetts 02109), a wholly-owned
subsidiary of Institutional Administration Services Inc., serves as the
Funds' distributor pursuant to an agreement with Dreyfus effective
October 17, 1994. Premier also acts as distributor for other funds in
the Premier Family of Funds, the Dreyfus/Laurel Family of Funds and for
certain other investment companies. Premier also serves as Sub-
Administrator ("Sub-Administrator") to the Funds pursuant to a Sub-
Administration Agreement effective October 17, 1994.
Distribution Plan-Investor Shares. The Securities and Exchange
Commission ("SEC") has adopted Rule 12b-1 under the 1940 Act ("Rule")
regulating the circumstances under which investment companies such as
the Trust 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.
Prior to April 4, 1994, the Investor Shares of each Fund were
known as either the "Retail Class" of shares or the "Institutional
Class" of shares. These two Classes of shares of the Funds were
reclassified as a single Class of shares (the Investor Shares) by the
Board of Trustees at a meeting held on November 22, 1993, subject to
certain approvals that were obtained from each Fund's shareholders at a
meeting held on March 14, 1994. At the November 22, 1993 Board Meeting,
the Trustees also approved a new distribution plan for the Investor
Shares (formerly a Fund's Retail and/or Institutional Class of shares)
of each Fund. Shareholders of each Fund's Retail Class of Shares and
Institutional Class of Shares approved the new distribution plans at a
shareholders' meeting held on March 14 and March 29, 1994. These new
distribution plans ("Current Plans") were effective on April 4,
1994.
Prior Plans. Prior to April, 1994, each Fund's Retail shares
and Institutional shares were subject to distribution plans (the "Prior
Plans") that were adopted by the Trust under Section 12(b) of the Act
and Rule 12b-1. Under the Prior Plans, each Fund was authorized to
spend up to .25% of its average daily net assets on activities primarily
intended to result in the sale of such Shares, and up to .15% of its
average daily net assets attributable to the Institutional Class on
activities primarily intended to result in the sale of such Shares.
Under the distribution agreements with the prior distributor, Funds
Distributor, Inc. ("Funds Distributor"), each Fund was authorized to
pay, or reimburse Funds Distributor, for distribution activities (which
are the same as those authorized by the Plans) on behalf of each Fund on
a monthly basis, provided that any payment by a Fund to Funds
Distributor, together with any other payments made by such Fund pursuant
to the Prior Plan, shall not exceed .0208% of its average daily net
assets attributable to the Retail Class for the prior month (.25% on an
annualized basis) and .0125% of its average daily net assets
attributable to the Institutional Class for the prior month (.15% on an
annualized basis).
Current Plans. Under the Current Plans, each Fund may spend
annually up to .25% of the average of its net asset values for costs and
expenses incurred in connection with the distribution of, and
shareholder servicing with respect to, its Investor Shares.
The Current Plan provides that a report for the amounts expended
under the Current Plan, and the purposes for which such expenditures
were incurred, must be made the Trust's Trustees for their review at
least quarterly. In addition, the Current Plan provides that it may not
be amended to increase materially the costs which a Fund may bear for
distribution pursuant to the Current Plan without approval of a Fund's
shareholders, and that other material amendments of the Current Plan
must be approved by the vote of a majority of the Trustees and of the
Trustees who are not "interested persons" of the Trust (as defined in he
1940 act) and who do not have any direct or indirect financial interest
in the operation of the Current Plan, cast in person at a meeting called
for the purpose of considering such amendments. The Current Plan is
subject to annual approval by the entire Board of Trustees and the
Trustees who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Current Plan, by
vote cast in person at a meeting called for the purpose of voting on the
Current Plan. The Current Plan is terminable, as to a Fund's class of
shares, at any time by vote of a majority of the Trustees who are not
interested persons and have no direct or indirect financial interest in
the operation of the Current Plan or by vote of the holders of a
majority of the outstanding shares of such class of the Fund.
During the 1992, 1993 and 1994 fiscal years, Funds Distributor
received $14,768, $18,221 and $21,482 respectively, in the aggregate
from the Trust under the Plan. For the 1994 fiscal year the
distribution expenses incurred by the Funds totaled approximately
$26,357, consisting of approximately $8,478 for advertising, $0 for
printing and mailing of Prospectuses, $1,479 for commissions and $16,400
for other.
CUSTODIAN AND FUND ACCOUNTANT. Mellon Bank, N.A., One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258, serves as custodian and fund
accountant with respect to each Fund. Mellon Bank provides portfolio
and shareholder recordkeeping required for regulatory and financial
reporting purposes. Mellon Bank, as Custodian and Fund Accountant, has
no part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
TRANSFER AND DIVIDEND DISBURSING AGENT. The Shareholder Services Group,
Inc. ("TSSG"), a susbsidiary of First Data Corporation, is each Fund's
transfer and dividend disbursing agent. TSSG has no part in determining
the investment policies of a Fund or which securities are to be
purchased or sold by a Fund.
REDEMPTION OF SHARES
The right to redeem shares of a Fund may be suspended or the date of
payment postponed (a) for any period during which the NYSE is closed
(other than for customary weekend or holiday closings); (b) when trading
in the markets the Trust normally uses is restricted or when an
emergency exists as determined by the SEC so that disposal of a 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 for protection of a Fund's shareholders.
Redemption Commitment
Each Fund has committed itself to pay in cash all redemption requests by
any shareholder of record of the Fund, limited in amount during any 90-
day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. In the case of
requests for redemption in excess of such amount, the Board of Trustees
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 a Fund to the detriment of the existing
shareholders. In this event, the securities would be valued in the same
manner as a Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges would be incurred.
VALUATION OF SHARES
Each Fund's net asset value per share is calculated on each business
day. A business day is any day on which the NYSE is open for business.
The Fund determines net asset value as of the close of business of the
regular session of NYSE (currently 4:00 p.m. Eastern time). The
holidays (as observed) on which the NYSE is closed currently are: New
Years Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas. The Prospectuses describe the
time at which the net asset value of each Fund is determined for
purposes of sales and redemptions. Generally, a Fund's investments are
valued at market value or, in the absence of a market value with respect
to any portfolio securities, at fair value as determined by or under the
direction of the Trust's Board of Trustees. In determining fair value,
the Trustees may employ the services of an independent pricing service.
A security that is primarily traded on a U.S. or foreign exchange (
including securities traded through the National Market System) is
valued at the last sale price on that exchange on the date on which the
valuation is made or, if there were no sales during the day, at the mean
between the closing bid and asked prices. Portfolio securities that are
primarily traded on foreign exchanges are generally valued at the
preceding closing values of such securities on their respective
exchanges, except that when an occurrence subsequent to the time a value
was established is likely to have changed the value, then the fair value
of those securities will be determined by consideration of other factors
by or under the direction of the Fund's Trust Board of Trustees or its
delegates. Over-the-counter securities that are not traded through the
National Market System and securities listed or traded on certain
foreign exchanges whose operations are similar to U.S. over-the-counter
market are valued on the basis of the bid price at the close of business
on each day.
Options are generally valued at the last sale price; in the absence of
last sale price, the last offer price is used. When a Fund writes an
option, an amount equal to the premium received by it is included in the
Fund's statement of assets and liabilities as an asset and as an
equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option
written. When a Fund purchases a stock index option, the premium paid
by the Fund is recorded as an asset and is subsequently adjusted to the
current market value of the option. Investments in U.S. Government
Securities (other than short-term securities) are valued at the average
of the quoted bid and asked prices in the over-the-counter market.
The value of a futures contract equals the unrealized gain or loss on
the contract, which is determined by marking the contract to the current
settlement price for a like contract acquired on the day on which the
futures contract is being valued. A settlement price may not be used if
the market makes a limit move with respect to the security or index
underlying the futures contract. In such an event, the futures contract
will be valued at a fair market price to be determined by or under the
direction of the Board of Trustees.
Short-term obligations with maturities of 60 days or less are valued at
amortized cost when the Board of Trustees determines that such method of
valuation reflects fair value for the securities. All other securities
and other assets of each Fund are appraised at their fair value as
determined in good faith by the Trustees. In carrying out the Board of
Trustees' valuation policies Dreyfus may consult with independent
pricing services approved by the Board of Trustees.
PERFORMANCE DATA
From time to time, the Funds may quote their yields in
advertisements, shareholder reports or other communications to
shareholders. Price/yield information is generally available by calling
the Trust toll free at 1-800-548-2868.
ach Fund may compare the performance of its Investor and Class
R shares to that of other mutual funds, relevant indices or rankings
prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster,
No Load Investor, Money Magazine, Morningstar Mutual Fund Values, U.S.
News and World Report, Forbes, Fortune, Barron's, Financial Planning,
Financial Planning on Wall Street, Certified Financial Planner Today,
Investment Advisor, Kiplinger's, Smart Money and similar publications
may also be used in comparing the Fund's performance. Furthermore, a
Fund may quote its Investor and Class R Shares yield in advertisements
or in shareholder reports.
Effective April 4, 1994, the Retail and Institutional Classes
of shares of each Fund were reclassified as a single Class of Shares
known as "Investor Shares" and the Investment Class of shares of each
Fund was renamed as such Fund's "Trust Shares." Effective October 17,
1994, each Fund's Trust shares were reclassified as Class R shares. The
following performance data for Investor Shares is reflective of each
Fund's Investor Class of Shares' performance. Performance data is not
available for the Class R Shares of the Funds because the Funds did not
offer Class R shares during the fiscal year ended August 31, 1994.
30-Day Yield
The Short-Term Bond Fund's 30-day yield figure described and shown below
is calculated according to a formula prescribed by the SEC. The formula
can be expressed as follows:
YIELD=2[(a - b+1)6 - 1]
cd
Where: a = dividends and interest earned during the
period.
b = expenses accrued for the period (net of reimbursement).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the net asset value per share on the last day of the
period.
For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by a Fund at a discount
or premium, the formula generally calls for amortization of the discount
or premium; the amortization schedule will be adjusted monthly to
reflect changes in the market values of the debt obligations. Yield
information is useful in reviewing the Funds' performance, but because
yields fluctuate, such information cannot necessarily be used to compare
an investment in a Fund's shares with bank deposits, savings accounts
and similar investment alternatives which often provide an agreed or
guaranteed fixed yield for a stated period of time. Shareholders
should remember that yield is a function of the kind and quality of the
instruments in the Funds' portfolios, portfolio maturity, operating
expense and market conditions. The Funds' yields and total returns will
also be affected if Dreyfus waives its investment management fees.
For the 30-day period ended August 31, 1994, the Short-Term Bond
Fund's yield as computed above was 4.81% for the Investor Shares.
Investors should recognize that in periods of declining interest rates
the Short-Term Bond Fund's yield will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates the
Short-Term Bond Fund's yield will tend to be somewhat lower. Also, when
interest rates are falling, the inflow of net new money to the Fund from
the continuous sale of its shares will likely be invested in portfolio
instruments producing lower yields than the balance of the Short-Term
Bond Fund's portfolio, thereby reducing the current yield of the Fund.
In periods of rising interest rates, the opposite can be expected to
occur.
Total Return
Each Fund's "average annual total return" figures described and shown
below are computed according to a formula prescribed by the SEC. The
formula can be expressed as follows:
P(1+T)1/n = ERV
Where: P = a hypothetical initial payment of
$1000
T = average annual total return
n = number of years
ERV =Ending Redeemable Value of a hypothetical
1000 (or other) periods at the end of the
1, 5, or 10 year (or other) periods (or
fractional portion thereof); payment made
at the beginning of the 1, 5, or 10 year
.The table below shows the average annual total return for the Funds'
Investor Shares for the specified periods. The average annual total
return for each Fund's Class R Shares is not presented below because no
Fund offered Class R Shares during the entire fiscal year ended on
August 31, 1994.
Inter- Short-Term
national(1) Contrarian(2) Bond(3)
For the one-year
period ended
8/31/94 9.67% (2.55)% 0.06%
For the five-year
period ended
8/31/94 3.02% 9.88% 6.50%
From commencement
of operations
to 8/31/94 3.97% 12.56% 6.65%
(1) The Fund commenced operations on October 12, 1988.
(2) The Fund commenced operations on October 17, 1988.
(3) The Fund commenced operations on October 18, 1988.
Aggregate Total Return
Each Fund's aggregate total return figures described and shown
below represent the cumulative change in the value of an investment in
each Fund for the specified period and are computed by the following
formula:
ERV-P
AGGREGATE TOTAL RETURN = P
Where: P = a hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000 investment
made at the beginning of the 1-, 5- or 10-year period at the end of the
1-, 5- or 10- year period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.
The table below shows the aggregate total return for the Funds'
Investor Shares for the specified periods. The aggregate annual return
for each Fund's Class R Shares is not presented below because no Fund
offered Class R Shares during the entire fiscal year ended on August 31,
1994.
Inter- Short-Term
national(1) Contrarian(2) Bond(3)
For the one-year
period ended
8/31/94 9.64% (2.55)% 0.06%
For the five-year
period ended
8/31/94 16.02% 60.19 37.01%
From commencement
of operations
to 8/31/94 25.77% 100.32 45.18%
(1) The Fund commenced operations on October 12, 1988.
(2) The Fund commenced operations on October 17, 1988.
(3) The Fund commenced operations on October 18, 1988.
The Funds' net investment income changes in response to fluctuations in
interest rates and the expenses of the Funds. Consequently, any given
performance quotation should not be considered as representative of the
Funds' performance for any specified period of time.
TAXES
Each Fund has satisfied, and intends to satisfy, the requirements for
qualifying as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended, (the "Code"). Accordingly,
each Fund will not be liable for Federal income taxes to the extent its
taxable net investment income and capital gain net income are
distributed to shareholders, provided that at least 90% of its net
investment income and net short-term capital gains for the taxable year
are distributed.
To qualify as a regulated investment company, among other requirements,
the Fund must earn at least 90% of its gross income from (i) interest,
(ii) dividends, (iii) payments with respect to securities loans, (iv)
gains from the sale or other disposition of stock, securities, or
foreign currencies and (v) other income (including, but not limited to,
gains from options, futures, or forward contracts) derived with respect
to its business of investing in such stock, securities or currencies
(the "90% Test"). An additional requirement is that the Fund must earn
less than 30% of its gross income from the disposition of any of the
following held for less than three months (the "30% Test"): (i) stock or
securities; (ii) options, futures or forward contracts (other than on
foreign currencies) or (iii) foreign currencies (or options, futures or
forward contracts on foreign currencies) but only if such currencies (or
options, futures or forward contracts) are not directly related to the
Fund's principal business of investing in stock or securities (or
options and futures with respect to stock or securities). The 30% Test
will limit the extent to which the Fund may sell securities held for
less than three months; write options which expire in less than three
months; and effect closing transactions with respect to call or put
options that have been written or purchased within the preceding three
months. (If a Fund purchases a put option for the purpose of hedging an
underlying portfolio security, the acquisition of the option is treated
as a short sale of the underlying security unless, for purposes only of
the 30% Test, the option and the security are acquired on the same
date.) Finally, as discussed below, this requirement may also limit
investments by certain Funds in options on stock indexes, options on
nonconvertible debt securities, futures contracts and options on
interest rate futures contracts.
Taxation of Investments by the Funds
Gains or losses on sales of securities by a Fund will generally be long-
term capital gains or losses if the Fund has held the securities for
more than one year. Gains or losses on sales of securities held for
less than one year will generally be short-term. Debt securities
purchased by a Fund may be treated for Federal income tax purposes as
having original issue discount. Original issue discount represents
interest for Federal income tax purposes and can generally be defined as
the excess of the stated redemption price at maturity of a debt
obligation over its issue price. Original issue discount is treated as
income earned by a Fund, whether or not any income is actually received,
and therefore is subject to the distribution requirements of the Code.
Generally, the amount of original issue discount included in the income
of a Fund each year is determined on the basis of a constant yield to
maturity which takes into account the compounding of accrued interest.
In addition, debt securities may be purchased by a Fund at a discount
which exceeds the original issue discount remaining on the securities,
if any, at the time the Fund purchased the securities. This additional
discount represents market discount for income tax purposes. In the
case of any debt security having a fixed maturity date of more than one
year from the date of issue and having market discount, the gain
realized on disposition will be treated as interest to the extent it
does not exceed the accrued market discount on the security (unless a
Fund elects to include such accrued market discount in income in the tax
year to which it is attributable). Generally, market discount is
accrued on a daily basis. A Fund may be required to capitalize, rather
than deduct currently, part or all of any direct interest expense
incurred or continued to purchase or carry any debt security having
market discount, unless such Fund makes the election to include market
discount currently. If a Fund must include original issue discount in
income or if a Fund makes an election to include accrued market discount
in income, it may be more difficult for the Fund to make the
distributions required for such Fund to maintain its status as a
regulated investment company under Subchapter M of the Code or to avoid
the 4% excise tax described in the Prospectus.
Options and Futures Transactions. The tax consequences of options and
futures transactions entered into by a Fund will vary depending on the
nature of the underlying security, whether the option is written or
purchased and finally, whether the "straddle" rules, discussed
separately below, apply to the transaction. When a Fund writes a call
or a put option on an equity or convertible debt security, it will
receive a premium that will, subject to the straddle rules, be treated
as follows for tax purposes. If the option expires unexercised, or if
the Fund enters into a closing purchase transaction, the Fund will
realize a gain (or a loss if the cost of the closing purchase
transaction exceeds the amount of the premium) without regard to any
unrealized gain or loss on the underlying security. Any such gain or
loss generally will be a short-term capital gain or loss except that any
loss on a "qualified" covered call option that is not treated as part of
a straddle may be treated as a long-term capital loss. To be
"qualified" the option must be exchange traded, must be granted more
than 30 days before the day on which the option expires, must not be a
"deep-in-the-money" option and gain or loss with respect to such option
must not be ordinary income or loss. If a call option written by the
Fund is exercised, the Fund will recognize a capital gain or loss from
the sale of the underlying security, and will treat the premium as
additional sales proceeds. Whether the gain or loss will be long-term
or short-term will depend on the holding period of the underlying
security. If a put option written by the Fund is exercised, the amount
of the premium will reduce the tax basis of the security that the Fund
then purchases. If an option with respect to an equity security that
the Fund has purchased expires on the stipulated expiration date, or if
the Fund enters into a closing sale transaction, the Fund realizes a
short-term or long-term (depending on the holding period) capital loss
or gain (depending on whether the proceeds from a sale are greater or
less than the cost of the option) for Federal income tax purposes. If
the Fund exercises a put option with respect to an equity security, it
realizes a capital gain or loss from the sale of the underlying security
(long-term or short-term, depending on the holding period of the
security) and the proceeds from the sale will be decreased by the
premium originally paid. However, because the purchase of a put option
is treated as a short sale for Federal income tax purposes, if a Fund
has held the underlying security for not more than one year or acquired
such security after acquiring the put option and on or before the date
such option is exercised or lapses the holding period of a hedged
underlying security will generally be terminated by such a purchase and
will start again only when the Fund enters into a closing sale
transaction with respect to such option, or it expires. In such case,
any gain to the Fund on the exercise or failure to exercise such put
option will be short-term capital gain. If the Fund exercises a call
option, the cost of the security which the Fund purchases upon exercise
will be increased by the premium originally paid.
The Code imposes a special "marked-to-market" system for taxing "section
1256 contracts". These contracts generally include without limitation,
regulated futures contracts, certain foreign currency contracts and
options on nonconvertible debt securities (including U.S. government
securities), certain stock indexes and futures contracts. The Funds may
invest in section 1256 contracts. In general, gain or loss on section
1256 contracts will be taken into account for tax purposes when actually
realized (by a closing transaction, by exercise, by taking delivery or
by other termination). In addition, any section 1256 contracts held at
the end of a taxable year will be treated as sold at their year-end fair
market value (that is, marked-to-the-market), and the resulting gain or
loss will be recognized for tax purposes in such taxable year. Provided
that section 1256 contracts are held as capital assets and are not part
of a "mixed" straddle, both the realized and the unrealized year-end
gain or loss from these investment positions (including premiums on
options that expire unexercised) will be treated as 60% long-term and
40% short-term capital gain or loss, regardless of the period of time
particular positions are actually held by a Fund.
Straddles. The Code contains other rules applicable to "straddles,"
that is, transactions which create positions which offset positions in
section 1256 or other investment contracts. Those rules, applicable to
"straddle transactions", are intended to eliminate any special tax
advantages for such transactions. "Straddles" are defined to include
"offsetting positions" in actively-traded personal property. Under
current law, it is not clear under what circumstances one investment
made by a Fund, such as an option or futures contract, would be treated
as "offsetting" another investment also held by the Fund, such as the
underlying security (or vice versa) and, therefore, whether the Fund
would be treated as having entered into a straddle. In general,
investment positions may be "offsetting" if there is a substantial
diminution in the risk of loss from holding one position by reason of
holding one or more other positions.
If two (or more) positions constitute a straddle, (but such straddle
does not consist solely of section 1256 positions), recognition of a
realized loss from one position (including a marked-to-market loss) must
be deferred to the extent of unrecognized gain in an offsetting
position, successor position or offsetting position to a successor
position which is still held at a Fund's year end. Also, long-term
capital gains may be recharacterized as short-term capital gains, or
short-term capital losses as long-term capital losses. Furthermore,
interest and other carrying charges allocable to personal property that
is part of a straddle which does not consist entirely of section 1256
positions must be capitalized. In addition, "wash sale" rules apply to
prevent the recognition of loss where an identical or substantially
identical position is or has been acquired within a prescribed period.
If a Fund chooses to identify a particular offsetting position as being
one component of a straddle and all other conditions necessary for
qualifying as an "identified straddle" are met, a realized loss on any
component of that straddle will be recognized, no earlier than upon the
liquidation of all of the components of that straddle. Special rules
apply to "mixed" straddles (that is, straddles consisting of a section
1256 contract and an offsetting position that is not a section 1256
contract). If a Fund makes certain elections, the section 1256 contract
components of such mixed straddles will not be subject to the "60%/40%"
market-to-market rules. If any such election is made, the amount, the
nature (as long- or short-term) and the timing of the recognition of the
Fund's gains or losses from the affected straddle positions will be
determined under rules that will vary according to the type of election
made.
Foreign Currency Transactions. Under section 988 of the Code, special
rules are provided for certain foreign currency transactions. Foreign
currency gains or losses from certain forward contracts, from futures
contracts that are not "regulated futures contracts", and from options
other than non-equity options are treated as ordinary income or loss
under section 988. The International Fund may elect to have foreign
currency-related regulated futures contracts and non-equity options
subject to ordinary income or loss treatment under section 988. In
addition, in certain circumstances, the Fund may elect capital gain or
loss for foreign currency transactions. The rules under section 988 may
also affect the timing of income recognized by this Fund.
Taxation of the Funds' Shareholders--Special Considerations
The portion of the dividends received from the Contrarian Fund by
their corporate shareholders that qualifies for the 70% dividends-
received deduction will be reduced to the extent that the Funds hold
dividend-paying stock for less than 46 days (91 days for certain
preferred stocks). A Fund's holding period will not include any period
during which the Fund has reduced its risk of loss from holding the
stock by writing certain call options with respect to substantially
identical stock or securities, such as securities convertible into the
stock. The holding period for stock may also be reduced if a Fund
diminishes its risk of loss by holding one or more positions in
substantially similar or related property. Accordingly, the percentage
of dividends from the Contrarian Fund qualifying for the dividends-
received deduction may be less than 100%. Dividends-received deductions
will be allowed only with respect to shares that a corporate shareholder
has held for at least 46 days within the meaning of the same holding
period rules applicable to the Funds. Dividends paid by the
International Fund and the Short-Term Bond Fund do not qualify for the
dividends-received deduction.
Dividends paid by a Fund from net investment income and distributions of
net short-term capital gain will be taxable to shareholders as ordinary
income for Federal income tax purposes, whether received in cash or
reinvested in additional shares. Distributions of net capital gain (the
excess of net long-term capital gains over net short-term capital
losses) will be taxable to shareholders as long-term capital gain,
whether paid in cash or reinvested in additional shares, and regardless
of the length of time the investor has held his or her shares of the
Fund.
If a shareholder receives a distribution taxable as long-term capital
gain with respect to shares of a Fund, and redeems or exchanges the
shares before he or she has held them for more than six months, any loss
on the redemption or exchange that is less than or equal to the amount
of the distribution will be treated as a long-term capital loss. Under
U.S. tax laws, domestic corporations, such as the International Fund,
and U.S. citizens are taxable on their worldwide income. To mitigate
the effect of U.S. and foreign taxes on foreign income, qualified
taxpayers may treat certain foreign taxes as a credit against U.S. tax
liability or as a deduction in computing U.S. taxes. If more than 50%
of the value of the total assets of the International Fund at the close
of a taxable year consists of stock or securities in foreign
corporations, then the International Fund may elect to pass through to
its shareholders the right to take the credit or deduction for the
qualifying foreign taxes it has paid. In effect, the shareholders are
treated as if they owned directly the stock of the foreign corporations
actually held by the International Fund. Accordingly, each shareholder
must include in income (in addition to dividends paid by the
International Fund) his or her proportionate share of qualifying foreign
taxes the Fund has paid and may treat such amounts as paid by him or her
for purposes of the deduction or credit for foreign taxes paid.
If a shareholder fails to furnish a correct taxpayer identification
number, fails to fully report dividend or interest income, or fails to
certify that he or she has provided a correct taxpayer identification
number or that he or she is not subject to "backup withholding", then
the shareholder may be subject to a 31% Federal backup withholding tax
with respect to (i) taxable dividends and distributions and (ii) the
proceeds of redemptions or exchanges. The backup withholding tax is not
an additional tax and may be credited against a shareholder's regular
Federal income tax liability. An individual's taxpayer identification
number is his or her social security number.
DESCRIPTION OF THE TRUST
The Trust is a diversified, open-end management investment company
established as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts by a Master Trust Agreement dated May 26,
1988. On April 4, 1994 the Trust changed its name from "The Boston
Company Investment Series" to "The Laurel Investment Series." and on
October 17, 1994, the Trust changed its name from "The Laurel/Investment
Series" to "The Dreyfus/Laurel Investment Series".
The Trustees have authority to create an unlimited number of shares
of beneficial interest of separate series, $.001 par value per share.
Shares of three series have been authorized. The Trustees have
authority to create additional series at any time in the future without
shareholder approval. Shares of the three Funds described herein are
classified into two classes of shares- Investor Shares and Class R
Shares.
Each share (regardless of Class) has one vote. On each matter submitted
to a vote of shareholders, all shares of each portfolio or Class shall
vote together as a single Class, except as to any matter for which a
separate vote of any Fund or Class is required by the 1940 Act, and
except as to any matter which affects the interest of one or more
particular Funds or Classes, in which case only the shareholders of
shares of one or more of the affected Funds or Classes shall be entitled
to vote, each as a separate Class.
The assets received by the Trust for the issue or sale of shares of each
Fund and all income, earnings, profits and proceeds thereof, subject
only to the rights of creditors, are specially allocated to such Fund,
and constitute the underlying assets of such Fund. The underlying
assets of each Fund are required to be segregated on the books of
account, and are to be charged with the expenses in respect of such Fund
and with a share of the general expenses of the Trust. Any general
expenses of the Trust not readily identifiable as belonging to a
particular Fund shall be allocated by or under the direction of the
Trustees in such manner as the Trustees determine to be fair and
equitable. Each share of each Fund represents an equal proportionate
interest in that Fund with each other share and is entitled to such
dividends and distributions out of the income belonging to such Funds as
are declared by the Trustees. Upon any liquidation of a Fund,
shareholders thereof are entitled to share pro rata in the net assets
belonging to that Fund available for distribution.
The Trust does not hold annual meetings of shareholders. There will
normally be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the Act, shareholders of record of no less
than two-thirds of the outstanding shares of the Trust may remove a
Trustee through a declaration in writing or by vote cast in person or by
proxy at a meeting called for that purpose. The Trustees are required
to call a meeting of shareholders for the purposes of voting upon the
question of removal of any Trustee when requested in writing to do so by
the shareholders of record of not less than 10% of the Trust's
outstanding shares.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. However, the Agreement and Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or a Trustee. The
Agreement and Declaration of Trust provides for indemnification from
Trust property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the Trust itself would be unable to
meet its obligations, a possibility which Dreyfus believes is remote.
Upon payment of any liability incurred by a Fund, the shareholder of
that Fund paying such liability will be entitled to reimbursement from
the general assets of the Fund. The Trustees intend to conduct the
operations of each Fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of such
Fund.
CONTROLLING SHAREHOLDER
At December 28, 1994, to the knowledge of management, the following
company/individual owned beneficially more than 5% of the Trust's
outstanding shares: Cegelec Engenharia s\a, al jau n 1754 Sao Paolo
ATHCAS NARCUS, Brazil 1420905 owned 47.88% of the Short-Term Bond
Fund
FINANCIAL STATEMENTS
The Funds' financial statements for the fiscal year ended August 31,
1994, including notes to the financial statements, supplementary
information and the Report of Independent Auditors, are contained in
the Annual Reports for the Funds which accompany this Statement of
Additional Information and are incorporated by reference.
APPENDIX
INFORMATION ABOUT SECURITIES RATINGS
Corporate Bond Ratings
Description of Moody's Investors Service, Inc. corporate bond ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt-edge". Interest payments are protected by a large or 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 are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A--Bonds 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
sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this Class.
B--Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated Class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic
rating classification from Aa through B. The modifier l indicates that
the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the issue ranks in the lower end of its generic rating category.
Description of Standard & Poor's Corporation corporate bond ratings:
AAA--Bonds rated AAA have the highest rating assigned by S&P to debt
obligations. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher rated categories.
BB, B, CCC, CC--Bonds rated BB, B, CCC and CC are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
represents the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
Cl: The rating Cl is reserved for income bonds on which no interest is
being paid.
D: Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within
the major rating categories.
NR: Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Commercial Paper Ratings
The rating A-1 + is the highest, and A-1 the second highest, commercial
paper rating assigned by S & P. Paper rated A-1 must have either the
direct credit support of an issuer or guarantor that possesses excellent
long-term operating and financial strengths combined with strong
liquidity characteristics (typically, such issuers or guarantors would
display credit quality characteristics which would warrant a senior bond
rating of "AA-" or higher), or the direct credit support of an issuer or
guarantor that possesses above average, long-term fundamental operating
and financing capabilities combined with ongoing excellent liquidity
characteristics. Paper rated A-1 must have the following
characteristics: liquidity ratios are adequate to meet cash
requirements; long-term senior debt is rated A or better; the issuer has
access to at least two additional channels of borrowing; basic earnings
and cash flow have an upward trend with allowance made for unusual
circumstances; typically, the issuer's industry is well established and
the issuer has a strong position within the industry; and the
reliability and quality of management are unquestioned.
The rating P-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigned rating are
the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and the
appraisal of speculative-type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten
years; (7) financial strength of parent company and the relationships
which exist with the issuer; and (8) recognition by the management of
obligations which may be present or may arise as a result of public
interest questions and preparations to meet such obligations.
ANNUAL
DESCRIPTION OF ART WORK ON REPORT COVER
Small box with a leaf in it. Above box the funds name Laurel is showing and
below box the word Funds is there under a line.
Contrarian Fund
AUGUST 31, 1994
DEAR SHAREHOLDER,
We are pleased to bring you performance, market and portfolio activity in-
formation on the Contrarian Fund for the year ended August 31, 1994.
As you know from recent correspondence, on October 17, 1994, The Laurel
Family of Funds began integrating with The Dreyfus Family of Funds. In
connection with this integration, the Laurel Funds have been renamed to
provide a more cohesive fund family unified under the Dreyfus name. The
Laurel Contrarian Fund is now known, and publicly listed, as the Dreyfu-
s/Laurel Contrarian Fund. Please be assured that the Fund's name change
does not affect the value of your account or the investment objective or
strategy of your Fund. The integration is discussed in greater detail in
the subsequent events footnote, which is located in the notes to the fi-
nancial statements of this report.
In the pages that follow, we have provided a more detailed description of
the market environment over the last twelve months, along with commentary
on your Fund's investment management strategy and portfolio changes for
the period. Additional financial data is also included.
In closing, we would like to extend our appreciation for your past support
of The Laurel Family of Funds and hope that you will find that the new
Dreyfus Family of Funds will continue to provide the diversity and perfor-
mance that you have come to expect. As always, we welcome your thoughts
and suggestions.
Sincerely,
Richard W. Healey
Richard W. Healey
Vice President
The Laurel Funds
October 20, 1994
TABLE OF CONTENTS
Shareholder Letter 1
Market Environment 3
Portfolio Review 4
Performance Summary 5
Portfolio of Investments 6
Statement of Assets and Liabilities 9
Statement of Operations 10
Statement of Changes in Net Assets 11
Financial Highlights 12
Notes to Financial Statements 14
Independent Auditors' Report 20
Tax Information 21
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY, ANY BANK, OR THE U.S. GOVERNMENT, AND ARE NOT
FEDERALLY IN-
SURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. ALL MUTUAL FUND SHARES INVOLVE
CERTAIN INVEST-
MENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE DREYFUS FUNDS ARE DISTRIBUTED BY PREMIER MUTUAL FUND
SERVICES.
MARKET ENVIRONMENT
ADVANCING PERFORMANCE AMID INTEREST RATE CAUTION
After a rocky start, the stock market evened out and ended the report pe-
riod September 1, 1993 through August 31, 1994 on a rally that began in
June. The volatility of January, February and March was primarily a re-
sponse to the Federal Reserve Board's initial interest rate hikes, which
sent securities markets around the world into sharp decline. In addition,
the U.S. equity market had to contend with Whitewater headlines, the North
Korean nuclear crisis and several other unsettling international situa-
tions. However, as months passed, investors began to adjust to the new en-
vironment of higher interest rates and later Fed moves had little effect
on market values. Although still cautious about future interest rate
hikes, the market seems to have shifted its focus to the strengthening
economy, which is exerting a positive influence on many industries and in-
dividual companies.
STRONG AND WEAK SECTORS CONTINUE TO SHIFT
Performance leadership flowed back and forth among various market sectors
throughout the report period. Weak and strong performers exchanged posi-
tions almost month to month, although consumer durable goods like major
appliances and autos stayed relatively strong through all the fluctua-
tions. On balance, financial companies, basic industries, utilities and
even health care stocks performed best, while consumer service and non-
durable stocks such as retailers lagged behind broad market performance.
THE OUTLOOK: GROWTH, FROM AN IMPROVING ECONOMY
The economy continued to improve as the report period drew to a close.
Global economic activity had also picked up, providing additional stimulus
for U.S. growth. While many investors expect the Fed to raise interest
rates again by year end, others feel that the economy's growth is insuffi-
cient to stimulate inflationary pressures that would force the Fed to act.
In terms of value, we believe the stock market still holds solid potential
for growth and appreciation. Traditional measures of value such as price-
to-earnings and price-to-book ratios may be somewhat above "normal", but
not markedly so.
If the economy's growth continues to percolate at its present steady pace,
we are optimistic about stock market performance overall and about the
Fund's potential to tally solid price appreciation in the months ahead.
PORTFOLIO REVIEW
Like most stock mutual funds, the Fund felt the effects of the early year
market decline, although our performance did rebound by the end of the pe-
riod as some astute sector selections began to provide handsome returns.
Market volatility and the almost-constant leadership rotation among sec-
tors made individual stock selection and sector allocation even more im-
portant than usual. Anticipating a turnaround in the health care sector as
President Clinton's reform proposal became bogged down in Congress, we
began to increase our position in these stocks to 11%. This move enabled
the Fund to capture excellent returns as health care stocks moved up in
the market rally. Going forward, we expect these stocks to perform well.
Increased worldwide economic activity also boosted the performance of en-
ergy stocks during the period, and here again the Fund benefited from
larger holdings. As with health care issues, we anticipate continued
strength for the energy sector as world economies recover and grow.
The Fund also benefited from positions in basic industry stocks such as
paper and steel. These industries, along with telecommunications issues
and various economically sensitive, cyclical stocks, should continue to do
well in the strengthening economic environment. Our regional airline hold-
ings provided the only real disappointment of the period. These stocks
failed to live up to their performance potential, largely due to investor
fears that the major airlines would soon be cutting into the rising plane
capacities and strong corporate earnings of these smaller carriers. At the
end of the period, however, these stocks were beginning to improve and
provide the Fund with stronger returns.
PERFORMANCE SUMMARY
CONTRARIAN FUND (UNAUDITED)
GROWTH OF $10,000 INVESTED FROM OCTOBER 17, 1988 -- AUGUST 31,
1994+
DESCRIPTION OF MOUNTAIN CHART
A line graph depicting the total growth (including reinvestment of divi-
dends and capital gains) of a hypothetical investment of $10,000 in Con-
trarian Fund's investor shares on October 17, 1988 through August 31, 1994
as compared with the growth of a $10,000 investment in the Standard &
Poor's 500 Index. The plot points used to draw the line graph were as
follows:
<TABLE>
<CAPTION>
GROWTH OF
$10,000
GROWTH OF $10,000 INVESTMENT
IN THE
MONTH INVESTED IN INVESTOR STANDARD &
POOR'S
ENDED SHARES OF THE FUND 500
INDEX
<S> <C> <C>
10/17/88 $10,000 --
10/88 $ 9,967 $10,000
11/30/88 -- $ 9,857
12/88 $10,062 $10,029
3/89 $10,715 $10,739
6/89 $11,602 $11,686
9/89 $12,271 $12,935
12/89 $11,805 $13,201
3/90 $11,447 $12,805
6/90 $12,301 $13,609
9/90 $10,244 $11,741
12/90 $10,798 $12,791
3/91 $13,076 $14,646
6/91 $13,056 $14,611
9/91 $14,476 $15,391
12/91 $15,290 $16,680
3/92 $15,377 $16,259
6/92 $14,750 $16,567
9/92 $15,603 $17,090
12/92 $16,909 $17,950
3/93 $18,513 $18,734
6/93 $19,032 $18,823
9/93 $20,660 $19,308
12/93 $10,492 $19,757
3/94 $19,222 $19,010
6/94 $18,908 $19,088
8/94 $20,032 $20,521
</TABLE>
AVERAGE ANNUAL TOTAL RETURN -- INVESTOR SHARES
<TABLE>
<S> <C>
Year Ended 8/31/94 (2.55)%
Five Years Ended 8/31/94 9.88%
Inception (10/17/88) through 8/31/94 12.56%
</TABLE>
+Hypothetical illustration of $10,000 invested in Investor Shares at in-
ception (October 17, 1988) and reinvestment of dividends and capital
gains at net asset value through August 31, 1994.
The Standard & Poor's Composite Index of 500 Common Stocks ("Standard &
Poor's 500") is an unmanaged index used to portray the pattern of common
stock price movement.
Index information is available at month-end only, therefore, the closest
month-end to inception date of the Fund has been used.
This period was one in which common stock prices fluctuated and the re-
sults should not be considered as representative of dividend income or
capital gain or loss which may be realized from an investment in the Fund
today. No adjustment has been made for a shareholder's tax liability on
dividends or capital gains.
NOTE: All figures cited here and on the following pages represent past
performance and do not guarantee future results. Investment return and
principal value of an investment will fluctuate so that an investor's
shares upon redemption may be worth more or less than original cost.
PORTFOLIO OF INVESTMENTS
CONTRARIAN FUND AUGUST 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
SHARES
VALUE
(NOTE 1)
COMMON STOCKS -- 96.0%
BASIC INDUSTRIES -- 14.7%
2,000 Alumax, Inc.+
$ 61,250
1,400 Broken Hill Proprietary Ltd. ADR
85,575
1,500 IMC Fertilizer Group, Inc.
60,188
2,000 Inco Ltd.
57,500
2,800 Pentair, Inc.
114,100
3,000 Stone Container Corporation
59,250
437,863
ENERGY -- 14.5%
191 El Paso Natural Gas Company
6,279
19,600 Global Marine, Inc.+
78,400
9,400 Parker Drilling Company+
52,875
10,500 Rowan Companies, Inc.+
77,438
3,300 Tidewater, Inc.
74,662
6,900 Varco International, Inc.+
43,125
7,800 Weatherford International, Inc.+
94,575
427,354
UTILITIES/GAS -- 12.3%
3,700 MCI Communications Corporation
89,956
1,400 Telecom Corporation, New Zealand ADR
70,175
1,100 Telefonica de Espana ADR
45,512
1,600 Telefonos de Mexico ADR
100,400
1,300 Telephone and Data Communications
56,550
362,593
CONSUMER SERVICES -- 11.0%
208 Cellular Communications, Puerto Rico+
6,396
1,400 Comcast Corporation, Class A
22,400
3,700 Comcast Corporation, Class A, Special
(non-voting)
59,200
4,000 Home Shopping Network, Inc.+
47,000
4,300 Levitz Furniture, Inc.+
40,313
1,300 NEXTEL Communications, Inc., Class A
33,963
1,600 Rogers Cantel Mobile Communications, Inc.+
47,200
2,100 Viacom, Inc., Class B+
69,300
325,772
HEALTH CARE -- 11.0%
2,500 Alza Corporation
58,750
1,700 FHP International Corporation+
45,900
2,000 Genzyme Corporation+
68,000
2,200 Healthtrust-The Hospital Company+
67,650
900 Schering-Plough Corporation
62,887
700 SmithKline Beecham ADR
21,788
324,975
CONSUMER DURABLES -- 9.0%
2,000 Champion Enterprises, Inc.+
73,000
6,600 Fedders Corporation+
50,325
3,600 Fleetwood Enterprises
94,950
3,400 River Oaks Furniture, Inc.+
48,450
266,725
FINANCIAL SERVICES -- 9.0%
3,375 Charter One Financial, Inc.
80,156
2,000 MGIC Investment Corporation
61,500
2,600 Phoenix Re Corporation, Class A
68,900
1,000 Transatlantic Holdings, Inc.
53,875
264,431
TRANSPORTATION -- 8.9%
4,100 Builders Transportation, Inc.+
51,762
3,000 Canadian Pacific Ltd. ADR
52,875
2,300 Comair Holdings, Inc.
60,950
2,100 SkyWest, Inc.
58,275
1,500 Werner Enterprises, Inc.
37,875
261,737
TECHNOLOGY -- 2.7%
5,200 TANDEM COMPUTERS, INC.+
78,650
CAPITAL GOODS -- 2.7%
2,300 Trinity Industries Inc.
78,200
OTHER -- 0.2%
920 Mesa Incorporated+
5,175
TOTAL COMMON STOCKS
(Cost $2,340,960)
2,833,475
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
CORPORATE BOND (Cost $79,288) -- 0.8%
$ 100,000 Nu Med, Inc., Sr. Sub. Deb.,
13.750% due 09/15/1995
$ 22,750
TOTAL INVESTMENTS
(Cost $2,420,248*) 96.8%
2,856,225
OTHER ASSETS AND LIABILITIES (NET) 3.2
93,905
NET ASSETS 100.0%
$2,950,130
<FN>
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
CONTRARIAN FUND AUGUST 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Cost $2,420,248)
(Note 1)
See accompanying schedule
$2,856,225
Cash
77,403
Receivable from investment adviser (Note
2)
39,304
Receivable for Fund shares sold
6,354
Dividends receivable
829
TOTAL ASSETS
2,980,115
LIABILITIES
Accrued audit fees $10,558
Accrued shareholder reports expense 8,500
Investment management fee payable (Note
2) 6,263
Payable for Fund shares redeemed 1,929
Transfer agent fees payable (Note 2) 375
Accrued Trustees' fees and expenses
(Note 2) 259
Distribution fee payable (Note 3) 101
Accrued expenses and other payables 2,000
TOTAL LIABILITIES
29,985
NET ASSETS
$2,950,130
NET ASSETS consist of:
Accumulated net realized gain on invest-
ments sold
$193,263
Unrealized appreciation of investments
435,977
Par value
178
Paid-in capital in excess of par value
2,320,712
TOTAL NET ASSETS
$2,950,130
NET ASSET VALUE
INVESTOR SHARES
Net asset value, offering and redemption
price per share ($2,950,130 / 178,023
shares of beneficial interest outstand-
ing)
$16.57
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
CONTRARIAN FUND
FOR THE YEAR ENDED AUGUST 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding
taxes of $1,042) $
32,677
Interest
9,727
TOTAL INVESTMENT INCOME
42,404
EXPENSES
Legal and audit fees $ 30,289
Investment advisory fee (Note 2) 23,862
Registration and filing fees 22,733
Shareholder reports expense 19,588
Investment management fee (Note 2) 15,958
Distribution fee (Note 3) 7,938
Custodian fees (Note 2) 6,275
Transfer agent fees (Note 2) 6,167
Trustees' fees and expenses (Note 2) 1,503
Amortization of organization costs (Note
6) 944
Other 394
Fees waived and/or expenses reimbursed by
adviser and custodian (Note 2) (68,515)
TOTAL EXPENSES
67,136
NET INVESTMENT LOSS
(24,732)
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS (Notes 1 and 4):
Net realized gain on investments sold
during the year
284,533
Net unrealized depreciation of invest-
ments during the year
(437,148)
NET REALIZED AND UNREALIZED LOSS ON IN-
VESTMENTS
(152,615)
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS
$(177,347)
</TABLE>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
CONTRARIAN FUND
<TABLE>
<CAPTION>
YEAR
YEAR
ENDED
ENDED
8/31/94
8/31/93
<S> <C> <C>
Net investment loss $ (24,732) $
(24,662)
Net realized gain on investments sold
during the year 284,533
111,782
Net unrealized appreciation/(deprecia-
tion) of investments during the year (437,148)
856,211
Net increase/(decrease) in net assets
resulting from operations (177,347)
943,331
Distribution to shareholders from net
realized gain on investments:
Investor Shares (166,692) --
Retail Class --
(182,355)
Institutional Class (9,767) --
Net increase/(decrease) in net assets
from Fund share transactions (Note 5):
Investor Shares (316,038) --
Retail Class --
25,744
Institutional Class --
167,243
Net increase/(decrease) in net assets (669,844)
953,963
NET ASSETS:
Beginning of year 3,619,974
2,666,011
End of year $2,950,130
$3,619,974
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
CONTRARIAN FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR OR
PERIOD.*
<TABLE>
<CAPTION>
YEAR
YEAR
ENDED
ENDED
8/31/94++
8/31/93++
<S> <C> <C>
Net asset value, beginning of period $17.81
$14.00
Income from investment operations:
Net investment income/(loss)*** (0.12)
(0.12)
Net realized and unrealized gain/(loss)
on investments (0.32)
4.90
Total from investment operations (0.44)
4.78
Less distributions:
Distributions from net investment income -- -
- -
Distributions from net realized capital
gains (0.80)
(0.97)
Total distributions (0.80)
(0.97)
Net asset value, end of period $16.57
$17.81
Total return+ (2.55)%
35.97%
Ratios to average net assets/Supplemen-
tal Data:
Net assets, end of period (in 000's) $2,950
$3,503
Ratio of operating expenses to average
net assets** 1.83%
2.00%
Ratio of net investment income/(loss) to
average net assets (0.68)%
(0.81)%
Portfolio turnover rate 65%
39%
<FN>
* The Fund commenced operations on October 17, 1988. Effective April 4,
1994, the Retail and Institutional Classes were reclassified as a sin-
gle class of shares known as the Investor Shares. The amounts shown
for the year ended August 31, 1994, were calculated using the perfor-
mance of a Retail Share outstanding from September 1, 1993 to April 3,
1994, and the performance of an Investor Share outstanding from April
4, 1994 to August 31, 1994. The Financial Highlights for the year
ended August 31, 1993 and prior periods are based upon a Retail Share
outstanding.
** Annualized expense ratios before waiver of fees and/or reimbursement
of expenses by investment adviser, transfer agent and custodian for
the years ended August 31, 1994, 1993, 1992, 1991, 1990 and for the
period ended August 31, 1989 were 3.69%, 4.70%, 3.88%, 5.18%, 4.58%
and 5.28%, respectively.
*** Net investment income/(loss) before waiver of fees and/or reimburse-
ment of expenses by investment adviser, transfer agent and custodian
for the years ended August 31, 1994, 1993, 1992, 1991, 1990 and for
the period ended August 31, 1989 were $(.44), $(.54), $(.24), $(.24),
$(.14) and $(.18), respectively.
+ Total return represents aggregate total return for the periods indi-
cated.
++ Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for this
period since use of the undistributed income method does not accord
with results of operations.
+++ Annualized.
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR YEAR YEAR
PERIOD
ENDED ENDED ENDED
ENDED
8/31/92 8/31/91 8/31/90
8/31/89
<S> <C> <C>
<C>
$14.08 $12.06 $ 14.95
$12.00
0.04 0.13 0.15
0.18
0.67 3.08 (1.80)
2.82
0.71 3.21 (1.65)
3.00
(0.09) (0.22) (0.14)
(0.05)
(0.70) (0.97) (1.10)
- --
(0.79) (1.19) (1.24)
(0.05)
$14.00 $14.08 $ 12.06
$14.95
5.10% 29.93% (11.47)%
25.05%
$2,666 $2,197 $ 1,831
$1,635
1.99% 2.00% 2.00%
1.84%+++
0.25% 1.09% 1.34%
1.75%+++
76% 205% 176%
93%
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Laurel Investment Series (the "Trust") (formerly The Boston Company
Investment Series), The Laurel Funds, Inc., The Laurel Funds Trust and The
Laurel Tax-Free Municipal Funds are all registered open-end investment
companies that compose The Laurel Fund Family. The Trust is an investment
company that consists of three funds: the Contrarian Fund, the Short-Term
Bond Fund and the International Fund. This report contains financial
statements for the Contrarian Fund (the "Fund"). The Trust is a
Massachusetts business trust and is registered with the Securities and Ex-
change Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. Effective
April 4, 1994, the Retail and Institutional Classes of shares were reclas-
sified as a single class of shares known as the Investor Shares, and the
Fund began offering Trust Shares. As of August 31, 1994, the Fund had not
issued any Trust Shares. Investor Shares are designed for the retail in-
vestor and bear a distribution fee. Trust Shares are designed for institu-
tional investors, clients of financial institutions, such as banks, trust
companies or thrift institutions, who have qualified accounts, and bear no
distribution fee. Each class of shares has identical rights and privileges
except with respect to the distribution fee and voting rights on matters
affecting a single class. The following is a summary of significant ac-
counting policies consistently followed by the Fund in the preparation of
its financial statements in accordance with generally accepted accounting
principles.
(A) PORTFOLIO VALUATION
Investments in securities that are traded on a national securities ex-
change are valued at the last reported sales price or, in the absence of a
recorded sale, at the mean of the closing bid and asked prices. Over-the-
counter securities are valued at the closing bid price at the close of
business each day, or, if market quotations for such securities are not
readily available, at fair value, as determined in good faith by the Board
of Trustees. Investments in U.S. Government Securities (other than short-
term securities) are valued at the most recent quoted bid price in the
over-the-counter market. Short-term investments with maturities of 60 days
or less from the valuation day are valued on the basis of amortized cost.
Foreign securities are generally valued at the preceding closing values of
such securities on their respective exchanges, except that when an occur-
rence subsequent to the time a value was so established is likely to have
changed such value, then the fair value of those securities will be deter-
mined by consideration of other factors by or under the direction of the
Board of Trustees or its delegates.
(B) REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the terms
of a typical repurchase agreement, the Fund takes possession of an under-
lying debt obligation subject to an obligation of the seller to repur-
chase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to mar-
ket fluctuations during the Fund's holding period. The value of the col-
lateral is at least equal, at all times, to the total amount of the repur-
chase obligations, including interest. In the event of counterparty de-
fault, the Fund has the right to use the collateral to offset losses
incurred. There is potential loss to the Fund in the event the Fund is de-
layed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund's investment manager, acting under the supervision of the
Board of Trustees, reviews the value of the collateral and the creditwor-
thiness of those banks and dealers with which the Fund enters into repur-
chase agreements to evaluate potential risks.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Dividend income
is recorded on the ex-dividend date, except that certain dividends from
foreign securities are recorded as soon as the Fund is informed of the ex-
dividend date. Interest income is recorded on the accrual basis. Securi-
ties purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date. Realized gains and losses
from securities sold are recorded on the identified cost basis. Investment
income and realized and unrealized gains and losses are allocated based
upon relative net assets of each class.
(D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions to shareholders are recorded on the ex-
dividend date. Dividends from net investment income, if any, of the Fund
are declared on a class level and paid quarterly. The Fund distributes any
net realized capital gains on a Fund level annually. Additional distribu-
tions of net investment income and capital gains for the Fund may be made
at the discretion of the Board of Trustees in order to avoid the 4% nonde-
ductible Federal excise tax. Income distributions and capital gain distri-
butions on a Fund level are determined in accordance with income tax regu-
lations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and
gains on various investment securities held by the Fund, timing differ-
ences and differing characterization of distributions made by the Fund as
a whole. Permanent differences incurred during the year ended August 31,
1994 resulting from a tax basis net operating loss were reclassified to
paid-in capital at year end.
(E) FEDERAL TAXES
It is the Fund's intention to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code applicable to
regulated investment companies and by distributing substantially all of
its taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES AND OTHER
RELATED PARTY
TRANSACTIONS
Effective April 4, 1994, the Trust entered into an investment management
agreement with Mellon Bank, N.A. (the "Manager"), a wholly owned subsid-
iary of Mellon Bank Corporation ("Mellon"), under which the Manager pro-
vides, or arranges for one or more third parties to provide, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Trust. The Manager also directs the investment of the Fund
in accordance with its investment objectives, policies and limitations.
For these services, the Fund pays the Manager a fee, calculated daily and
paid monthly, at the annual rate of 1.25% of the value of the Fund's aver-
age daily net assets. Out of its fee, the Manager pays all of the expenses
of the Fund except brokerage, taxes, interest, Rule 12b-1 distribution
fees and expenses, fees and expenses of the non-interested Trustees (in-
cluding counsel fees) and extraordinary expenses. In addition, the Manager
is required to reduce its fee in an amount equal to the Fund's allocable
portion of fees and expenses of the non-interested Trustees (including
counsel). Prior to April 4, 1994, the Trust had an investment advisory
agreement under which the Fund paid The Boston Company Advisors, Inc.
("Boston Advisors") a monthly fee at the annual rate of 1.00% of the value
of its average daily net assets for investment advisory services. For the
year ended August 31, 1994, Boston Advisors, as investment adviser, volun-
tarily waived fees of $23,862 and reimbursed expenses of $38,378.
Effective April 4, 1994, the Fund entered into an administration agreement
with Frank Russell Investment Management Company (the "Administrator") to
serve as the Fund's administrator to provide various administrative and
corporate secretarial services to the Fund. The Administrator's fee is
paid by the Manager out of the management fee described above.
No officer or employee of Mellon or of any parent, subsidiary or affiliate
thereof receives any compensation from The Laurel Fund Family for serving
as an officer or Trustee of The Laurel Fund Family. The Laurel Fund Family
pays each Trustee who is not an officer or employee of Mellon or of any
parent, subsidiary or affiliate thereof, or of the Administrator or any
parent, subsidiary or affiliate thereof, $27,000 per annum, $1,000 for
each Board meeting attended, and $750 for each Audit Committee meeting at-
tended, and reimburses each Trustee for travel and out-of-pocket expenses.
Prior to April 4, 1994, the Trust paid each Trustee $5,000 per annum, plus
$1,000 per meeting attended, plus $250 per Audit Committee meeting at-
tended, plus reimbursement for travel and out-of-pocket expenses.
Prior to April 4, 1994, the Trust had individual contracts, which con-
tained specific fee provisions, with Boston Safe Deposit and Trust Com-
pany, a wholly owned subsidiary of Mellon, and The Shareholder Services
Group, Inc. to provide custody and transfer agent services, respectively,
to the Fund. For the period ended April 4, 1994, the custodian waived its
fees of $6,275. Effective April 4, 1994, the payment of fees for custody,
accounting and transfer agent services are covered by the investment man-
agement agreement described above. Funds Distributor, Inc. ("Funds Dis-
tributor") continues to act as distributor of the Fund's shares.
3. DISTRIBUTION PLAN
The Fund has adopted a plan of distribution (the "Plan") pursuant to Rule
12b-1 under the 1940 Act relating to Investor Shares. Under the Plan, the
Fund may pay up to 0.25% of the value of the average daily net assets of
Investor Shares to compensate Funds Distributor for shareholder servicing
activities and for activities primarily intended to result in the sale of
Investor Shares. The Trust Shares bear no distribution fee. Prior to April
4, 1994, under a distribution plan, the Fund was authorized to spend annu-
ally up to 0.25% and 0.15% of its average daily net assets on distribution
expenses for the Retail Class and the Institutional Class, respectively,
which classes, on April 4, 1994, were reclassified into Investor Shares.
Under its terms, the Plan shall remain in effect from year to year, pro-
vided such continuance is approved annually by a vote of a majority of
those Trustees who are not "interested persons" of the Trust and who have
no direct or indirect financial interest in the operation of the Plan or
in any agreement related to the Plan.
4. SECURITIES TRANSACTIONS
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended August 31, 1994 aggregated
$2,205,841 and $2,579,588, respectively, for the Fund.
At August 31, 1994, aggregate gross unrealized appreciation for all secu-
rities in which there was an excess of value over tax cost amounted to
$582,246 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value amounted to $146,269.
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of ben-
eficial interest of each class in each separate series, with a par value
of $.001. The Trust has authority to issue two classes of shares. Effec-
tive April 4, 1994, the Retail and Institutional Classes of shares were
combined and reclassified as a single class of shares known as the
Investor Shares. The table below summarizes transactions in Fund shares
for the periods shown in the accompanying Statement of Changes in Net As-
sets.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
8/31/94 8/31/93*
(INVESTOR SHARES) (RETAIL CLASS)
(INSTITUTIONAL CLASS)
SHARES** AMOUNT*** SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C> <C> <C> <C>
<C>
Sold 136,619 $ 2,337,972 261,416 $ 3,615,652
682 $ 77,876
Issued as rein-
vestment of div-
idends and dis-
tributions 10,218 171,464 9,485 134,019 -
- - --
Redeemed (172,032) (2,825,474) (258,473) (3,629,195)
(334) (5,365)
Exchanged for In-
stitutional
shares -- -- (6,216) (94,732) -
- - --
Issued in exchange
for Retail
shares -- -- -- --
6,216 94,732
Net increase/ de-
crease (25,195) $ (316,038) 6,212 $ 25,744
6,564 $167,243
<FN>
* The Fund commenced selling Institutional Class shares on February 1,
1993. Any shares outstanding prior to February 1, 1993 were designated
as Retail Class shares.
** Shares include 18,936 of subscriptions, 339 of reinvestments and 3,836
of redemptions for the Institutional Class up to April 4, 1994.
*** Amounts include $329,352 of subscriptions, $5,688 of reinvestments and
$66,208 of redemptions for the Institutional Class up to April 4,
1994.
</TABLE>
6. ORGANIZATION COSTS
The Fund paid all costs in connection with the Fund's organization includ-
ing the fees and expenses of registering and qualifying the Fund's shares
for distribution under Federal and state securities regulations. All such
costs were being amortized on the straight-line method over a period of
five years. These costs were fully amortized during the year ended August
31, 1994.
7. LINE OF CREDIT
The Trust and several affiliated entities participate in a $20 million
line of credit provided by Continental Bank, N.A. under a Line of Credit
Agreement (the "Agreement") dated March 31, 1992, as amended, primarily
for temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of securi-
ties. Under this Agreement, the Trust may borrow up to the amount speci-
fied in its Borrowing Base Certificate. Interest is payable either at the
bank's Money Market Rate or the London Interbank Offered Rate (LIBOR) plus
0.375% on an annualized basis. As amended effective May 21, 1994, the
Trust and the other affiliated entities are charged an aggregated commit-
ment fee of $40,000, which is allocated equally among each of the partici-
pants. The Agreement requires, among other provisions, each participating
fund to maintain a ratio of net assets (not including funds borrowed pur-
suant to the Agreement) to aggregate amount of indebtedness pursuant to
the Agreement of no less than 4 to 1. At August 31, 1994, the Fund had no
outstanding borrowings under this Agreement. During the year ended August
31, 1994, the Fund had an average outstanding balance of $822 with an in-
terest rate of 3.875%. Interest expense totalled $32 for the year ended
August 31, 1994.
8. SUBSEQUENT EVENTS
At a meeting held on September 23, 1994, the Board of Trustees of The Lau-
rel Investment Series approved several changes which became effective Oc-
tober 17, 1994. The name of the Trust became The Dreyfus/Laurel Investment
Series, which consists of Dreyfus/Laurel Short-Term Bond Fund, Dreyfus/
Laurel International Fund and Dreyfus/ Laurel Contrarian Fund. The in-
vestment manager became The Dreyfus Corporation. Premier Mutual Fund Ser-
vices, Inc. became each fund's distributor and sub-administrator.
INDEPENDENT AUDITORS' REPORT
KPMG
The Board of Trustees and Shareholders
The Laurel Investment Series Contrarian Fund
We have audited the accompanying statement of assets and liabilities, in-
cluding the portfolio of investments, of the Contrarian Fund of The Laurel
Investment Series (formerly The Boston Company Investment Series), as of
August 31, 1994, and the related statement of operations, statement of
changes in net assets, and the financial highlights for the year then
ended. These financial statements and financial highlights are the respon-
sibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on
our audit. The statement of changes in net assets for the year ended Au-
gust 31, 1993 and financial highlights for the four year period ended Au-
gust 31, 1993 and for the period from October 17, 1988 to August 31, 1989
were audited by other auditors whose report thereon, dated October 8,
1993, expressed an unqualified opinion on that statement and those finan-
cial highlights.
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 financial statements and fi-
nancial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclo-
sures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1994 by correspondence with the custo-
dian and brokers. An audit also includes assessing the accounting princi-
ples used and significant estimates made by management, as well as evalu-
ating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Contrarian Fund of The Laurel Investment Series as of August 31,
1994, and the results of operations, changes in net assets, and financial
highlights for the year then ended in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
October 21, 1994
TAX INFORMATION (UNAUDITED)
THE LAUREL FUNDS CONTRARIAN FUND
YEAR ENDED AUGUST 31, 1994
The following tax information represents fiscal year end disclosures of
various tax benefits passed through to shareholders at calendar year end.
The capital gains dividend distribution paid to shareholders for the fis-
cal year ended August 31, 1994, whether taken in shares or in cash, is as
follows:
Long Term Capital Gains $176,459
Of the distributions made by the Fund, 100% represents the amount of each
distribution which will qualify for the dividends received deduction
available to corporate shareholders.
The above figures may differ from those cited elsewhere in this report due
to differences in the calculations of income and capital gains for Securi-
ties and Exchange Commission (book) purposes and Internal Revenue Service
(tax) purposes.
FOR MORE INFORMATION ON THE LAUREL FUNDS INCLUDING:
* Fund information - 9:00 a.m. to 5:00 p.m., Monday through Friday
* Additional Prospectuses - Read the prospectus carefully before you
invest.
* Account Information - 9:00 a.m. to 5:00 p.m., Monday through Friday
* Yield and Share Price Information - 24 hours a day, 7 days a week
CALL 1-800-548-2868
Or write:
The Dreyfus Family of Funds
P.O. Box 9692
Providence, R.I. 02940-9830
The Funds are distributed by:
Premier Mutual Fund Services, Inc.
One Exchange Place
10th Floor
Boston, MA 02109
CONT 2104
ANNUAL
DESCRIPTION OF ART WORK ON REPORT COVER
Small box with a leaf in it. Above box the funds name Laurel is showing
and below box the word Funds is there under a line.
Short-Term Bond Fund
AUGUST 31, 1994
DEAR SHAREHOLDER,
We are pleased to bring you performance, market and portfolio activity in-
formation on the Short-Term Bond Fund for the year ended August 31, 1994.
As you know from recent correspondence, on October 17, 1994, The Laurel
Family of Funds began integrating with The Dreyfus Family of Funds. In
connection with this integration, the Laurel Funds have been renamed to
provide a more cohesive fund family unified under the Dreyfus name. The
Laurel Short-Term Bond Fund is now known, and publicly listed, as the
Dreyfus/Laurel Short-Term Bond Fund. Please be assured that the Fund's
name change does not affect the value of your account or the investment
objective or strategy of your Fund. The integration is discussed in
greater detail in the subsequent events footnote, which is located in the
notes to the financial statements of this report.
In the pages that follow, we have provided a more detailed description of
the market environment over the last twelve months, along with commentary
on your Fund's investment management strategy and portfolio changes for
the period. Additional financial data is also included.
In closing, we would like to extend our appreciation for your past support
of The Laurel Family of Funds and hope that you will find that the new
Dreyfus Family of Funds will continue to provide the diversity and perfor-
mance that you have come to expect. As always, we welcome your thoughts
and suggestions.
Sincerely,
Richard W. Healey
Richard W. Healey
Vice President
The Laurel Funds
October 20, 1994
TABLE OF CONTENTS
Shareholder Letter 1
Market Environment 3
Portfolio Strategy 4
Performance Summary 5
Portfolio of Investments 6
Statement of Assets and Liabilities 8
Statement of Operations 9
Statement of Changes in Net Assets 10
Financial Highlights 11
Notes to Financial Statements 13
Independent Auditors' Report 18
Tax Information 19
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY, ANY BANK, OR THE U.S. GOVERNMENT, AND ARE NOT
FEDERALLY IN-
SURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. ALL MUTUAL FUND SHARES INVOLVE
CERTAIN INVEST-
MENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE DREYFUS FUNDS ARE DISTRIBUTED BY PREMIER MUTUAL FUND
SERVICES.
MARKET ENVIRONMENT
STEADILY RISING SHORT-TERM INTEREST RATES
After more than five years of declining interest rates, the Federal Re-
serve Board raised short-term rates six times between January and August
1994. The first three hikes sent the securities markets, including the
bond market in which this Fund invests, into sharp corrections. Market
values dropped in keeping with the inverse relationship that exists be-
tween interest rates and bond prices. Fortunately, the Fund's shorter ma-
turity bonds were less affected by decreases in capital value than inter-
mediate and longer maturity issues.
As the marketplace adapted to the new reality of rising interest rates,
subsequent hikes had little effect on bond values. Although the market re-
mained somewhat volatile at the end of the annual report period (September
1, 1993 through August 31, 1994), it had calmed considerably from the ear-
lier part of the year. The short maturity bond sector had become rela-
tively stable, anticipating another Fed interest rate increase toward the
end of the year. However, the market continues to watch the economy care-
fully for any signs of too-rapid growth that could prompt the Fed to make
an earlier interest rate move.
A STRENGTHENING ECONOMY
Following several years of a sluggish, stop-and-start recovery, the econ-
omy finally established a relatively steady pace of expansion toward the
end of 1993. In fact, government statistics for the first six months of
1994 indicated stronger-than-anticipated growth, with lower unemployment
and solid increases in housing sales and new orders for manufactured
goods. In raising the Federal Funds and discount interest rates, the Fed
was responding to this growth and attempting to head off inflation before
it had a chance to surface.
As the report period ended, the economy continued to grow and inflation
remained low. This is a positive environment for investment and, if it can
be sustained, investors should be rewarded over the long term.
THE OUTLOOK: CONTINUED GROWTH AND HIGHER RATES
Over the next several months, we expect the economy to continue along its
path of steady growth. In order to keep inflation in check, the Fed will
most likely continue to raise interest rates gradually. Still, even moder-
ately higher interest rates will be low by historic standards. In this
climate, we believe the bond market will offer ample opportunity for posi-
tive investment performance.
PORTFOLIO STRATEGY
Despite daunting market conditions that challenged bond investors in vir-
tually every market sector, the Short-Term Bond Fund was able to tally a
modest positive total return for the report period. Two of our most impor-
tant strategies for achieving these returns have been to keep the Fund's
weighted average maturity very short at between one and two years, and to
focus our portfolio on investments of the very highest quality. This com-
bined approach has enabled us to minimize the performance-dampening effect
of interest rate advances while keeping the Fund flexible for future rate
changes.
Looking ahead, we believe the market will remain relatively stable
throughout the fall if the current pace of economic growth continues. Ac-
cordingly, we plan to keep the portfolio's average weighted maturity short
and to retain our focus on superior quality investments. Once the Fed
raises short-term interest rates again, we will extend the average
weighted maturity a bit further to help capture higher yields and garner
additional income for the Fund.
PERFORMANCE SUMMARY
SHORT-TERM BOND FUND (UNAUDITED)
GROWTH OF $10,000 INVESTED FROM OCTOBER 18, 1988 -- AUGUST 31,
1994+
DESCRIPTION OF MOUNTAIN CHART
A line graph depicting the total growth (including reinvestment of divi-
dends and capital gains) of a hypothetical investment of $10,000 in Short-
Term Bond Fund's investor shares on October 18, 1988 through August 31,
1994 as compared with the growth of a $10,000 investment in the Merrill
Lynch 1-3 Year Government Treasury Index. The plot points used to draw the
line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF
$10,000
INVESTMENT IN
THE
GROWTH OF $10,000 MERRILL LYNCH 1-3
YEAR
MONTH INVESTED IN INVESTOR GOVERNMENT
TREASURY
ENDED SHARES OF THE FUND INDEX
<S> <C> <C>
10/18/88 $10,000 --
10/88 $10,012 $10,000
11/88 $ 9,981 $ 9,973
12/88 $10,026 $ 9,996
3/89 $10,234 $10,121
6/89 $10,467 $10,624
9/89 $10,659 $10,778
12/89 $10,877 $11,083
3/90 $11,042 $11,182
6/90 $11,294 $11,495
9/90 $11,477 $11,769
12/90 $11,791 $12,160
3/91 $12,305 $12,427
6/91 $12,341 $12,671
9/91 $12,836 $13,097
12/91 $13,365 $13,579
3/92 $13,291 $13,600
6/92 $13,646 $13,992
9/92 $14,035 $14,408
12/92 $14,023 $14,434
3/93 $14,263 $14,754
6/93 $14,392 $14,913
9/93 $14,553 $15,127
12/93 $14,587 $15,216
3/94 $14,402 $15,140
6/94 $14,386 $15,153
8/94 $14,518 $15,337
</TABLE>
AVERAGE ANNUAL TOTAL RETURN -- INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
Year Ended 8/31/94 0.06%
Five Years Ended 8/31/94 6.50%
Inception (10/18/88) through 8/31/94 6.56%
</TABLE>
+ Hypothetical illustration of $10,000 invested in Investor Shares at in-
ception (October 18, 1988) and reinvestment of dividends and capital
gains at net asset value through August 31, 1994.
The Merrill Lynch 1-3 Year Government Treasury Index consists of AAA
U.S. Government and Treasury bonds maturing from 1 to 2.99 years.
Index information is available at month-end only, therefore, the closest
month-end to inception date of the Fund has been used.
This period was one in which short-term bond prices fluctuated and the
results should not be considered as a representation of the dividend in-
come or capital gain or loss which may be realized from an investment in
the Fund today. No adjustment has been made for a shareholder's tax lia-
bility on dividends or capital gains.
NOTE: All figures cited here and on the following pages represent past
performance and do not guarantee future results. Investment return and
principal value of an investment will fluctuate so that an investor's
shares upon redemption may be worth more or less than original cost.
PORTFOLIO OF INVESTMENTS
SHORT-TERM BOND FUND AUGUST 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL COUPON MATURITY
VALUE
AMOUNT RATE DATE
(NOTE 1)
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 37.2%
$270,000 U.S. Treasury Notes 7.625% 12/31/94 $
272,263
90,000 U.S. Treasury Notes 5.500 02/15/95
90,143
150,000 U.S. Treasury Notes 7.500 02/29/96
153,382
350,000 U.S. Treasury Notes 5.125 12/31/98
329,301
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $858,898)
845,089
MEDIUM-TERM NOTES -- 20.2%
100,000 Atlantic Richfield Company 10.375 07/15/95
103,750
50,000 Beneficial Corporation 9.500 05/25/95
51,250
150,000 Commercial Credit Group 9.200 06/15/95
153,563
100,000 ITT Financial Corporation 8.375 08/01/95
102,000
50,000 Schering Plough Corporation Zero 12/02/96
43,312
Coupon
5,380 SPNB Home Equity Loan 8.100 06/15/20
5,442
TOTAL MEDIUM-TERM NOTES
(Cost $451,619)
459,317
MORTGAGE-BACKED SECURITIES -- 5.6%
GOVERNMENT NATIONAL MORTGAGE ASSOCI-
ATION (GNMA) -- 5.3%
19,641 GNMA 10.000 03/15/03
21,219
41,516 GNMA 11.500 07/15/13
46,939
51,705 GNMA II 6.000 07/20/17
51,640
TOTAL GNMA (COST $113,333)
119,798
FEDERAL HOME LOAN MORTGAGE CORPORA-
TION (FHLMC) -- 0.3%
(Cost $7,555)
7,612 FHLMC 5.417 03/01/19
7,640
TOTAL MORTGAGED-BACKED
SECURITIES
(Cost $120,888)
127,438
REPURCHASE AGREEMENT -- 33.9%
(Cost $770,000)
$770,000 Agreement with Morgan Stanley & Co.,
4.650% dated 08/31/94, to be repur-
chased at $770,099 on 09/01/94, col-
lateralized by $750,000 U.S. Trea-
sury Bond, 8.125% due 08/15/19 $
770,000
TOTAL INVESTMENTS
(Cost $2,201,405*) 96.9%
2,201,844
OTHER ASSETS AND LIABILITIES (NET) 3.1
70,743
NET ASSETS 100.0%
$2,272,587
<FN>
* Aggregate cost for Federal tax purposes.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
SHORT-TERM BOND FUND AUGUST 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Cost $2,201,405)
(Note 1)
See accompanying schedule:
Securities $1,431,844
Repurchase agreement 770,000
$2,201,844
Cash
6,565
Receivable from investment adviser (Note
2)
71,055
Interest receivable
13,819
Receivable for Fund shares sold
76
TOTAL ASSETS
2,293,359
LIABILITIES
Accrued audit fees $10,558
Accrued shareholder reports expense 3,000
Dividends payable 2,822
Investment management fee payable (Note
2) 2,177
Transfer agent fees payable (Note 2) 252
Accrued Trustees' fees and expenses
(Note 2) 194
Payable for Fund shares redeemed 90
Distribution fee payable (Note 3) 78
Accrued expenses and other payables 1,601
TOTAL LIABILITIES
20,772
NET ASSETS
$2,272,587
NET ASSETS consist of:
Distributions in excess of net invest-
ment income
$(4,964)
Accumulated net realized loss on invest-
ments sold
(150,476)
Unrealized appreciation of investments
439
Par value
192
Paid-in capital in excess of par value
2,427,396
TOTAL NET ASSETS
$2,272,587
NET ASSET VALUE
INVESTOR SHARES
Net asset value, offering and redemption
price per share ($2,272,587 / 191,832
shares of beneficial interest outstand-
ing)
$11.85
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
SHORT-TERM BOND FUND
FOR THE YEAR ENDED AUGUST 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest $
175,721
EXPENSES
Shareholder reports expense $ 29,560
Legal and audit fees 26,789
Registration and filing fees 24,287
Investment advisory fee (Note 2) 9,060
Transfer agent fees (Note 2) 5,665
Investment management fee (Note 2) 5,143
Distribution fee (Note 3) 4,543
Custodian fees (Note 2) 3,098
Trustees' fees and expenses (Note 2) 1,606
Amortization of organization costs (Note
6) 1,051
Other 5,455
Fees waived and/or expenses reimbursed by
investment adviser and custodian (Note
2) (90,576)
TOTAL EXPENSES
25,681
NET INVESTMENT INCOME
150,040
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS (Notes 1 and 4):
Net realized gain on investments sold
during the year
699
Net unrealized depreciation of invest-
ments during the year
(156,593)
NET REALIZED AND UNREALIZED LOSS ON IN-
VESTMENTS
(155,894)
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $
(5,854)
</TABLE>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
SHORT-TERM BOND FUND
<TABLE>
<CAPTION>
YEAR
YEAR
ENDED
ENDED
8/31/94
8/31/93
<S> <C> <C>
Net investment income $ 150,040 $
269,709
Net realized gain on investments sold
during the year 699
24,532
Net unrealized depreciation of invest-
ments during the year (156,593)
(73,490)
Net increase/(decrease) in net assets re-
sulting from operations (5,854)
220,751
Distributions to shareholders from net
investment income:
Investor Shares (131,766) --
Retail Class --
(266,613)
Institutional Class (13,133)
(2,533)
Distributions to shareholders in excess
of net investment income:
Investor Shares (4,675) --
Retail Class --
(558)
Institutional Class (466)
(5)
Net increase/(decrease) in net assets
from Fund share transactions (Note 5):
Investor Shares (1,106,873) --
Retail Class --
(1,923,798)
Institutional Class --
58,871
Net decrease in net assets (1,262,767)
(1,913,885)
NET ASSETS:
Beginning of year 3,535,354
5,449,239
End of year (including distributions in
excess of net investment income of
$4,964 at August 31, 1994) $ 2,272,587 $
3,535,354
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
SHORT-TERM BOND FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR.*
<TABLE>
<CAPTION>
YEAR YEAR
YEAR
ENDED ENDED
ENDED
8/31/94 8/31/93++
8/31/92
<S> <C> <C>
<C>
Net asset value, beginning of year $12.50 $12.64
$12.23
Income from investment operations:
Net investment income*** 0.63 0.68
0.75
Net realized and unrealized gain/(loss)
on investments (0.62) (0.15)
0.41
Total from investment operations 0.01 0.53
1.16
Less distributions:
Distributions from net investment income (0.64) (0.67)
(0.75)
Distributions in excess of net invest-
ment income (0.02) (0.00)#
- --
Total distributions (0.66) (0.67)
(0.75)
Net asset value, end of year $11.85 $12.50
$12.64
Total return+ 0.06% 4.34%
9.73%
Ratios to average net assets/Supplemen-
tal Data:
Net assets, end of year (in 000's) $2,273 $3,477
$5,449
Ratio of operating expenses to average
net assets** 0.95% 0.99%
0.98%
Ratio of net investment income to aver-
age net assets 5.38% 5.29%
5.96%
Portfolio turnover rate 53% 6%
30%
<FN>
* The Fund commenced operations on October 18, 1988. Effective April 4,
1994, the Retail and Institutional Classes were reclassified as a sin-
gle class of shares known as the Investor Shares. The amounts shown for
the year ended August 31, 1994, were calculated using the performance
of a Retail Share outstanding from September 1, 1993 to April 3, 1994,
and the performance of an Investor Share outstanding from April 4, 1994
to August 31, 1994. The Financial Highlights for the year ended August
31, 1993 and prior periods are based upon a Retail Share outstanding.
** Annualized expense ratios before waiver of fees and/or reimbursement
of expenses by investment adviser, transfer agent and custodian for
the years ended August 31, 1994, 1993 and 1992 were 4.21%, 2.54% and
1.88%, respectively.
*** Net investment income before waiver of fees and/or reimbursement of
expenses by investment adviser, transfer agent and custodian for the
years ended August 31, 1994, 1993 and 1992 would have been $.25, $.48
and $.63, respectively.
+ Total return represents aggregate total return for the periods indi-
cated.
++ Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for this
period since use of the undistributed income method does not accord
with results of operations.
# Amount represents less than $0.01.
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS (CONTINUED)
SHORT-TERM BOND FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR OR
PERIOD.*
<TABLE>
<CAPTION>
YEAR YEAR
PERIOD
ENDED ENDED
ENDED
8/31/91 8/31/90
8/31/89
<S> <C> <C>
<C>
Net asset value, beginning of period $11.82 $11.84
$12.00
Income from investment operations:
Net investment income*** 0.82 0.93
0.86
Net realized and unrealized gain/(loss)
on investments 0.41 (0.02)
(0.17)
Total from investment operations 1.23 0.91
0.69
Less distributions:
Distributions from net investment income (0.82) (0.93)
(0.85)
Distributions in excess of net invest-
ment income -- --
- --
Total distributions (0.82) (0.93)
(0.85)
Net asset value, end of period $12.23 $11.82
$11.84
Total return+ 10.79% 7.95%
5.97%
Ratios to average net assets/Supplemen-
tal Data:
Net assets, end of period (in 000's) $3,895 $2,771
$3,374
Ratio of operating expenses to average
net assets** 0.99% 0.99%
1.14%++
Ratio of net investment income to aver-
age net assets 6.90% 7.77%
8.07%++
Portfolio turnover rate 70% 52%
232%
<FN>
* The Fund commenced operations on October 18, 1988. Effective April 4,
1994, the Retail and Institutional Classes were reclassified as a sin-
gle class of shares known as the Investor Shares. The Financial High-
lights for the year ended August 31, 1991 and prior periods are based
upon a Retail Share outstanding.
** Annualized expense ratios before waiver of fees and/or reimbursement
of expenses by
investment adviser, transfer agent and custodian for the years ended
August 31, 1991
and 1990 and for the period ended August 31, 1989 were 3.07%, 3.67%
and 1.54%,
respectively.
*** Net investment income before waiver of fees and/or reimbursement of
expenses by investment adviser, transfer agent and custodian for the
years ended August 31, 1991 and
1990 and for the period ended August 31, 1989 would have been $.57,
$.61 and $.82,
respectively.
+ Total return represents aggregate total return for the periods
indicated.
++ Annualized.
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Laurel Investment Series (the "Trust") (formerly The Boston Company
Investment Series), The Laurel Funds, Inc., The Laurel Funds Trust and The
Laurel Tax-Free Municipal Funds are all registered open-end investment
companies that compose The Laurel Fund Family. The Trust is an investment
company that consists of three funds: the Contrarian Fund, the Short-Term
Bond Fund and the International Fund. This report contains financial
statements for the Short-Term Bond Fund (the "Fund"). The Trust is a Mas-
sachusetts business trust and is registered with the Securities and Ex-
change Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. Effective
April 4, 1994, the Retail and Institutional Classes of shares were reclas-
sified as a single class of shares known as the Investor Shares, and the
Fund began offering Trust Shares. As of August 31, 1994, the Fund had not
issued any Trust Shares. Investor Shares are designed for the retail in-
vestor and bear a distribution fee. Trust Shares are designed for institu-
tional investors, clients of financial institutions, such as banks, trust
companies or thrift institutions, who have qualified accounts, and bear no
distribution fee. Each class of shares has identical rights and privileges
except with respect to the distribution fee and voting rights on matters
affecting a single class. The following is a summary of significant ac-
counting policies consistently followed by the Fund in the preparation of
its financial statements in accordance with generally accepted accounting
principles.
(A) PORTFOLIO VALUATION
Investments in securities that are traded on a national securities ex-
change are valued at the last reported sales price or, in the absence of a
recorded sale, at the mean of the closing bid and asked prices. Over-the-
counter securities are valued at the closing bid price at the close of
business each day, or, if market quotations for such securities are not
readily available, at fair value, as determined in good faith by the Board
of Trustees. Investments in U.S. Government Securities (other than short-
term securities) are valued at the most recent quoted bid price in the
over-the-counter market. Short-term investments with maturities of 60 days
or less from the valuation day are valued on the basis of amortized cost.
Foreign securities are generally valued at the preceding closing values of
such securities on their respective exchanges, except that when an
occurrence subsequent to the time a value was so established is likely to
have changed such value, then the fair value of those securities will be
determined by consideration of other factors by or under the direction of
the Board of Trustees or its delegates.
(B) REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the terms
of a typical repurchase agreement, the Fund takes possession of an under-
lying debt obligation subject to an obligation of the seller to repur-
chase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to mar-
ket fluctuations during the Fund's holding period. The value of the col-
lateral is at least equal, at all times, to the total amount of the repur-
chase obligations, including interest. In the event of counterparty de-
fault, the Fund has the right to use the collateral to offset losses
incurred. There is potential loss to the Fund in the event the Fund is de-
layed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund's investment manager, acting under the supervision of the
Board of Trustees, reviews the value of the collateral and the creditwor-
thiness of those banks and dealers with which the Fund enters into repur-
chase agreements to evaluate potential risks.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis. Securities purchased or sold on a when-issued or delayed-
delivery basis may be settled a month or more after the trade date. Real-
ized gains and losses from securities sold are recorded on the identified
cost basis. Investment income and realized and unrealized gains and losses
are allocated based upon relative net assets of each class.
(D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions to shareholders are recorded on the ex-
dividend date. Dividends from net investment income, if any, of the Fund
are declared on a class level and paid quarterly. The Fund distributes any
net realized capital gains on a Fund level annually. Additional distribu-
tions of net investment income and capital gains for the Fund may be made
at the discretion of the Board of Trustees in order to avoid the 4% nonde-
ductible Federal excise tax. Income distributions and capital gain distri-
butions on a Fund level are determined in accordance with income tax regu-
lations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and
gains on various investment securities held by the Fund, timing differ-
ences and differing characterization of distributions made by the Fund as
a whole. Permanent differences incurred during the year ended August 31,
1994 resulting from different book and tax accounting for certain debt in-
struments have been reclassified to paid-in capital at year end.
(E) FEDERAL TAXES
It is the Fund's intention to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code applicable to
regulated investment companies and by distributing substantially all of
its taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES AND OTHER
RELATED PARTY
TRANSACTIONS
Effective April 4, 1994, the Trust entered into an investment management
agreement with Mellon Bank, N.A. (the "Manager"), a wholly owned subsid-
iary of Mellon Bank Corporation ("Mellon"), under which the Manager
provides,
or arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to
the
Trust. The Manager also directs the investment of the Fund in accordance
with
its investment objectives, policies and limitations. For these services,
the
Fund pays the Manager a fee, calculated daily and paid monthly, at the
annual
rate of 0.55% of the value of the Fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the Fund except brokerage,
taxes, interest, Rule 12b-1 distribution fees and expenses, fees and ex-
penses of the non-interested Trustees (including counsel fees) and ex-
traordinary expenses. In addition, the Manager is required to reduce its
fee in an amount equal to the Fund's allocable portion of fees and ex-
penses of the non-interested Trustees (including counsel). Prior to April
4, 1994, the Trust had an investment advisory agreement under which the
Fund paid The Boston Company Advisors, Inc. ("Boston Advisors") a monthly
fee at the annual rate of 0.50% of the value of its average daily net as-
sets for investment advisory services. For the year ended August 31, 1994,
Boston Advisors, as investment adviser, voluntarily waived fees of $9,060
and reimbursed expenses of $78,894.
Effective April 4, 1994, the Fund entered into an administration agreement
with Frank Russell Investment Management Company (the "Administrator") to
serve as the Fund's administrator to provide various administrative and
corporate secretarial services to the Fund. The Administrator's fee is
paid by the Manager out of the management fee described above.
No officer or employee of Mellon or of any parent, subsidiary or affiliate
thereof receives any compensation from The Laurel Fund Family for serving
as an officer or Trustee of The Laurel Fund Family. The Laurel Fund Family
pays each Trustee who is not an officer or employee of Mellon or of any
parent, subsidiary or affiliate thereof, or of the Administrator or any
parent, subsidiary or affiliate thereof, $27,000 per annum, $1,000 for
each Board meeting attended, and $750 for each Audit Committee meeting
attended, and reimburses each Trustee for travel and out-of-pocket ex-
penses. Prior to April 4, 1994, the Trust paid each Trustee $5,000 per
annum, plus $1,000 per meeting attended, plus $250 per Audit Committee
meeting attended, plus reimbursement for travel and out-of-pocket ex-
penses.
Prior to April 4, 1994, the Trust had individual contracts, which con-
tained specific fee provisions, with Boston Safe Deposit and Trust Com-
pany, a wholly owned subsidiary of Mellon, and The Shareholder Services
Group, Inc. to provide custody and transfer agent services, respectively,
to the Fund. For the period ended April 4, 1994, the custodian waived its
fees of $2,622. Effective April 4, 1994, the payment of fees for custody,
accounting and transfer agent services are covered by the investment man-
agement agreement described above. Funds Distributor, Inc. ("Funds Dis-
tributor") continues to act as distributor of the Fund's shares.
3. DISTRIBUTION PLAN
The Fund has adopted a plan of distribution (the "Plan") pursuant to Rule
12b-1 under the 1940 Act relating to Investor Shares. Under the Plan, the
Fund may pay up to 0.25% of the value of the average daily net assets of
Investor Shares to compensate Funds Distributor for shareholder servicing
activities and for activities primarily intended to result in the sale of
Investor Shares. The Trust Shares bear no distribution fee. Prior to April
4, 1994, under the distribution plan, the Fund was authorized to spend an-
nually up to 0.25% and 0.15%, of its average daily net assets on distribu-
tion expenses for the Retail Class and the Institutional Class, respec-
tively, which classes, on April 4, 1994 were reclassified into Investor
Shares.
Under its terms, the Plan shall remain in effect from year to year, pro-
vided such continuance is approved annually by a vote of a majority of
those Trustees who are not "interested persons" of the Trust and who have
no direct or indirect financial interest in the operation of the Plan or
in any agreement related to the Plan.
4. SECURITIES TRANSACTIONS
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended August 31, 1994 aggregated
$1,335,513 and $2,952,141, respectively, for the Fund.
At August 31, 1994, aggregate gross unrealized appreciation for all secu-
rities in which there was an excess of value over tax cost amounted to
$26,289, and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value amounted to $25,850.
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of ben-
eficial interest of each Class in each separate series, with a par value
of $.001. The Trust has authority to issue two classes of shares. Effec-
tive April 4, 1994, the Retail and Institutional Classes of shares were
combined and reclassified as a single class of shares known as the Inves-
tor Shares. The table below summarizes transactions in Fund shares for the
periods shown in the accompanying Statement of Changes in Net Assets.
<TABLE>
<CAPTION>
YEAR ENDED YEAR
ENDED
8/31/94 8/31/93*
(INVESTOR SHARES) (RETAIL CLASS)
(INSTITUTIONAL CLASS)
SHARES** AMOUNT*** SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C> <C> <C>
<C> <C>
Sold 125,473 $ 1,547,869 147,353 $ 1,852,904
216 $ 2,706
Issued as rein-
vestment of div-
idends and dis-
tributions 8,894 108,098 13,071 164,107
200 2,515
Redeemed (225,283) (2,762,840) (305,609) (3,841,443)
(3,651) (45,716)
Exchanged for In-
stitutional
shares (7,905) (99,366)
Issued in exchange
for Retail
shares -- -- -- --
7,905 99,366
Net increase/(de-
crease) (90,916) $ (1,106,873) (153,090) $ (1,923,798)
4,670 $ 58,871
<FN>
* The Fund commenced selling Institutional Class shares on February 1,
1993. Any shares outstanding prior to February 1, 1993 were designated
as Retail Class shares.
** Shares include 51,296 of subscriptions, 1,060 of reinvestments and
5,203 of redemptions for the Institutional Class up to April 4, 1994.
*** Amounts include $635,969 of subscriptions, $13,003 of reinvestments
and $62,943 of redemptions for the Institutional Class up to April 4,
1994.
</TABLE>
6. ORGANIZATION COSTS
The Fund paid all costs in connection with the Fund's organization includ-
ing the fees and expenses of registering and qualifying the Fund's shares
for distribution under Federal and state securities regulations. All such
costs were being amortized on the straight-line method over a period of
five years. These costs were fully amortized during the year ended August
31, 1994.
7. LINE OF CREDIT
The Trust and several affiliated entities participate in a $20 million
line of credit provided by Continental Bank, N.A. under a Line of Credit
Agreement (the "Agreement") dated March 31, 1992, as amended, primarily
for temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of securi-
ties. Under this Agreement, the Trust may borrow up to the amount speci-
fied in its Borrowing Base Certificate. Interest is payable either at the
bank's Money Market Rate or the London Interbank Offered Rate (LIBOR) plus
0.375% on an annualized basis. As amended effective May 21, 1994, the
Trust and the other affiliated entities are charged an aggregated commit-
ment fee of $40,000, which is allocated equally among each of the partici-
pants. The Agreement requires, among other provisions, each participating
fund to maintain a ratio of net assets (not including funds borrowed pur-
suant to the Agreement) to aggregate amount of indebtedness pursuant to
the Agreement of no less than 4 to 1. At August 31, 1994, the Fund had no
outstanding borrowings under this Agreement.
8. CAPITAL LOSS CARRYFORWARD
As of August 31, 1994, the Fund had available for Federal tax purposes un-
used capital loss carryforwards of $133,822 expiring in 1997 and $10,258
expiring in 1999.
9. SUBSEQUENT EVENTS
At a meeting held on September 23, 1994, the Board of Trustees of The Lau-
rel Investment Series approved several changes which became effective Oc-
tober 17, 1994. The name of the Trust became The Dreyfus/Laurel Investment
Series, which consists of Dreyfus/Laurel Short-Term Bond Fund, Dreyfu-
s/Laurel International Fund and Dreyfus/ Laurel Contrarian Fund. The in-
vestment manager became The Dreyfus Corporation. Premier Mutual Fund Ser-
vices, Inc. became each fund's distributor and sub-administrator.
INDEPENDENT AUDITORS' REPORT
KPMG
The Board of Trustees and Shareholders
The Laurel Investment Series Short-Term Bond Fund
We have audited the accompanying statement of assets and liabilities, in-
cluding the portfolio of investments, of the Short-Term Bond Fund of The
Laurel Investment Series (formerly The Boston Company Investment Series),
as of August 31, 1994, and the related statement of operations, statement
of changes in net assets, and the financial highlights for the year then
ended. These financial statements and financial highlights are the respon-
sibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on
our audit. The statement of changes in net assets for the year ended Au-
gust 31, 1993 and financial highlights for the four year period ended Au-
gust 31, 1993 and for the period from October 18, 1988 to August 31, 1989
were audited by other auditors whose report thereon,
dated October 8, 1993, expressed an unqualified opinion on that statement
and those financial highlights.
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 financial statements and fi-
nancial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclo-
sures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1994 by correspondence with the custo-
dian and brokers. An audit also includes assessing the accounting princi-
ples used and significant estimates made by management, as well as evalu-
ating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Short-Term Bond Fund of The Laurel Investment Series as of August
31, 1994, and the results of operations, changes in net assets, and finan-
cial highlights for the year then ended in conformity with generally ac-
cepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
October 21, 1994
TAX INFORMATION (UNAUDITED)
THE LAUREL FUNDS SHORT-TERM BOND FUND
YEAR ENDED AUGUST 31, 1994
The following tax information represents fiscal year end disclosures of
various tax benefits passed through to shareholders at calendar year end.
At August 31, 1994 the Fund had available for Federal tax purposes unused
capital loss carryforwards of $140,218 expiring in 1997, and $10,258 ex-
piring in 1999.
Of the distributions made by the Fund from investment income, 58.78% rep-
resents the portion of each distribution derived from investments in U.S.
Government and Agency Obligations. All or a portion of the distributions
made from this income may be exempt from taxation at the state level.
Please consult your tax advisor for state specific information.
The above figures may differ from those cited elsewhere in this report due
to differences in the calculations of income and capital gains for Securi-
ties and Exchange Commission (book) purposes and Internal Revenue Service
(tax) purposes.
FOR MORE INFORMATION ON THE LAUREL FUNDS INCLUDING:
* Fund information - 9:00 a.m. to 5:00 p.m., Monday through Friday
* Additional Prospectuses - Read the prospectus carefully before you
invest.
* Account Information - 9:00 a.m. to 5:00 p.m., Monday through Friday
* Yield and Share Price Information - 24 hours a day, 7 days a week
CALL 1-800-548-2868
Or write:
The Dreyfus Family of Funds
P.O. Box 9692
Providence, R.I. 02940-9830
The Funds are distributed by:
Premier Mutual Fund Services, Inc.
One Exchange Place
10th Floor
Boston, MA 02109
STB2104
<PAGE>
- ---------------------------------------------------------------------------
- -----
A N N U A L
Small box with a leaf in
it. Above box the funds
name Laurel is showing
and below box the word
Funds is there under a
line.
[LEAF]
International
Fund
[LEAF]
-----------------------------------------------------------------
- -----
AUGUST 31, 1994
<PAGE>
DEAR SHAREHOLDER,
We are pleased to bring you performance, market and portfolio activity
information on the International Fund for the year ended August 31, 1994.
As you know from recent correspondence, on October 17, 1994, The Laurel
Family
of Funds began integrating with The Dreyfus Family of Funds. In
connection
with this integration, the Laurel Funds have been renamed to provide a
more
cohesive fund family unified under the Dreyfus name. The Laurel
International
Fund is now known, and publicly listed, as the Dreyfus/Laurel
International
Fund. Please be assured that the Fund's name change does not affect the
value
of your account or the investment objective or strategy of your Fund. The
integration is discussed in greater detail in the subsequent events
footnote,
which is located in the notes to the financial statements of this report.
In the pages that follow, we have provided a more detailed description of
the
market environment over the last twelve months, along with commentary on
your
Fund's investment management strategy and portfolio changes for the
period.
Additional financial data is also included.
In closing, we would like to extend our appreciation for your past
support of
The Laurel Family of Funds and hope that you will find that the new
Dreyfus
Family of Funds will continue to provide the diversity and performance
that
you have come to expect. As always, we welcome your thoughts and
suggestions.
Sincerely,
Richard W. Healey
Vice President
The Laurel Funds
October 20, 1994
1
...........................................................................
.....
<PAGE>
TABLE of CONTENTS
...........................................................................
.....
<TABLE>
<S> <C>
Shareholder Letter........................................ 1
Market Environment........................................ 3
Portfolio Review.......................................... 4
Performance Summary....................................... 5
Portfolio of Investments.................................. 6
Statement of Assets and Liabilities....................... 17
Statement of Operations................................... 18
Statement of Changes in Net Assets........................ 19
Financial Highlights...................................... 20
Notes to Financial Statements............................. 22
Independent Auditors' Report.............................. 29
</TABLE>
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED
BY, ANY BANK, OR THE U.S. GOVERNMENT, AND ARE NOT FEDERALLY
INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY
OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT
RISKS, INCLUDING
THE
POSSIBLE LOSS OF PRINCIPAL, AND THERE CAN BE NO GUARANTEE
THAT A MONEY
MARKET
FUND WILL BE ABLE TO MAINTAIN A STABLE $1.00 SHARE PRICE.
THE DREYFUS FUNDS ARE DISTRIBUTED BY PREMIER MUTUAL FUND
SERVICES.
2
...........................................................................
.....
<PAGE>
MARKET ENVIRONMENT
...........................................................................
.....
POSITIVE PERFORMANCE AMID DIMINISHING VOLATILITY
The world's stock markets ended the report period September 1, 1993 to
August
31, 1994 on a positive note, achieving aggregate performance exceeding
returns
tallied by the broad U.S. stock market averages.
This growth was accompanied by a fair amount of volatility, particularly
in
the first quarter of 1994. Overseas markets throughout Southeast Asia and
Europe followed the lead of U.S. securities markets, which dropped
sharply in
February and March in response to the Federal Reserve Board's early
interest
rate hikes. International markets worried that their own interest rates
would
soon climb, too. Some rates did rise, although not as precipitously as
investors had feared. Hong Kong, New Zealand and United Kingdom posted
the
most significant price declines of the period, while markets in France
and
Switzerland also came under strong pressure. Italy was a clear and
positive
exception. Its stock market rose 27% during March, April and May on
expectations that a recent election would soon produce major economic
reform.
As the report period drew to a close, much of this early volatility began
to
subside. A certain amount of rebalancing occurred, with some of the
sharpest
first quarter market swings correcting themselves.
STRENGTH BUILDS IN EUROPE AND EMERGING MARKETS
Despite the performance-dampening effects of rising U.S. interest rates
on
international markets, underlying economic considerations remained
positive in
many countries. Once the U.S. clarified its policies on interest rates
and the
dollar, many of the issues that had been causing upheaval in these
markets
were finally settled. Investors could once again return to decision-
making
based on fundamentals.
In Europe, many economies are either on the brink of recovery or in its
early
stages. In fact, the stock market in the United Kingdom now offers the
best
relative value in the world. While its economy seems to have turned the
corner, the UK still lags the U.S. economic cycle by approximately six
months,
giving investors ample opportunity to profit from the economic expansion.
Germany is another promising European market. Among the emerging markets,
Thailand offers particularly good value in an economy that continues to
grow
well. The recent election in Mexico removed much of the uncertainty that
had
been plaguing its stock market, and the government now seems set on a
conservative economic course that bodes well for investors.
THE OUTLOOK: GROWTH AND OPPORTUNITY
Looking ahead, we see growth opportunities in select markets around the
globe.
European markets offer solid investment potential, particularly in the
pharmaceutical industry where stock values have become exceptionally
attractive. Japan seems to have reached the bottom of its economic cycle
and
should begin to offer better value as the
3
...........................................................................
.....
<PAGE>
MARKET ENVIRONMENT (continued)
...........................................................................
.....
economy begins to recover. In Latin America, consumer goods stocks are
well-positioned for good performance as falling interest rates and
controlled
inflation give people more disposable income.
In the following section, we discuss the specific strategies that
produced
success for the Fund from September 1, 1993 through August 31, 1994.
PORTFOLIO REVIEW
...........................................................................
.....
Despite a rather challenging period for the world's securities markets,
the
Fund tallied returns well in excess of those posted by the Standard &
Poor's
500 during the most recent fiscal year. The Fund provided shareholders
with a
9.6% return for the period, while the S&P grew just 2.4% during this
time.
The Fund remained fully invested in equities throughout the fiscal year.
With
large positions in both Italy and Japan, the Fund benefited handsomely
from
rises in these markets. By focusing on non-dollar-denominated
investments, the
Fund also managed to temper or even avoid losses in some markets when the
dollar began to weaken.
Going forward, we are currently evaluating some very attractive sectors
in
local markets around the world. With many of the most unsettling issues
of the
period now behind us, we believe international equities markets are
well-positioned to outperform the domestic market in coming months.
4
...........................................................................
.....
<PAGE>
PERFORMANCE SUMMARY
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND (UNAUDITED)
GROWTH OF $10,000 INVESTED FROM OCTOBER 12, 1988 -- AUGUST 31,
1994+
A line graph depicting the total growth (including reinvestment of
dividends and
capital gains) of a hypothetical investment of $10,000 in International
Fund's
investor shares on October 12, 1988 through August 31, 1994 as compared
with the
growth of a $10,000 investment in the Morgan Stanley EAFE Index. The plot
points
used to draw the line graph were as follows:
<TABLE>
<CAPTION>
Growth of
$10,000
Invested in
Investor Growth of $10,000
Month Shares of the Investment in the Morgan Stanley
Ended Fund EAFE Index
<S> <C> <C>
9/30/88 -- $ 10,000
10/12/88 $10,000 --
10/88 10,075 10,950
11/88 10,217 11,354
12/88 10,180 11,481
3/89 10,113 11,472
6/89 9,913 11,397
9/89 11,074 12,890
12/89 11,752 13,908
3/90 10.780 12,641
6/90 11,368 13,557
9/90 9,033 10,688
12/90 9,577 11,516
3/91 10,247 12,210
6/91 9,735 11,558
9/91 10,291 12,490
12/91 10,212 12,819
3/92 9,277 11,937
6/92 9,493 12,353
9/92 9,583 12,067
12/92 9,151 11,647
3/93 10,077 13,042
6/93 10,527 14,231
9/93 11,255 15,417
12/93 11,399 15,619
3/94 11,803 16,496
6/94 11,911 16,941
8/94 12,577 17,637
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN -- INVESTOR SHARES
<S> <C>
-------------------------------------------------------------------
Year Ended 8/31/94 9.64%
-------------------------------------------------------------------
Five Years Ended 8/31/94 3.02%
-------------------------------------------------------------------
Inception (10/12/88) through 8/31/94 3.97%
-------------------------------------------------------------------
<FN>
+ HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN INVESTOR
SHARES AT
INCEPTION
(OCTOBER 12, 1988) AND REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS AT NET
ASSET VALUE THROUGH AUGUST 31, 1994.
THE MORGAN STANLEY EAFE INDEX IS A COMPOSITE PORTFOLIO
CONSISTING OF
EQUITY
TOTAL RETURNS FOR THE COUNTRIES OF EUROPE, AUSTRALIA, NEW
ZEALAND AND
COUNTRIES IN THE FAR EAST, WEIGHTED BASED ON EACH COUNTRY'S
GROSS
DOMESTIC
PRODUCT.
INDEX INFORMATION IS AVAILABLE AT MONTH-END ONLY;
THEREFORE, THE CLOSEST
MONTH-END TO INCEPTION DATE OF THE FUND HAS BEEN USED.
THIS PERIOD WAS ONE IN WHICH STOCK PRICES FLUCTUATED AND THE
RESULTS
SHOULD NOT
BE CONSIDERED AS A REPRESENTATION OF THE DIVIDEND INCOME OR
CAPITAL GAIN
OR
LOSS WHICH MAY BE REALIZED FROM AN INVESTMENT IN THE FUND
TODAY. NO
ADJUSTMENT
HAS BEEN MADE FOR A SHAREHOLDER'S TAX LIABILITY ON DIVIDENDS
OR CAPITAL
GAINS.
NOTE: ALL FIGURES CITED HERE AND ON THE FOLLOWING PAGES
REPRESENT PAST
PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTOR'S
SHARES
UPON REDEMPTION MAY BE WORTH MORE OR LESS THAN ORIGINAL
COST.
</TABLE>
5
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS -- 71.4%
<C> <S>
<C>
FRANCE -- 15.2%
200 Air Liquide (L') $
31,170
500 Alcatel Alsthom Cie Generale d'Electricite
55,435
3,500 AXA Company+
169,730
400 Banque Nationale de Paris
18,546
200 Carnaudmetalbox SA
6,367
200 Casino Guichard Perrachon Et Cie
6,016
100 Chargeurs
27,727
200 Cie Financiale (Paribas)
13,715
100 Compagnie Bancaire SA
9,625
200 Compagnie De St. Gobain
25,469
500 Compagnie Financiere de Suez
25,524
100 Crecie Par Reesco NV
7,642
200 Danone
30,873
400 Eaux (Cie Generale Des)
41,461
100 Euro Disney SCA
172
100 Finextel
2,454
100 Havas
8,699
200 Lafarge Coppee SA
16,547
200 L'Oreal Group
45,533
200 Lvhm Moet Hennessey
32,984
100 Lyonnause Des Eaux Dunez
10,217
200 Michelin (Cie Gle Des Establ.)
8,784
100 Pechiney International
2,982
100 Pernod-Ricard
6,154
100 Peugeot SA
16,066
700 Rhone-Poulenc SA
17,789
100 Schneider SA
7,850
100 Sefimeg
7,950
100 Simco-Union Pout L'Habitation
8,635
200 Societe Generale
21,545
900 Societe National Elf Aquitaine
69,299
100 Sommer-Allibert
40,628
300 Thompson
8,979
800 Total Cie Francaise Des Petroles, Total 'B'
47,754
200 Unibail
18,620
</TABLE>
6 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
FRANCE (CONTINUED)
150 Union Immobiliere De France $
14,215
-
- ----------
883,156
-
- ----------
<CAPTION>
GERMANY -- 12.6%
<C> <S>
<C>
100 BASF Group AG
20,972
100 Bayer Group AG
24,062
200 Daimler-Benz Group AG
106,063
500 Deutsche Bank AG
232,072
500 Dresdner Bank AG
130,600
70 Mannesmann AG
19,467
300 RWE Aktiengesellschaft
90,233
200 Siemens AG
89,410
50 Viag AG
16,017
-
- ----------
728,896
-
- ----------
<CAPTION>
JAPAN -- 11.9%
<C> <S>
<C>
800 Ajinomoto Company
10,713
900 Asahi Chemical Industry
7,159
800 Asahi Glass Company
9,993
400 Bridgestone Company
6,396
500 Canon Inc.
8,744
400 Chugai Pharmaceutical
4,597
800 Dai Nippon Printing
15,189
200 Daido Steel
1,109
700 Dai-Ichi Kango Bank
12,731
2,100 Daikyo Kanko, Inc.
22,035
400 Daishowa Paper Manufacturing
4,077
400 Daiwa House Industry
6,116
600 Denki Kagaku Kogyo
2,488
1,300 Fuji Bank Ltd.
29,359
200 Fuji Photo Film
4,497
800 Fujitsu Ltd.
8,714
900 Hitachi Ltd.
8,922
400 Honda Motor
6,635
220 House Food Industrial Company
4,815
200 Industrial Bank of Japan
6,036
1,700 Itochu & Company
12,163
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
JAPAN (CONTINUED)
500 Ito-Yokado Company $
26,481
600 Japan Air Lines
4,545
600 Japan Energy Corporation
2,686
420 Joyo Bank
3,672
1,300 Kajima Corporation
12,939
400 Kamigumi Company
4,437
330 Kandenko Company
6,760
600 Kansai Electric Power
15,589
2,200 Kawasaki Steel Corporation
9,299
1,800 Kinki Nippon Railway Company Ltd.
15,289
1,000 Kirin Brewery Company
11,892
600 Komatsu Ltd.
5,426
200 Kyocera Corporation
14,830
100 Kyushu Electric Power
2,528
200 Maeda Road Construction
3,657
200 Marudai Food Company Ltd.
1,635
400 Matsushita Electric Works
7,035
1,100 Mitsubishi Bank
28,800
2,700 Mitsubishi Heavy Industries
21,180
900 Mitsubishi Kasei Company
4,839
200 Mitsubishi Trust & Banking
2,998
600 Mitsui Marine & Fire
4,797
600 Mitsui Trust & Banking
6,775
400 Mitsui & Company
3,446
800 NEC Corporation
9,753
600 Nikon
5,996
50 Nintendo Company
3,148
400 Nippon Light Metal Company
2,970
800 Nippon Oil Company
5,996
5,100 Nippon Steel Corporation
19,112
800 Nippon Yusen Kaisha
5,204
600 Oji Paper
6,116
1,600 Sakura Bank
22,704
200 Sanwa Shutter Corporation
1,849
220 Seven-Eleven Japan NPV
17,456
400 Shizuoka Bank
5,356
</TABLE>
8 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
JAPAN (CONTINUED)
500 Snow Brand Milk Products Company Ltd. $
3,937
100 Sony Corporation
6,106
400 Sumitomo Bank Ltd.
7,954
800 Sumitomo Electric Company
11,992
1,100 Sumitomo Trust & Banking
15,059
400 Taiyo Fishery Company+
1,639
1,000 Takeda Chemical Industries
12,691
800 Tokai Bank
10,553
800 Tokio Marine & Fire
9,913
300 Tokyo Electric Power Company
9,024
1,300 Tokyu Railway Corporation
9,548
1,200 Toyobo Company
5,432
500 Toyota Motor Company
10,792
600 UBE Industries Ltd.
2,446
200 Yakult Honsha
3,278
500 Yamanouchi Pharmaceutical Company
9,593
1,000 Yasuda Trust and Banking Company Ltd.
8,774
2,900 Yokogawa Electric Corporation
29,559
-
- ----------
687,973
-
- ----------
<CAPTION>
SWITZERLAND -- 6.5%
<C> <S>
<C>
11 Adia I
2,099
3 Alusuisse-Lonza Holdings AG, Series A
1,569
7 Alusuisse-Lonza Holdings AG, Series B
3,640
13 Brown Boveri & Cie AG, Series A
11,789
9 Brown Boveri & Cie AG, Series B
1,521
51 Ciba Geigy AG
30,894
37 Credit Suisse Holdings
15,345
75 CS Holdings
6,001
10 Forbo Holdings AG
20,098
3 Grand Magasin Jelmoli
403
24 Holderbank Financier Glaris AG
6,934
6 Merkur Holdings
1,654
68 Nestle SA
62,689
2 Roche Holdings, AG
18,032
12 Roche Holdings, AG Genuscheine NPV
54,998
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
SWITZERLAND (CONTINUED)
55 Sandoz Group AG $
28,555
1 Schindler Holdings AG
1,157
23 Schweiz Ruckversicherungs
9,537
36 Schweizerische Bankgesellschaft
31,755
86 Schweizerischer Bankverein
17,883
11 Sika Finanz AG
1,335
33 SMH AG Neuenburg
6,736
2 Societe Generale de Surveillance
3,065
4 Sulzer AG
2,898
3 Swiss Air AG
1,984
38 Union Bank Of Switzerland
8,908
25 Zurich Versicherungs
24,220
-
- ----------
375,699
-
- ----------
<CAPTION>
BELGIUM -- 6.4%
<C> <S>
<C>
135 ACEC Union Miniere NPV+
11,124
20 Bekaert SA
16,511
45 CBR Cimenteries NPV
17,103
279 Delhaize "Le Lion"
10,980
314 Electrabel NPV Common
55,899
50 Electrabell-Pr Reunies
8,993
500 Fortis AG
39,048
109 Generale de Banque
27,783
23 Gevaert Photo Prod NPV
6,810
28 Glaverbal NPV
4,330
144 Group Brussels Lambert SA
19,348
20 Kredietbank Afv NPV
4,157
75 Kredietbank NPV
15,704
195 Petrofina SA NPV
62,504
110 Royale Belge NPV
17,748
50 Solvay Et Cie, Series A, NPV
24,597
25 Tractobel
7,879
60 Tractobel Cap NPV
19,278
-
- ----------
369,796
-
- ----------
</TABLE>
10 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
AUSTRIA -- 6.0%
100 BWT Benchiser Wassertechnik AG $
15,168
100 Constantia Industry Holdings
8,856
500 Creditanstalt Bank
31,424
100 Ea Generali AG
29,087
100 Lenzing AG
11,545
200 Oesterreichische
11,904
600 Oesterreichische El Wirtsch
38,680
500 Omev AG
46,305
200 Radex Heraklith
8,326
200 Steyer-Daimler Puch AG
4,244
100 Universale-Bau AG
7,463
200 Veitscher
6,725
100 Wienerberger Baust
34,841
1,000 Z-Laenderbank Bank Austria AG
84,023
100 Z-Landerbank
5,485
-
- ----------
344,076
-
- ----------
<CAPTION>
ITALY -- 5.3%
<C> <S>
<C>
500 Aedes SpA di Risp
2,151
300 Aedes SpA Lig Lomb
2,464
900 Alitalia Linee Priv
666
500 Alitalia-Linee Aeree Italiane
283
2,000 Assicurazioni Generali
52,836
1,000 Banca Commerciale Italiana SpA
2,398
700 Banco Ambrosiano Veneto
1,922
300 Banco Ambrosiano Veneto di Risp
512
1,650 Banco Nazionale Del Agricoltra
1,662
200 Benetton
3,139
100 Cartiere Burgo
600
300 Cementir SpA
330
500 Cogefar-Impresit Construzioni
664
1,600 Credito Italiano SpA
2,278
1,700 Dalmine SpA
446
800 Edison
3,660
100 Falck Acc Ferr Lamb
320
10,200 Fiat SpA
40,742
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
ITALY (CONTINUED)
700 Fiat SpA di Risp $
1,699
500 Fidis
1,756
700 Finanziaria Cirio Bertolli De Rica SpA
484
600 Finanziaria Italgel SpA
583
300 Gildini
841
700 Instituto Banca San Paolo di Torino
4,228
100 Italcementi
778
100 Italcementi di Risp
386
600 Italgas
2,027
100 La Previdente
924
5,200 Mediobanca SpA
47,348
4,800 Montedison SpA
4,255
900 Montedison SpA di Risp
634
1,200 Olivetti & Group SpA
1,617
200 Olivetti & Group SpA di Risp
218
1,100 Parmalat Finanziaria SpA
1,371
1,400 Pirelli SpA
2,272
200 Pirelli Risp
251
300 RAS
4,879
300 RAS di Risp
2,857
200 Rinascente
1,262
1,000 Rinascente di Risp
3,385
700 Risanamento Napo
12,845
200 Saffa SpA, Class A
699
400 Saipem
991
100 Sasib
563
200 Sirti SpA
1,527
500 SME (Meridionale Finanziaria)
1,196
600 Smi (Soc Metal Ital)
357
500 Snia Bpd
694
500 Snia Bpd di Risp
399
400 Snia Bpd Risp
557
200 S.A.I. di Risp
1,417
100 S.A.I. (Societa Assicuratrice Industriale)
1,288
30,680 Telecom Italia SpA
89,689
1,540 Telecom Italia SpA di Risp
3,796
-
- ----------
317,146
-
- ----------
</TABLE>
12 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
SPAIN -- 4.5%
500 Autopista Cesa $
4,719
1,800 Banco Bilbao Vizcaya
42,297
1,300 Banco Central Hispano Americans
26,127
800 Banco de Santander
32,462
300 Banco Espanol De Credito
2,384
900 Empresa Nacional De Elec
40,234
50 Gas Natural SDG SA
3,989
3,300 Iberdrola I
22,192
1,100 Repsol SA
35,305
3,600 Telefonica Nacional d'Espana
49,931
-
- ----------
259,640
-
- ----------
<CAPTION>
FINLAND -- 2.0%
<C> <S>
<C>
100 Amer Group, Series A
2,312
100 Cultor Oy, Series 1
2,645
2,800 Kansallis-Osake-Pankki
5,924
500 Kesko Group
5,485
50 Kone Corp Free, Series B
5,407
400 Kymmene Stromberg
10,971
100 Metra AB
3,272
100 Metra AB, Series B
3,291
200 Nokia Group AB
21,708
600 Outokumpu Oy, Series A
12,460
100 Pohjola Insurance Co., Series A
1,352
100 Pohjola Insurance Co., Series B
1,215
800 Repola
17,241
100 Sampo, Series A
5,194
175 Stockmann AB, Series B
7,817
2,600 Unitas
6,877
-
- ----------
113,171
-
- ----------
<CAPTION>
HONG KONG -- 0.7%
<C> <S>
<C>
200 Cheung Kong (Holdings)
1,012
240 China Light & Power
1,239
1,100 Hang Seng Bank Ltd
7,900
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
COMMON STOCKS (continued)
<C> <S>
<C>
HONG KONG (CONTINUED)
700 Hong Kong Telecommunications
1,540
2,100 HSBC Holdings $
24,729
200 Hutchison Whampoa
1,002
220 Sun Hung Kai Properties
1,623
-
- ----------
39,045
-
- ----------
<CAPTION>
NETHERLANDS -- 0.3%
<C> <S>
<C>
100 ABN Amro Holdings
3,378
100 Royal Dutch Petroleum
11,277
-
- ----------
14,655
-
- ----------
TOTAL COMMON STOCKS (Cost $4,012,205)
4,133,253
-
- ----------
<CAPTION>
PREFERRED STOCKS -- 0.5%
<C> <S>
<C>
300 Credit Anstalt Bank
18,450
100 Nokia
10,873
-
- ----------
TOTAL PREFERRED STOCKS (Cost $26,556)
29,323
-
- ----------
<CAPTION>
RIGHTS -- 0.1%
<C> <S>
<C>
1,000 Banca Commerciale Italiana SpA, expire 09/07/94+
389
200 Lvmh Moet Hennessy, expire 10/03/94+
3,291
100 Pernod-Ricard, expire 09/07/94+
1,211
300 RAS di Risp, expire 09/07/94+
196
-
- ----------
TOTAL RIGHTS (Cost $4,756)
5,087
-
- ----------
<CAPTION>
WARRANTS -- 0.0%
<C> <S>
<C>
112 CS Holdings, expire 12/16/94+
406
100 Euro Disney, expire 07/11/04+
17
3 Grand Nagasin Jelmoli, expire
7
48 Holderbank Financiere Glaris, expire 01/19/95+
61
-
- ----------
TOTAL WARRANTS (Cost $569)
491
-
- ----------
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S>
<C>
U.S. TREASURY OBLIGATION -- 0.7% (Cost $44,890)
$ 45,000 U.S. Treasury Bill, 4.500%++ due 09/22/94+++
44,890
-
- ----------
</TABLE>
14 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
COMMERCIAL PAPER -- 12.2%
<C> <S>
<C>
$352,000 Ford Motor Credit Corporation, 4.700% due 09/01/94 $
352,000
352,000 General Electric Capital Corporation, 4.750% due 09/01/94
352,000
-
- ----------
TOTAL COMMERCIAL PAPER (Cost $704,000)
704,000
-
- ----------
TOTAL INVESTMENTS (Cost $4,792,976*) 84.9%
4,917,044
<CAPTION>
CONTRACTS
<C> <S>
<C>
FUTURES -- LONG POSITION --
10 Eurotop, September 1994
1,235,000
2 Nikkei, September 1994
206,850
-
- ----------
TOTAL FUTURES -- LONG POSITION (Cost $1,408,270) 24.9
1,441,850
OTHER ASSETS AND LIABILITIES (NET) (9.8)
(565,939)
------
- ----------
NET ASSETS 100.0% $
5,792,955
------
- ----------
------
- ----------
--------------------------------------------------------------------------
- ----------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
+ NON-INCOME PRODUCING SECURITY.
++ ANNUALIZED YIELD AT DATE OF PURCHASE (UNAUDITED).
+++ $45,000 IN PRINCIPAL OF U.S. TREASURY BILLS HAS BEEN PLEDGED
AS
COLLATERAL
FOR INITIAL MARGIN FOR FUTURES CONTRACTS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
...........................................................................
.....
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND (UNAUDITED)
AT AUGUST 31, 1994, SECTOR DIVERSIFICATION OF THE FUND WAS AS
FOLLOWS:
<TABLE>
<CAPTION>
% OF NET
VALUE
ASSETS
(NOTE 1)
<S> <C> <C>
COMMON STOCKS:
Banking 17.1% $
988,943
Financial Services 10.0
581,641
Utilities 10.0
580,327
Manufacturing 6.6
382,658
Durable Goods 5.4
313,823
Chemicals 3.1
179,875
Food and Household Products 3.1
179,608
Oil and Gas 3.0
169,644
Telecommunications 2.7
152,935
Basic Industry 1.9
113,872
Transportation 1.2
70,685
Consumer Services 1.1
62,350
Construction and Housing 1.0
54,189
Mining and Metals 0.9
52,676
Other 4.3
250,027
------ ---
- --------
TOTAL COMMON STOCKS 71.4
4,133,253
PREFERRED STOCKS 0.5
29,323
RIGHTS 0.1
5,087
WARRANTS 0.0
491
U.S. TREASURY OBLIGATIONS 0.7
44,890
COMMERCIAL PAPER 12.2
704,000
------ ---
- --------
TOTAL INVESTMENTS 84.9
4,917,044
FUTURES--LONG POSITION 24.9
1,441,850
OTHER ASSETS AND LIABILITIES (Net) (9.8)
(565,939)
------ ---
- --------
NET ASSETS 100.0% $
5,792,955
------ ---
- --------
------ ---
- --------
</TABLE>
16 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
STATEMENT of ASSETS and LIABILITIES
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND AUGUST 31,
1994
<TABLE>
<CAPTION>
ASSETS
<S> <C>
<C>
Investments, at value (Cost $4,792,976) (Note 1)
See accompanying schedule $
4,917,044
Cash and foreign currency (Cost $670,932)
668,443
Receivable from investment adviser (Note 2)
145,291
Dividends and interest receivable
43,838
Receivable for Fund shares sold
68,670
--
- ----------
TOTAL ASSETS
5,843,286
--
- ----------
--
- ----------
LIABILITIES
Investment management fee payable (Note 2) $ 14,086
Payable for Fund shares purchased 7,695
Daily variation margin on open futures contracts (Note 1) 3,650
Transfer agent fees payable (Note 2) 760
Accrued Trustees' fees and expenses (Note 2) 447
Distribution fee payable (Note 3) 193
Accrued expenses and other payables 23,500
---------
TOTAL LIABILITIES
50,331
--
- ----------
NET ASSETS $
5,792,955
--
- ----------
--
- ----------
NET ASSETS consist of:
Undistributed net investment income $
74,036
Accumulated net realized loss on investments, futures
contracts and currency transactions
(1,901,540)
Net unrealized appreciation of investments, futures
contracts, foreign currency transactions and net other
assets
151,446
Par value
414
Paid-in capital in excess of par value
7,468,599
--
- ----------
TOTAL NET ASSETS $
5,792,955
--
- ----------
--
- ----------
NET ASSETS VALUE
INVESTOR SHARES
Net asset value, offering and redemption price per share
($5,792,955 DIVIDED BY 414,039 shares of beneficial
interest outstanding)
$13.99
- ------
- ------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
...........................................................................
.....
<PAGE>
STATEMENT of OPERATIONS
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND
FOR THE YEAR ENDED AUGUST 31, 1994
<TABLE>
<S> <C>
<C>
INVESTMENT INCOME
Dividends (net of withholding taxes of $12,761) $
95,849
Interest
36,540
-
- ---------
TOTAL INVESTMENT INCOME
132,389
EXPENSES
Investment management fee (Note 2) $ 33,088
Shareholder reports expense 32,024
Legal and audit fees 28,231
Investment advisory fee (Note 2) 27,471
Registration and filing fees 24,542
Custodian fees (Note 2) 20,058
Trustees' fees and expenses (Note 2) 15,572
Transfer agent fees (Note 2) 14,297
Distribution fee (Note 3) 9,001
Amortization of organization costs (Note 6) 923
Other 10,002
Fees waived and/or expenses reimbursed by adviser and
distributor (Notes 2 and 3) (121,384)
----------
TOTAL EXPENSES
93,825
-
- ---------
NET INVESTMENT INCOME
38,564
-
- ---------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 4):
Net realized gain on:
Securities transactions
314,583
Futures contracts
238,016
Forward foreign exchange contracts and foreign
currency
35,535
-
- ---------
Net realized gain on investments during the year
588,134
Net change in unrealized depreciation of:
Securities
(121,509)
Futures contracts
6,060
Currencies and net other assets
(312)
-
- ---------
Net unrealized depreciation of investments during the
year
(115,761)
-
- ---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
472,373
-
- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$
510,937
-
- ---------
-
- ---------
</TABLE>
18 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
STATEMENT of CHANGES in NET ASSETS
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
8/31/94 8/31/93
<S>
<C> <C>
Net investment income
$ 38,564 $ 49,741
Net realized gain on investments, forward foreign exchange contracts,
futures contracts and currency transactions during the year
588,134 623,351
Net unrealized appreciation/(depreciation) on investments, futures
contracts, currencies and net other assets during
the year
(115,761) 1,110,818
- ------------ ------------
Net increase in net assets resulting from operations
510,937 1,783,910
Net increase/(decrease) in net assets from Fund share transactions (Note
5):
Investor Shares
1,496,568 --
Retail Class
- -- (9,764,428)
Institutional Class
- -- 331,278
- ------------ ------------
Net increase/(decrease) in net assets
2,007,505 (7,649,240)
NET ASSETS:
Beginning of year
3,785,450 11,434,690
- ------------ ------------
End of year (including undistributed net investment income of $74,036 at
August 31, 1994)
$ 5,792,955 $ 3,785,450
- ------------ ------------
- ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
...........................................................................
.....
<PAGE>
FINANCIAL HIGHLIGHTS
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
INTERNATIONAL FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR OR
PERIOD.*
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
8/31/94+++ 8/31/93+++
<S> <C> <C>
--------------------------------------------------------------------------
- -
Net asset value, beginning of year $ 12.76 $ 10.93
---------- ----------
- -
Income from investment operations:
Net investment income*** 0.10 0.05
Net realized and unrealized gain/(loss) on
investments 1.13 1.78
---------- ----------
- -
Total from investment operations 1.23 1.83
Less distributions:
Distributions from net investment income -- --
Distributions from net realized capital gains -- --
---------- ----------
- -
Total distributions -- --
---------- ----------
- -
Net asset value, end of year $ 13.99 $ 12.76
---------- ----------
- -
Total return++ 9.64 % 16.74
%
---------- ----------
- -
---------- ----------
- -
Ratios to average net assets/Supplemental Data:
Net assets, end of year (in 000's) $ 5,793 $ 3,399
Ratio of operating expenses to average net
assets** 1.84 % 1.79
%#
Ratio of net investment income to average net
assets 0.74 % 0.46
%
Portfolio turnover rate 114 % 202
%
--------------------------------------------------------------------------
- -
<FN>
* THE FUND COMMENCED OPERATIONS ON OCTOBER 12, 1988.
EFFECTIVE APRIL 4,
1994,
THE RETAIL AND INSTITUTIONAL CLASSES WERE RECLASSIFIED AS A
SINGLE CLASS
OF
SHARES KNOWN AS THE INVESTOR SHARES. THE AMOUNTS SHOWN
FOR THE YEAR
ENDED
AUGUST 31, 1994, WERE CALCULATED USING THE PERFORMANCE OF A
RETAIL SHARE
OUTSTANDING FROM SEPTEMBER 1, 1993 TO APRIL 3, 1994, AND THE
PERFORMANCE
OF
AN INVESTOR SHARE OUTSTANDING FROM APRIL 4, 1994 TO AUGUST
31, 1994. THE
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED AUGUST 31, 1993 AND
PRIOR
PERIODS ARE
BASED UPON A RETAIL SHARE OUTSTANDING.
** ANNUALIZED EXPENSE RATIOS BEFORE WAIVER OF FEES AND/OR
REIMBURSEMENT OF
EXPENSES BY INVESTMENT ADVISER AND/OR TRANSFER AGENT
AND/OR DISTRIBUTOR
FOR
THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992 WERE 4.21%, 3.15%
AND
2.11%,
RESPECTIVELY.
*** NET INVESTMENT INCOME/(LOSS) BEFORE WAIVER OF FEES AND/OR
REIMBURSEMENT
OF
EXPENSES BY INVESTMENT ADVISER AND/OR TRANSFER AGENT
AND/OR DISTRIBUTOR
FOR
THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992 WERE $(0.21),
$(0.10)
AND
$0.00, RESPECTIVELY.
# THE ANNUALIZED OPERATING EXPENSE RATIO EXCLUDES INTEREST
EXPENSE. THE
ANNUALIZED RATIO INCLUDING INTEREST EXPENSE WAS 1.80% FOR
THE YEAR ENDED
AUGUST 31, 1993.
+ ANNUALIZED.
++ TOTAL RETURN REPRESENTS AGGREGATE TOTAL RETURN FOR THE
PERIODS
INDICATED.
+++ PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE
MONTHLY AVERAGE SHARE
METHOD, WHICH MORE APPROPRIATELY PRESENTS THE PER SHARE
DATA FOR THIS
PERIOD BECAUSE USE OF THE UNDISTRIBUTED INCOME METHOD
DOES NOT ACCORD
WITH
RESULTS OF OPERATIONS.
</TABLE>
20 SEE NOTES TO FINANCIAL STATEMENTS.
...........................................................................
.....
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
...........................................................................
.....
- ---------------------------------------------------------------------------
- -----
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
8/31/92 8/31/91 8/31/90 8/31/89
<S> <C> <C> <C>
- ----------------------------------------------------
$ 11.25 $ 12.25 $ 12.98 $ 12.00
- ----------- ------------ ----------- ------------
0.03 0.12 0.19 0.12
(0.14) (0.73) (0.65) 0.89
- ----------- ------------ ----------- ------------
(0.11) (0.61) (0.46) 1.01
(0.07) (0.17) (0.18) (0.03)
(0.14) (0.22) (0.09) --
- ----------- ------------ ----------- ------------
(0.21) (0.39) (0.27) (0.03)
- ----------- ------------ ----------- ------------
$ 10.93 $ 11.25 $ 12.25 $ 12.98
- ----------- ------------ ----------- ------------
(1.05)% (4.88)% (3.69)% 8.40%
- ----------- ------------ ----------- ------------
- ----------- ------------ ----------- ------------
$ 11,435 $ 29,706 $ 31,372 $ 24,699
1.87% 1.63% 1.63% 1.76%+
0.24% 0.97% 1.50% 1.52%+
110% 145% 28% 47%
- ----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
...........................................................................
.....
<PAGE>
NOTES to FINANCIAL STATEMENTS
...........................................................................
.....
1. SIGNIFICANT ACCOUNTING POLICIES
The Laurel Investment Series (the "Trust") (formerly The Boston Company
Investment Series), The Laurel Funds, Inc., The Laurel Funds Trust and
The
Laurel Tax-Free Municipal Funds are all registered open-end investment
companies that compose The Laurel Fund Family. The Trust is an investment
company that consists of three funds: the Contrarian Fund, the Short-Term
Bond
Fund and the International Fund. This report contains financial
statements for
the International Fund (the "Fund"). The Trust is a Massachusetts
business
trust and is registered with the Securities and Exchange Commission under
the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-
end
management investment company. Effective April 4, 1994, the Retail and
Institutional Classes of shares were reclassified as a single class of
shares
known as the Investor Shares, and the Fund began offering Trust Shares.
As of
August 31, 1994, the Fund had not issued any Trust Shares. Investor
Shares are
designed for the retail investor and bear a distribution fee. Trust
Shares are
designed for institutional investors, clients of financial institutions,
such
as banks, trust companies or thrift institutions, who have qualified
accounts,
and bear no distribution fee. Each class of shares has identical rights
and
privileges except with respect to the distribution fee and voting rights
on
matters affecting a single class. The following is a summary of
significant
accounting policies consistently followed by the Fund in the preparation
of
its financial statements in accordance with generally accepted accounting
principles.
(A) PORTFOLIO VALUATION
Investments in securities that are traded on a national securities
exchange
are valued at the last reported sales price or, in the absence of a
recorded
sale, at the mean of the closing bid and asked prices. Over-the-counter
securities are valued at the closing bid price at the close of business
each
day, or, if market quotations for such securities are not readily
available,
at fair value, as determined in good faith by the Board of Trustees.
Investments in U.S. Government Securities (other than short-term
securities)
are valued at the most recent quoted bid price in the over-the-counter
market.
Short-term investments with maturities of 60 days or less from the
valuation
day are valued on the basis of amortized cost. Foreign securities are
generally valued at the preceding closing values of such securities on
their
respective exchanges, except that when an occurrence subsequent to the
time a
value was so established is likely to have changed such value, then the
fair
value of those securities will be determined by consideration of other
factors
by or under the direction of the Board of Trustees or its delegates.
(B) REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the terms
of a
typical repurchase agreement, the Fund takes possession of an underlying
debt
obligation subject to an obligation of the seller to repurchase, and the
Fund
to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement
results in a fixed rate of return that is not subject to market
22
...........................................................................
.....
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
...........................................................................
.....
fluctuations during the Fund's holding period. The value of the
collateral is
at least equal, at all times, to the total amount of the repurchase
obligations, including interest. In the event of counterparty default,
the
Fund has the right to use the collateral to offset losses incurred. There
is
potential loss to the Fund in the event the Fund is delayed or prevented
from
exercising its rights to dispose of the collateral securities, including
the
risk of a possible decline in the value of the underlying securities
during
the period while the Fund seeks to assert its rights. The Fund's
investment
manager, acting under the supervision of the Board of Trustees, reviews
the
value of the collateral and the creditworthiness of those banks and
dealers
with which the Fund enters into repurchase agreements to evaluate
potential
risks.
(C) FUTURES CONTRACTS ACCOUNTING PRINCIPLES
The Fund may enter into futures contracts. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of
cash or
cash equivalents equal to a certain percentage of the contract amount.
This is
known as the initial margin. Subsequent payments ("variation margin") are
made
or received by the Fund each day, depending on the daily fluctuation of
the
value of the contract. The daily changes in the contract are recorded as
unrealized gains or losses. The Fund recognizes a realized gain or loss
when
the contract is closed.
The use of futures contracts as a hedging device involves several risks.
The
change in value of futures contracts primarily corresponds with the value
of
their underlying instruments, which may not correlate with the change in
value
of the hedged investments. In addition, the Fund may not be able to enter
into
a closing transaction because of an illiquid secondary market.
(D) FORWARD FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in forward foreign currency contracts. Forward
foreign
currency contracts are valued at the forward rate and are marked-to-
market
daily. The change in market value is recorded by the Fund as an
unrealized
gain or loss. When the contract is closed, the Fund records a realized
gain or
loss equal to the difference between the value of the contract at the
time it
was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations
in the underlying prices of the Fund's investment securities, but it does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a
decline in
the value of the hedged currency, they also limit any potential gain that
might result should the value of the currency increase. In addition, the
Fund
could be exposed to risks if the counterparties to the contracts are
unable to
meet the terms of their contracts.
(E) FOREIGN CURRENCY
The books and records of the Fund are maintained in United States (U.S.)
dollars. Foreign currencies, investments and other assets and liabilities
are
translated into U.S.
23
...........................................................................
.....
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
...........................................................................
.....
dollars at the exchange rates prevailing at the end of the period, and
purchases and sales of investment securities, income and expenses are
translated on the respective dates of such transactions. Unrealized gains
and
losses which result from changes in foreign currency exchange rates have
been
included in the unrealized appreciation/(depreciation) of foreign
currency and
net other assets. Net realized foreign currency gains and losses
resulting
from changes in exchange rates include foreign currency gains and losses
between trade date and settlement date on investment securities
transactions,
foreign currency transactions and the difference between the amounts of
interest and dividends recorded on the books of the Fund and the amount
actually received. The portion of foreign currency gains and losses
related to
fluctuation in exchange rates between the initial purchase trade date and
subsequent sale trade date is included in realized gains and losses on
investment securities sold.
(F) SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Dividend
income is
recorded on the ex-dividend date except that certain dividends from
foreign
securities are recorded as soon as the Fund is informed of the ex-
dividend
date. Interest income is recorded on the accrual basis. Securities
purchased
or sold on a when-issued or delayed-delivery basis may be settled a month
or
more after the trade date. Realized gains and losses from securities sold
are
recorded on the identified cost basis. Investment income and realized and
unrealized gains and losses are allocated based upon the relative net
assets
of each class.
(G) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions to shareholders are recorded on the ex-
dividend
date. Dividends from net investment income, if any, of the Fund are
declared
on a class level and paid semi-annually. The Fund distributes any net
realized
capital gains on a Fund level annually. Additional distributions of net
investment income and capital gains for the Fund may be made at the
discretion
of the Board of Trustees in order to avoid the 4% nondeductible Federal
excise
tax. Income distributions and capital gain distributions on a Fund level
are
determined in accordance with income tax regulations, which may differ
from
generally accepted accounting principles. These differences are primarily
due
to differing treatments of income and gains on various investment
securities
held by the Fund, timing differences and differing characterization of
distributions made by the Fund as a whole. Permanent differences incurred
during the year ended August 31, 1994 resulted from different book and
tax
accounting for certain investment securities.
(H) FEDERAL TAXES
It is the Fund's intention to qualify as a regulated investment company
by
complying with the requirements of the Internal Revenue Code applicable
to
regulated investment companies and by distributing substantially all of
its
taxable income to its shareholders. Therefore, no Federal income tax
provision
is required.
24
...........................................................................
.....
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
...........................................................................
.....
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES
AND OTHER RELATED PARTY TRANSACTIONS
Effective April 4, 1994, the Trust entered into an investment management
agreement with Mellon Bank, N.A. (the "Manager"), a wholly owned
subsidiary of
Mellon Bank Corporation ("Mellon"), under which the Manager provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to
the
Trust. The Manager also directs the investment of the Fund in accordance
with
its investment objectives, policies and limitations. For these services,
the
Fund pays the Manager a fee, calculated daily and paid monthly, at the
annual
rate of 1.50% of the value of the Fund's average daily net assets. Out of
its
fee, the Manager pays all of the expenses of the Fund except brokerage,
taxes,
interest, Rule 12b-1 distribution fees and expenses, fees and expenses of
the
non-interested Trustees (including counsel fees) and extraordinary
expenses.
In addition, the Manager is required to reduce its fee in an amount equal
to
the Fund's allocable portion of fees and expenses of the non-interested
Trustees (including counsel). Prior to April 4, 1994, the Trust had an
investment advisory agreement under which the Fund paid The Boston
Company
Advisors, Inc. ("Boston Advisors") a monthly fee at the annual rate of
0.95%
of the value of its average daily net assets for investment advisory
services.
For the period ended August 31, 1994, Boston Advisors, as investment
adviser,
voluntarily waived fees of $27,471 and reimbursed expenses of $93,444.
From September 1, 1993 to July 31, 1994, PanAgora Asset Management, Inc.
("PanAgora") served as sub-investment adviser for the Fund. Fifty percent
of
the outstanding voting stock of PanAgora is owned by Nippon Life
Insurance
Company, and fifty percent is owned by Lehman Brothers. PanAgora was paid
a
fee by Mellon at an annual rate of 0.75% of the value of the Fund's
average
daily net assets. The Fund paid no direct sub-investment advisory fee to
PanAgora.
Effective April 4, 1994, the Fund entered into an administration
agreement
with Frank Russell Investment Management Company (the "Administrator") to
serve as the Fund's administrator to provide various administrative and
corporate secretarial services to the Fund. The Administrator's fee is
paid by
the Manager out of the management fee described above.
No officer or employee of Mellon or of any parent, subsidiary or
affiliate
thereof receives any compensation from The Laurel Fund Family for serving
as
an officer or Trustee of The Laurel Fund Family. The Laurel Fund Family
pays
each Trustee who is not an officer or employee of Mellon or of any
parent,
subsidiary or affiliate thereof, or of the Administrator or any parent,
subsidiary or affiliate thereof, $27,000 per annum, $1,000 for each Board
meeting attended, and $750 for each Audit Committee meeting attended, and
reimburses each Trustee for travel and out-of-pocket expenses. Prior to
April
4, 1994,
25
...........................................................................
.....
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
...........................................................................
.....
the Trust paid each Trustee $5,000 per annum, plus $1,000 per meeting
attended, plus $250 per Audit Committee meeting attended, plus
reimbursement
for travel and out-of-pocket expenses.
Prior to April 4, 1994, the Trust had individual contracts, which
contained
specific fee provisions, with Boston Safe Deposit and Trust Company, a
wholly
owned subsidiary of Mellon, and The Shareholder Services Group, Inc. to
provide custody and transfer agent services, respectively, to the Fund.
Effective April 4, 1994, the payment of fees for custody, accounting and
transfer agent services are covered by the investment management
agreement
described above. Funds Distributor, Inc. ("Funds Distributor") continues
to
act as distributor of the Fund's shares.
3. DISTRIBUTION PLAN
The Fund has adopted a plan of distribution (the "Plan") pursuant to Rule
12b-1 under the 1940 Act relating to Investor Shares. Under the Plan, the
Fund
may pay up to 0.25% of the value of the average daily net assets of
Investor
Shares to compensate Funds Distributor for shareholder servicing
activities
and for activities primarily intended to result in the sale of Investor
Shares. The Trust Shares bear no distribution fee. Prior to April 4,
1994,
under a distribution plan, the Fund was authorized to spend annually up
to
0.25% and 0.15% of its average daily net assets on distribution expenses
for
the Retail Class and the Institutional Class, respectively, which
classes, on
April 4, 1994, were reclassified into Investor Shares. For the year ended
August 31, 1994, Funds Distributor waived $469 in distribution fees.
Under its terms, the Plan shall remain in effect from year to year,
provided
such continuance is approved annually by a vote of a majority of those
Trustees who are not "interested persons" of the Trust and who have no
direct
or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
4. SECURITIES TRANSACTIONS
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended August 31, 1994 aggregated
$5,699,111 and $4,292,965, respectively, for the Fund.
At August 31, 1994, aggregate gross unrealized appreciation for all
securities
in which there was an excess of value over tax cost amounted to $280,064,
and
aggregate gross unrealized depreciation for all securities in which there
was
an excess of tax cost over value amounted to $155,996 for the Fund.
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of
beneficial interest of each Class in each separate series, with a par
value of
$.001. The Trust has authority
26
...........................................................................
.....
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
...........................................................................
.....
to issue two classes of shares. Effective April 4, 1994, the Retail and
Institutional Classes of shares were combined and reclassified as a
single
class of shares known as the Investor Shares. The table below summarizes
transactions in Fund shares for the periods shown in the accompanying
Statement of Changes in Net Assets.
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED
AUGUST 31, 1994
AUGUST 31, 1993*
(INVESTOR
(INSTITUTIONAL CLASS)
SHARES) (RETAIL
CLASS)
SHARES** AMOUNT*** SHARES
AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
<C> <C>
--------------------------------------------------------------------------
- ----------
Sold 910,492 $11,309,382 861,657 $
9,316,148 111,096 $ 1,277,509
Redeemed (793,030) (9,812,814 ) (1,621,049)
(18,868,909) (101,637) (1,157,898)
Exchanged for Institutional
shares (20,772)
(211,667)
Issued in exchange for Retail
shares -- -- -- -
- - 20,772 211,667
-------- ------------ ---------- ------
- ------ -------- ------------
-------- ------------ ---------- ------
- ------ -------- ------------
Net increase/(decrease) 117,462 $ 1,496,568 (780,164) $
(9,764,428) 30,231 $ 331,278
-------- ------------ ---------- ------
- ------ -------- ------------
-------- ------------ ---------- ------
- ------ -------- ------------
--------------------------------------------------------------------------
- ----------
<FN>
* THE FUND COMMENCED SELLING INSTITUTIONAL CLASS SHARES ON
FEBRUARY 1,
1993.
ANY SHARES OUTSTANDING PRIOR TO FEBRUARY 1, 1993 WERE
DESIGNATED AS
RETAIL
CLASS SHARES.
** SHARES INCLUDE 273,052 OF SUBSCRIPTIONS AND 255,176 OF
REDEMPTIONS FOR
THE
INSTITUTIONAL CLASS UP TO APRIL 4, 1994.
*** AMOUNTS INCLUDE $3,497,501 OF SUBSCRIPTIONS AND $3,369,970 OF
REDEMPTIONS
FOR THE INSTITUTIONAL CLASS UP TO APRIL 4, 1994.
</TABLE>
6. ORGANIZATION COSTS
The Fund paid all costs in connection with the Fund's organization
including
the fees and expenses of registering and qualifying the Fund's shares for
distribution under Federal and state securities regulations. All such
costs
were being amortized on the straight-line method over a period of five
years.
These costs were fully amortized during the year ended August 31, 1994.
7. LINE OF CREDIT
The Trust and several affiliated entities participate in a $20 million
line of
credit provided by Continental Bank, N.A. under a Line of Credit
Agreement
(the "Agreement") dated March 31, 1992, as amended, primarily for
temporary or
emergency purposes, including the meeting of redemption requests that
otherwise might require the untimely disposition of securities. Under
this
Agreement, the Trust may borrow up to the amount specified in its
Borrowing
Base Certificate. Interest is payable either at the bank's Money Market
Rate
or the London Interbank Offered Rate (LIBOR) plus 0.375% on an annualized
basis. As amended effective May 21, 1994, the Trust and the other
affiliated
entities are charged an aggregated commitment fee of $40,000, which is
allocated equally among each of the
27
...........................................................................
.....
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
...........................................................................
.....
participants. The Agreement requires, among other provisions, each
participating fund to maintain a ratio of net assets (not including funds
borrowed pursuant to the Agreement) to aggregate amount of indebtedness
pursuant to the Agreement of no less than 4 to 1. At August 31, 1994, the
Fund
had no outstanding borrowings under this Agreement.
8. CAPITAL LOSS CARRYFORWARDS
As of August 31, 1994, the Fund had available for Federal tax purposes
unused
capital loss carryforwards of $1,871,098 expiring in the year 2001.
9. SUBSEQUENT EVENTS
At a meeting held on September 23, 1994, the Board of Trustees of The
Laurel
Investment Series approved several changes which became effective October
17,
1994. The name of the Trust became The Dreyfus/Laurel Investment Series,
which
consists of Dreyfus/Laurel Short-Term Bond Fund, Dreyfus/Laurel
International
Fund and Dreyfus/ Laurel Contrarian Fund. The Dreyfus Corporation became
the
investment manager. Premier Mutual Fund Services, Inc. became each fund's
distributor and sub-administrator.
28
...........................................................................
.....
<PAGE>
INDEPENDENT AUDITORS' REPORT
...........................................................................
.....
[LOGO]
The Board of Trustees and Shareholders
The Laurel Investment Series International Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the International Fund of The
Laurel Investment Series (formerly The Boston Company Investment Series),
as
of August 31, 1994, and the related statement of operations, statement of
changes in net assets, and the financial highlights for the year then
ended.
These financial statements and financial highlights are the
responsibility of
the Fund's management. Our responsibility is to express an opinion on
these
financial statements and financial highlights based on our audit. The
statement of changes in net assets for the year ended August 31, 1993 and
financial highlights for the four year period ended August 31, 1993 and
for
the period from October 12, 1988 to August 31, 1989 were audited by other
auditors whose report thereon, dated October 8, 1993, expressed an
unqualified
opinion on that statement and those financial highlights.
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 financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in
the financial statements. Our procedures included confirmation of
securities
owned as of August 31, 1994 by correspondence with the custodian and
brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to
above present fairly, in all material respects, the financial position of
the
International Fund of The Laurel Investment Series as of August 31, 1994,
and
the results of operations, changes in net assets, and financial
highlights for
the year then ended in conformity with general accepted accounting
principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
October 21, 1994
29
...........................................................................
.....
<PAGE>
...........................................................................
.....
FOR MORE INFORMATION ON THE LAUREL FUNDS INCLUDING:
- FUND INFORMATION - 9:00 a.m. to 5:00 p.m., Monday through Friday
- ADDITIONAL PROSPECTUS - Read the prospectus carefully before you
invest.
- ACCOUNT INFORMATION - 9:00 a.m. to 5:00 p.m., Monday through Friday
- YIELD AND SHARE PRICE INFORMATION - 24 hours a day, 7 days a week
<TABLE>
<S> <C>
CALL 1-800-548-2868
OR WRITE:
The Dreyfus Family of Funds
P.O. Box 9692
Providence, RI 02940-9830
</TABLE>
The Funds are distributed by:
Premier Mutual Fund Services, Inc.
One Exchange Place
10th Floor
Boston, MA 02109
INT
2104
THE BOSTON COMPANY INVESTMENT SERIES
Part C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in the Prospectus (Part A):
Financial Highlights
Included in the Statement of Additional
Information (Part B):
Financial Statements for the fiscal year ended
August 31, 1994
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statement
Report of Independent Accountants
Included in Part C:
None
(b) Exhibits:
Exhibits No. Description of Exhibit
(1) (a) Amended and Restated Master Trust Agreement is
incorporated by reference to Post-Effective Amendment No. 9.
(1) (b) Amendment No. 1 to Registrant's Amended and
Restated Master Trust Agreement filed on February 7, 1994.
(1) (c) Amendment No. 2 to Registrant's Amended and
Restated Master Trust Agreement filed on March 31, 1994.
(1)d) Amendment No. 3 to Registrant's Amended and Restated
Master Trust Agreement filed on December 19, 1994.
(2) By-Laws of the Trust are incorporated by reference to
the Registrant's Registration Statement (No. 33-43847) as filed on May
31, 1988 ("Registration Statement").
(3) Not Applicable
(4) Specimen Certificate for shares of the Laurel
Investment Series shall be filed by amendment.
(5) (a) Investment Management Agreements between the
Registrant and Mellon Bank, N.A. dated April 4, 1994.
(5) (b) Sub-Advisory Agreements between Mellon Bank,
N.A. and PanAgora Asset Management, Inc. dated April 4, 1994 relating to
the International Fund and the Asset Allocation Fund, respectively.
(5) (c) Assignment Agreement among the Registrant,
Mellon Bank, N.A., dated as of October 17, 1994, (relating to Investment
Management Agreement dated April 4, 1994) filed herewith.( )
(6) (a) Form of Distribution Agreement between the
Registrant and TBC Funds Distributor, Inc. (currently known as Funds
Distributor, Inc.) is incorporated by reference to the Registration
Statement as filed on May 31, 1988.
(6) (b) Amendment No. 1 to the Distribution Agreement
dated November 1, 1992 is incorporated by reference to Post-Effective
Amendment No. 7 filed on August 31, 1993.
(6) (c) Form of Distribution Agreement between
Registrant and Funds Distributor, Inc.
(6) (d) Forms of Selling Agreements between the
Registrant's Distributor and certain banks, brokers, dealers and other
financial institutions will be filed by amendment.
(6)(e) Distribution Agreement between the Reegistrant
and Premier Mutual Fund Services, Inc., dated as of October 17, 1994,
filed herewith.
(7) Not Applicable.
(8) (a) Custody and Fund Accounting Agreement between
Registrant and Mellon Bank, N.A., dated April 4, 1994.
(8)(b) Amendment to Custody and Fund Accounting
Agremenet, dated August 1,1994, filed herewith
(8)(c) Subcustodian Agreement between the Registrant
and Mellon Bank, N.A. Dated April 4, 1994, filed herewith
(9) (a) Form of Transfer Agency Agreement between the
Registrant and Boston Safe Deposit and Trust Company (currently known as
The Shareholder Services Group) is incorporated by reference to the
Registration Statement as filed on May 31, 1988.
(9) (b) Supplement to the Transfer Agent Agreement
for Registrant dated April 4, 1994, filed herewith.
(9) (c) Administration Agreement between the Registrant
and Frank Russell Investment Management Company dated April 4, 1994.
(9) (d) Sub-Administration Agreement
(9) (d) (1) Amendment to Sub-Administration Agreement
(10) Opinion of Counsel as to the Legality of
Securities being Registered
(11)(a) Consent of Independent Accountants: KPMG Peat
Marwick
(11)(b) Consent of Independent Accountants: Coopers &
Lybrand.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable
(15) (a) Restated Distribution Plan (relating to
Investor Shares) filed herewith
(16) Performance Data is incorporated by reference to Post-
Effective Amendment No. 3 as filed on October 31, 1990.
a
Item 25.
Persons Controlled By or Under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
Set forth below are the number of record holders,
as of December 28, 1994 of each class of
securities
of the Registrant.
Series Number of Record Holders
Investor Class R
International Fund Shares 813 0
Contrarian Fund Shares 412 0
Short-Term Bond Fund Shares 181 0
Item 27. Indemnification
Under a provision of the Registrant's Agreement and
Declaration of Trust (the "Declaration of Trust"), any past or present
trustee or officer of the Registrant is indemnified to the fullest
extent permitted by law against liability and all expenses reasonably
incurred by him/her in connection with any action, suit or proceeding to
which he/she may be a party or otherwise involved by reason of his being
or having been a trustee or officer of Registrant. This provision does
not authorize indemnification where it is determined, in the manner
specified in the Declaration of Trust, that such trustee or officer has
not acted in good faith in the reasonable belief that his actions were
in the best interest of Registrant. Moreover, this provision does not
authorize indemnification where such trustee or officer is finally
adjudged to have been liable to Registrant or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless
disregard of this duties.
Item 28. Business and Other Connections of Investment Adviser
Investment Adviser - The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise a
financial service organization whose business consists primarily of
providing investment management services as the investment adviser,
manager and distributor for sponsored investment companies registered
under the Investment Company Act of 1940 and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as sub-
investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus , serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another wholly-
owned subsidiary, provides investment management services to various
pension plans, institutions and individuals
Officers and Directors of Investment Adviser
Name and Position
with Dreyfus
Other Business
MANDELL L. BERMAN
Director
Real estate consultant and private
investor
29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET
Director
Chairman of the Board, President and
Chief Executive Officer:
Mellon Bank Corporation
One Mellon bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 9103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN
Director
Senior Adviser to Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
DAVID B. TRUMAN
Director
Educational consultant;
Past President of the Russell Sage
Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director;
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN
Chairman of the Board and
Chief Executive Officer
Chairman of the Board:
Dreyfus Acquisition Corporation;
The Dreyfus Consumer Credit Corporation;
Dreyfus Land Development Corporation;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International
Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporation Property Investors
New York, New York;
JULIAN M. SMERLING
Vice Chairman of the Board
of Directors
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)+;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DIMARTINO
President, and Director
Director and Chairman of the Board:
The Dreyfus Trust Company++;
Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Service Organization, Inc.*:
Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837
Vice President and former Treasurer and
Director:
National Muscular Dystrophy Association
810 Seventh Avene
New York, New York 10019;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
KEITH SMITH
Chief Operating Officer
Chairman and Chief Executive Officer:
The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
PAUL H. SNYDER
Vice President and Chief
Financial Officer
Director:
Pennsylvania Economy League
Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute
Philadelphia Chapter
Philadelphia, Pennsylvania;
LAWRENCE S. KASH
Vice Chairman, Distribution
Chairman, President and Chief Executive
Officer:
The Boston Advisers, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
JAY R. DEMARTINE
Vice President, Marketing
Chairman of the Board and President:
The Woodbury Society
16 Woodbury Lane
Ogunquit, ME 03907;
Former Managing Director:
Bankers Trust Company
280 Park Avenue
New York, NY 10017;
BARBARA E. CASEY
Vice President, Retirement
Services
President:
Dreyfus Retirement Services;
Executive Vice President:
Boston Safe Deposit & Trust co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY
Vice President, Corporate
Communications
None
LAWRENCE M. GREENE
Legal Consultant and
Director
Chairman of the Board:
The Dreyfus Security Sings Bank, F.S.B.
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice president:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Precious Meals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++
Seven Six Seven Agency, Inc.*;
ROBERT F. DUBUSS
Vice President
Director and Treasurer:
Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ELIE M. GENADRY
Vice President,
Wholesale
President:
Institutional Services Division of
Dreyfus Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of
Dreyfus Servicees Corporation;
Execute Vice President:
Dreyfus Service Corporation;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN
Vice President and General
Counsel
Director, Vice President and Secretary:
Dreyfus Precious Metals, Inc.*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN
Vice President,
Fund Administration
None
PHILIP L. TOIA
Vice Chairman, Operations
and Administration
Chairman of the Board and Vice President;
Dreyfus Thrift & Commerce****;
Director:
The Dreyfus Security Savings Bank
F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and The
Chase Manhattan
Capital Markets Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICHMAN
Vice president,
Human Resources
Formerly, Assistant Commissioner
Department of Parks and Recreation of the
City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM
Controller
Treasurer:
Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation;
Assistant Treasurer:
Dreyfus Precious Metals
Formerly, Vice President-Financial
Planning, Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS
Vice President, Fund Legal
and Compliance
Secretary:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS
Assistant Secretary
Assistant Secretary:
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
The Truepenny Corporation*
_____________________________________________
* The address of the business so indicated is 200 park Avenue, new
York, New York 10166
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021
*** The address of the Business so indicated is 45 Broadway, new York,
New York 10006
**** The address of the business so indicated is Five Triad Center,
Salt Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80
Route 4 East, Paramus, new Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
new York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama
Islands.
Item 29. Principal Underwriter
(a) Premier Mutual Fund Services, Inc. ("Premier") currently serves as
the distributor for The Dreyfus/Laurel Tax-Free Municipal Funds.
Premier is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities
Dealers, Inc. Premier is a wholly-owned subsidiary of Institutional
Administration Services, Inc., the parent company of which is Boston
Institutional Group, Inc.
Premier also currently serves as the exclusive distributor or principal
underwriter for the following investment companies:
1) Comstorck Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connection Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus Michigan Municipal Money Market Fund, Inc.
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York ax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal bond Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) Dreyfus Treasury Cash Management
71) Dreyfus Treasury Prime Cash Management
72) Dreyfus Variable Investment Fund
73) Dreyfus-Wiltshire Target Funds, Inc.
74) Dreyfus Worldwide Dollar Money Market Fund, Inc.
75) First Prairie Cash Management
76) First Prairie Diversified Asset Fund
77) First Prairie Money Market Fund
78) First Prairie Municipal Money Market Fund
79) First Prairie Tax Exempt Bond Fund, Inc.
80) First Prairie U.S. Government Income Fund
81) First Prairie U.S. Treasury Securities Cash Management
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Fund, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Fund, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
90) Pacific American Fund
91) Peoples Index Fund, Inc.
92) Peoples S&P MidCap Index Fund, Inc.
93) Premier Insured Municipal Bond Fund
94) Premier California Municipal bond Fund
95) Premier GNMA Fund
96) Premier Growth Fund, Inc.
97) Premier Municipal Bond Fund
98) Premier New York Municipal bond Fund
99) Premier State Municipal Bond Fund
100) the Dreyfus/Laurel Funds Trust
101) The Dreyfus/Laurel Tax-Free Municipal Funds
102) The Dreyfus/Laurel Investment Series
(b) The names of the principal executive officers of Premier together
with their respective positions with Premier and their positions and
offices with the registrant, are set forth below.
Name
and Address
Position and
Office(s) with
Premier
Position and
Office(s) with
Registrant
Marie E. Connolly*
Director, President
& Chief Operating
Officer
President &
Treasurer
John E. Pelletier*
Senior Vice
President &
General Counsel
Vice President &
Secretary
Joseph F. Tower,
III*
Senior vice
President & Chief
Financial Officer
Assistant Treasurer
John J. Fyburn**
Vice President
Assistant Treasurer
Jean M. O'Leary*
Assistant Secretary
N/A
Eric B. Fischman**
Vice President &
Associate General
Counsel
Vice President &
Assistant Secretary
Frederic C. Dey**
Senior Vice
President
Vice President &
Assistant Treasurer
Ruth D. Leibert**
Assistant Vice
President
Assistant Secretary
Paul D. Furcinito
Assistant Vice
President
Assistant Secretary
* Address: Funds Distributor, Inc., Exchange Place, Boston, MA 02109
**Address: Premier Mutual Fund Services, Inc., 200 Park Avenue, new
York, NY 10166.
Item 30. Location of Accounts and Records
(1) The Dreyfus/Laurel Tax-Free Municipal Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
(2) Mellon Bank, N.A.
c/o The Boston Company Advisers, Inc.
4th Floor
One Exchange Place
Boston, MA 02109
(3) Mellon Bank, N.A.
c/o The Boston Company, Inc.
5th Floor
One Boston Place
Boston, MA 02108
(4) Mellon Bank, N.A.
The Park Square Building
31 St. James Avenue
Boston, MA 02116
(5) The Shareholder Services Group, Inc.
1 America Express Plaza
Providence, RI 02903
(6) Mellon Bank, N.A.
One Mellon Bank Center
39th Floor
Pittsburgh, PA 15258
(7) The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Item 31. Management Services
Not applicable.
Item 32. Undertakings
a(i). Not applicable.
b(ii). Not applicable.
Rule 485(b)(3) Certification
The Registrant hereby certifies that it meets all of the
requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, The Dreyfus/Laurel Investment Series (formerly The Laurel
Investment Series), has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Boston, the Commonwealth of Massachusetts
on the 30TH day of December, 1994.
THE DREYFUS/LAUREL INVESTMENT SERIES
s/Marie E. Connolly
___________________________
Marie E. Connolly
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
s/Marie E. Connolly President, Treasurer 12/30/94
Marie E. Connolly
Signature Title Date
s/Francis P. Brennan Trustee, 12/30/94
Francis P. Brennan Chairman of the Board
s/Ruth Marie Adams Trustee 12/30/94
Ruth Marie Adams
s/James M. Fitgibbons Trustee 12/30/94
James M. Fitzgibbons
s/Kenneth A. Himmel Trustee 12/30/94
Kenneth A. Himmel
s/Stephen J. Lockwood_ Trustee 12/30/94
Stephen J. Lockwood
_s/Roslyn M. Watson Trustee 12/30/94
Roslyn M. Watson
s/J. Tomlinson Fort Trustee 12/30/94
J. Tomlinson Fort
s/Arthur L. Goeschel Trustee 12/30/94
Arthur L. Goeschel
s/Arch S. Jeffery Trustee 12/30/94
Arch S. Jeffery
s/Robert D. McBride Trustee 12/30/94
Robert D. McBride
s/John L. Propst Trustee 12/30/94
John L. Propst
s/John J. Sciullo Trustee 12/30/94
John J. Sciullo
Does not include fees and expenses of the non-interested Trustees
(including counsel). The investment manager is
contractually required to reduce its Management Fee in an amount equal
to the Fund's allocable portion of such fees
and expenses, which are estimated to be 0.02% of the Fund's net assets.
(See "Management.")
(1) Effective April 4, 1994, the Retail and Institutional classes of
shares were reclassified as a single class of shares known
as Investor Shares. The amounts shown for the year ended August 31,
1994, were calculated using the performance of a
Retail Share outstanding from September 1, 1993 to April 3, 1994, and
the performance of an Investor Share outstanding
from April 4, 1994 to August 31, 1994. The Financial Highlights for
the year ended August 31, 1993 and prior years are
based upon a Retail Share outstanding.
( ) Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager. From April 4, 1994 to
October 16, 1994, Mellon Bank served as the Fund's investment manager.
Prior to April 4, 1994, The Boston Company
Advisors, Inc. served as the Fund's investment adviser.
* The Fund commenced operations on October 12, 1988.
** Annualized expense ratios before voluntary waiver of fees and/or
reimbursement of expenses for the years ended August
31, 1994, 1993 and 1992 were 4.21%, 3.15% and 2.11%, respectively.
*** Net investment income before waiver of fees and/or reimbursement of
expenses by investment adviser
for the years ended August 31, 1994, 1993 and 1992 were ($0.21), ($0.10)
and $0.00, respectively.
+ Annualized.
++ The annualized operating expense ratio excludes interest expense.
The annualized
ratio including interest expense was 1.80% for the year ended
August 31, 1993.
+++ Total return represents aggregate total return for the
periods indicated.
# Per share amounts have been calculated using the monthly average share
method,
which more appropriately presents the per share data for the year
since the use
of the
undistributed method does not accord with results of operations.
tbc/tbclaur/pea/tbis12.doc
1
Comment on Wang: 46332.45273Created on Wang: 03/14/88Revised on Wang:
10/19/92@
THE BOSTON COMPANY INVESTMENT SERIES
AMENDED AND RESTATED MASTER TRUST AGREEMENT
, 1992
@
@
THE BOSTON COMPANY INVESTMENT SERIES
AMENDED AND RESTATED MASTER TRUST AGREEMENT
Page
ARTICLE I. NAME AND DEFINITIONS 1
Section 1.1 Name.................................... 1
Section 1.2 Definitions 1
(a) "By-laws".......................... 1
(b) "Class"............................ 2
(c) "Commission"....................... 2
(d) "Declaration of Trust"............. 2
(e) "1940 Act"......................... 2
(f) "Shareholder"...................... 2
(g) "Shares"........................... 2
(h) "Sub-Trust" or "Series"............ 2
(i) "Trust............................. 2
(j) "Trustees"......................... 2
ARTICLE II. PURPOSE OF TRUST 2
ARTICLE III. THE TRUSTEES 2
Section 3.1 Number, Designation, Election, Term, etc. 2
(a) Trustees........................... 3
(b) Number............................. 3
(c) Election and Term.................. 3
(d) Resignation and Retirement......... 3
(e) Removal............................ 3
(f) Vacancies.......................... 3
(g) Effect of Death, Resignation, etc.. 4
(h) No Accounting...................... 4
Section 3.2 Powers of Trustees...................... 4
(a) Investments........................ 6
(b) Disposition of Assets.............. 6
(c) Ownership Powers................... 6
(d) Subscription....................... 6
(e) Form of Holding.................... 6
(f) Reorganization, etc................ 6
(g) Voting Trusts, etc................. 6
(h) Compromise......................... 7
(i) Partnerships, etc.................. 7
(j) Borrowing and Security............. 7
(k) Guarantees, etc.................... 7
(l) Insurance.......................... 7
(m) Pensions, etc...................... 7
(n) Distribution Plans................. 7
(i)
Page
Section 3.3 Certain Contracts....................... 8
(a) Advisory........................... 8
(b) Administration..................... 8
(c) Distribution....................... 9
(d) Custodian and Depository........... 9
(e) Transfer and Dividend
Disbursing Agency................ 9
(f) Shareholder Servicing.............. 9
(g) Accounting......................... 9
Section 3.4 Payment of Trust Expenses and
Compensation of Trustees.............. 10
Section 3.5 Ownership of Assets of the Trust........ 11
ARTICLE IV. SHARES 11
Section 4.1 Description of Shares................... 11
Section 4.2 Establishment and Designation of
Sub-Trusts............................ 12
(a) Assets Belonging to Sub-Trusts..... 13
(b) Liabilities Belonging to Sub-Trusts 13
(c) Dividends.......................... 14
(d) Liquidation........................ 15
(e) Voting............................. 15
(f) Redemption by Shareholder.......... 15
(g) Redemption by Trust................ 16
(h) Net Asset Value.................... 16
(i) Transfer........................... 17
(j) Equality........................... 17
(k) Fractions.......................... 17
(l) Conversion Rights.................. 18
Section 4.3 Ownership of Shares..................... 18
Section 4.4 Investments in the Trust................ 18
Section 4.5 No Pre-emptive Rights................... 18
Section 4.6 Status of Shares and Limitation of
Personal Liability.................... 18
Section 4.7 No Appraisal Rights..................... 19
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS 19
Section 5.1 Voting Powers........................... 19
Section 5.2 Meetings................................ 20
(ii)
Page
Section 5.3 Record Dates............................ 20
Section 5.4 Quorum and Required Vote................ 21
Section 5.5 Action by Written Consent............... 21
Section 5.6 Inspection of Records................... 21
Section 5.7 Additional Provisions................... 21
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION 21
Section 6.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice............. 21
Section 6.2 Trustee's Good Faith Action; Expert
Advice; No Bond or Surety............. 22
Section 6.3 Indemnification of Shareholders......... 23
Section 6.4 Indemnification of Trustees, Officers,
etc................................... 23
Section 6.5 Compromise Payment...................... 24
Section 6.6 Indemnification Not Exclusive, etc...... 24
Section 6.7 Liability of Third Persons Dealing with
Trustees.............................. 25
ARTICLE VII. MISCELLANEOUS 25
Section 7.1 Duration and Termination of Trust....... 25
Section 7.2 Reorganization.......................... 25
Section 7.3 Amendments.............................. 26
Section 7.4 Filing of Copies; References; Headings.. 27
Section 7.5 Applicable Law.......................... 28
@
(iii)
THE BOSTON COMPANY INVESTMENT SERIES
AMENDED AND RESTATED MASTER TRUST AGREEMENT
AMENDED AND RESTATED MASTER TRUST AGREEMENT made at Boston,
Massachusetts as of this day of , 1992, by the Trustees
hereunder, and by the holders of shares of beneficial interest to be issued
hereunder as hereinafter provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust
hereunder, and to issue classes of Shares of any Sub-Trust or divide Shares
of any Sub-Trust into two or more classes, all in accordance with the
provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance with
the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire
in any manner as Trustees hereunder IN TRUST to manage and dispose of the
same upon the following terms and conditions for the benefit of the holders
from time to time of shares of beneficial interest in this Trust or Sub-
Trusts (as hereinafter defined) created hereunder as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as THE BOSTON COMPANY
INVESTMENT SERIES and the Trustees shall conduct the business of the Trust
under that name or any other name or names as they may from time to time
determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time;
(b) "Class" refers to any class of Shares of any Series or Sub-Trust
established and designated under or in accordance with the provisions of
Article IV;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Declaration of Trust" shall mean this Amended and Restated
Master Trust Agreement, as amended or restated from time to time;
(e) "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(f) "Shareholder" means a record owner of Shares;
(g) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust and/or
any class of any Sub-Trust (as the context may require) shall be divided
from time to time;
(h) "Sub-Trust" or "Series" refers to a series of Shares established
and designated under or in accordance with the provisions of Article IV;
(i) "Trust" refers to the Massachusetts business trust established
by this Declaration of Trust, as amended from time to time, inclusive of
each and every Sub-Trust established hereunder; and
(j) "Trustees" refers to the Trustees of the Trust and of each Sub-
Trust hereunder named herein or elected in accordance with Article III.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Trustees. The Trustees hereof and of each Sub-Trust hereunder
are Ruth Marie Adams, Francis P. Brennan, James M. Fitzgibbons, Kenneth A.
Himmel, William J. Nutt and Roslyn M. Watson.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease (to not less than two)
the number of Trustees to a number other than the number theretofore
determined. No decrease in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his term, but
the number of Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 3.1.
(c) Election and Term. The Trustees shall be elected by the
Shareholders of the Trust at the first meeting of the Shareholders following
the initial public offering of shares of the Trust. Each Trustee, whether
named above or hereafter becoming a Trustee, shall serve as a Trustee of the
Trust and of each Sub-Trust hereunder during the lifetime of this Trust and
until its termination as hereinafter provided except as such Trustee sooner
dies, resigns or is removed. Subject to Section 16(a) of the 1940 Act, the
Trustees may elect their own successors and may, pursuant to Section 3.1(f)
hereof, appoint Trustees to fill vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to
the other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as
is specified in such instrument and shall be effective as to the Trust and
each Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause at
any time: (i) by written instrument, signed by at least two-thirds of the
number of Trustees in office immediately prior to such removal, specifying
the date upon which such removal shall become effective; or (ii) by vote of
Shareholders holding not less than two-thirds of the Shares then
outstanding, cast in person or by proxy at any meeting called for the
purpose; or (iii) by a written declaration signed by Shareholders holding
not less than two-thirds of the Shares then outstanding and filed with the
Trust's custodian. Any such removal shall be effective as to the Trust and
each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from
any reason, including without limitation the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase
in the number of
Trustees by the other Trustees may (but so long as there are at least two
remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section
16(a) of the 1940 Act, through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine and
such appointment shall be effective upon the written acceptance of the
person named therein to serve as a Trustee and agreement by such person to
be bound by the provisions of this Declaration of Trust, except that any
such appointment in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees to be effective at
a later date shall become effective only at or after the effective date of
said retirement, resignation or increase in number of Trustees. As soon as
any Trustee so appointed shall have accepted such appointment and shall have
agreed in writing to be bound by this Declaration of Trust and the
appointment is effective, the Trust estate shall vest in the new Trustee,
together with the continuing Trustees, without any further act or
conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall
not operate to annul or terminate the Trust or any Sub-Trust hereunder or to
revoke or terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or
under circumstances which would justify his removal for cause, no person
ceasing to be a Trustee as a result of his death, resignation, retirement,
removal or incapacity (nor the estate of any such person) shall be required
to make an accounting to the Shareholders or remaining Trustees upon such
cessation.
Section 3.2 Powers of Trustees. The Trustees in all instances shall
act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any
and all acts and to make and execute any and all contracts and instruments
that they may consider necessary or appropriate in connection with the
management of the Trust. The Trustees shall not be bound or limited by
present or future laws or customs with regard to investment by trustees or
fiduciaries, but shall have full authority and absolute power and control
over the assets of the Trust and the business of the Trust to the same
extent as if the Trustees were the sole owners of the assets of the Trust
and the business in their own right, including such authority, power and
control to do all acts and things as they, in their uncontrolled discretion,
shall deem proper to accomplish the purposes of this Trust. Without
limiting the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business and affairs of the Trust and may
amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may sue or be sued in the name of the Trust;
they may from time to time in accordance with the provisions of Section 4.1
hereof establish Sub-Trusts, each such Sub-Trust to operate as a separate
and distinct investment medium and with separately defined investment
objectives and policies and distinct investment purposes; they may from time
to time in accordance with the provisions of Section 4.1 hereof establish
classes of Shares of any Series or Sub-Trust or divide the Shares of any
Series or Sub-Trust into classes; they may as they consider appropriate
elect and remove officers and appoint and terminate agents and consultants
and hire and terminate employees, any one or more of the foregoing of whom
may be a Trustee, and may provide for the compensation of all of the
foregoing; they may appoint from their own number, and terminate, any one or
more committees consisting of two or more Trustees, including without
implied limitation an executive committee, which may, when the Trustees are
not in session and subject to the 1940 Act, exercise some or all of the
power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more advisers,
administrators, depositories and custodians and may authorize any depository
or custodian to employ subcustodians or agents and to deposit all or any
part of such assets in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting or
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, and set record dates or times for the
determination of Shareholders or various of them with respect to various
matters; they may compensate or provide for the compensation of the
Trustees, officers, advisers, administrators, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms as they
deem appropriate; and in general they may delegate to any officer of the
Trust, to any committee of the Trustees and to any employee, adviser,
administrator, distributor, depository, custodian, transfer and dividend
disbursing agent, or any other agent or consultant of the Trust such
authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust,
including without implied limitation the power and authority to act in the
name of the Trust and any Sub-Trust and of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the
Trustees shall have power and authority for and on behalf of the Trust and
each separate Sub-Trust established hereunder:
(a) Investments. To invest and reinvest cash and other property,
and to hold cash or other property uninvested without in any event being
bound or limited by any present or future law or custom in regard to
investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the assets
of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities, debt
instruments or property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation
to securities, debt instruments or property as the Trustees shall deem
proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer, unregistered
or other negotiable form, or in the name of the Trustees or of the Trust or
of any Sub-Trust or in the name of a custodian, subcustodian or other
depository or a nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan
for the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument of which is or was held in the
Trust; to consent to any contract, lease, mortgage, purchase or sale of
property by such corporation or issuer, and to pay calls or subscriptions
with respect to any security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee, depositary,
voting trustee or otherwise, and in that connection to deposit any security
or debt instrument with, or transfer any security or debt instrument to, any
such committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security or debt instrument (whether or
not so deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation of
such committee, depositary or trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims
in favor of or against the Trust or any Sub-Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure obligations
arising in connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof; and to
mortgage and pledge the Trust property or any part thereof to secure any of
or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and principal
on its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, consultants, investment
advisers, managers, administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected therewith),
of the Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or omitted
by any such person in any such capacity, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such person against such liability;
and
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including
the purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
(n) Distribution Plans. To adopt on behalf of the Trust or any Sub-
Trust with respect to any class thereof a plan of distribution and related
agreements thereto pursuant to the terms of Rule 12b-1 of the 1940 Act and
to make payments from Trust assets pursuant to said Rule 12b-1 Plan.
Except as otherwise provided by the l940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the
Trustees on behalf of the Trust or any Sub-Trust may be taken by a majority
of the Trustees present at a meeting of Trustees (a quorum, consisting of at
least one-half of the Trustees then in office, being present), within or
without Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other at the same time, and
participation by such means shall constitute presence in person at a
meeting, or by written consents of a majority of the Trustees then in office
(or such larger or different number as may be required by the 1940 Act or
other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present
and future law or custom in regard to delegation of powers by trustees
generally, the Trustees may, at any time and from time to time and without
limiting the generality of their powers and authority otherwise set forth
herein, enter into one or more contracts with any one or more corporations,
trusts, associations, partnerships, limited partnerships, other type of
organizations, or individuals (a "Contracting Party"), to provide for the
performance and assumption of some or all of the following services, duties
and responsibilities to, for or on behalf of the Trust and/or any Sub-Trust,
and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set
forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees
and in conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to
manage such investments and assets, make investment decisions with respect
thereto, and to place purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with respect to
the operations of the Trust and each Sub-Trust (including each class
thereof), to supervise all or any part of the operations of the Trust and
each Sub-Trust, and to provide all or any part of the administrative and
clerical personnel, office space and office equipment and services
appropriate for the efficient administration and operations of the Trust and
each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof), to be principal underwriter of
such Shares, and/or to act as agent of the Trust and each Sub-Trust in the
sale of Shares and the acceptance or rejection of orders for the purchase of
Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and each Sub-Trust and
accounting records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of
the ownership of outstanding Shares, the issuance and redemption and the
transfer thereof, and to disburse any dividends declared by the Trustees and
in accordance with the policies of the Trustees and/or the instructions of
any particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties
and responsibilities provided for, including provisions that are not
inconsistent with the 1940 Act relating to the standard of duty of and the
rights to indemnification of the Contracting Party and others, as the
Trustees may determine. Nothing herein shall preclude, prevent or limit the
Trust or a Contracting Party from entering into sub-contractual arrangements
relating to any of the matters referred to in Sections 3.3(a) through (g)
hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any Contracting
Party or that the Contracting Party or any parent or affiliate thereof is a
Shareholder or has an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one
or more other corporations, trusts, associations, partnerships,
limited partnerships or other organizations, or have other business or
interests,
shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the Trust
or any Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee
or officer of the Trust from voting upon or executing the same or create any
liability or accountability to the Trust, any Sub-Trust or its Shareholders,
provided that in the case of any relationship or interest referred to in the
preceding clause (i) on the part of any Trustee or officer of the Trust
either (x) the material facts as to such relationship or interest have been
disclosed to or are known by the Trustees not having any such relationship
or interest and the contract involved is approved in good faith by a
majority of such Trustees not having any such relationship or interest (even
though such unrelated or disinterested Trustees are less than a quorum of
all of the Trustees), (y) the material facts as to such relationship or
interest and as to the contract have been disclosed to or are known by the
Shareholders entitled to vote thereon and the contract involved is
specifically approved in good faith by vote of the Shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is
authorized, approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the
principal or income of the Trust or any Sub-Trust, or partly out of
principal and partly out of income, and to charge or allocate the same to,
between or among such one or more of the Sub-Trusts and/or one or more
classes of Shares thereof that may be established and designated pursuant to
Article IV, as the Trustees deem fair, all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the Trust, any Sub-
Trust and/or any class of Shares thereof, or in connection with the
management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer
agent, dividend disbursing agent, accounting agent, Shareholder servicing
agent, and such other agents, consultants, and independent contractors and
such other expenses and charges as the Trustees may deem necessary or proper
to incur. Without limiting the generality of any other provision hereof,
the Trustees shall be entitled to reasonable compensation from the Trust for
their services as Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the
Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all with $.001 par value, and the
Trustees shall have the authority from time to time to establish and
designate one or more Series of Shares (including without limitation those
Sub-Trusts specifically established and designated in Section 4.2), and one
or more classes thereof as they deem necessary or desirable, and to fix and
determine the relative rights and preferences as between the different Sub-
Trusts or classes of Shares as to right of redemption and the price, terms
and manner of redemption, special and relative rights as to dividends and
other distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the several Sub-Trusts or
classes thereof shall have separate voting rights or no voting rights.
Except as aforesaid, as otherwise provided herein, or as provided in an
instrument of the Trustees establishing and designating a Sub-Trust or
class, all Shares of the different Sub-Trusts or classes thereof shall be
identical.
The number of authorized Shares and the number of Shares of each Sub-
Trust or class thereof that may be issued is unlimited, and the Trustees may
issue Shares of any Sub-Trust or class for such consideration and on such
terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders.
All Shares when so issued on the terms determined by the Trustees shall be
fully paid and non-assessable (but may be subject to mandatory contribution
back to the Trust as provided in subsection (h) of Section 4.2). The
Trustees may classify or reclassify any unissued Shares or any Shares
previously issued and reacquired of any Sub-Trust or class into one or more
Sub-Trusts or classes that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
Sub-Trust or class), reissue for such consideration and on such terms as
they may determine, or cancel, at their discretion from time to time, any
Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of
determining the holders of Shares entitled to be treated as such, to the
extent provided or referred to in Section 5.3.
The establishment and designation of any Sub-Trust or classes of
Shares in addition to those established and designated in Section 4.2 shall
be effective (i) upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation of the relative
rights and preferences of the Sub-Trust or class, (ii) upon the execution of
such an instrument in writing by an officer of the Trust pursuant to the
vote of a majority of the Trustees, or (iii) as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any
particular Sub-Trust or class previously established and designated the
Trustees may by an instrument executed by a majority of their number (or by
an instrument executed by an officer of the Trust pursuant to the vote of a
majority of the Trustees) abolish that Sub-Trust or class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration of
Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust (including any classes thereof) of the Trust to the
same extent as if such person were not a Trustee, officer or other agent of
the Trust; and the Trust may issue and sell or cause to be issued and sold
and may purchase Shares of any Sub-Trust (including any classes thereof)
from any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or
purchase of Shares of such Sub-Trust (including any classes thereof)
generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without
limiting the authority of the Trustees set forth in Section 4.1 to establish
and designate any further Sub-Trusts and classes, the Trustees hereby
establish and designate the following Sub-Trusts and classes thereof: "The
Boston Company Asset Allocation Fund," consisting of a "Retail Class" and an
"Institutional Class;" "The Boston Company International Fund," consisting
of a "Retail Class" and an "Institutional Class;" "The Boston Company
Contrarian Fund," consisting of a "Retail Class" and an "Institutional
Class;" "The Boston Company Short-Term Bond Fund," consisting of a "Retail
Class" and an "Institutional Class;" and "The Boston Company Core Equity
Fund," consisting of a "Retail Class," an "Institutional Class" and an
"Investment Class." The Shares of such Sub-Trusts and classes thereof and
any Shares of any further Sub-Trusts or classes that may from time to time
be established and designated by the Trustees shall (unless the Trustees
otherwise
determine with respect to some further Sub-Trust or class at the time of
establishing and designating the same) have the following relative rights
and preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by
the Trust for the issue or sale of Shares of a particular Sub-Trust or any
classes thereof, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall be held by the Trustees in
trust for the benefit of the holders of Shares of that Sub-Trust or class
thereof and shall irrevocably belong to that Sub-Trust (and be allocable to
any classes thereof) for all purposes, and shall be so recorded upon the
books of account of the Trust. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same
may be, together with any General Items (as hereinafter defined) allocated
to that Sub-Trust as provided in the following sentence, are herein referred
to as "assets belonging to" that Sub-Trust (and be allocable to any classes
thereof). In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Sub-Trust (collectively "General
Items"), the Trustees shall allocate such General Items to and among any one
or more of the Sub-Trusts established and designated from time to time in
such manner and on such basis as they, in their sole discretion, deem fair
and equitable; and any General Items so allocated to a particular Sub-Trust
shall belong to that Sub-Trust (and be allocable to any classes thereof).
Each such allocation by the Trustees shall be conclusive and binding upon
the Shareholders of all Sub-Trusts (including any classes thereof) for all
purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to
each particular Sub-Trust shall be charged with the liabilities in respect
of that Sub-Trust and all expenses, costs, charges and reserves belonging to
that Sub-Trust, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as belonging to any
particular Sub-Trust shall be allocated and charged by the Trustees to and
among any one or more of the Sub-Trusts established and designated from time
to time in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. In addition, the liabilities in respect
of a particular class of Shares of a particular Sub-Trust and all expenses,
costs, charges and reserves belonging to that class of Shares, and any
general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-
Trust shall be allocated and charged by the Trustees to and among any one or
more of the classes of Shares of that Sub-Trust established and designated
from time to time in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to a Sub-Trust or class
thereof are herein referred to as "liabilities belonging to" that Sub-Trust
or class thereof. Each allocation of liabilities, expenses, costs, charges
and reserves by the Trustees shall be conclusive and binding upon the
Shareholders, creditors and any other persons dealing with the Trust or any
Sub-Trust (including any classes thereof) for all purposes. Any creditor of
any Sub-Trust may look only to the assets of that Sub-Trust to satisfy such
creditor's debt.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a
particular Sub-Trust or any class thereof may be paid with such frequency as
the Trustees may determine, which may be daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with such frequency
as the Trustees may determine, to the holders of Shares of that Sub-Trust or
class, from such of the income and capital gains, accrued or realized, from
the assets belonging to that Sub-Trust, or in the case of a class, belonging
to that Sub-Trust and allocable to that class, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to
that Sub-Trust or class. All dividends and distributions on Shares of a
particular Sub-Trust or class thereof shall be distributed pro rata to the
holders of Shares of that Sub-Trust or class in proportion to the number of
Shares of that Sub-Trust or class held by such holders at the date and time
of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure the Trustees may determine that no dividend or distribution shall
be payable on Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or times established by the
Trustees under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or class or a combination
thereof as determined by the Trustees or pursuant to any program that the
Trustees may have in effect at the time for the election by each Shareholder
of the mode of the making of such dividend or distribution to that
Shareholder. Any such dividend or distribution paid in Shares will be paid
at the net
asset value thereof as determined in accordance with subsection (h) of
Section 4.2.
(d) Liquidation. In the event of the liquidation or dissolution of
the Trust, the Shareholders of each Sub-Trust or any class thereof that has
been established and designated shall be entitled to receive, when and as
declared by the Trustees, the excess of the assets belonging to that Sub-
Trust, or in the case of a class, belonging to that Sub-Trust and allocable
to that class, over the liabilities belonging to that Sub-Trust or class.
The assets so distributable to the Shareholders of any particular Sub-Trust
or class thereof shall be distributed among such Shareholders in proportion
to the number of Shares of that Sub-Trust or class thereof held by them and
recorded on the books of the Trust. The liquidation of any particular Sub-
Trust or class may be authorized at any time by vote of a majority of the
Trustees then in office.
(e) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a Share shall be entitled to one vote for each whole Share
standing in his name on the books of the Trust irrespective of the Series
thereof and classes thereof and all Shares of all Series and classes thereof
shall vote as a single class ("Single Class Voting"); provided, however,
that (a) as to any matter with respect to which a separate vote of any
Series or classes thereof is required by the 1940 Act or would be required
under the Massachusetts Business Corporation Law if the Trust were a
Massachusetts business corporation, such requirements as to a separate vote
by that Series or class shall apply in lieu of Single Class Voting as
described above; (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more Series or classes
thereof, then, subject to (c) below, the Shares of all other Series or
classes thereof shall vote as a single class; and (c) as to any matter which
does not affect the interest of a particular Series or class thereof, only
the holders of Shares of the one or more affected Series or classes thereof
shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Sub-Trust or any class thereof shall have the right at such times
as may be permitted by the Trust, but no less frequently than once each
week, to require the Trust to redeem all or any part of his Shares of that
Sub-Trust or class thereof at a redemption price equal to the net asset
value per Share of that Sub-Trust or class thereof next determined in
accordance with subsection (h) of this Section 4.2 after the Shares are
properly tendered for redemption, subject to any contingent deferred sales
charge in effect at the time of redemption. Payment of the redemption price
shall be in cash; provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Trust may, subject to
the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Sub-Trust of which the Shares
being redeemed are part at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent
permissible under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust or class
thereof that has been established and designated is subject to redemption by
the Trust at the redemption price which would be applicable if such Share
was then being redeemed by the Shareholder pursuant to subsection (f) of
this Section 4.2: (a) at any time, if the Trustees determine in their sole
discretion and by majority vote that failure to so redeem may have
materially adverse consequences to the holders of the Shares of the Trust or
any Sub-Trust thereof or class thereof, or (b) upon such other conditions as
may from time to time be determined by the Trustees and set forth in the
then current Prospectus of the Trust with respect to maintenance of
Shareholder accounts of a minimum amount. Upon such redemption the holders
of the Shares so redeemed shall have no further right with respect thereto
other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust
shall be (i) in the case of a Sub-Trust whose Shares are not divided into
classes, the quotient obtained by dividing the value of the net assets of
that Sub-Trust (being the value of the assets belonging to that Sub-Trust
less the liabilities belonging to that Sub-Trust) by the total number of
Shares of that Sub-Trust outstanding, and (ii) in the case of a class of
Shares of a Sub-Trust whose Shares are divided into classes, the quotient
obtained by dividing the value of the net assets of that Sub-Trust allocable
to such class (being the value of the assets belonging to that Sub-Trust
allocable to such class less the liabilities belonging to such class) by the
total number of Shares of such class outstanding; all determined in
accordance with the methods and procedures, including without limitation
those with respect to rounding, established by the Trustees from time to
time.
The Trustees may determine to maintain the net asset value per Share
of any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations
of income attributable to that Sub-Trust as dividends payable in additional
Shares of that Sub-Trust at the designated constant dollar amount and for
the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed
to have contributed to the capital of the Trust attributable to that Sub-
Trust his pro rata portion of the total number of Shares required to be
cancelled in order to permit the net asset value per Share of that Sub-Trust
to be maintained, after reflecting such loss, at the designated constant
dollar amount. Each Shareholder of the Trust shall be deemed to have
agreed, by his investment in any Sub-Trust with respect to which the
Trustees shall have adopted any such procedure, to make the contribution
referred to in the preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust or class
thereof shall be transferable, but transfers of Shares of a particular Sub-
Trust or class thereof will be recorded on the Share transfer records of the
Trust applicable to that Sub-Trust or class only at such times as
Shareholders shall have the right to require the Trust to redeem Shares of
that Sub-Trust or class and at such other times as may be permitted by the
Trustees.
(j) Equality. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all
Shares of each particular Sub-Trust or class thereof shall represent an
equal proportionate interest in the assets belonging to that Sub-Trust, or
in the case of a class, belonging to that Sub-Trust and allocable to that
class, subject to the liabilities belonging to that Sub-Trust or class, and
each Share of any particular Sub-Trust or class shall be equal to each other
Share of that Sub-Trust or class; but the provisions of this sentence shall
not restrict any distinctions permissible under subsection (c) of this
Section 4.2 that may exist with respect to dividends and distributions on
Shares of the same Sub-Trust or class. The Trustees may from time to time
divide or combine the Shares of any particular Sub-Trust or class into a
greater or lesser number of Shares of that Sub-Trust or class without
thereby changing the proportionate beneficial interest in the assets
belonging to that Sub-Trust or class or in any way affecting the rights of
Shares of any other Sub-Trust or class.
(k) Fractions. Any fractional Share of any Sub-Trust or class, if
any such fractional Share is outstanding, shall carry proportionately all
the rights and obligations of a whole Share of that Sub-Trust or class,
including rights and obligations with respect to voting, receipt of
dividends and distributions, redemption of Shares, and liquidation of the
Trust.
(l) Conversion Rights. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide that
holders of Shares of any Sub-Trust or class thereof shall have the right to
convert said Shares into Shares of one or more other Sub-Trust or class
thereof in accordance with such requirements and procedures as may be
established by the Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof that has been established and designated.
No certificates certifying the ownership of Shares need be issued except as
the Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the issuance of Share
certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who
are the Shareholders and as to the number of Shares of each Sub-Trust and
class thereof held from time to time by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust and each Sub-Trust thereof from such persons and on
such terms and for such consideration, not inconsistent with the provisions
of the 1940 Act, as they from time to time authorize. The Trustees may
authorize any distributor, principal underwriter, custodian, transfer agent
or other person to accept orders for the purchase of Shares that conform to
such authorized terms and to reject any purchase orders for Shares whether
or not conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no pre-
emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the Trust or any
Sub-Trust thereof nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere against the
Trust or the Trustees, but only to the rights of said decedent under this
Trust. Ownership of Shares shall not entitle the Shareholder to any title
in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or
for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay.
Section 4.7 No Appraisal Rights. Shareholders shall have no right to
demand payment for their shares or to any other rights of dissenting
shareholders in the event the Trust participates in any transaction which
would give rise to appraisal or dissenters' rights by a shareholder of a
corporation organized under Chapter 156B of the General Laws of the
Commonwealth of Massachusetts.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act,
(iii) with respect to any termination or reorganization of the Trust to the
extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in
Section 7.3, (v) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or
claim should or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or any Sub-Trust thereof or the
Shareholders (provided, however, that a Shareholder of a particular Sub-
Trust shall not be entitled to a derivative or class action on behalf of any
other Sub-Trust (or Shareholder of any other Sub-Trust) of the Trust) and
(vi) with respect to such additional matters relating to the Trust as may be
required by the 1940 Act, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or
any state, or as the Trustees may consider necessary or desirable. There
shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to
be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged
at or prior to its exercise and the burden of proving invalidity shall rest
on the challenger. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. No annual or regular meeting of Shareholders
is required. Special meetings of Shareholders may be called by the Trustees
from time to time for the purpose of taking action upon any matter requiring
the vote or authority of the Shareholders as herein provided or upon any
other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given
by the Trustees by mailing such notice at least seven days before such
meeting, postage prepaid, stating the time, place and purpose of the
meeting, to each Shareholder at the Shareholder's address as it appears on
the records of the Trust. The Trustees shall promptly call and give notice
of a meeting of Shareholders for the purpose of voting upon removal of any
Trustee of the Trust when requested to do so in writing by Shareholders
holding not less than 10% of the Shares then outstanding. If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders holding at least
10% of the Shares then outstanding requesting a meeting be called for any
other purpose requiring action by the Shareholders as provided herein or in
the By-Laws, then Shareholders holding at least 10% of the Shares then
outstanding may call and give notice of such meeting, and thereupon the
meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to participate in any dividend or
distribution, or for the purpose of any other action, the Trustees may from
time to time close the transfer books for such period, not exceeding 30 days
(except at or in connection with the termination of the Trust), as the
Trustees may determine; or without closing the transfer books the Trustees
may fix a date and time not more than 60 days prior to the date of any
meeting of Shareholders or other action as the date and time of record for
the determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes
of such other action, and any Shareholder who was a Shareholder at the date
and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action, even though he has since that date and time disposed
of his Shares, and no Shareholder becoming such after that date and time
shall be so entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action.
Section 5.4 Quorum and Required Vote. Except as otherwise provided
by the 1940 Act or other applicable law, thirty percent of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders'meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting without the
necessity of further notice. A majority of the Shares voted, at a meeting
of which a quorum is present shall decide any questions and a plurality
shall elect a Trustee, except when a different vote is required or permitted
by any provision of the 1940 Act or other applicable law or by this
Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may
be taken without a meeting if a majority of Shareholders entitled to vote on
the matter (or such larger proportion thereof as shall be required by the
1940 Act or by any express provision of this Declaration of Trust or the By-
Laws) consent to the action in writing and such written consents are filed
with the records of the meetings of Shareholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any
claim against the Trust shall look only to the assets of the Sub-Trust with
which such person dealt for payment under such credit, contract or claim;
and neither the Shareholders of any Sub-Trust nor the Trustees, nor any of
the Trust's officers, employees or agents, whether past, present or future,
nor any other Sub-Trust shall be personally liable therefor. Every note,
bond, contract, instrument, certificate or undertaking and every other act
or thing whatsoever executed or done by or on behalf of the Trust, any Sub-
Trust or the
Trustees or any of them in connection with the Trust shall be conclusively
deemed to have been executed or done only by or for the Trust (or the Sub-
Trust) or the Trustees and not personally. Nothing in this Declaration of
Trust shall protect any Trustee or officer against any liability to the
Trust or the Shareholders to which such Trustee or officer would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officers or officer shall give
notice that this Declaration of Trust is on file with the Secretary of The
Commonwealth of Massachusetts and shall recite to the effect that the same
was executed or made by or on behalf of the Trust or by them as Trustees or
Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property
of the Trust, or the particular Sub-
Trust in question, as the case may be, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretion
hereunder shall be binding upon everyone interested. A Trustee shall be
liable for his own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. Subject to the foregoing, (a) the
Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, consultant, adviser,
administrator, distributor or principal underwriter, custodian or transfer,
dividend disbursing, Shareholder servicing or accounting agent of the Trust,
nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission
in accordance with such advice or for failing to follow such advice; and (c)
in discharging their duties, the Trustees, when acting in good faith, shall
be entitled to rely upon the books of account of the Trust and upon written
reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of
the contract involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall
not be required to give any bond or surety or any other security for the
performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or
held to be personally liable for any obligation or liability of the Trust
solely by reason of being or having been a Shareholder and not because of
such Shareholder's acts or omissions or for some other reason, said Sub-
Trust (upon proper and timely request by the Shareholder) shall assume the
defense against such charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or his heirs, executors, administrators
or other legal representatives or in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled out of
the assets of said Sub-Trust estate to be held harmless from and indemnified
against all loss and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust
shall indemnify (from the assets of the Sub-Trust or Sub-Trusts in question)
each of its Trustees and officers (including persons who serve at the
Trust's request as directors, officers or trustees of another organization
in which the Trust has any interest as a shareholder, creditor or otherwise
[hereinafter referred to as a "Covered Person"]) against all liabilities,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person in connection
with the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been involved as a
party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office (such
conduct referred to hereafter as "Disabling Conduct"). A determination that
the Covered Person is entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before whom the proceeding
was brought that the person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of
Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling
Conduct by (a) a vote of a majority of a quorum of Trustees who are neither
"interested persons" of the Trust as defined in
section 2(a)(l9) of the 1940 Act nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Sub-Trust in
question in advance of the final disposition of any such action, suit or
proceeding, provided that the Covered Person shall have undertaken to repay
the amounts so paid to the Sub-Trust in question if it is ultimately
determined that indemnification of such expenses is not authorized under
this Article VI and (i) the Covered Person shall have provided security for
such undertaking, (ii) the Trust shall be insured against losses arising by
reason of any lawful advances, or (iii) a majority of a quorum of the
disinterested Trustees who are not a party to the proceeding, or an
independent legal counsel in a written opinion, shall have determined, based
on a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Covered Person ultimately
will be found entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either
for said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent
legal counsel in a written opinion. Approval by the Trustees pursuant to
clause (a) or by independent legal counsel pursuant to clause (b) shall not
prevent the recovery from any Covered Person of any amount paid to such
Covered Person in accordance with any of such clauses as indemnification if
such Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that
such Covered Person's action was in or not opposed to the best interests of
the Trust or to have been liable to the Trust or its Shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled.
As used in this Article VI, "Covered Person" shall include such person's
heirs, executors and administrators, an "interested Covered Person" is one
against whom the action, suit or other proceeding in question or another
action, suit or other proceeding on the same or similar grounds is then or
has been pending or threatened, and a "disinterested" person is a person
against whom none of such
actions, suits or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened. Nothing contained in this Article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability insurance
on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust or any Sub-Trust may be terminated at any
time by a majority of the Trustees then in office subject to a favorable
vote of a majority of the outstanding voting securities, as defined in the
1940 Act, Shares of each Sub-Trust voting separately by Sub-Trust.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as
may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets
to distributable form in cash, securities or other property, or any
combination thereof, and distribute the proceeds to the Shareholders, in
conformity with the provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or to the Trust
to be held as assets belonging to another Sub-Trust of the Trust, in
exchange for cash, shares or other securities (including, in the case of a
transfer to another Sub-Trust of the Trust, Shares of such other Sub-Trust
or any class thereof with such transfer either (1) being made subject to, or
with the assumption by the transferee of, the liabilities belonging to
each Sub-Trust the assets of which are so transferred, or (2) not being made
subject to, or not with the assumption of, such liabilities; provided,
however, that no assets belonging to any particular Sub-Trust shall be so
transferred unless the terms of such transfer shall have first been approved
at a meeting called for the purpose by the affirmative vote of the holders
of a majority of the outstanding voting Shares, as defined in the 1940 Act,
of that Sub-Trust. Following such transfer, the Trustees shall distribute
such cash, shares or other securities (taking into account the differences
among the classes of Shares thereof, if any, and giving due effect to the
assets and liabilities belonging to and any other differences among the
various Sub-Trusts the assets belonging to which have so been transferred)
among the Shareholders of the Sub-Trust the assets belonging to which have
been so transferred; and if all of the assets of the Trust have been so
transferred, the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the
successor, survivor, or non-survivor, (1) consolidate with one or more other
trusts, partnerships, associations or corporations organized under the laws
of the Commonwealth of Massachusetts or any other state of the United
States, to form a new consolidated trust, partnership, association or
corporation under the laws of which any one of the constituent entities is
organized, or (2) merge into one or more other trusts, partnerships,
associations or corporations organized under the laws of the Commonwealth of
Massachusetts or any other state of the United States, or have one or more
such trusts, partnerships, associations or corporations merged into it, any
such consolidation or merger to be upon such terms and conditions as are
specified in an agreement and plan of reorganization entered into by the
Trust, or one or more Sub-Trusts as the case may be, in connection
therewith. The terms "merge" or "merger" as used herein shall also include
the purchase or acquisition of any assets of any other trust, partnership,
association or corporation which is an investment company organized under
the laws of the Commonwealth of Massachusetts or any other state of the
United States. Any such consolidation or merger shall require approval by
the affirmative vote of the holders of a majority of the outstanding voting
Shares, as defined in the 1940 Act, of the Trust (or each Sub-Trust affected
thereby, as the case may be), except that such affirmative vote of the
holders of Shares shall not be required if the Trust (or Sub-Trust affected
thereby, as the case may be) shall be the survivor of such consolidation or
merger.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the
right to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any
Shareholder or Trustee or repeal the prohibition of assessment upon the
Shareholders without the express consent of each Shareholder or Trustee
involved. Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Shareholders) may be amended
at any time, so long as such amendment does not adversely affect the rights
of any Shareholder with respect to which such amendment is or purports to be
applicable and so long as such amendment is not in contravention of
applicable law, including the 1940 Act, by an instrument in writing signed
by a majority of the then Trustees (or by an officer of the Trust pursuant
to the vote of a majority of such Trustees). Any amendment to this
Declaration of Trust that adversely affects the rights of Shareholders may
be adopted at any time by an instrument in writing signed by a majority of
the then Trustees (or by an officer of the Trust pursuant to a vote of a
majority of such Trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.2 of Shareholders holding a
majority of the Shares entitled to vote. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the
terms of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate
(which may be a part of such instrument) executed by a Trustee or officer of
the Trust to the effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or
a copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each amendment hereto shall be filed by the Trust
with the Secretary of The Commonwealth of Massachusetts and with the Boston
City Clerk, as well as any other governmental office where such filing may
from time to time be required, but the failure to make any such filing shall
not impair the effectiveness of this instrument or any such amendment.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the
original, may rely on a copy certified by an officer of the Trust to be a
copy of this instrument or of any such amendments. In this instrument and
in any such amendment, references to this instrument, and all expressions
like "herein", "hereof" and "hereunder" shall be deemed to refer to this
instrument as a whole as the same may be amended or affected by any such
amendments. The masculine gender shall include the feminine and neuter
genders. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed
in any number of counterparts each of which shall be deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed
by and construed and administered according to the laws of said
Commonwealth, including the Massachusetts Business Corporation Law as the
same may be amended from time to time, to which reference is made with the
intention that matters not specifically covered herein or as to which an
ambiguity may exist shall be resolved as if the Trust were a business
corporation organized in Massachusetts, but the reference to said Business
Corporation Law is not intended to give the Trust, the Trustees, the
Shareholders or any other person any right, power, authority or
responsibility available only to or in connection with an entity organized
in corporate form. The Trust shall be of the type referred to in Section 1
of Chapter 182 of the Massachusetts General Laws and of the type commonly
called a Massachusetts business trust, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised by
such a trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston for themselves and their assigns, as of the day
and year first above written.
@
Ruth Marie Adams
Francis P. Brennan
James M. Fitzgibbons
Kenneth A. Himmel
William J. Nutt
Roslyn M. Watson
@
DP-2100/d
10/16/92
CR.003
Conv. #:
136261.c1
26
THE LAUREL INVESTMENT SERIES
AMENDMENT NO.3 TO THE AMENDED AND RESTATED
MASTER TRUST AGREEMENT
The undersigned, the President of The Laurel Investment Series (the
"Trust"), does hereby certify that, pursuant to Article VII, Section 7.3 of
the Trust's Amended and Restated Master Trust Agreement dated December 9,
1992 (the "Trust Instrument"), the following votes were duly adopted by at
least a majority of the Trustees of the Trust at meetings held July 27,
1994 and September 23, 1994, at which meetings a quorum was present and
acting throughout.
VOTED: That, effective upon the closing of the acquisition of The
Dreyfus Corporation by Mellon Bank, N.A., or upon such later date as the
President of the Trust shall determine, Article I, Section 1.1 of the Trust
Instrument shall be amended in the following respect:
"Name: This Trust shall be known as "The Dreyfus/Laurel
Investment Series," and the Trustees shall conduct the business of the
Trust under that name or any other name or names as they may from time to
time determine.
FURTHER
VOTED: That the name of each investment portfolio of the Trust shall
be changed to the name set forth below, effective as of October 17, 1994,
or such other date as the appropriate officers of the Trust shall
determine:
Laurel Short-Term Bond Fund Dreyfus/Laurel Short-Term
Bond Fund
Laurel International Fund Dreyfus/Laurel
International Fund
Laurel Contrarian Fund Dreyfus/Laurel Contrarian
Fund
FURTHER
VOTED: That pursuant to Article VII, Section 7.3 of the Amended and
Restated Master Trust Agreement dated December 9, 1992 (the "Trust
Instrument") of The Laurel Investment Series (the "Trust"), Article IV,
Section 4.2 of the Trust Instrument shall be amended to reflect the
foregoing changes in the names of the Trust's investment portfolios and to
read in its entirety as follows:
Section 4.2 Establishment and Designation of Sub-Trusts.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Series, the Trustees hereby establish
and designate three Sub-Trusts: "Dreyfus/Laurel Short-Term Bond Fund,"
"Dreyfus/Laurel International Fund" and "Dreyfus/Laurel Contrarian Fund."
The Shares of such Sub-Trusts and any Shares of any further Sub-Trusts that
may from time to time be established and designated by the Trustees, shall
(unless the Trustees otherwise determine with respect to some further Sub-
Trust at the time of establishing and designating the same) have the
following relative rights and preferences: . . .; and
FURTHER
VOTED: That any officer of the Trust be, and each of them hereby is,
authorized to prepare, execute, seal and deliver any and all documents,
instruments, certificates, papers and writings; to file the same with any
public official including, without limitation, the Secretary of State of
The Commonwealth of Massachusetts and the Boston City Clerk; and to do any
and all other acts, in the name of the Trust or on its behalf, as may be
necessary or advisable in connection with or in furtherance of the
foregoing votes; and
FURTHER
VOTED: That the foregoing amendment to the Trust's Trust Instrument
shall be effective on October 17, 1994, or such other date as the
appropriate officers of the Trust shall determine, upon the filing of an
instrument containing the same with the Secretary of State of The
Commonwealth of Massachusetts and the Boston City Clerk.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this
17th day of October, 1994.
________________________
Marie E. Connolly
President
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this _____ day of ______, 1994 between The Laurel
Investment Series, a Massachusetts business trust (hereinafter referred to
as the "Trust"), on behalf of the investment portfolios (individually a
"Fund", collectively the "Funds") listed hereto as Exhibit A, and MELLON
BANK, N.A., a national banking corporation (hereinafter referred to as the
"Adviser").
WHEREAS, the Trust is engaged in business as an open-end management
company and is so registered under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest ("Shares") in separate Funds with each such Fund representing the
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Trust currently offers shares of beneficial interest in
the Funds listed on Exhibit A, established by the Trust with respect to
which the Trust desires to retain the Adviser to render investment advisory
services hereunder and the Adviser is willing so to do; and
WHEREAS, the Trust desires for the Adviser to provide or otherwise
arrange for the provision of other services for the Funds, including
custody, transfer agency, administrative, accounting, legal, audit and
similar services;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. NAME OF TRUST.
The Adviser consents to the use by the Trust of the name "The Laurel
Investment Series" so long as this Agreement or an extension, renewal or
amendment thereof remains in effect, including any such agreements with any
organization which shall have succeeded to the business of the Adviser.
The Trust agrees that if and when no such agreement is in effect it will
cease to use that name or any name indicating that it is advised by or
otherwise associated with the Adviser.
2. APPOINTMENT OF ADVISER.
(a) The Trust hereby appoints the Adviser to act as investment
adviser to each of the Funds for the period and on the terms herein set
forth. The Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
(b) In the event that the Trust establishes one or more Funds other
than the Funds with respect to which it desires to retain the Adviser to
render investment advisory services hereunder, it shall notify the Adviser
in writing. If the Adviser is willing to render such services it shall
notify the Trust in writing whereupon each of such Funds shall become a
Fund hereunder and the compensation payable by such new Funds to the
Adviser will be as agreed in writing at the time.
3. DUTIES OF THE ADVISER.
(a) The Adviser shall supervise the investments of the Funds of the
Trust, maintain a continuous investment program for each Fund of the Trust,
determine what securities shall be purchased or sold by the Funds of the
Trust, secure and evaluate such information as it deems proper and take
whatever action is necessary or convenient to perform its functions,
including the placing of purchase and sale orders. With the approval of
the Board of Trustees, the Advisor may, from time to time, engage one or
more sub-investment advisers.
(b) The Adviser shall also provide, or arrange for and supervise the
provision of by third parties, to the Funds of custody, transfer agency,
administrative, accounting, legal, audit and similar services.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the account of each Fund with
brokers or dealers selected by the Adviser. In executing portfolio
transactions and selecting brokers or dealers, the Adviser will use its
best efforts to seek on behalf of the Trust or any Fund thereof the best
overall terms available. In assessing the best overall terms available for
any transaction, the Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). In evaluating the best overall
terms available, and in selecting the broker or dealer to execute a
particular transaction, the Adviser may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to any Fund and/or other accounts
over which the Adviser or any affiliate of the Adviser exercises investment
discretion. The Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for any Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer -- viewed in terms of
that particular transaction or in terms of all of accounts over which
investment discretion is so exercised.
(d) All of the functions undertaken by the Adviser hereunder shall
at all times be subject to any directions of the Board of Trustees of the
Trust, its committees or officers of the Trust acting under the authority
of the Board of Trustees.
4. COMPENSATION OF THE ADVISER.
(a) The Trust agrees to pay to the Adviser, and the Adviser agrees
to accept, as full compensation for the services and facilities provided by
the Adviser hereunder with respect to each Funds of the Trust, a fee
computed daily and payable monthly at the annual rates applied to the
average daily net assets of the applicable Funds as set forth in Exhibit A
attached hereto and incorporated herein, less, in the case of each Fund,
its allocable portion of the accrued fees and expenses (including counsel
fees) of the non-interested trustees of the Trust.
In case of termination of this Agreement with respect to any Funds
during any month, the fee with respect to such Funds for that month shall
be reduced proportionately based upon the number of calendar days during
which it is in effect, and the fee shall be computed upon the average net
assets of such Funds for the business days during which it is so in effect.
The fees payable under this Agreement shall be calculated by applying
1/365ths of the annual rate to the net assets of each Funds each day, such
net assets to be determined as of the close of business on that day or that
last previous business day, and shall be accrued daily.
(b) The Adviser will pay all of the Trust's expenses, including the
fees and other charges of third-party service providers engaged pursuant to
paragraph 3(a) or (b) above, except interest, taxes, brokerage commissions,
Rule 12b-1 distribution fees and expenses, fees and expenses of the non-
interested trustees (including counsel fees), and extraordinary expenses.
The Adviser will provide the Trust with all physical facilities and
personnel required to carry on the business of the Trust, including but not
limited to office space, office furniture, fixtures and equipment, office
supplies, computer hardware and software, and salaried and hourly paid
personnel. The Adviser may at its own expense employ others to provide all
or any part of such facilities and personnel.
5. LIMITATION OF LIABILITY OF ADVISER.
The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust or any Funds thereof in
connection with the performance of its obligations under this Agreement;
but nothing herein contained shall be construed to protect the Adviser
against any liability to the Trust by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the Agreement.
6. COVENANTS OF THE ADVISER.
All functions undertaken by the Adviser shall at all times conform
to, and be in accordance with, any requirements imposed by: (i) the
Investment Company Act of 1940, and any rules and regulations promulgated
thereunder; (ii) any other applicable provisions of law; (iii) the Amended
and Restated Master Trust Agreement dated December 9, 1992 as amended from
time to time; (iv) the By-Laws of the Trust as amended from time to time;
and (v) the registration statement of the Trust, as amended from time to
time, filed under the Securities Act of 1933 and the Investment Company of
1940.
7. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) This Agreement shall become effective with respect to each Funds
on the date hereof and, with respect to any additional Fund, on the date of
receipt by the Trust of notice from the Adviser in accordance with Article
2(b) hereof that the Adviser is willing to serve as Adviser with respect to
such Fund. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two years from the date hereof with
respect to the Funds and, with respect to each other Fund added to the
Trust pursuant to paragraph 2(b), for two years from the date on which such
Fund becomes a Fund hereunder, and shall continue in full force and effect
for periods of one year thereafter with respect to each Fund so long as
such continuance with respect to any such Fund is approved at least
annually, (a) by either the Trustees of the Trust or by vote of a majority
of the outstanding voting Shares (as defined in the 1940 Act) of such
Funds, and (b) in either event by the vote of a majority of the Trustees of
the Trust who are not parties to this Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of the
outstanding Shares (as defined in the 1940 Act) of any Funds shall be
effective to continue this Agreement with respect to any such Funds
notwithstanding (A) that this Agreement has not been approved by the
holders of a majority of the outstanding Shares of any other Funds affected
thereby, and (B) that this Agreement has not been approved by the vote of a
majority of the outstanding Shares of the Trust, unless such approval shall
be required by any other applicable law or otherwise.
(b) This Agreement may be terminated at any time, without payment of
any penalty, by vote of the Trustees of the Trust or by vote of a majority
of the outstanding Shares (as defined in the 1940 Act), or by the Adviser
on sixty (60) days' written notice to the other party.
(c) This Agreement shall automatically and immediately terminate in
the event of its assignment.
8. LIMITATION OF LIABILITY.
The term "Trustees of The Laurel Investment Series" means and refers
to the Trustees from time to time serving under the Amended and Restated
Master Trust Agreement dated December 9, 1992, as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly
agreed that the obligations of the Trust hereunder shall not be binding
upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the trust property of the
Trust, as provided in the Amended and Restated Master Trust Agreement of
the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees and shareholders of the Trust and signed by the
President of the Trust, acting as such, and neither such authorization by
such Trustees and shareholders nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Amended and Restated Master
Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed the day and year above written.
THE LAUREL INVESTMENT SERIES
By:
Name:
Title:
MELLON BANK, N.A.
By:
Name:
Title:
EXHIBIT A
THE LAUREL INVESTMENT SERIES
Investment Portfolio (Fund)
Investment Management Fee
International Fund
1.50%
Short-Term Bond Fund
0.55%
Asset Allocation Fund
0.90%
Contrarian Fund
1.25%
6/tbclaurl/merg/agreemnts/adagree3.doc/lac/03/22/94
Form of
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT
for
The Laurel Funds Trust
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT, made as of the
day of October, 1994, by and among THE LAUREL FUNDS TRUST, a
Massachusetts business trust (the "Trust"), MELLON BANK, N.A., a national
banking corporation organized under the laws of the United States ("Mellon
Bank"), and THE DREYFUS CORPORATION, a [ ]
("Dreyfus").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trust consists of several distinct investment portfolios
or series (collectively, the "Funds"); and
WHEREAS, the Trust, on behalf of the Funds, and Mellon Bank entered
into an Investment Management Agreement on April 4, 1994, under which
Mellon serves as the investment manager (the "Investment Manager") for the
Funds of the Trust; and
WHEREAS, Mellon Bank desires that its interest in the Investment
Management Agreement be assigned to Dreyfus and Dreyfus desires to assume
Mellon Bank's interest under the terms of the Investment Management
Agreement; and
WHEREAS, Mellon Bank, Dreyfus and the Trust believe that this
Assignment Agreement does not result in a change of actual control or
management of the Investment Manager to the Funds and, therefore, is not an
assignment as defined in Section 2(a)(4) of the Act nor an assignment for
purposes of Section 15(a)(4) of the Act; and
WHEREAS, Mellon Bank and the Trust agree to the terms of this
Assignment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants discussed in
this Assignment Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Assignment. Effective as of the date hereof, Mellon Bank
hereby assigns to Dreyfus all of Mellon Bank's interest in the Investment
Management Agreement dated April 4, 1994, to which Mellon Bank is a party
with the Trust.
- -1-
2. Assumption and Performance of Duties. Effective as of the date
hereof, Dreyfus hereby assumes and agrees to perform all of Mellon Bank's
duties and obligations
under the Investment Management Agreement and to be subject to all of the
terms and conditions of said Agreement as if they applied to Dreyfus; and
Dreyfus shall indemnify and hold harmless Mellon Bank from any claim or
demand made thereunder arising or incurred after the effective date
designated above.
3. Representation of Dreyfus. Dreyfus represents and warrants
that: (1) it is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended; and (2) Mellon Bank is its sole
shareholder.
4. Consent. The Trust hereby consents to this assignment by
Mellon Bank to Dreyfus of Mellon Bank's rights under the Investment
Management Agreement and to the assumption by Dreyfus of Mellon Bank's
interest in such Agreement and the duties and obligations thereunder, and
agrees, subject to the terms and conditions of said Agreement, to look to
Dreyfus for the performance of the Investment Manager's duties and
obligations under said Agreement in return for the consideration provided
for in said Agreement.
5. Limitation of Liability of Trustees, Officers and Shareholders.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the trust
property of the Trust, as provided in the Second Amended and Restated
Agreement and Declaration of Trust of the Trust. The execution and
delivery of this Assignment Agreement have been authorized by the Trustees
of the Trust and signed by the President of the Trust, acting as such, and
neither such authorization by such Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Second
Amended and Restated Agreement and Declaration of Trust.
6. Counterparts. This Assignment Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
- -2-
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their duly authorized officers hereunto duly
attested.
Attest:
By:
John E. Pelletier, Secretary Marie E. Connolly, President
The Laurel Funds Trust
Date: , 1994
Attest:
By:
James M. Gockley, Secretary Frank V. Cahouet, President
Mellon Bank, N.A.
Date: , 1994
Attest:
By
Mark N. Jacobs, Secretary Joseph S. DiMartino, President
The Dreyfus Corporation
Date: , 1994
- -3-
Form of
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT
for
The Laurel Tax-Free Municipal Funds
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT, made as of the
day of October, 1994, by and among THE LAUREL TAX-FREE MUNICIPAL
FUNDS, a Massachusetts business trust (the "Trust"), MELLON BANK, N.A., a
national banking corporation organized under the laws of the United States
("Mellon Bank"), and THE DREYFUS CORPORATION, a [ ]
("Dreyfus").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trust consists of several distinct investment portfolios
or series (collectively, the "Funds"); and
WHEREAS, the Trust, on behalf of the Funds, and Mellon Bank entered
into an Investment Management Agreement on April 4, 1994, under which
Mellon serves as the investment manager (the "Investment Manager") for the
Funds of the Trust; and
WHEREAS, Mellon Bank desires that its interest in the Investment
Management Agreement be assigned to Dreyfus and Dreyfus desires to assume
Mellon Bank's interest under the terms of the Investment Management
Agreement; and
WHEREAS, Mellon Bank, Dreyfus and the Trust believe that this
Assignment Agreement does not result in a change of actual control or
management of the Investment Manager to the Funds and, therefore, is not an
assignment as defined in Section 2(a)(4) of the Act nor an assignment for
purposes of Section 15(a)(4) of the Act; and
WHEREAS, Mellon Bank and the Trust agree to the terms of this
Assignment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants discussed in
this Assignment Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
- -1-
1. Assignment. Effective as of the date hereof, Mellon Bank
hereby assigns to Dreyfus all of Mellon Bank's interest in the Investment
Management Agreement dated April 4, 1994, to which Mellon Bank is a party
with the Trust.
2. Assumption and Performance of Duties. Effective as of the date
hereof, Dreyfus hereby assumes and agrees to perform all of Mellon Bank's
duties and obligations under the Investment Management Agreement and to be
subject to all of the terms and conditions of said Agreement as if they
applied to Dreyfus; and Dreyfus shall indemnify and hold harmless Mellon
Bank from any claim or demand made thereunder arising or incurred after the
effective date designated above.
3. Representation of Dreyfus. Dreyfus represents and warrants
that: (1) it is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended; and (2) Mellon Bank is its sole
shareholder.
4. Consent. The Trust hereby consents to this assignment by
Mellon Bank to Dreyfus of Mellon Bank's rights under the Investment
Management Agreement and to the assumption by Dreyfus of Mellon Bank's
interest in such Agreement and the duties and obligations thereunder, and
agrees, subject to the terms and conditions of said Agreement, to look to
Dreyfus for the performance of the Investment Manager's duties and
obligations under said Agreement in return for the consideration provided
for in said Agreement.
5. Limitation of Liability of Trustees, Officers and Shareholders.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the trust
property of the Trust, as provided in the Third Amended and Restated Master
Trust Agreement of the Trust. The execution and delivery of this
Assignment Agreement have been authorized by the Trustees of the Trust and
signed by the President of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Third Amended and Restated
Master Trust Agreement.
6. Counterparts. This Assignment Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
- -2-
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their duly authorized officers hereunto duly
attested.
Attest:
By:
John E. Pelletier, Secretary Marie E. Connolly, President
The Laurel Tax-Free
Municipal Funds
Date: , 1994
Attest:
By:
James M. Gockley, Secretary Frank V. Cahouet, President
Mellon Bank, N.A.
Date: , 1994
Attest:
By:
Mark N. Jacobs, Secretary Joseph S. DiMartino, President
The Dreyfus Corporation
Date: , 1994
- -3-
Form of
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT
for
The Laurel Investment Series
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT, made as of the
day of October, 1994, by and among THE LAUREL INVESTMENT SERIES, a
Massachusetts business trust (the "Trust"), MELLON BANK, N.A., a national
banking corporation organized under the laws of the United States ("Mellon
Bank"), and THE DREYFUS CORPORATION, a [ ]
("Dreyfus").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trust consists of several distinct investment portfolios
or series (collectively, the "Funds"); and
WHEREAS, the Trust, on behalf of the Funds, and Mellon Bank entered
into an Investment Management Agreement on April 4, 1994, under which
Mellon serves as the investment manager (the "Investment Manager") for the
Funds of the Trust; and
WHEREAS, Mellon Bank desires that its interest in the Investment
Management Agreement be assigned to Dreyfus and Dreyfus desires to assume
Mellon Bank's interest under the terms of the Investment Management
Agreement; and
WHEREAS, Mellon Bank, Dreyfus and the Trust believe that this
Assignment Agreement does not result in a change of actual control or
management of the Investment Manager to the Funds and, therefore, is not an
assignment as defined in Section 2(a)(4) of the Act nor an assignment for
purposes of Section 15(a)(4) of the Act; and
WHEREAS, Mellon Bank and the Trust agree to the terms of this
Assignment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants discussed in
this Assignment Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
- -1-
1. Assignment. Effective as of the date hereof, Mellon Bank
hereby assigns to Dreyfus all of Mellon Bank's interest in the Investment
Management Agreement dated April 4, 1994, to which Mellon Bank is a party
with the Trust.
2. Assumption and Performance of Duties. Effective as of the date
hereof, Dreyfus hereby assumes and agrees to perform all of Mellon Bank's
duties and obligations under the Investment Management Agreement and to be
subject to all of the terms and conditions of said Agreement as if they
applied to Dreyfus; and Dreyfus shall indemnify and hold harmless Mellon
Bank from any claim or demand made thereunder arising or incurred after the
effective date designated above.
3. Representation of Dreyfus. Dreyfus represents and warrants
that: (1) it is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended; and (2) Mellon Bank is its sole
shareholder.
4. Consent. The Trust hereby consents to this assignment by
Mellon Bank to Dreyfus of Mellon Bank's rights under the Investment
Management Agreement and to the assumption by Dreyfus of Mellon Bank's
interest in such Agreement and the duties and obligations thereunder, and
agrees, subject to the terms and conditions of said Agreement, to look to
Dreyfus for the performance of the Investment Manager's duties and
obligations under said Agreement in return for the consideration provided
for in said Agreement.
5. Limitation of Liability of Trustees, Officers and Shareholders.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the trust
property of the Trust, as provided in the Amended and Restated Master Trust
Agreement of the Trust. The execution and delivery of this Assignment
Agreement have been authorized by the Trustees of the Trust and signed by
the President of the Trust, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property
of the Trust as provided in its Amended and Restated Master Trust
Agreement.
6. Counterparts. This Assignment Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
- -2-
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their duly authorized officers hereunto duly
attested.
Attest:
By:
John E. Pelletier, Secretary Marie E. Connolly, President
The Laurel Investment
Series
Date: , 1994
Attest:
By:
James M. Gockley, Secretary Frank V. Cahouet, President
Mellon Bank, N.A.
Date: , 1994
Attest:
By
Mark N. Jacobs, Secretary Joseph S. DiMartino, President
The Dreyfus Corporation
Date: , 1994
- -3-
Form of
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT
for
The Laurel Funds, Inc.
ASSIGNMENT OF INVESTMENT MANAGEMENT AGREEMENT, made as of the
day of October, 1994, by and among THE LAUREL FUNDS, INC., a Maryland
corporation (the "Company"), MELLON BANK, N.A., a national banking corporation
organized under the laws of the United States ("Mellon Bank"), and THE DREYFUS
CORPORATION, a [ ] ("Dreyfus").
WHEREAS, the Company is registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Company consists of several distinct investment portfolios
or series (collectively, the "Funds"); and
WHEREAS, the Company, on behalf of the Funds, and Mellon Bank entered
into an Investment Management Agreement on April 4, 1994, under which Mellon
serves as the investment manager (the "Investment Manager") for the Funds of
the Company; and
WHEREAS, Mellon Bank desires that its interest in the Investment
Management Agreement be assigned to Dreyfus and Dreyfus desires to assume
Mellon Bank's interest under the terms of the Investment Management Agreement;
and
WHEREAS, Mellon Bank, Dreyfus and the Company believe that this
Assignment Agreement does not result in a change of actual control or
management of the Investment Manager to the Funds and, therefore, is not an
assignment as defined in Section 2(a)(4) of the Act nor an assignment for
purposes of Section 15(a)(4) of the Act; and
WHEREAS, Mellon Bank and the Company agree to the terms of this
Assignment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants discussed in
this Assignment Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Assignment. Effective as of the date hereof, Mellon Bank hereby
assigns to Dreyfus all of Mellon Bank's interest in the Investment Management
Agreement dated April 4, 1994, to which Mellon Bank is a party with the
Company.
- -1-
2. Assumption and Performance of Duties. Effective as of the date
hereof, Dreyfus hereby assumes and agrees to perform all of Mellon Bank's
duties and obligations under the Investment Management Agreement and to be
subject to all of the terms and conditions of said Agreement as if they
applied to Dreyfus; and Dreyfus shall indemnify and hold harmless Mellon Bank
from any claim or demand made thereunder arising or incurred after the
effective date designated above.
3. Representation of Dreyfus. Dreyfus represents and warrants that:
(1) it is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended; and (2) Mellon Bank is its sole shareholder.
4. Consent. The Company hereby consents to this assignment by Mellon
Bank to Dreyfus of Mellon Bank's rights under the Investment Management
Agreement and to the assumption by Dreyfus of Mellon Bank's interest in such
Agreement and the duties and obligations thereunder, and agrees, subject to
the terms and conditions of said Agreement, to look to Dreyfus for the
performance of the Investment Manager's duties and obligations under said
Agreement in return for the consideration provided for in said Agreement.
5. Counterparts. This Assignment Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
- -2-
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their duly authorized officers hereunto duly
attested.
Attest:
Attest:
By:
John E. Pelletier, Secretary Marie E. Connolly, President
The Laurel Funds, Inc.
Date: , 1994
Attest:
By:
James M. Gockley, Secretary Frank V. Cahouet, President
Mellon Bank, N.A.
Date: , 1994
Attest:
By:
Mark N. Jacobs, Secretary Joseph S. DiMartino, President
The Dreyfus Corporation
Date: , 1994
- -3-
tbc/tbclaure/book/092394/assign.doc
DISTRIBUTION AGREEMENT
The Dreyfus/Laurel Investment Series
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
October 17, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the above-named investment company (the "Fund") has
agreed that you shall be, for the period of this agreement, the distributor
of (a) shares of each Series of the Fund set forth on Exhibit A hereto, as
such Exhibit may be revised from time to time (each, a "Series") or (b) if
no Series are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized shares of the
relevant Series, if any, and otherwise shall mean the Fund's authorized
shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by,
and in accordance with, the registration statement and prospectus then in
effect under the Securities Act of 1933, as amended, and will transmit
promptly any orders received by you for purchase or redemption of Shares to
the Transfer and Dividend Disbursing Agent for the Fund of which the Fund
has notified you in writing.
1.2 You agree to use your best efforts to solicit orders for the
sale of Shares. It is contemplated that you will enter into sales or
servicing agreements with securities dealers, financial institutions and
other industry professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your own behalf
as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitation, all
rules and regulations made or adopted pursuant to the Investment Company
Act of 1940, as amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange Act of
1934, as amended.
1.4 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by abnormal circumstances of any kind,
the Fund's officers may decline to accept any orders for, or make any sales
of, any Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you promptly of
such determination.
1.5 The Fund agrees to pay all costs and expenses in connection with
the registration of Shares under the Securities Act of 1933, as amended,
and all expenses in connection with maintaining facilities for the issue
and transfer of Shares and for supplying information, prices and other data
to be furnished by the Fund hereunder, and all expenses in connection with
the preparation and printing of the Fund's prospectuses and statements of
additional information for regulatory purposes and for distribution to
shareholders; provided, however, that nothing contained herein shall be
deemed to require the Fund to pay any of the costs of advertising the sale
of Shares.
1.6 The Fund agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Fund's officers in connection
with the qualification of Shares for sale in such states as you may
designate to the Fund and the Fund may approve, and the Fund agrees to pay
all expenses which may be incurred in connection with such qualification.
You shall pay all expenses connected with your own qualification as a
dealer under state or Federal laws and, except as otherwise specifically
provided in this agreement, all other expenses incurred by you in
connection with the sale of Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for use in connec-
tion with the sale of Shares, such information with respect to the Fund or
any relevant Series and the Shares as you may reasonably request, all of
which shall be signed by one or more of the Fund's duly authorized
officers; and the Fund warrants that the statements contained in any such
information, when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with: (a) semi-
annual reports and annual audited reports of the Fund's books and accounts
made by independent public accountants regularly retained by the Fund,
(b) quarterly earnings statements prepared by the Fund, (c) a monthly
itemized list of the securities in the Fund's or, if applicable, each
Series' portfolio, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional
information regarding the Fund's financial condition as you may reasonably
request.
1.8 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and under the Investment
Company Act of 1940, as amended, with respect to the Shares have been
carefully prepared in conformity with the requirements of said Acts and
rules and regulations of the Securities and Exchange Commission thereunder.
As used in this agreement the terms "registration statement" and "prospec-
tus" shall mean any registration statement and prospectus, including the
statement of additional information incorporated by reference therein,
filed with the Securities and Exchange Commission and any amendments and
supplements thereto which at any time shall have been filed with said Com-
mission. The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement becomes
effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission;
that all statements of fact contained in any such registration statement
and prospectus will be true and correct when such registration statement
becomes effective; and that neither any registration statement nor any pro-
spectus when such registration statement becomes effective will include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. The Fund may but shall not be obligated to propose from
time to time such amendment or amendments to any registration statement and
such supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Fund's counsel, be necessary or
advisable. If the Fund shall not propose such amendment or amendments
and/or supplement or supplements within fifteen days after receipt by the
Fund of a written request from you to do so, you may, at your option,
terminate this agreement or decline to make offers of the Fund's securities
until such amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus without giving
you reasonable notice thereof in advance; provided, however, that nothing
contained in this agreement shall in any way limit the Fund's right to file
at any time such amendments to any registration statement and/or supple-
ments to any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the form
furnished to you from time to time, in connection with the sale of Shares.
The Fund agrees to indemnify, defend and hold you, your several officers
and directors, and any person who controls you within the meaning of Sec-
tion 15 of the Securities Act of 1933, as amended, free and harmless from
and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
you, your officers and directors, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon any untrue statement, or alleged
untrue statement, of a material fact contained in any registration state-
ment or any prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated in either
any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the
Fund's agreement to indemnify you, your officers or directors, and any such
controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or alleged
untrue statement or omission or alleged omission made in any registration
statement or prospectus in reliance upon and in conformity with written
information furnished to the Fund by you specifically for use in the
preparation thereof. The Fund's agreement to indemnify you, your officers
and directors, and any such controlling person, as aforesaid, is expressly
conditioned upon the Fund's being notified of any
action brought against you, your officers or directors, or any such con-
trolling person, such notification to be given by letter or by telegram
addressed to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served. The
failure so to notify the Fund of any such action shall not relieve the Fund
from any liability which the Fund may have to the person against whom such
action is brought by reason of any such untrue, or alleged untrue, state-
ment or omission, or alleged omission, otherwise than on account of the
Fund's indemnity agreement contained in this paragraph 1.9. The Fund will
be entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability, but, in such case, such defense shall be con-
ducted by counsel of good standing chosen by the Fund and approved by you.
In the event the Fund elects to assume the defense of any such suit and
retain counsel of good standing approved by you, the defendant or defen-
dants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not elect to
assume the defense of any such suit, or in case you do not approve of
counsel chosen by the Fund, the Fund will reimburse you, your officers and
directors, or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained
by you or them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in this agree-
ment shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of you, your officers and directors, or
any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the
benefit of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the commencement of
any litigation or proceedings against the Fund or any of its officers or
Board members in connection with the issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its several
officers and Board members, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such control-
ling person, may incur under the Securities Act of 1933, as amended, or
under common law or otherwise, but only to the extent that such liability
or expense incurred by the Fund, its officers or Board members, or such
controlling person resulting from such claims or demands, shall arise out
of or be based upon any untrue, or alleged untrue, statement of a material
fact contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or
be based upon any omission, or alleged omission, to state a material fact
in connection with such information furnished in writing by you to the Fund
and required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the Fund, its
officers and Board members, and any such controlling person, as aforesaid,
is expressly conditioned upon your being notified of any action brought
against the Fund, its officers or Board members, or any such controlling
person, such notification to be given by letter or telegram addressed to
you at your address set forth above within ten days after the summons or
other first legal process shall have been served. You shall have the right
to control the defense of such action, with counsel of your own choosing,
satisfactory to the Fund, if such action is based solely upon such alleged
misstatement or omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any
such action. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the Fund, its officers
or Board members, or to such controlling person by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure exclusively to the
Fund's benefit, to the benefit of the Fund's officers and Board members,
and their respective estates, and to the benefit of any controlling persons
and their successors.
You agree promptly to notify the Fund of the commencement of any litigation
or proceedings against you or any of your officers or directors in
connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the Fund under any
of the provisions of this agreement and no orders for the purchase or sale
of such Shares hereunder shall be accepted by the Fund if and so long as
the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions
of the Securities Act of 1933, as amended, or if and so long as a current
prospectus as required by Section 10 of said Act, as amended, is not on
file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph 1.11 shall in any way restrict or have
an application to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of the Fund's
prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or
for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the registra-
tion statement or prospectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes untrue any state-
ment of a material fact made in the registration statement or prospectus
then in effect or which requires the making of a change in such registra-
tion statement or prospectus in order to make the statements therein not
misleading; and
(d) of all actions of the Securities and Exchange Commission
with respect to any amendments to any registration statement or prospectus
which may from time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be
offered for sale at a price per share (the "offering price") approximately
equal to (a) their net asset value (determined in the manner set forth in
the Fund's charter documents) plus (b) a sales charge, if any and except to
those persons set forth in the then-current prospectus, which shall be the
percentage of the offering price of such Shares as set forth in the Fund's
then-current prospectus. The offering price, if not an exact multiple of
one cent, shall be adjusted to the nearest cent. In addition, Shares of
any class of the Fund offered for sale by you may be subject to a
contingent deferred sales charge as set forth in the Fund's then-current
prospectus. You shall be entitled to receive any sales charge or
contingent deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you and such
dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the "Reapproval Date")
set forth on Exhibit A hereto (and, if the Fund has Series, a separate
Reapproval Date shall be specified on Exhibit A for each Series), and
thereafter shall continue automatically for successive annual periods
ending on the day (the "Reapproval Day") of each year set forth on Exhibit
A hereto, provided such continuance is specifically approved at least
annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940) of the Shares of the Fund or the
relevant Series, as the case may be, provided that in either event its
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to this agree-
ment, by vote cast in person at a meeting called for the purpose of voting
on such approval. This agreement is terminable without penalty, on
60 days' notice, by vote of holders of a majority of the Fund's or, as to
any relevant Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case may be.
This agreement is terminable by you, upon 270 days' notice, effective on or
after the fifth anniversary of the date hereof. This agreement also will
terminate automatically, as to the Fund or relevant Series, as the case may
be, in the event of its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you shall not
perform any services for any entity other than investment companies advised
or administered by The Dreyfus Corporation. The Fund acknowledges that the
persons employed by you to assist in the performance of your duties under
this agreement may not devote their full time to such service and nothing
contained in this agreement shall be deemed to limit or restrict your or
any of your affiliates right to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
5. Miscellaneous
Notice is hereby given that a copy of the Fund's Amended and Restated
Master Trust Agreement, dated December 9, 1992, is on file with the
Secretary of State of The Commonwealth of Massachusetts, that the
undersigned executed this agreement on behalf of the Fund acting as an
officer of the Fund and not individually, and that the obligations of the
Fund under this agreement are not binding upon any Board member, officer or
shareholder of the Fund individually, but are binding only upon the assets
and property of the Fund.
Please confirm that the foregoing is in accordance with your
understanding and indicate your acceptance hereof by signing below,
whereupon it shall become a binding agreement between us.
Very truly yours,
The Dreyfus/Laurel Investment Series
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
Dreyfus/Laurel Short-Term Bond October 17, 1996 October 17th
Fund
Dreyfus/Laurel International Fund October 17, 1996 October 17th
Dreyfus/Laurel Contrarian Fund October 17, 1996 October 17th
tbc/tbclaure/book/102694/lisdis.doc
H02-051-038-stroockdisk
AMENDMENT TO CUSTODY AND
FUND ACCOUNTING AGREEMENT
This Amendment is made as of this first day of August, 1994 to the
Custody and Fund Accounting Agreement dated as of April 4, 1994, (the
"Agreement") between The Laurel Investment Series (the "Fund") and Mellon
Bank, N.A. (the "Custodian").
That for and in consideration of the mutual promises set forth herein
and in the Agreement, the Fund and the Custodian agree that the Agreement
is hereby amended by the addition immediately following Section 10 of the
Agreement of the following Section 10A:
10A Overdraft Facility and Security for Payment
In the event that the Custodian is directed by Written Instruction
(or Oral Instructions confirmed in writing) to make any payment or transfer
of funds on behalf of the Fund for which there would be, at the close of
business on the date of such payment or transfer, insufficient funds held
by the Custodian on behalf of the Fund, the custodian may, in its sole
discretion, provide an overdraft (an "Overdraft") to the Fund in an amount
sufficient to allow the completion of such payment or transfer. Any
Overdraft provided hereunder: (a) shall be payable on the next Business
Day, unless otherwise agreed by the Fund and the Custodian; and (b) shall
accrue interest from the date of the Overdraft to the date of payment in
full by the Fund at a rate agreed upon in writing, from time to time, by
the Custodian and the Fund. The Custodian and the Fund acknowledge that
the purpose of such Overdraft is to temporarily finance the purchase of
securities for prompt delivery in accordance with the terms hereof, to meet
unanticipated or unusual redemptions, or to meet other emergency expenses
not reasonably foreseeable by the Fund. The Custodian shall promptly
notify the Fund in writing (an "Overdraft Notice") of any Overdraft by
facsimile transmission or in such other manner as the Fund and the
Custodian may agree in writing. To secure payment of any Overdraft, the
Fund hereby grants to the Custodian a continuing security interest in and
right of setoff against the Securities in the Fund's account from time to
time in the full amount of such Overdraft. Shall the Fund fail to pay
promptly any amounts owed hereunder, the Custodian shall be entitled to use
available cash in the Fund's account and to liquidate Securities in the
account as is necessary to meet the Fund's obligations under the Overdraft.
In any such case, and without limiting the foregoing, the Custodian shall
be entitled to take such other actions(s) or exercise such other options,
powers and rights as the Custodian now or hereafter has as a secured
creditor under the Massachusetts Uniform Commercial Code or any other
applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to the Agreement to be executed by their respective
representatives duly authorized as of the day and year first above written.
THE LAUREL INVESTMENT SERIES
(formerly The Boston Company Investment Series)
By:
Name:
Title:
MELLON BANK, N.A.
By:
Name:
Title:
tbc/tbclaure/agreement/liscstam.doc
SUBCUSTODIAN AGREEMENT
AGREEMENT made as of this fourth day of April, 1994 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 Laurel Investment
Series (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 and as accounting
agent for the Fund pursuant to the terms of the Custody and Fund Accounting
Agreement dated as of April 4, 1994, as amended, 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
fund accounting agent 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 and as accounting agent for the
Fund during the period of the Agreement.
(b) The Subcustodian hereby accepts appointment as such
subcustodian and fund accounting agent and agrees to perform the duties
thereof 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. Fund Accounting Services.
5. Custody of Cash and Securities.
6. Purchase and Sale of Investments of the Fund.
7. Lending of Securities.
8. Payment of Dividends and Distributions.
9. Sale and Redemption of Shares of the Fund.
10. Indebtedness.
10A. Overdraft Facility and Security for Payment
11. Persons Having Access to Assets of the Fund.
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:
- -1-
tbclaurel/agree/lissbcst.doc
THE LAUREL INVESTMENT SERIES
(formerly The Boston Company Investment Series)
SUPPLEMENT TO TRANSFER AGENT AGREEMENT
April 4, 1994
The Shareholder Services Group, Inc.
One Exchange Place
Boston, MA 02109
THE LAUREL INVESTMENT SERIES (formerly The Boston Company Investment
Series), an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), hereby supplements its
agreement with The Shareholder Services Group, Inc., a corporation
organized under the laws of the Commonwealth of Massachusetts (the
"Transfer Agent"), as follows:
1. Compensation: Pursuant to Section 15 of the Transfer Agent
Agreement dated October 11, 1988, as amended ("Agreement"), the Trust and
the Transfer Agent hereby agree that, effective as of the date and year
first written above, the payment of the investment management fee by the
Trust to Mellon Bank, N.A. ("Mellon"), pursuant to the terms of an
Investment Management Agreement between Mellon and the Trust dated April 4,
1994 ("Management Agreement"), will include a payment by the Trust for all
transfer agency services it receives. Mellon hereby agrees that it shall
compensate the Transfer Agent for the services that the Transfer Agent
provides to the Trust under the Agreement in accordance with such
Agreement's Fee Schedule (as this term is defined in such Agreement) now or
hereinafter in effect. and shall compensate the Transfer Agent for out-of-
pocket expenses as provided in the Agreement or the Fee Schedule. The
Transfer Agent will bill Mellon for services rendered and out-of-pocket
expenses incurred with respect to each Fund of the Trust as soon as
practicable after the end of each calendar month, and Mellon agrees to
remit payment of such fees and expenses within 30 days of the date of the
invoice. The Transfer Agent hereby agrees that effective as of April 4,
1994 no fee will be payable by the Trust to the Transfer Agent for transfer
agency services rendered by the Transfer Agent under the Agreement and the
Transfer Agent will seek payment solely from Mellon for fees and expenses
under the Agreement.
All other obligations of the Trust and the Transfer Agent under the
Agreement shall remain in full force and effect.
2. Limitation of Liability. The names "The Laurel Investment
Series" and "Trustees" of "The Laurel Investment Series" refer to the Trust
created and the Trustees, as trustees but not individually or personally,
acting from time to time under the Master Trust Agreement dated May 26,
1988 which is hereby referred to and a copy of which is on file at the
office of the State Secretary of the Commonwealth of Massachusetts and at
the principal office of the Trust. The obligations of "The Laurel
Investment Series" entered into in the name or on behalf thereof by any
Trustees, representatives or agents are not binding upon any of the
Trustees, shareholders or representatives of the Trust personally, but bind
only the Trust property, and all persons dealing with any class of shares
of the Trust must look solely to the Trust property belonging to such class
for the enforcement of any claims against the Trust.
If the foregoing accurately set forth our agreement and you intend to
be legally bound thereby, please execute a copy of this letter and return
it to us.
Very truly yours,
THE LAUREL INVESTMENT SERIES
(formerly The Boston Company Investment
Series
By
Name:
Title:
MELLON BANK, N.A.
By
Name:
Title:
Accepted by:
THE SHAREHOLDER SERVICES
GROUP, INC.
By:
Name:
Title:
2
tbc/tbclaure/agreements/lfistasu.doc
SUB-ADMINISTRATION AGREEMENT
THIS SUB-ADMINISTRATION AGREEMENT (the "Agreement") is made as of
August 24, 1994 by and between PREMIER MUTUAL FUND SERVICES, INC., a
Delaware corporation ("Sub-Administrator") and THE DREYFUS CORPORATION, a
New York corporation ("Dreyfus").
WHEREAS, Dreyfus provides investment advisory and/or administration
services to certain registered open-end management investment companies
under the Investment Company Act of 1940, as amended (the "1940 Act"), as
listed on Attachment A hereto, (each a "Fund," collectively the "Funds");
and
WHEREAS, Dreyfus desires to retain Sub-Administrator to render
certain sub-administrative services for the Funds' investment portfolios
(each an "Investment Portfolio", collectively the "Investment Portfolios")
listed on Attachment A hereto and Sub-Administrator is willing to render
such services.
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Dreyfus hereby appoints Sub-Administrator to act
as sub-administrator of the Funds, and Sub-Administrator hereby accepts
such appointment and agrees to render such services and undertake such
duties as set forth in this Agreement, for the compensation and on the
terms herein provided. Absent written notification to the contrary by
Dreyfus, each new investment portfolio established in the future by an
existing Fund and each new Fund established in the future that is provided
investment advisory and/or administration services by Dreyfus shall
automatically become a Fund and/or an Investment Portfolio for all purposes
hereunder as if listed on Attachment A. Sub-Administrator shall render the
services and undertake the duties set forth in this Agreement on the same
days and during the same hours that Dreyfus conducts business.
2. Delivery of Documents. Each Fund has furnished Sub-
Administrator with, or has provided Sub-Administrator with access to, each
of the following:
(a) Each Fund's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A (the "Registration Statement") under
the Securities Act of 1933, as amended, and under the 1940 Act as filed
with the Securities and Exchange Commission (the "SEC") relating to each
Fund's shares (the "Shares");
(b) Each Fund's most recent Prospectus(es);
(c) Each Fund's most recent Statement(s) of Additional Information;
(d) Each Fund's most recent annual and semi-annual financial
statements;
(e) Each Fund's most recent Form N-SAR filing;
(f) Each Fund's most recent filings pursuant to Rules 24f-2/24e-2
under the 1940 Act;
(g) Each Fund's most recently filed tax returns (federal, state,
city);
(h) Each Fund's most recent audit representation letter;
(i) With respect to each Fund, all relevant recent financial data,
including but not limited to the most recent work papers relating to an
annual audit completed by each Fund's auditors;
(j) Each Fund's most recent SEC examination letter; and
(k) Each Fund's charter documents and by-laws.
Dreyfus will furnish Sub-Administrator from time to time with copies,
or access to, all amendments of or supplements to the foregoing.
Furthermore, Dreyfus will provide Sub-Administrator with, or access to, any
other documents that Sub-Administrator may reasonably request and will
notify Sub-Administrator as soon as possible of any matter materially
affecting Sub-Administrator's performance of its services under this
Agreement.
3. Duties as Sub-Administrator. Subject to the supervision and
direction of Dreyfus, Sub-Administrator will assist in supervising various
aspects of each Fund's and each Investment Portfolio's administrative
operations and undertakes to perform the following specific services, from
and after the effective date of this Agreement to the extent requested by
Dreyfus and to the extent reasonably consistent with the staffing and
resources to be provided by Sub-Administrator as Qualifying Costs pursuant
to the Fee Letter Agreement referenced in Section 4(a) below:
(a) Furnishing corporate secretarial services;
(b) Furnishing corporate treasury services, including the review of
financial data, tax and other regulatory filings and audit requests.
(c) Providing the services of certain persons who may be appointed
as officers of a Fund by such Fund's Board;
(d) Providing advice and counsel to each Fund with respect to
regulatory matters, including monitoring regulatory and legislative
developments which may affect each Fund and assisting each Fund in routine
regulatory examinations or investigations of the Fund, and working closely
with outside counsel to each Fund in connection with litigation in which a
Fund is involved;
(e) Generally assisting in all aspects of the Fund's operations and
providing general consulting services on a day to day, as needed basis;
(f) In connection with the foregoing activities, maintaining office
facilities (which may be in the offices Sub-Administrator or a corporate
affiliate); and
(g) In connection with the foregoing activities, furnishing clerical
services, and internal executive and administrative services, stationery
and office supplies.
In performing all services under this Agreement, Sub-Administrator
shall (a) act in conformity with each Fund's charter documents and bylaws,
the 1940 Act, the Investment Advisers Act of 1940 (to the extent
applicable) and other applicable laws, as the same may be amended from time
to time, (b) consult and coordinate with legal counsel for each Fund, as
necessary and appropriate, and (c) advise and report to a Fund and its
legal counsel, as necessary or appropriate, with respect to any material
compliance or other matters that come to its attention.
In performing its services under this Agreement, Sub-Administrator
shall cooperate and coordinate with Dreyfus as necessary and appropriate
and shall provide such information related to the foregoing as is
reasonably necessary or appropriate for Dreyfus to perform its
responsibilities to each Fund. Sub-Administrator shall perform its
obligations under this Agreement in a conscientious and diligent manner
consistent with prevailing industry standards.
4. Compensation.
(a) For the services to be rendered and expenses assumed by Sub-
Administrator under this Agreement, Dreyfus will pay to Sub-Administrator,
for its services, a fee in accordance with the terms set forth in the Fee
Letter Agreement dated as of August 24, 1994 between Sub-Administrator and
Dreyfus as the same may be amended from time to time (the "Fee Letter
Agreement"). Sub-Administrator shall bear all expenses in connection with
the performance of its services under this Agreement, except those
enumerated in the Fee Letter Agreement.
(b) Sub-Administrator will from time to time employ or associate
with itself such person or persons as Sub-Administrator may believe to be
particularly suited to assist it in performing services under this
Agreement. Such person or persons may be officers and employees who are
employed by both Sub-Administrator (and/or an affiliated company) and a
Fund. The compensation of such person or persons shall be paid by Sub-
Administrator or a corporate affiliate and no obligation shall be incurred
on behalf of a Fund in such respect.
5. Limitation of Liability.
(a) Sub-Administrator shall not be liable to Dreyfus for any error
of judgment or mistake of law or for any loss (collectively a "Loss") which
Loss is suffered by Dreyfus in connection with the performance of Sub-
Administrator's obligations and duties under this Agreement and:
(i) is the direct result of a claim, demand, action or suit against
Dreyfus (or a Dreyfus affiliate) by a party other than Dreyfus (or a
Dreyfus affiliate) and does not result from Sub-Administrator's willful
misfeasance, bad faith, or gross negligence in the performance of such
obligations or duties; or
(ii) is not the direct result of a claim, demand action or suit
against Dreyfus (or a Dreyfus affiliate) by a party other than Dreyfus (or
a Dreyfus affiliate) and does not result from Sub-Administrator's willful
misfeasance, bad faith, or negligence in the performance of such
obligations or duties.
(b) Dreyfus will indemnify Sub-Administrator, its officers,
employees and agents and any persons who control Sub-Administrator and hold
each of them harmless from any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) resulting from
any claim, demand, action or suit by a party other than Dreyfus (or a
Dreyfus affiliate) , relating to Sub-Administrator's performance of its
obligations under this Agreement and not resulting from the willful
misfeasance, bad faith or gross negligence of Sub-Administrator in the
performance of such obligations, but only to the extent such losses,
claims, damages, liabilities or expenses are not covered by any applicable
insurance policy maintained by Sub-Administrator and/or its affiliates
(other than by virtue of being part of a deductible under any such policy).
Dreyfus' indemnification obligations under this Section 5 (b) are expressly
conditioned on satisfaction of all the following requirements:
(i) Sub-Administrator shall notify Dreyfus in writing of any
notice, claim, demand or other occurrence which relates to or in respect of
which Sub-Administrator may seek indemnification, promptly after Sub-
Administrator becomes aware of it;
(ii) Subject to the terms of any applicable insurance policies
maintained by Sub-Administrator and/or its affiliates, Dreyfus shall have
sole control of the defense of any resulting action or suit and shall
promptly notify Sub-Administrator if Dreyfus determines not to exercise
such control; and
(iii) Sub-Administrator shall not confess any claim or settle or make
any compromise relating thereto, except with Dreyfus' prior written
consent.
6. Termination of Agreement.
(a) This Agreement shall become effective August 24, 1994 and shall
remain in full force and effect until August 23, 1999 (the "Initial Term")
and thereafter, unless terminated pursuant to the provisions of this
Section 6.
(b) This Agreement may be terminated by Dreyfus at any time upon
any material breach of this Agreement by Sub-Administrator.
(c) This Agreement may be terminated by Sub-Administrator upon
material breach of this Agreement by Dreyfus, provided Sub-Administrator
has provided written notice of such breach to Dreyfus and Dreyfus has not
cured such breach within 10 business days thereafter.
(d) This Agreement may be terminated by Dreyfus at any time, in its
entirety or as to one or more Funds, upon 90 days' prior written notice to
Sub-Administrator. If a termination of this Agreement in its entirety
pursuant to this Section 6(d) is effective prior to August 24, 1996,
Dreyfus shall reimburse Sub-Administrator for the reasonable out-of-pocket
direct costs of such termination, limited as described below. Dreyfus
shall not be required hereunder to reimburse the amount of any cost payable
by Sub-Administrator subsequent to August 24, 1996 or which is reasonably
allocable to any time period after such date, except for rental payments
due and payable on an office space lease or sub-lease or license or sub-
license consented to in writing by Dreyfus for purposes of this Section
6(d). Costs which are otherwise reimbursable pursuant to this Section 6(d)
shall include only those resulting from termination of the personnel or
disposing of assets or equipment who or which in either case are included
at the time of termination as Qualifying Costs under the Fee Letter
Agreement referred to in Section 4(a) above, and shall include reasonable
severance payments and related personnel costs, reasonable costs of
terminating applicable equipment leases and other similar items. Sub-
Administrator shall have a duty to mitigate any such costs and shall cause,
as applicable, its affiliates to mitigate such costs. In so doing, Sub-
Administrator shall make, or cause its affiliates to make, reasonable
offers to Dreyfus providing for the transfer or assignment to Dreyfus (at
no profit to Sub-Administrator) of any applicable leases, equipment or
other similar items and shall allow Dreyfus to offer, if it so chooses, any
applicable personnel employment by Dreyfus or by any of its affiliates.
Under no circumstances shall the amounts payable by Dreyfus hereunder
include any amount in respect of lost profits, lost opportunity costs or
the like. The expense reimbursement provided for in this Section 6(d)
shall be the sole recourse of Sub-Administrator in respect of any
termination of this Agreement in its entirety under this Section 6(f) and
Sub-Administrator expressly waives any other rights it may have in respect
of any such termination.
(e) This Agreement may be terminated by Sub-Administrator effective
on or after the expiration of the Initial Term, provided Sub-Administrator
has notified Dreyfus of such termination in writing at least 270 days prior
to the effective date thereof.
(f) This Agreement shall automatically terminate if Sub-
Administrator files a petition in bankruptcy, or if an involuntary petition
in bankruptcy is filed against Sub-Administrator and not dismissed within
30 days after filing, or if Sub-Administrator applies for or consents to
the appointment of a receiver, custodian, trustee or liquidator, or if Sub-
Administrator makes a general assignment for the benefit of its creditors.
(g) This Agreement shall automatically terminate as it relates to
any Fund upon termination of the Distribution Agreement between such Fund
and Sub-Administrator or the termination of the Investment Advisory,
Management or Administration Agreement (as applicable) between such Fund
and Dreyfus. In such event, Sub-Administrator shall procure the
resignations specified in Section 6(h) below with respect to the applicable
Fund(s).
(h) Upon termination of this Agreement for any reason, with
respect to each person that Sub-Administrator has provided to serve as an
officer of any of the Funds, Sub-Administrator shall procure each such
person's resignations from all such officerships effective as of the time
such termination becomes effective. If this Agreement is terminated as to
less than all of the Funds, the resignations shall be only from the Funds
as to which the termination is effective.
(i) In connection with any termination of this Agreement, Sub-
Administrator will cooperate with and assist Dreyfus and its agents in
converting to a different sub-administrator or in the assumption of such
responsibilities by Dreyfus or an affiliate of Dreyfus. This Section 6(i)
shall survive termination of this Agreement.
(j) Upon termination of this Agreement for any reason, Sub-
Administrator shall cease using "Premier" as part of its name and shall
make such regulatory or legal filings as are necessary so as to change its
name to a name which is not confusingly similar. This Section 6(j) shall
survive termination of this Agreement.
7. Amendments. No provision of this Agreement may be changed,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
8. Confidentiality.
(a) All books, records, information and data pertaining to the
business of Dreyfus and each Fund, its prior, present or potential
shareholders and Dreyfus' customers that are exchanged or received pursuant
to the performance of Sub-Administrator's duties under this Agreement shall
remain confidential and shall not be disclosed to any other person, except
as specifically authorized in writing by Dreyfus or a Fund or as may be
required by law, and shall not be used for any purpose other than
performance of its responsibilities and duties hereunder. The provisions
of this Section 8(a) shall survive this Agreement's termination.
(b) All books, records, information and data that are the property
of Sub-Administrator, which are not included in Section 8(a) above, and
which were received by Dreyfus pursuant to Sub-Administrator's performance
of this Agreement, shall be treated by Dreyfus as confidential and shall
not be disclosed to any other person, except as specifically authorized in
writing by Sub-Administrator, as may be required by law or as may be
reasonably necessary in connection with the conversion to a different sub-
administrator upon termination of this Agreement. The provisions of this
Section 8(b) shall survive termination of this Agreement.
9. Service to Other Companies or Accounts; Limitation on Other
Activities.
(a) During the term of this Agreement, Sub-Administrator shall not
conduct any business activities other than as contemplated by this
Agreement or any Distribution Agreement between Sub-Administrator and a
Fund. Dreyfus acknowledges that the persons employed by Sub-Administrator
to assist in the performance of Sub-Administrator's duties under this
Agreement may not devote their full time to such service and nothing
contained in this Agreement shall be deemed to limit or restrict the right
of any employee or affiliate of Sub-Administrator to engage in and devote
time and attention to other businesses or to render services of whatever
kind or nature, provided such other activities do not adversely affect Sub-
Administrator's performance hereunder.
(b) Other than as set forth on Attachment B hereto and other than
in respect of (i) the Qualifying Costs and Qualifying Expenses provided for
in the Fee Letter Agreement or (ii) bona fide tax and other obligations due
to government entities, Sub Administrator shall not incur or assume any
indebtedness or obligation and shall not issue any guarantees or endorse
any instrument (except checks endorsed for deposit in the ordinary course
of business) or otherwise become contingently liable for the obligations of
any other person and shall not grant, permit or suffer the creation,
imposition or continuance of any pledge, lien or security interest on or in
any of its assets (other than liens imposed by law in respect to tax
obligations not yet due and owing and being contested in good faith or
liens with respect to judgments being contested in good faith).
10. Books and Records; Audits; Reports. Dreyfus shall have the
right at any time to have representatives of its auditors and/or legal
counsel, and/or auditors and legal counsel of any of the Funds, and/or
employees of Dreyfus or any of its affiliates to: (a) obtain full and
complete access to any of Sub-Administrator's books and records relating to
its services and duties required under this Agreement, including, but not
limited to, correspondence, contracts, agreements, bank transaction
documents and records of any type, receipts, ledgers and any other books of
account ("Books and Records") and obtain a reasonable number of copies of
any such Books and Records; and (b) perform on-site audits at any of Sub-
Administrator's facilities, such audits to include, but not be limited to,
reviewing Sub-Administrator's compliance with this Agreement, its operating
procedures and/or Books and Records.
At Dreyfus's request, Sub-Administrator shall provide Dreyfus with a
report which includes control objectives, in accordance with Statement on
Auditing Standards No. 70, "Reports on the Processing of Transactions by
Service Organizations," as amended or replaced from time to time, as
applicable and as issued by the American Institute of Certified Public
Accountants, on Sub-Administrator's system of internal controls with
respect to its services and duties required under this Agreement.
11. Dividends and Distributions; Payments to Affiliates. Except as
otherwise consented to in writing by Dreyfus, Sub-Administrator agrees to
not declare any dividend on, or make any payment on account of, or set
apart assets for the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of stock of Sub-Administrator,
whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property
or in obligations of Sub-Administrator, or permit any subsidiary to make
any payment on account of, or purchase or otherwise acquire, any shares of
any class of the stock of Sub-Administrator from any person, or make any
payment or other distribution to or for the account of, or assume any
obligation of any affiliate of Sub-Administrator, provided, that so long as
no default has occurred and is continuing hereunder or would result
therefrom:
(a) Sub-Administrator may from time to time declare and pay cash
dividends on its common stock, and may redeem its common stock for cash, if
and to the extent that (i) the aggregate amount of all such distributions
or redemptions does not exceed 75% of the aggregate net earnings of Sub-
Administrator (computed in accordance with U.S. generally accepted
accounting principles consistently applied ["GAAP"]) realized after the
date of this Agreement, or (ii) Sub-Administrator will have both (1)
stockholders' equity (computed in accordance with GAAP) and (2) tangible
net worth (i.e., the amount by which the fair value of Sub-Administrator's
tangible assets exceed the fair value of its liabilities), immediately
after giving effect to such dividend or redemption, of at least $3 million.
(b) Sub-Administrator may from time to time make bona fide
intercompany payments to affiliates in consideration of services provided
by those affiliates subject to the limitations contained in Attachment C
hereto.
12. Change in Control. Sub-Administrator shall provide Dreyfus at
least 270 days' prior written notice of any change in "control" (as such
term is defined in the 1940 Act) of Sub-Administrator, except that in the
case of a change in control resulting from an initial public offering of
securities of Sub-Administrator or an affiliate of Sub-Administrator, 120
days' prior written notice shall be provided.
13. Use of Name. Sub-Administrator shall not use the name
"Dreyfus" in any manner without Dreyfus' prior written consent. This
prohibition includes, but is not limited to, use of Dreyfus' name in any
marketing materials. This Section 13 shall survive termination of this
Agreement.
14. Insurance. Sub-Administrator shall, during the term of this
Agreement, maintain insurance coverage as specified in Attachment D hereto.
15. Miscellaneous.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to Dreyfus or Sub-Administrator shall
be sufficiently given if addressed to that party and received by it at its
office set forth below or at such other place as it may from time to time
designate in writing.
To Dreyfus:
The Dreyfus Corporation
200 Park Avenue
55th Floor
New York, N.Y. 10166
Attn: General Counsel
To Sub-Administrator:
Premier Mutual Fund Services, Inc.
c/o Funds Distributor, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Attn: President
with a copy to:
Premier Mutual Fund Services, Inc.
c/o Funds Distributor, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Attn: General Counsel
(b) This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that
this
Agreement
shall not be assignable without the written consent of the other party.
(c) This Agreement shall be construed in accordance with the laws of the
State
of New York.
(d) This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and which collectively shall be deemed to constitute
only
one instrument.
(e) The captions of this Agreement 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.
(f) This Agreement and the Fee Letter Agreement constitute the entire
agreement between the parties hereto with respect to the matters described
herein.
(g) The parties hereto acknowledge that in performing its services and duties
under this Agreement,
Sub-Administrator shall do so in the capacity of an independent
contractor.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed and delivered by their duly authorized officers as of the date, first
written above.
PREMIER MUTUAL FUND SERVICES, INC.
By: ____________________________________
Name: John E. Pelletier
Title: Senior Vice President and
General Counsel
THE DREYFUS CORPORATION
By: ____________________________________
Name: Daniel C. Maclean
Title: Vice President and
General Counsel
ATTACHMENT A
The following is a list of Funds and each Fund's Investment Portfolios
that are
subject to this Agreement:
ATTACHMENT B
ATTACHMENT C
ATTACHMENT D
NA67397.1
NA67397.1
NA45467.1
AMENDMENT TO SUB-ADMINISTRATION AGREEMENT BETWEEN PREMIER MUTUAL FUND
SERVICES, INC. AND THE DREYFUS CORPORATION DATED AUGUST 24, 1994.
Attachment A to the Sub-Administration Agreement between Premier
Mutual Fund Services, Inc. and The Dreyfus Corporation dated August 24,
1994 (the "Agreement") hereby is amended to include, in addition to the
Funds/Investment Portfolios currently enumerated therein, the following
Funds/Investment Portfolios:
The Dreyfus/Laurel Funds Trust
Dreyfus Core Value Fund
Dreyfus Special Growth Fund
Dreyfus/Laurel Government Money Fund
Dreyfus/Laurel Cash Management Fund
Premier Limited Term Government Securities Fund
Premier Managed Income Fund
The Dreyfus/Laurel Investment Series
Dreyfus/Laurel Short-Term Bond Fund
Dreyfus/Laurel International Fund
Dreyfus/Laurel Contrarian Fund
The Dreyfus/Laurel Tax-Free Municipal Funds
Dreyfus/Laurel Tax Free Money Fund
Dreyfus/Laurel Massachusetts Tax-Free Money Fund
Dreyfus/Laurel New York Tax-Free Money Fund
Dreyfus/Laurel California Tax-Free Money Fund
Premier Limited Term Municipal Fund
Premier Limited Term Massachusetts Municipal Fund
Premier Limited Term New York Municipal Fund
Premier Limited Term California Municipal Fund
The Dreyfus/Laurel Funds, Inc.
Dreyfus Disciplined Stock Fund
Dreyfus Disciplined Midcap Stock Fund
Dreyfus S&P 500 Stock Index Fund
Dreyfus Equity Income Fund
Dreyfus European Fund
Dreyfus Bond Market Index Fund
Dreyfus International Equity Allocation Fund
Dreyfus/Laurel Short-Term Government Securities Fund
Dreyfus/Laurel Prime Money Market Fund
Dreyfus/Laurel U.S. Treasury Money Market Fund
Dreyfus/Laurel Institutional Prime Money Market Fund
Dreyfus/Laurel Tax-Exempt Money Market Fund
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund
Dreyfus/Laurel Institutional Government Money Market Fund
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund
Dreyfus/Laurel Institutional Short-Term Bond Fund
Premier Balanced Fund
Premier Small Company Stock Fund
Premier Limited Term Income Fund
Capitalized terms used herein shall have the meanings assigned to those
terms in the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to
be duly executed and delivered by their duly authorized officers as of the
date indicated below.
PREMIER MUTUAL FUNDS SERVICES, INC.
By:
Name: John E. Pelletier
Title: Senior Vice President
and General Counsel
Date: October 17, 1994
THE DREYFUS CORPORATION
By:
Name: Mark N. Jacobs
Title: Vice President-Legal
and Secretary
Date: October 17, 1994
I69-051-038-2
December 30, 1994
The Dreyfus/Laurel Investment Series
200 Park Avenue
New York, New York 10166
Dear Sir or Madam:
The Dreyfus/Laurel Investment Series (the "Trust") (formerly, The
Laurel Investment Series) is an unincorporated voluntary association
organized under the laws of The Commonwealth of Massachusetts under a
Master Trust Agreement, as amended and restated December 9, 1992. We
understand that the Trust is about to file Post-Effective Amendment No. 13
to its Registration Statement on Form N-lA for the purpose of registering
additional shares of beneficial interest of the Trust under the Securities
Act of 1933, as amended (the "1933 Act"), pursuant to Section 24(e)(2) of
the Investment Company Act of 1940, as amended (the "1940 Act").
We have examined copies, either certified or otherwise proved to be
genuine, of the Amended and Restated Master Trust Agreement and By-Laws of
the Trust, the minutes of the meetings of the Trustees and such other
documents relating to the organization and operation of the Trust as we
deemed necessary for purposes of this opinion. Based upon the foregoing, it
is our opinion that the shares of beneficial interest of the Trust
currently being registered pursuant to Section 24(e)(2) as reflected in
Post-Effective Amendment No. 13 may be sold in accordance with the Trust's
Amended and Restated Master Trust Agreement and By-Laws, and subject to
compliance with the 1933 Act, the 1940 Act and applicable state "blue sky"
laws regulating the offer and sale of securities, and when so sold will be
legally issued, fully paid and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, the shareholders could, under
certain circumstances, be held personally liable for the obligations of the
Trust. However, the Trust's Amended and Restated Master Trust Agreement
provides that creditors of, contractors with and claimants against the
Trust shall look only to the assets of the appropriate series of the
Trust for payment. It also requires that notice of such disclaimer be given
in every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or any officer(s) of the Trust on behalf of the
Trust. The Amended and Restated Master Trust Agreement further provides
that if any shareholder of any series of the Trust is charged or held to be
personally liable for any obligation or liability of the Trust solely by
reason of being or having been such a shareholder,~the shareholder shall be
entitled out of the assets of the appropriate series of the Trust to be
held harmless from and indemnified against all loss and expense arising
from such liability. Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is limited to circumstances in
which the Trust or appropriate series of the Trust would be unable to meet
its obligations.
We hereby consent to this opinion's accompanying PostEffective
Amendment No. 13, which the Trust is about to file with the Securities and
Exchange Commission.
Very truly yours,
Kirkpatrick & Lockhart
Consent of Independent Auditors
The Board of Trustees and Shareholders
The Dreyfus/Laurel Investment Series
(formerly the Laurel Investment Series
prior thereto The Boston Company Investment Series)
We consent to the use of our report dated October 21, 1994 included herein
and to the references to our firm under the headings "Financial Highlights"
and "Counsel and Auditors" in the prospectus and statement of additional
information filed with the Securities and Exchange Commission in this Post-
Effective Amendment No. 12 to the Registration Statement under the
Securities Act of 1933 and in this Amendment No. 13 to the Registration
Statement under the Investment Company Act of 1940.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December , 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
The Dreyfus/Laurel Investment Series:
We consent to the incorporation by reference in Post-Effective
Amendment No. 13 to the Registration Statement (File No. 33-43847) on Form
N-1A of The Dreyfus/Laurel Investment Series (formerly The Laurel
Investment Series and previously The Boston Company Investment Series) of
our reports dated October 8, 1993 on our audits of the financial statements
and financial highlights of the International Fund, Short-Term Bond Fund
and Contrarian Fund (three series of The Dreyfus/Laurel Investment Series),
which reports are included in the Annual Reports to Shareholders for the
year ended August 31, 1993 which are incorporated by reference in the
Registration Statement.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 30, 1994
shared/tbc/tbclaure/dreyfus/consent
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
RESTATED DISTRIBUTION PLAN
WHEREAS, The Dreyfus/Laurel Tax-Free Municipal Funds (formerly, The
Laurel Tax-Free Municipal Funds) (the "Trust") 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 beneficial interest (collectively, the "Funds" and
individually, a "Fund"), as may be established and designated from time to
time; and
WHEREAS, the Trust and its Distributor, a broker-dealer registered
under the Securities Act of 1934, as amended, have entered into a
Distribution Plan pursuant to which the Distributor will act as the
distributor of certain classes of shares (the "Shares") of the Funds; and
WHEREAS, the Board of Trustees of the Trust has adopted the
Distribution Plan in accordance with the requirements of the 1940 Act and
Rule 12b-1 thereunder, and has concluded, in the exercise of its reasonable
business judgment and in light of its fiduciary duties, that there is a
reasonable likelihood that the Distribution Plan will benefit the Trust and
the holders of its Shares;
NOW THEREFORE, the Trust hereby restates the Distribution Plan as set
forth below in this Restated Distribution Plan (the "Plan"):
Section 1. Payments for Distribution-Related Services. The Trust may
pay for any activities or expenses primarily intended to result in the sale
of certain classes of Shares of the Funds, as listed on Exhibit A, as such
Exhibit may be amended from time to time. Payments by the Trust 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 Trust's Board of Trustees, provided that
no rate set by the Board for any Fund may exceed, on an annual basis, 0.25%
of the value of a Fund's average daily net assets attributable to its
Investor Shares or Class A Shares, as the case may be.
Section 2. Expenses Covered by Plan. The fees payable under
Section 1 of this Plan may be used to compensate (i) Dreyfus Service
Corporation for shareholder servicing services provided by it, and/or (ii)
the Distributor for distribution and/or shareholder servicing services
provided by it, and related expenses incurred, including payments by the
Distributor to compensate banks, broker/dealers or other financial
institutions that have entered into written agreements with respect to
shareholder services and sales support services ("Agreements") with the
Distributor ("Selling and Servicing Agents"), for shareholder servicing and
sales support services provided, and related expenses incurred, by such
Selling and Servicing Agents.
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 Trustees of the Trust may duly
approve from time to time.
Section 4. Limitations on Payments. Payment made by a particular
Fund under Section 1 must be for distribution and/or shareholder servicing
rendered for or on behalf of such Fund. However, joint distribution or
sales support financing with respect to a Fund (which financing may also
involve other investment portfolios or companies that are affiliated
persons of such a person, or affiliated persons of the Distributor) shall
be permitted in accordance with applicable regulations of the Securities
and Exchange Commission as in effect from time to time.
Except for the payments specified in Section 1, no additional
payments are to be made by the Trust under this Plan, provided that nothing
herein shall be deemed to preclude the payments a Fund is otherwise
obligated to make to The Dreyfus Corporation ("Dreyfus") pursuant to the
Investment Management Agreement, and for the expenses otherwise incurred by
such Fund and the Trust 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 Trust on behalf of a Fund to Dreyfus, or any
affiliate thereof, or to any party pursuant to any agreement, or,
generally, by the Trust 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 Article III, Section 26 of the Rules of Fair Practice
of the National Association of Securities Dealers, Inc.
Section 5. Reports of Distributor. So long as this Plan is in
effect, the Distributor shall provide to the Trust's Officers and Board of
Trustees, and the Trustees shall review at least quarterly, a written
report of the amounts expended by it pursuant to the Plan, or by Selling
and Servicing Agents pursuant to Agreements, and the purposes for which
such expenditures were made.
Section 6. Majority Vote. As used herein, the term "Majority Vote"
of the Shares of a class of a Fund means a vote of the holders of the
lesser of (a) more than fifty percent (50%) of the outstanding Shares of
such class of such Fund or (b) sixty-seven percent (67%) or more of the
Shares of such class of such Fund present at a shareholders' meeting in
person or by proxy.
Section 7. Approval of Plan. This Plan will become effective at
such time as is specified by the Board of Trustees, as to any class of a
Fund; provided, however, that the Plan is approved by (a) a Majority Vote
of the Shares of that class of such Fund, and (b) a majority of the Board
of Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust 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 Trust's Board of Trustees in the manner described in Section 7(b)
hereof.
Section 9. Amendments. This Plan may be amended at any time by the
Board of Trustees; provided, that (a) any amendment to increase materially
the costs which a Fund's class of Shares may bear for distribution pursuant
to this Plan shall be effective only upon the Majority Vote of the
outstanding Shares of such class of the Fund, and (b) any material
amendments of the terms of this Plan shall become effective only upon
approval as provided in Section 7(b) hereof.
Section 10. Termination. This Plan is terminable, as to a Fund's
class of Shares, without penalty at any time by (a) a vote of a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust and who have no direct or indirect financial interest in the
operation of this Plan or in any Agreements entered into in connection with
this Plan, or (b) a Majority Vote of the outstanding Shares of such class
of the Fund.
Section 11. Selection/Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust shall be
committed to the discretion of such non-interested Trustees.
Section 12. Records. The Trust will preserve copies of this Plan,
and any related Agreements and any written reports regarding this Plan
presented to the Board of Trustees, 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.
Section 14. Limitation of Liability of Trustees, Officers and
Shareholders. A copy of the Third Amended and Restated Master Trust
Agreement of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that the
obligations of the Trust hereunder and under any related Plan Agreement
shall not be binding upon any Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the trust
property of the Trust, as provided in the Third Amended and Restated Master
Trust Agreement of the Trust.
IN WITNESS WHEREOF, the Trust has adopted this Restated Distribution
Plan as of this 17th day of October, 1994.
EXHIBIT A
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
Investor Shares:
Dreyfus/Laurel Massachusetts Tax-Free Money Fund
Dreyfus/Laurel California Tax-Free Money Fund
Dreyfus/Laurel New York Tax-Free Money Fund
Dreyfus/Laurel Tax-Free Money Fund
Class A Shares:
Premier Limited Term Massachusetts Municipal Fund
Premier Limited Term California Municipal Fund
Premier Limited Term New York Municipal Fund
Premier Limited Term Municipal Fund
THE DREYFUS/LAUREL FUNDS, INC.
RESTATED DISTRIBUTION PLAN
WHEREAS, The Dreyfus/Laurel Funds, Inc. (formerly, The Laurel Funds,
Inc.) (the "Investment Company") is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended,
(the "1940 Act") and consists of one or more distinct portfolios of shares
of common stock (collectively, the "Funds" and individually, a "Fund"), as
may be established and designated from time to time; and
WHEREAS, the Investment Company and its Distributor, a broker-dealer
registered under the Securities Act of 1934, as amended, have entered into
a Distribution Plan pursuant to which the Distributor will act as the
distributor of certain classes of shares (the "Shares") of the Funds; and
WHEREAS, the Board of Directors of the Investment Company has adopted
the Distribution Plan in accordance with the requirements of the 1940 Act
and Rule 12b-1 thereunder, and has concluded, in the exercise of its
reasonable business judgment and in light of its fiduciary duties, that
there is a reasonable likelihood that the Distribution Plan will benefit
the Investment Company and the holders of its Shares;
NOW THEREFORE, the Investment Company hereby restates the
Distribution Plan as set forth below in this Restated Distribution Plan
(the "Plan"):
Section 1. Payments for Distribution-Related Services. The
Investment Company may pay for any activities or expenses primarily
intended to result in the sale of certain classes of Shares of the Funds,
as listed on Exhibit A, as such Exhibit may be amended from time to time.
Payments by the Investment Company under this Section of this Plan will be
calculated daily and paid monthly at a rate or rates set from time to time
by the Investment Company's Board of Directors, provided that no rate set
by the Board for any Fund may exceed, on an annual basis, 0.25% of the
value of a Fund's average daily net assets attributable to its Investor
Shares or Class A Shares, as the case may be.
Section 2. Expenses Covered by Plan. The fees payable under
Section 1 of this Plan may be used to compensate (i) Dreyfus Service
Corporation for shareholder servicing services provided by it, and/or (ii)
the Distributor for distribution and/or shareholder servicing services
provided by it, and related expenses incurred, including payments by the
Distributor to compensate banks, broker/dealers or other financial
institutions that have entered into written agreements with respect to
shareholder services and sales support services ("Agreements") with the
Distributor ("Selling and Servicing Agents"), for shareholder servicing and
sales support services provided, and related expenses incurred, by such
Selling and Servicing Agents.
Section 3. Agreements. The Distributor may enter into written
Agreements with Selling and Servicing Agents, such Agreements to be
substantially in such forms as the Board of Directors of the Investment
Company may duly approve from time to time.
Section 4. Limitations on Payments. Payment made by a particular
Fund under Section 1 must be for distribution and/or shareholder servicing
rendered for or on behalf of such Fund. However, joint distribution or
sales support financing with respect to a Fund (which financing may also
involve other investment portfolios or companies that are affiliated
persons of such a person, or affiliated persons of the Distributor) shall
be permitted in accordance with applicable regulations of the Securities
and Exchange Commission as in effect from time to time.
Except for the payments specified in Section 1, no additional
payments are to be made by the Investment Company under this Plan, provided
that nothing herein shall be deemed to preclude the payments a Fund is
otherwise obligated to make to The Dreyfus Corporation ("Dreyfus") pursuant
to the Investment Management Agreement, and for the expenses otherwise
incurred by such Fund and the Investment Company on behalf of the Shares in
the normal conduct of such Fund's business pursuant to the Investment
Management Agreement. To the extent any payments by the Investment Company
on behalf of a Fund to Dreyfus, or any affiliate thereof, or to any party
pursuant to any agreement, or, generally, by the Investment Company on
behalf of a Fund to any party, are deemed to be payments for the financing
of any activity primarily intended to result in the sale of the Shares
within the context of Rule 12b-1 under the 1940 Act, then such payments
shall be deemed to have been approved pursuant to this Plan without regard
to Section 1.
Notwithstanding anything herein to the contrary, no Fund shall be
obligated to make any payments under this Plan that exceed the maximum
amounts payable under Article III, Section 26 of the Rules of Fair Practice
of the National Association of Securities Dealers, Inc.
Section 5. Reports of Distributor. So long as this Plan is in
effect, the Distributor shall provide to the Investment Company's Officers
and Board of Directors, and the Directors shall review at least quarterly,
a written report of the amounts expended by it pursuant to the Plan, or by
Selling and Servicing Agents pursuant to Agreements, and the purposes for
which such expenditures were made.
Section 6. Majority Vote. As used herein, the term "Majority Vote"
of the Shares of a class of a Fund means a vote of the holders of the
lesser of (a) more than fifty percent (50%) of the outstanding Shares of
such class of such Fund or (b) sixty-seven percent (67%) or more of the
Shares of such class of such Fund present at a shareholders' meeting in
person or by proxy.
Section 7. Approval of Plan. This Plan will become effective at
such time as is specified by the Board of Directors, as to any class of a
Fund; provided, however, that the Plan is approved by (a) a Majority Vote
of the Shares of such class of such Fund, and (b) a majority of the Board
of Directors, including a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act) of the Investment Company and who
have no direct or indirect financial interest in the operation of this
Plan or in any Agreements entered into in connection with this Plan,
pursuant to a vote cast in person at a meeting called for the purpose of
voting on the approval of this Plan.
Section 8. Continuance of Plan. This Plan shall continue in effect
for so long as its continuance is specifically approved at least annually
by the Investment Company's Board of Directors in the manner described in
Section 7(b) hereof.
Section 9. Amendments. This Plan may be amended at any time by the
Board of Directors; provided, that (a) any amendment to increase materially
the costs which a Fund's class of Shares may bear for distribution pursuant
to this Plan shall be effective only upon the Majority Vote of the
outstanding Shares of such class of the Fund, and (b) any material
amendments of the terms of this Plan shall become effective only upon
approval as provided in Section 7(b) hereof.
Section 10. Termination. This Plan is terminable, as to a Fund's
class of Shares, without penalty at any time by (a) a vote of a majority of
the Directors who are not "interested persons" (as defined in the 1940 Act)
of the Investment Company and who have no direct or indirect financial
interest in the operation of this Plan or in any Agreements entered into in
connection with this Plan, or (b) a Majority Vote of the outstanding Shares
of such class of the Fund.
Section 11. Selection/Nomination of Directors. While this Plan is
in effect, the selection and nomination of those Directors who are not
"interested persons" (as defined in the 1940 Act) of the Investment Company
shall be committed to the discretion of such non-interested Directors.
Section 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 Restated
Distribution Plan as of this 17th day of October, 1994.
EXHIBIT A
THE DREYFUS/LAUREL FUNDS, INC.
Investor Shares:
Dreyfus Disciplined Stock Fund
Dreyfus Disciplined Midcap Stock Fund
Dreyfus S&P 500 Stock Index Fund
Dreyfus Equity Income Fund
Dreyfus European Fund
Dreyfus Bond Market Index Fund
Dreyfus International Equity Allocation Fund
Dreyfus/Laurel Short-Term Government Securities Fund
Dreyfus/Laurel Prime Money Market Fund
Dreyfus/Laurel U.S. Treasury Money Market Fund
Dreyfus/Laurel Tax-Exempt Money Market Fund
Dreyfus/Laurel Institutional Prime Money Market Fund
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund
Dreyfus/Laurel Institutional Government Money Market Fund
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund
Dreyfus/Laurel Institutional Short-Term Bond Fund
Class A Shares:
Premier Balanced Fund
Premier Small Company Stock Fund
Premier Limited Term Income Fund
THE DREYFUS/LAUREL INVESTMENT SERIES
RESTATED DISTRIBUTION PLAN
WHEREAS, The Dreyfus/Laurel Investment Series (formerly, The Laurel
Investment Series) (the "Trust") 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 beneficial interest (collectively, the "Funds" and individually, a
"Fund"), as may be established and designated from time to time; and
WHEREAS, the Trust and its Distributor, a broker-dealer registered
under the Securities Act of 1934, as amended, have entered into a
Distribution Plan pursuant to which the Distributor will act as the
distributor of certain classes of shares (the "Shares") of the Funds; and
WHEREAS, the Board of Trustees of the Trust has adopted the
Distribution Plan in accordance with the requirements of the 1940 Act and
Rule 12b-1 thereunder, and has concluded, in the exercise of its reasonable
business judgment and in light of its fiduciary duties, that there is a
reasonable likelihood that the Distribution Plan will benefit the Trust and
the holders of its Shares;
NOW THEREFORE, the Trust hereby restates the Distribution Plan as set
forth below in this Restated Distribution Plan (the "Plan"):
Section 1. Payments for Distribution-Related Services. The Trust may
pay for any activities or expenses primarily intended to result in the sale
of certain classes of Shares of the Funds, as listed on Exhibit A, as such
Exhibit may be amended from time to time. Payments by the Trust 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 Trust's Board of Trustees, provided that
no rate set by the Board for any Fund may exceed, on an annual basis, 0.25%
of the value of a Fund's average daily net assets attributable to its
Investor Shares or Class A Shares, as the case may be.
Section 2. Expenses Covered by Plan. The fees payable under
Section 1 of this Plan may be used to compensate (i) Dreyfus Service
Corporation for shareholder servicing services provided by it, and/or (ii)
the Distributor for distribution and/or shareholder servicing services
provided by it, and related expenses incurred, including payments by the
Distributor to compensate banks, broker/dealers or other financial
institutions that have entered into written agreements with respect to
shareholder services and sales support services ("Agreements") with the
Distributor ("Selling and Servicing Agents"), for shareholder servicing and
sales support services provided, and related expenses incurred, by such
Selling and Servicing Agents.
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 Trustees of the Trust may duly
approve from time to time.
Section 4. Limitations on Payments. Payment made by a particular
Fund under Section 1 must be for distribution and/or shareholder servicing
rendered for or on behalf of such Fund. However, joint distribution or
sales support financing with respect to a Fund (which financing may also
involve other investment portfolios or companies that are affiliated
persons of such a person, or affiliated persons of the Distributor) shall
be permitted in accordance with applicable regulations of the Securities
and Exchange Commission as in effect from time to time.
Except for the payments specified in Section 1, no additional
payments are to be made by the Trust under this Plan, provided that nothing
herein shall be deemed to preclude the payments a Fund is otherwise
obligated to make to The Dreyfus Corporation ("Dreyfus") pursuant to the
Investment Management Agreement, and for the expenses otherwise incurred by
such Fund and the Trust 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 Trust on behalf of a Fund to Dreyfus, or any
affiliate thereof, or to any party pursuant to any agreement, or,
generally, by the Trust 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 Article III, Section 26 of the Rules of Fair Practice
of the National Association of Securities Dealers, Inc.
Section 5. Reports of Distributor. So long as this Plan is in
effect, the Distributor shall provide to the Trust's Officers and Board of
Trustees, and the Trustees shall review at least quarterly, a written
report of the amounts expended by it pursuant to the Plan, or by Selling
and Servicing Agents pursuant to Agreements, and the purposes for which
such expenditures were made.
Section 6. Majority Vote. As used herein, the term "Majority Vote"
of the Shares of a class of a Fund means a vote of the holders of the
lesser of (a) more than fifty percent (50%) of the outstanding Shares of
such class of such Fund or (b) sixty-seven percent (67%) or more of the
Shares of such class of such Fund present at a shareholders' meeting in
person or by proxy.
Section 7. Approval of Plan. This Plan will become effective at
such time as is specified by the Board of Trustees, as to any class of a
Fund; provided, however, that the Plan is approved by (a) a Majority Vote
of the Shares of that class of such Fund, and (b) a majority of the Board
of Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust 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 Trust's Board of Trustees in the manner described in Section 7(b)
hereof.
Section 9. Amendments. This Plan may be amended at any time by the
Board of Trustees; provided, that (a) any amendment to increase materially
the costs which a Fund's class of Shares may bear for distribution pursuant
to this Plan shall be effective only upon the Majority Vote of the
outstanding Shares of such class of the Fund, and (b) any material
amendments of the terms of this Plan shall become effective only upon
approval as provided in Section 7(b) hereof.
Section 10. Termination. This Plan is terminable, as to a Fund's
class of Shares, without penalty at any time by (a) a vote of a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust and who have no direct or indirect financial interest in the
operation of this Plan or in any Agreements entered into in connection with
this Plan, or (b) a Majority Vote of the outstanding Shares of such class
of the Fund.
Section 11. Selection/Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust shall be
committed to the discretion of such non-interested Trustees.
Section 12. Records. The Trust will preserve copies of this Plan,
and any related Agreements and any written reports regarding this Plan
presented to the Board of Trustees, 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.
Section 14. Limitation of Liability of Trustees, Officers and
Shareholders. A copy of the Amended and Restated Master Trust Agreement of
the Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that the obligations of the Trust
hereunder and under any related Plan Agreement shall not be binding upon
any Trustees, shareholders, nominees, officers, agents or employees of the
Trust, personally, but shall bind only the trust property of the Trust, as
provided in the Amended and Restated Master Trust Agreement of the Trust.
IN WITNESS WHEREOF, the Trust has adopted this Restated Distribution
Plan as of this 17th day of October, 1994.
EXHIBIT A
THE DREYFUS/LAUREL INVESTMENT SERIES
Investor Shares:
Dreyfus/Laurel International Fund
Dreyfus/Laurel Short-Term Bond Fund
Dreyfus/Laurel Contrarian Fund
THE DREYFUS/LAUREL FUNDS TRUST
RESTATED DISTRIBUTION PLAN
WHEREAS, The Dreyfus/Laurel Funds Trust (formerly, The Laurel Funds
Trust) (the "Trust") 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
beneficial interest (collectively, the "Funds" and individually, a "Fund"),
as may be established and designated from time to time; and
WHEREAS, the Trust and its Distributor, a broker-dealer registered
under the Securities Act of 1934, as amended, have entered into a
Distribution Plan pursuant to which the Distributor will act as the
distributor of certain classes of shares (the "Shares") of the Funds; and
WHEREAS, the Board of Trustees of the Trust has adopted the
Distribution Plan in accordance with the requirements of the 1940 Act and
Rule 12b-1 thereunder, and has concluded, in the exercise of its reasonable
business judgment and in light of its fiduciary duties, that there is a
reasonable likelihood that the Distribution Plan will benefit the Trust and
the holders of its Shares;
NOW THEREFORE, the Trust hereby restates the Distribution Plan as set
forth below in this Restated Distribution Plan (the "Plan"):
Section 1. Payments for Distribution-Related Services. The Trust may
pay for any activities or expenses primarily intended to result in the sale
of certain classes of Shares of the Funds, as listed on Exhibit A, as such
Exhibit may be amended from time to time. Payments by the Trust 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 Trust's Board of Trustees, provided that
no rate set by the Board for any Fund may exceed, on an annual basis, 0.25%
of the value of a Fund's average daily net assets attributable to its
Investor Shares or Class A Shares, as the case may be, (except 0.15% of the
value of the Dreyfus Core Value Fund's average daily net assets
attributable to such Fund's Institutional Shares).
Section 2. Expenses Covered by Plan. The fees payable under
Section 1 of this Plan may be used to compensate (i) Dreyfus Service
Corporation for shareholder servicing services provided by it, and/or (ii)
the Distributor for distribution and/or shareholder servicing services
provided by it, and related expenses incurred, including payments by the
Distributor to compensate banks, broker/dealers or other financial
institutions that have entered into written agreements with respect to
shareholder services and sales support services ("Agreements") with the
Distributor ("Selling and Servicing Agents"), for shareholder servicing and
sales support services provided, and related expenses incurred, by such
Selling and Servicing Agents.
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 Trustees of the Trust may duly
approve from time to time.
Section 4. Limitations on Payments. Payment made by a particular
Fund under Section 1 must be for distribution and/or shareholder servicing
rendered for or on behalf of such Fund. However, joint distribution or
sales support financing with respect to a Fund (which financing may also
involve other investment portfolios or companies that are affiliated
persons of such a person, or affiliated persons of the Distributor) shall
be permitted in accordance with applicable regulations of the Securities
and Exchange Commission as in effect from time to time.
Except for the payments specified in Section 1, no additional
payments are to be made by the Trust under this Plan, provided that nothing
herein shall be deemed to preclude the payments a Fund is otherwise
obligated to make to The Dreyfus Corporation ("Dreyfus") pursuant to the
Investment Management Agreement, and for the expenses otherwise incurred by
such Fund and the Trust 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 Trust on behalf of a Fund to Dreyfus, or any
affiliate thereof, or to any party pursuant to any agreement, or,
generally, by the Trust 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 Article III, Section 26 of the Rules of Fair Practice
of the National Association of Securities Dealers, Inc.
Section 5. Reports of Distributor. So long as this Plan is in
effect, the Distributor shall provide to the Trust's Officers and Board of
Trustees, and the Trustees shall review at least quarterly, a written
report of the amounts expended by it pursuant to the Plan, or by Selling
and Servicing Agents pursuant to Agreements, and the purposes for which
such expenditures were made.
Section 6. Majority Vote. As used herein, the term "Majority Vote"
of the Shares of a class of a Fund means a vote of the holders of the
lesser of (a) more than fifty percent (50%) of the outstanding Shares of
such class of such Fund or (b) sixty-seven percent (67%) or more of the
Shares of such class of such Fund present at a shareholders' meeting in
person or by proxy.
Section 7. Approval of Plan. This Plan will become effective at
such time as is specified by the Board of Trustees, as to any class of a
Fund; provided, however, that the Plan is approved by (a) a Majority Vote
of the Shares of that class of such Fund, and (b) a majority of the Board
of Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust 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 Trust's Board of Trustees in the manner described in Section 7(b)
hereof.
Section 9. Amendments. This Plan may be amended at any time by the
Board of Trustees; provided, that (a) any amendment to increase materially
the costs which a Fund's class of shares may bear for distribution pursuant
to this Plan shall be effective only upon the Majority Vote of the
outstanding Shares of such class of the Fund, and (b) any material
amendments of the terms of this Plan shall become effective only upon
approval as provided in Section 7(b) hereof.
Section 10. Termination. This Plan is terminable, as to a Fund's
class of Shares, without penalty at any time by (a) a vote of a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust and who have no direct or indirect financial interest in the
operation of this Plan or in any Agreements entered into in connection with
this Plan, or (b) a Majority Vote of the outstanding Shares of such class
of the Fund.
Section 11. Selection/Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust shall be
committed to the discretion of such non-interested Trustees.
Section 12. Records. The Trust will preserve copies of this Plan,
and any related Agreements and any written reports regarding this Plan
presented to the Board of Trustees, 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.
Section 14. Limitation of Liability of Trustees, Officers and
Shareholders. A copy of the Second Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of State of
The Commonwealth of Massachusetts and notice is hereby given that the
obligations of the Trust hereunder and under any related Plan Agreement
shall not be binding upon any Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the trust
property of the Trust, as provided in the Second Amended and Restated
Agreement and Declaration of Trust of the Trust.
IN WITNESS WHEREOF, the Trust has adopted this Restated Distribution
Plan as of this 17th day of October, 1994.
EXHIBIT A
THE DREYFUS/LAUREL FUNDS TRUST
Investor Shares:
Dreyfus Core Value Fund
Dreyfus Special Growth Fund
Dreyfus/Laurel Government Money Fund
Dreyfus/Laurel Cash Management Fund
Class A Shares:
Premier Managed Income Fund
Premier Limited Term Government Securities Fund
Institutional Shares:
Dreyfus Core Value Fund
EXHIBIT B
SHAREHOLDER SERVICING SALES SUPPORT AGREEMENT
[THE BOSTON COMPANY FUND,
THE BOSTON COMPANY TAX-FREE MUNICIPAL FUNDS,
THE BOSTON COMPANY INVESTMENT SERIES]
[INVESTOR SHARES OR INSTITUTIONAL SHARES,
AS APPLICABLE]
Ladies and Gentlemen:
We wish to enter into this Shareholder Servicing Sales Support
Agreement ("Agreement") with you concerning the provision of shareholder
servicing and sales support assistance relating to [Investor Shares or
Institutional Class Shares, as applicable,] of the investment portfolios
(the "Funds") of [The Boston Company Fund, The Boston Company Tax-Free
Municipal Funds, The Boston Company Investment Series] (the "Trust"), of
which we are the principal underwriter as defined in the Investment Trust
Act of 1940 (the "1940 Act") and the exclusive agent for the continuous
distribution of said shares.
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide reasonable sales support assistance
in connection with the sale of [Investor Shares or Institutional Class of
Shares, as applicable,] to your customers ("Customers"), which assistance
may include forwarding sales literature and advertising provided by the
Trust or by us to Customers and providing such other sales support
assistance as may be requested by us from time to time. You also agree to
provide the following administrative support services to your clients
("Customers") who may from time to time beneficially own [Investor Shares
or Institutional Class of Shares, as applicable]:1 (i) aggregating and
processing purchase and redemption requests for [Investor Shares or
Institutional Class of Shares, as applicable] from Customers and
transmitting promptly net purchase and redemption orders to us or the
transfer agent; (ii) providing Customers with a service that invests the
assets of their accounts in [Investor Shares or Institutional Class of
Shares, as applicable] pursuant to specific or pre-authorized instructions;
(iii) processing dividend and distribution payments from the Trust on
behalf of Customers; (iv) providing information periodically to Customers
showing their positions in [Investor Shares or Institutional Class of
Shares, as applicable]; (v) arranging for bank wires; (vi) responding to
Customers' inquiries concerning their investment in [Investor Shares or
Institutional Class of Shares, as applicable]; (vii) providing
subaccounting with respect to [Investor Shares or Institutional Class of
Shares, as applicable,] beneficially owned by Customers or the information
to us necessary for subaccounting; (viii) if required by law, forwarding
shareholder communications from us (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and
tax notices) to Customers; (ix) forwarding to Customers proxy statements
and proxies containing any proposals regarding this Agreement; (x) general
shareholder liaison services; and (xi) providing such other similar
services as we may reasonably request to the extent you are permitted to do
so under applicable statutes, rules or regulations. All services rendered
hereunder by you shall be performed in a professional, competent and timely
manner.
Section 2. We recognize that you may be subject to the provisions of
the Glass-Steagall Act and other laws governing, among other things, the
conduct of activities by federally chartered and supervised banks and other
banking organizations. As such, you may be restricted in the activities
you may undertake and for which you may be paid. You will perform only
those activities which are consistent with statutes and regulations
applicable to you. You will act solely as agent for, upon the order of,
and for the account of your Customers.
Section 3. You will provide such office space and equipment,
telephone facilities and personnel (which may be any part of the space,
equipment and facilities currently used in your business, or any personnel
employed by you) as may be reasonably necessary or beneficial in order to
provide the shareholder servicing and sales support services contemplated
hereby.
Section 4. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us, the Trust or the
[Investor Shares or Institutional Class of Shares, as applicable,] except
those contained in the Trust's applicable then current prospectuses and
statements of additional information, as amended or supplemented from time
to time, copies of which will be supplied by us to you, or in such
supplemental literature or advertising as may be authorized by us or the
Trust in writing.
Section 5. For all purposes of this Agreement you will be deemed to
be an independent contractor, and will have no authority to act as agent
for us or the Trust in any matter or in any respect, except as provided
herein. By your written acceptance of this Agreement, you agree to and do
release, indemnify and hold us and the Trust harmless from and against any
and all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees
or agents regarding your responsibilities hereunder or the purchase,
redemption, transfer or registration of [Investor Shares or Institutional
Class of Shares, as applicable,] (or orders relating to the same) by or on
behalf of Customers. You and your employees will, upon request, be
available during normal business hours to consult with us or the Trust or
our respective designees concerning the performance of your
responsibilities under this Agreement.
Section 6. In consideration of the services and facilities provided
by you hereunder, we will pay to you, and you will accept as full payment
therefor, a fee as described in the applicable then current prospectuses.
The fees payable under this Section 6 shall be used for shareholder
servicing and sales support services provided, and related expenses
incurred, by you. Payments may be applied to commissions, incentive
compensation or other compensation to, and expenses of, your account
executives or other employees; overhead and other office expenses
attributable to shareholder servicing and sales support activities;
preparation, printing and distribution of sales literature and advertising
materials attributable to sales support activities; and opportunity costs
relating to the foregoing (which may be calculated as a carrying charge on
your unreimbursed expenses incurred in connection with your sales support
services). The overhead and other office expenses referenced in this
Section 6 may include, without limitation, (i) the expenses of operating
your offices in connection with the sale of Fund shares, including lease
costs, the salaries and employee benefits of administrative, operations and
support personnel, utility costs, communication costs and the costs of
stationery and supplies, (ii) the costs of client sales seminars and travel
related to the provision of sales support services and (iii) other
expenses relating to the provision of sales support services. By your
acceptance of this Agreement, you agree to and do waive such portion of any
fee payable to you hereunder to the extent necessary to assure that such
fee and other expenses required to be accrued hereunder with respect to the
[Investor Shares or Institutional Class of Shares, as applicable,] owned by
or on behalf of Customers on any day does not exceed the income to be
accrued by the Trust to such shares on that day. The fee rate payable to
you may be prospectively increased or decreased by us or by the Trust, in
our or its sole discretion, at any time upon notice to you. Further, we or
the Trust may, in our or its discretion and without notice, suspend or
withdraw the sale of [Investor Shares or Institutional Class of Shares, as
applicable,] of any or all Funds, including the sale of [Investor Shares or
Institutional Class of Shares, as applicable,] for the account of any
Customer or Customers.
Section 7. You agree to provide to us and the Trust, at le
last quarterly, a written report of amounts expended by you in connection
with the provision of shareholder servicing and sales support services
hereunder and the purposes for which such expenditures were made. In
addition, you will furnish us or the Trust or our respective designees with
such information as we or they may reasonably request (including, without
limitation, periodic certifications confirming the provision to Customers
of the services described herein), and will otherwise cooperate with us and
the Trust and our respective designees (including, without limitation, any
auditors or legal counsel designated by us or the Trust), in connection
with the preparation of reports to the Trust's Board of Trustees concerning
this Agreement and the monies paid or payable by us pursuant hereto, as
well as any other reports or filings that may be required by law.
Section 8. We may enter into other similar Agreements with any other
person or persons without your consent.
Section 9. By your written acceptance of this Agreement, you
represent, warrant and agree that the compensation payable to you
hereunder, together with any other compensation you receive in connection
with the investment of your Customers' assets in [Investor Shares or
Institutional Class of Shares, as applicable,] of the Funds, will be
disclosed by you to your Customers to the extent required by applicable
laws or regulations, will be authorized by your Customers and will not be
excessive or unreasonable under the laws and instruments governing your
relationships with Customers. By your written acceptance of this Agreement,
you represent and warrant that: (i) in the event an issue pertaining to
this Agreement or the [Investor Shares' or Institutional Class of Shares',
as applicable,] Distribution Plan related hereto is submitted for
shareholder approval, and you have the authority to do so, you will vote
any [Investor Shares or Institutional Class of Shares, as applicable,] held
for your own account in the same proportion as the vote of the [Investor
Shares or Institutional Class of Shares, as applicable,] held for your
Customers' benefit; and (ii) you will not engage in activities pursuant to
this Agreement which constitute acting as a broker or dealer under state
law unless you have obtained any licenses required by such law. In
addition, you understand that this Agreement has been entered into pursuant
to Rule 12b-1 under the Act, and is subject to the provisions of said Rule,
as well as any other applicable rules or regulations promulgated by the
Securities and Exchange Commission.
Section 10. You agree to conform to compliance standards adopted by
the Trust or its distributor as to when a class of shares in a Fund may be
appropriately sold to particular investors.
Section 11. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee and
continues in effect until terminated. This Agreement is terminable with
respect to any Fund's [Investor Shares or Institutional Class of Shares, as
applicable,] without penalty, at any time by the Trust (which termination
may be by a vote of a majority of the disinterested Trustees of the Trust
or by vote of the holders of a majority of the outstanding [Investor
Shares or Institutional Class of Shares, as applicable,] of such Fund) or
by us or you upon notice to the other party hereto.
Section 12. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by
similar telecommunications device to the appropriate address or number
stated herein (with a conforming copy by mail), or to such other address as
either party shall so provide in writing to the other.
Section 13. This Agreement will be construed in accordance with the
laws of The Commonwealth of Massachusetts without giving effect to
principles of conflict of laws, and is nonassignable by the parties hereto.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return
it to us, at the following address:
____________________________________________; Fax No. _________________;
Attention: _______________________________.
Very truly yours,
FUNDS DISTRIBUTOR, INC.
Dated as of _______________ By: ________________________________
Name: _____________________________
Title: ______________________________
ACCEPTED AND AGREED TO:
(Firm Name)
(Address)
(City) (State) (County)
Fax #
Attention
Dated as of _____________ By:
Name:
Title:
1 Services may be modified or omitted in the particular case and
items relettered or renumbered.
tbc/tbclaure/book/102694/12b1rd
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<NAME> LAUREL CONTRARIAN FUND
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 5
<NAME> SHORT TERM BOND FUND
<S> <C>
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<PERIOD-END> AUG-31-1994
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</TABLE>
<TABLE> <S> <C>
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<NAME> LAUREL INTERNATIONAL FUND
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