Registration Nos. 33-46403
811-6595
=================================================================
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. 2
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
(Check appropriate box or boxes)
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212)
922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of
Rule 485
Registrant has registered an indefinite number of shares of
beneficial interest under the Securities Act of 1933
pursuant to
Section 24(f) of the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the period from March 5,
1993
(commencement of operations) through January 31, 1994 will
be
filed on or about March 25, 1994.
<PAGE>
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of Registrant 4
5 Management of the Fund 13
6 Capital Stock and Other
Securities 29
7 Purchase of Securities Being
Offered 15
8 Redemption or Repurchase 23
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-26
13 Investment Objectives and
Policies B-3
14 Management of the Fund B-7
15 Control Persons and Principal B-10
Holders of Securities
16 Investment Advisory and Other
Services B-10
NOTE * Omitted since answer is negative or inapplicable.
<PAGE>
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
17 Brokerage Allocation B-24
18 Capital Stock and Other
Securities B-26
19 Purchase, Redemption and Pricing
of Securities Being Offered B-14, B-26
20 Tax Status *
21 Underwriters B-14
22 Calculations of Performance Data B-25
23 Financial Statements B-27
Items in
Part C of
Form N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-8
30 Location of Accounts and Records C-16
31 Management Services C-16
32 Undertakings C-16
NOTE: * Omitted since answer is negative or inapplicable
<PAGE>
_______________, 1994
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
Supplement to Prospectus Dated ____________, 1994.
The following information supplements and should be read in
conjunction with the section of the Fund's Prospectus entitled
"Management of the Fund."
The Dreyfus Corporation ("Dreyfus") has entered into an
Agreement and Plan of Merger providing for the merger of Dreyfus
with a subsidiary of Mellon Bank Corporation ("Mellon").
Upon closing of the merger, it is planned that Dreyfus will
retain its New York headquarters and will be a separate
subsidiary within the Mellon organization. It is expected that
the Dreyfus management team and the Dreyfus mutual fund managers
will remain in place, and the Dreyfus mutual funds will be
operated in the same manner as they are currently.
Following the merger, Dreyfus will be either a direct or
indirect subsidiary of Mellon, whose principal banking subsidiary
is Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including the receipt of certain
regulatory approvals and the approvals of the stockholders of
Dreyfus and of Mellon. The merger is expected to occur in mid-
1994, but could occur significantly later.
<PAGE>
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
INTERMEDIATE SERIES
PROSPECTUS
The First National Bank of Chicago
Manager
Dreyfus Service Corporation
Distributor
Prospectus begins on page one.
<PAGE>
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
Intermediate Series
PROSPECTUS
PROSPECTUS-_______, 1994
First Prairie U.S. Government Income Fund (the "Fund") is an
open-end, management investment company, known as a series fund.
By this Prospectus, Class A, Class B and Class F shares of the
Fund's Intermediate Series (the "Series") are being offered. The
Series is a diversified mutual fund which seeks to provide
investors with as high a level of current income as is consist-
tent with the preservation of capital. The dollar-weighted
average maturity of the Series' portfolio ranges between three
and ten years.
The First National Bank of Chicago (the "Manager") serves as the
Fund's investment adviser. Dreyfus Service Corporation (the
"Distributor"), a wholly-owned subsidiary of The Dreyfus
Corporation, serves as the Fund's distributor.
Class A shares are subject to a sales charge imposed at the
time of purchase and Class B shares are subject to a contingent
deferred sales charge imposed on redemptions made within five
years of purchase. The Fund offers these alternatives to permit
an investor to choose the method of purchasing shares that is
most beneficial given the amount of the purchase, the length of
time the investor expects to hold the shares and other
circumstances. Class F shares are offered without a sales charge
and are sold only to clients of the Manager for their qualified
trust, custody and/or agency accounts maintained at its Personal
Investments Department and to clients of affiliates of the
Manager for their similar accounts maintained at such affiliates.
Other differences between the Classes include the services
offered to and the expenses borne by each Class and certain
voting rights, as described herein.
The Fund's shares are not deposits or obligations of, or
guaranteed by, the Manager or any of its affiliates, and are not
federally insured by the Federal Deposit Insurance Corporation
("FDIC"), the Federal Reserve Board or any other agency. The
Fund's shares involve certain investment risks, including the
possible loss of principal. The Fund's share price, yield and
investment return fluctuate and are not guaranteed.
______________________
This Prospectus sets forth concisely information about the
Fund that an investor should know before investing. It should be
read and retained for future reference.
Part B (also known as the Statement of Additional
Information), dated _______, 1994, which may be revised from time
to time, provides a further discussion of certain areas in this
Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For a free
copy, write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-346-3621. When
telephoning, ask for Operator 666.
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.
Table of Contents
Fee Table . . . . . . . . . . . . . . . . . . . .
Condensed Financial Information . . . . . . . . .
Highlights. . . . . . . . . . . . . . . . . . . .
Alternative Purchase Methods. . . . . . . . . . .
Description of the Fund . . . . . . . . . . . . .
Management of the Fund. . . . . . . . . . . . . .
How to Buy Fund Shares. . . . . . . . . . . . . .
Shareholder Services. . . . . . . . . . . . . . .
How to Redeem Fund Shares . . . . . . . . . . . .
Distribution Plan and Shareholder
Services Plan . . . . . . . . . . . . . . . . .
Dividends, Distributions and Taxes. . . . . . . .
Performance Information . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . .
Appendix. . . . . . . . . . . . . . . . . . . . .
<PAGE>
FEE TABLE
CLASS A CLASS B CLASS F
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.00% None None
Maximum Deferred Sales
Charge Imposed on Redemptions
(as a percentage of the amount
subject to charge) None 3.00% None
Annual Fund Operating Expenses
(as a percentage of average
daily net assets)
Management Fees
(after expense reimbursement) 0% 0% 0%
12b-1 Fees None .50% None
Service Fees .25% .25% None
Other Expenses (after expense
reimbursement) 0% 0% 0%
Total Series Operating Expenses
(after expense reimbursement) __% __% __%
Example
An investor would pay the following
expenses on a $1,000 investment, Class Class Class
Class
assuming (1) 5% annual return and A B B*
F
(2) except where noted, redemption
at the end of each time period: 1 Year $__ $__ $__ $__
3 Years $__ $__ $__ $__
* Assuming no redemption of Class B shares.
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED
AS REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE
THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE SERIES' ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses investors will
bear, directly or indirectly, the payment of which will reduce
investors' return on an annual basis. Long-term investors in
Class B shares could pay more in 12b-1 fees than the economic
equivalent of paying a front-end sales charge. Other Expenses
and Total Series Operating Expenses are based on estimated
amounts. Prior to ____________, 1994, Class A shares were
subject to 12b-1 fees, but no service fees. The Manager,
affiliates of the Manager and certain Service Agents (as defined
below) may charge their clients direct fees for services
provided to clients in connection with accounts through which
shares are purchased; such fees are not reflected in the
foregoing table. See "How to Buy Fund Shares," "Management of
the Fund" and "Distribution Plan and Shareholder Services Plan."
The expenses noted above, without reimbursements, would be:
with respect to each Class, Management Fees--.60% and, with
respect to Class A, Class B and Class F shares, Other Expenses--
.__%, .__% and .__%, respectively, and Total Series Operating
Expenses--__%, __% and __%, respectively; and the amount of
expenses that an investor would pay, assuming redemption after
one and three years, would be, assuming (1) 5% annual return and
(2) except where noted, redemption at the end of each time
period:
Class A Class B Class B* Class F
1 Year $ $ $ $
3 Years $ $ $ $
* Assuming no redemption of Class B shares.
CONDENSED FINANCIAL INFORMATION
The table below sets forth certain information covering the
Series' investment results for the period indicated. Further
financial data and related notes are included in the Statement
of Additional Information available upon request. Class B
shares has not been offered as of the date of the financial
statements and, accordingly, no financial data are available for
Class B.
Financial Highlights. Contained below is per share operating
performance data for a Class A and Class F share of beneficial
interest outstanding, total investment return, ratios to average
net assets and other supplemental data for the period indicated.
This information has been derived from information provided in
the Fund's financial statements.
<PAGE>
Period Ended August 31, 1993 (Unaudited)<F1>
Class A Shares Class F Shares
Per Share Data:
Net asset value, beginning of period $ $
Income from Investment Operations:
Investment income-net
Net realized and unrealized (loss) on investments
Total Income from Investment Operations
Distributions:
Dividends from investment income-net
Net asset value, end of period $ $
Total Investment Return:<F2>
Ratios/Supplemental Data:
Ratio of expenses to average net assets<F2> -- --
Ratio of net investment income to average
net assets<F2> % %
Decrease reflected in above expense ratio
due to undertaking by The First
National Bank of Chicago<F2> % %
Portfolio Turnover Rate<F3> % %
Net Assets, end of period (000's omitted) $ $
[FN]
<F1> From March 5, 1993 (commencement of operations) to August
31, 1993.
<F2> Annualized basis.
<F3> Not Annualized.
Further information about the Series' performance will be
contained in the Fund's annual report for the fiscal year ending
January 31, 1994, which will be available approximately the end
of March 1994, and may be obtained without charge by writing to
the address or calling the number set forth on the cover page of
this Prospectus.
HIGHLIGHTS
The following summary is qualified in its entirety by the
more detailed information appearing elsewhere in this
Prospectus.
The Fund. The Fund is an open-end, management investment
company, known as a series fund. The Fund currently has
established one diversified portfolio: the Intermediate Series.
Investment Objective. The Series seeks to provide investors
with as high a level of current income as is consistent with the
preservation of capital.
Management Policies. The Series invests in securities issued or
guaranteed as to principal and interest by the U.S. Government
or its agencies or instrumentalities ("U.S. Government
Securities"), and may enter into repurchase agreements in
respect thereof. Securities in which the Series invests may not
earn as high a level of current income as long-term or lower
quality securities which generally have less liquidity, greater
market risk and more fluctuation in market value.
The dollar-weighted average maturity of the Series'
portfolio ranges between three and ten years. The Series is not
limited in the maturities of the securities in which it invests
and the maturity of a portfolio security may range from
overnight to 40 years.
The Series may engage in various investment techniques such
as leveraging, short-selling, options and futures transactions
and lending portfolio securities for hedging or other
permissible purposes.
The Manager and Management Fee. The First National Bank of
Chicago is the Fund's investment adviser.
The Fund has agreed to pay the Manager, for its investment
management services, a monthly fee at the annual rate of .60 of
1% of the value of the Series' average daily net assets.
Alternative Purchase Methods. The Series offers three classes
of shares: Class A shares, Class B shares and Class F shares.
Each Class A, Class B and Class F share represents an identical
pro rata interest in the Series' investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 3% of the public offering price
imposed at the time of purchase. The initial sales charge may
be reduced or waived for certain purchases. See "How to Buy
Fund Shares--Class A Shares." Class A are subject to an annual
service fee at the rate of .25 of 1% of the value of the average
daily net assets of Class A.
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the
entire purchase price is immediately invested in the Fund.
Class B shares are subject to a maximum 3% contingent deferred
sales charge ("CDSC"), which is assessed only if the Class B
shares are redeemed within five years of purchase. See "How to
Redeem Fund Shares--Contingent Deferred Sales Charge--Class B
Shares". Class B shares also are subject to an annual service
fee at the rate of .25 of 1% of the value of the average daily
net assets of Class B. In addition, Class B shares are subject
to an annual distribution fee at the rate of .50 of 1% of the
value of the average daily net assets of Class B. The
distribution fee paid by Class B will cause such Class to have a
higher expense ratio and to pay lower dividends than Class A.
Approximately six years after the date of purchase, Class B
shares automatically will convert to Class A shares, based on
the relative net asset values for shares of each Class, and will
no longer be subject to the distribution fee.
Class F shares are sold at net asset value with no sales
charge. Class F shares are offered exclusively to certain
clients of the Manager and its affiliates as described below.
See "Alternative Purchase Methods."
How to Buy Fund Shares. Orders for purchases of Class A and
Class B shares may be placed through a number of institutions,
including: the Manager, affiliates of the Manager, including
First Chicago Investment Services, Inc. ("FCIS"), a registered
broker-dealer, the Distributor and certain banks, securities
dealers and other industry professionals, such as investment
advisers, accountants and estate planning firms (collectively,
"Service Agents").
Orders for purchases of Class F shares may be placed only
for clients of the Manager for their qualified trust, custody
and/or agency accounts maintained at its Personal Investments
Department and for clients of affiliates of the Manager for
their similar accounts maintained at such affiliates. These
accounts are referred to herein as "Fiduciary Accounts."
Investors purchasing Class F shares through their Fiduciary
Accounts at the Manager or its affiliates should contact such
entity directly for appropriate instructions, as well as for
information about conditions pertaining to the account and any
related fees.
The minimum initial investment for each Class is $1,000
($250 for IRAs and other personal retirement plans). All
subsequent investments must be at least $100.
See "How to Buy Fund Shares."
Investors should consult their financial and tax advisers
before buying Class F shares to determine, among other matters,
the tax consequences to them of their purchase, including the
effect of selling any assets to fund such purchase.
How to Redeem Fund Shares. Generally, investors should contact
their representatives at the Manager or appropriate Service
Agent for redemption instructions.
Investors who are not clients of the Manager or a Service
Agent may redeem Fund shares by written request, by wire or
telephone, or through the TeleTransfer Privilege.
See "How to Redeem Fund Shares."
Risks and Special Considerations. The use of investment
techniques such as short-selling, engaging in financial futures
and options transactions, lending portfolio securities,
borrowing for investment purposes, entering into repurchase
agreements and purchasing securities on a when-issued or forward
commitment basis, and the purchase of certain mortgage-backed
securities and zero coupon securities involves greater risk than
that incurred by many other funds with similar objectives and
may affect the degree to which the Series' net asset value
fluctuates.
Changes in the value of the Series' portfolio securities
will result in changes in the value of a Series share and thus
the Series' yield and total return to investors.
See "Description of the Fund--Risk Factors."
ALTERNATIVE PURCHASE METHODS
The Fund offers investors three methods of purchasing Fund
shares. Orders for purchases of Class F shares, however, may be
placed only for clients of the Manager or its affiliates for
their Fiduciary Accounts maintained at the Manager or one of its
affiliates. An investor who is not eligible to purchase Class F
shares may choose from Class A and Class B the Class of shares
that best suits the investor's needs, given the amount of
purchase, the length of time the investor expects to hold the
shares and any other relevant circumstances. Each Class A,
Class B and Class F share represents an identical pro rata
interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 3% of the public offering price
imposed at the time of purchase. The initial sales charge may
be reduced or waived for certain purchases. See "How to Buy
Fund Shares--Class A Shares." These shares are subject to an
annual service fee at the rate of .25 of 1% of the value of the
average daily net assets of Class A. See "Distribution Plan and
Shareholder Services Plan--Shareholder Services Plan."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the
entire purchase price is immediately invested in the Fund.
Class B shares are subject to a maximum 3% CDSC, which is
assessed only if Class B shares are redeemed within five years
of purchase. See "How to Buy Fund Shares--Class B Shares" and
"How to Redeem Fund Shares--Contingent Deferral Sales Charge--
Class B Shares." These shares also are subject to an annual
service fee at the rate of .25 of 1% of the value of the average
daily net assets of Class B. In addition, Class B shares are
subject to an annual distribution fee at the rate of .50 of 1%
of the value of the average daily net assets of Class B. See
"Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class B will cause such Class to have a
higher expense ratio and to pay lower dividends than Class A or
Class F. Approximately six years after the date of purchase,
Class B shares automatically will convert to Class A shares,
based on the relative net asset values for shares of each Class,
and will no longer be subject to the distribution fee. Class B
shares that have been acquired through the reinvestment of
dividends and distributions will be converted on a pro rata
basis together with other Class B shares, in the proportion that
a shareholder's Class B shares converting to Class A shares
bears to the total Class B shares not acquired through the
reinvestment of dividends and distributions.
Class F shares are sold at net asset value with no sales
charge. Class F shares are not subject to an annual service fee
or distribution fee.
An investor who is not eligible to purchase Class F shares
should consider whether, during the anticipated life of the
investor's investment in the Fund, the accumulated distribution
fee and CDSC on Class B shares prior to conversion would be less
than the initial sales charge on Class A shares purchased at the
same time, and to what extent, if any, such differential would
be offset by the return of Class A. In this regard, generally,
Class B shares may be more appropriate for investors who invest
less than $100,000 in Fund shares. Additionally, investors
qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B shares may exceed the
initial sales charge on Class A shares during the life of the
investment. Generally, Class A shares may be more appropriate
for investors who invest $100,000 or more in Fund shares.
DESCRIPTION OF THE FUND
[For left margin side bar: The Fund is a series fund,
currently offering only one portfolio: the Intermediate
Series.]
General. The Fund is a "series fund," which is a mutual fund
divided into separate portfolios. Each portfolio is treated as
a separate entity for certain matters under the Investment
Company Act of 1940 and for other purposes, and a shareholder of
one Series is not deemed to be a shareholder of any other
Series. As described below, for certain matters Fund
shareholders vote together as a group; as to others they vote
separately by Series.
[For left margin side bar: The Series seeks to provide as
high a level of current income as is consistent with the
preservation of capital.]
Investment Objective. The Series seeks to provide investors
with as high a level of current income as is consistent with the
preservation of capital. The Series' investment objective
cannot be changed without approval by the holders of a majority
(as defined in the Investment Company Act of 1940) of the
Series' outstanding voting shares. There can be no assurance
that the Series' investment objective will be achieved.
[For left margin side bar: The Series invests primarily in
U.S. Government Securities, which include U.S. Treasury
securities, Agency securities and mortgage-backed securities,
and may enter into repurchase agreements.]
Management Policies. The Series invests in U.S. Government
Securities and may enter into repurchase agreements in respect
thereof. It is a fundamental policy of the Series that it will
invest at least 65% of the value of its total assets in U.S.
Government Securities. The dollar-weighted average maturity of
the Series' portfolio ranges between three and ten years. The
Series is not limited in the maturities of the securities in
which it invests and the maturity of a portfolio security may
range from overnight to 40 years.
U.S. Government Securities
U.S. Treasury Securities--The U.S. Government Securities in
which the Fund invests include U.S. Treasury securities, which
differ in their interest rates, method of payment and
maturities. Treasury Bills have initial maturities of one year
or less; Treasury Notes have initial maturities of one to ten
years; and Treasury Bonds generally have initial maturities of
greater than ten years.
Obligations Issued or Guaranteed by U.S. Government Agencies and
Instrumentalities--U.S. Government Securities also include
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, some of which are supported by the full faith
and credit of the U.S. Treasury, for example, Maritime
Administration Bonds; others, such as those of the Federal Home
Loan Banks, by the right of the issuer to borrow from the U.S.
Treasury; others, such as those issued by the Federal National
Mortgage Association ("Fannie Mae"), by discretionary authority
of the U.S. Government to purchase certain obligations of the
agency or instrumentality; and others, such as those issued by
the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed,
floating or variable rates of interest. Principal and interest
may fluctuate based on generally recognized reference rates or
the relationship of rates. While the U.S. Government provides
financial support to such U.S. Government-sponsored agencies or
instrumentalities, no assurance can be given that it will always
do so, since it is not so obligated by law. The Series will
invest in such securities only when it is satisfied that the
credit risk with respect to the issuer is minimal.
Mortgage-Related Securities Issued or Guaranteed by U.S.
Government Agencies and Instrumentalities--U.S. Government
Securities also include mortgage-related securities represented
by pools of mortgage loans assembled for sale to investors by
various governmental agencies such as the Government National
Mortgage Association ("Ginnie Mae") and government-related
organizations such as Fannie Mae and the Federal Home Loan
Mortgage Corporation ("Freddie Mac"). Such securities are
ownership interests in the underlying mortgage loans and provide
for monthly payments that are a "pass-through" of the monthly
interest and principal payments (including any prepayments) made
by the individual borrowers on the pooled mortgage loans, net of
any fees paid to the guarantor of such securities and the
servicer of the underlying mortgage loans. As more fully
described in the "Appendix-Portfolio Securities," these
securities also may include multiclass pass-through securities
and stripped mortgage-backed securities including interest-only
and principal-only classes of such securities. The mortgages
backing these securities include conventional fixed rate
mortgages, graduated payment mortgages and adjustable rate
mortgages.
Zero Coupon U.S. Treasury Securities--U.S. Government Securities
also include zero coupon U.S. Treasury securities, which are
Treasury Notes and Bonds that have been stripped of their
unmatured interest coupons, the coupons themselves and receipts
or certificates representing interests in such stripped debt
obligations and coupons. A zero coupon security pays no
interest to its holder during its life and is sold at a discount
to its face value at maturity. The amount of the discount
fluctuates with the market price of the security. The market
prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest
periodically and are likely to respond to a greater degree to
changes in interest rates than non-zero coupon securities having
similar maturities and credit qualities. The Series also may
purchase zero coupon securities issued by domestic corporations
and financial institutions which constitute a proportionate
ownership of the issuer's pool of underlying U.S. Treasury
securities. Such securities will not be considered as
obligations of the U.S. Government for purposes of the 65%
requirement referred to above.
Repurchase Agreements--Repurchase agreements involve the
acquisition by the Series of an underlying debt instrument,
subject to an obligation of the seller to repurchase, and the
Series to resell, the instrument at a fixed price usually not
more than one week after its purchase. The Fund's custodian or
sub-custodian will have custody of, and will hold in a
segregated account, securities acquired by the Series under a
repurchase agreement. Repurchase agreements are considered by
the staff of the Securities and Exchange Commission to be loans
by the Series which enters into them. In an attempt to reduce
the risk of incurring a loss on a repurchase agreement, the Fund
will enter into repurchase agreements on behalf of the Series
only with registered or unregistered securities dealers or banks
with total assets in excess of one billion dollars, with respect
to securities of the type in which the Series may invest, and
will require that additional securities be deposited with it if
the value of the securities purchased should decrease below
resale price. The Manager will monitor on an ongoing basis the
value of the collateral to assure that it always equals or
exceeds the repurchase price. Certain costs may be incurred by
the Series in connection with the sale of the securities if the
seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings
are commenced with respect to the seller of the securities,
realization on the securities by the Series may be delayed or
limited. The Fund will consider on an ongoing basis the
creditworthiness of the institutions with which the Series
enters into repurchase agreements.
[For left margin side bar: Investment techniques used by
the Series may include leveraging, short-selling, options and
futures transactions and lending portfolio securities.]
The Series may engage in various investment techniques
such as leveraging, short-selling, options and futures
transactions and lending portfolio securities, each of which
involves risk. For a discussion of such investment techniques
and their related risks, see "Appendix--Investment Techniques"
and "Risk Factors" below.
[For left margin side bar: The Series has adopted certain
fundamental policies intended to limit the risk of its
investment portfolio. These policies cannot be changed without
shareholder approval.]
Certain Fundamental Policies. The Series may (i) borrow
money for investment purposes to the extent permitted under
the Investment Company Act of 1940, which currently provides
that total borrowings may not exceed 33-1/3% of the value of the
Series' total assets; and (ii) invest up to 25% of the value of
its total assets in the securities of issuers in a single
industry, provided there is no limitation on the purchase of
U.S. Government Securities. This paragraph describes
fundamental policies that cannot be changed without approval by
the holders of a majority (as defined in the Investment Company
Act of 1940) of the Series' outstanding voting shares. See
"Investment Objective and Management Policies-Investment
Restrictions" in the Statement of Additional Information.
Certain Additional Non-Fundamental Policies. The Series may (i)
pledge, hypothecate, mortgage or otherwise encumber its assets,
but only to secure permitted borrowings; and (ii) invest up to
15% of the value of its net assets in repurchase agreements
providing for settlement in more than seven days after notice
and in other illiquid securities. See "Investment Objective and
Management Policies-Investment Restrictions" in the Statement of
Additional Information.
Risk Factors. The Series' net asset value is not fixed and
should be expected to fluctuate.
The value of the portfolio securities held by the Series
will vary inversely to changes in prevailing interest rates.
Thus, if interest rates have increased from the time a security
was purchased, such security, if sold, might be sold at a price
less than its cost. Similarly, if interest rates have declined
from the time a security was purchased, such security, if sold,
might be sold at a price greater than its cost. In either
instance, if the security was purchased at face value and held
to maturity, no gain or loss would be realized.
While the Series invests in securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, no
assurance can be given as to the liquidity of the market for
certain of these securities, such as multiclass pass-through
securities, stripped mortgage-backed securities and zero coupon
securities. See "Appendix-Portfolio Securities." Determination
as to the liquidity of such securities will be made in
accordance with guidelines established by the Fund's Board of
Trustees. In accordance with such guidelines, the Manager will
monitor the Series' investments in such securities with
particular regard to trading activity, availability of reliable
price information and other relevant information. The Series
will not invest more than 15% of its net assets in securities
which are illiquid.
The yield characteristics of mortgage-related securities
differ from traditional debt securities. Among the major
differences are that interest and principal payments are made
more frequently, usually monthly, and that principal may be
prepaid at any time because the underlying mortgage loans
generally may be prepaid at any time. As a result, if the
Series purchases such a security at a premium, a prepayment rate
that is faster than expected will reduce yield to maturity,
while a prepayment rate that is slower than expected will have
the opposite effect of increasing yield to maturity.
Conversely, if the Series purchases these securities at a
discount, faster than expected prepayments will increase, while
slower than expected prepayments will reduce, yield to maturity.
Derivative mortgage-related securities, such as stripped
mortgage-backed securities, and certain types of mortgage
pass-through securities, including those whose interest rates
fluctuate directly or indirectly based on multiples of a stated
index, are designed to be highly sensitive to changes in
prepayment and interest rates and can subject the holders
thereof to extreme reductions of yield and possibly loss of
principal.
Prepayments on a pool of mortgage loans are influenced by a
variety of economic, geographic, social and other factors,
including changes in mortgagor's housing needs, job transfers,
unemployment, mortgagors' net equity in the mortgaged properties
and servicing decisions. Generally, however, prepayments on
fixed rate mortgage loans will increase during a period of
falling interest rates and decrease during a period of rising
interest rates. Accordingly, amounts available for reinvestment
by the Series are likely to be greater during a period of
declining interest rates and, as a result, likely to be
reinvested at lower interest rates than during a period of
rising interest rates. Mortgage-related securities may decrease
in value as a result of increases in interest rates and may
benefit less than other fixed income securities from declining
interest rates because of the risk of prepayment.
[For left margin side bar: The Series uses various
investment techniques which may enhance the Series' performance;
their use involves certain risks.]
The use of investment techniques such as short-selling,
engaging in financial futures and options transactions, leverage
through borrowing, purchasing securities on a when-issued or
forward commitment basis and lending portfolio securities
involves greater risk than that incurred by many other funds
with similar objectives. These risks are described in the
"Appendix" hereto. Using these techniques may produce higher
than normal portfolio turnover and may affect the degree to
which the Series' net asset value fluctuates.
[For left margin side bar: The Series focuses on long-term
investment strategies and will engage in short-term trading only
when consistent with its stated investment objective.]
The Series' ability to engage in certain short-term
transactions may be limited by the requirement that, to qualify
as a regulated investment company, the Series must earn less
than 30% of its gross income from the disposition of securities
held for less than three months. This 30% test limits the
extent to which the Series may sell securities held for less
than three months, effect short sales of securities held for
less than three months, write options expiring in less than
three months and invest in certain futures contracts, among
other strategies. However, portfolio turnover will not
otherwise be a limiting factor in making investment decisions.
Investment decisions for the Series are made independently
from those of the other investment companies, investment
advisory accounts, custodial accounts, individual trust accounts
and commingled funds that may be advised by the Manager.
However, if such other investment companies or managed accounts
are prepared to invest in, or desire to dispose of, securities
in which the Series invests at the same time as the Series,
available investments or opportunities for sales will be
allocated equitably to each of them. In some cases, this
procedure may adversely affect the size of the position obtained
for or disposed of by the Series or the price paid or received
by the Series.
MANAGEMENT OF THE FUND
[For left margin side bar: The investment adviser, The
First National Bank of Chicago, is one of the largest commercial
banks in the United States and the largest in the mid-western
United States and manages approximately $9.1 billion of
investment assets.]
Manager. The Manager, located at Three First National Plaza,
Chicago, Illinois 60670, is the Fund's investment adviser. The
Manager, a wholly-owned subsidiary of First Chicago Corporation,
a registered bank holding company, is a commercial bank offering
a wide range of banking and investment services to customers
throughout the United States and around the world. As of March
31, 1993, it was one of the largest commercial banks in the
United States and the largest in the mid-western United States
in terms of assets ($48.4 billion) and in terms of deposits
($27.6 billion). As of March 31, 1993, the Manager provided
investment management services to portfolios containing
approximately $9.1 billion in assets. The Manager serves as
investment adviser for the Fund pursuant to a Management
Agreement dated as of August 18, 1992 (as revised June 17,
1993). Under the Management Agreement, the Manager, subject to
the supervision of the Fund's Board of Trustees and in
conformity with Massachusetts law and the stated policies of the
Fund, manages the investment of the Fund's assets. The Manager
is responsible for making investment decisions for the Fund,
placing purchase and sale orders (which may be allocated to
various dealers based on their sales of Fund shares) and
providing research, statistical analysis and continuous
supervision of the investment portfolio. The Manager provides
these services through its Investment Management Department.
The investment advisory services of the Manager are not
exclusive under the terms of the Management Agreement. The
Manager is free to, and does, render investment advisory
services to others including other investment companies as well
as commingled trust funds and a broad spectrum of individual
trust and investment management portfolios, which have varying
investment objectives. The Manager has advised the Fund that in
making its investment decisions the Manager does not obtain or
use material inside information in the possession of any
division or department of the Manager or in the possession of
any affiliate of the Manager.
The Manager and its affiliates presently intend to continue
to charge and collect customary account and account transaction
fees with respect to accounts through which or for which shares
of the Series are purchased or redeemed. This will result in
the receipt by the Manager and its affiliates of customer
account fees in addition to management and Service Agent fees
from the Fund with respect to assets in certain accounts. See
"Distribution Plan and Shareholder Services Plan."
[For left margin side bar: The Dreyfus Corporation, which
manages or administers approximately $82 billion in mutual fund
assets, will assist the Manager in providing certain
administrative services for the Fund.]
The Manager has engaged The Dreyfus Corporation ("Dreyfus"),
located at 200 Park Avenue, New York, New York 10166, to assist
it in providing certain administrative services for the Fund
pursuant to a separate agreement between it and Dreyfus. The
Manager, from its own finds, will pay Dreyfus for Dreyfus'
services. Dreyfus was formed in 1947 and as of June 1, 1993,
managed or administered approximately $82 billion in assets for
more than 1.9 million investor accounts.
Under the terms of the Management Agreement, the Fund has
agreed to pay the Manager a monthly fee at the annual rate of
.60 of 1% of the value of the Series' average daily net assets.
For the period from March 5, 1993 (commencement of operations)
to August 31, 1993, no management fee was paid by the Fund
pursuant to an undertaking by the Manager.
The Fund's primary portfolio manager is Annette Cole. She
has held that position since the Fund's inception, and has been
employed by the Adviser since October 1984. The Adviser also
provides research services for the Fund as well as for other
funds it advises through a professional staff of portfolio
managers and security analysts.
Glass-Steagall Act. The Glass-Steagall Act and other applicable
laws prohibit Federally chartered or supervised banks from
engaging in certain aspects of the business of issuing,
underwriting, selling and/or distributing securities, although
banks such as the Manager are permitted to purchase and sell
securities upon the order and for the account of their
customers. The Manager has advised the Fund of its belief that
it may perform the services for the Fund contemplated by the
Management Agreement and this Prospectus without violating the
Glass-Steagall Act or other applicable banking laws or
regulations. The Manager has pointed out, however, that future
changes in either Federal or state statutes and regulations
relating to permissible activities of banks and their
subsidiaries and affiliates, as well as future judicial or
administrative decisions or interpretations of present and
future statutes and regulations, could prevent the Manager from
continuing to perform such services for the Fund. If the
Manager were to be prevented from providing such services to the
Fund, the Fund's Board of Trustees would review the Fund's
relationship with the Manager and consider taking all actions
necessary in the circumstances. See "Management Agreement--
Glass-Steagall Act" in the Statement of Additional Information.
[For left margin side bar: The Shareholder Services Group,
Inc. keeps the Fund's records and pays dividends to
shareholders.]
Transfer and Dividend Disbursing Agent and Custodian. The
Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671,
is the Fund's Transfer and Dividend Disbursing Agent (the
"Transfer Agent"). The Bank of New York, 110 Washington Street,
New York, New York 10286, is the Fund's Custodian.
Expenses. All expenses incurred in the operation of the Fund
are borne by the Fund, except to the extent specifically assumed
by the Manager. The expenses borne by the Fund include the
following: organizational costs, taxes, interest, loan
commitment fees, interest paid on securities sold short,
brokerage fees and commissions, if any, fees of Trustees who are
not officers, directors, employees or holders of 5% or more of
the outstanding voting securities of the Manager, Securities and
Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of
maintaining the Fund's existence, costs of independent pricing
services, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings and any extraordinary
expenses. Class A and Class B shares are subject to an annual
service fee for ongoing personal services relating to
shareholder accounts and services related to the maintenance of
shareholder accounts. In addition, Class B shares are subject
to an annual distribution fee for advertising, marketing and
distributing Class B shares pursuant to a distribution plan
adopted in accordance with Rule 12b-1 under the Investment
Company Act of 1940. See "Distribution Plan and Shareholder
Services Plan." Expenses attributable to a particular Series
are charged against the assets of that Series; other expenses of
the Fund are allocated between the Series on the basis
determined by the Board of Trustees, including, but not limited
to, proportionately in relation to the net assets of each
Series.
HOW TO BUY FUND SHARES
[For left margin side bar: The Fund offers a number of
convenient ways to purchase shares.]
Information Applicable to All Purchasers. The Fund's
distributor is Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus, located at 200 Park Avenue, New York,
New York 10166. The shares it distributes are not deposits or
obligations of The Dreyfus Security Savings Bank, F.S.B. or the
Manager and therefore are not insured by the FDIC.
When purchasing Series shares, you must specify whether the
purchase is for Class A, Class B or Class F shares. Class A and
Class B shares are offered to the general public and may be
purchased through a number of institutions, including the
Manager and its affiliates, other Service Agents, and directly
through the Distributor. Orders for purchases of Class F shares
may be placed only for clients of the Manager or its affiliates
for their Fiduciary Accounts maintained at the Manager or one of
its affiliates. Share certificates will not be issued. The
Fund reserves the right to reject any purchase order.
[For left margin side bar: You can open an account with as
little as $1,000 ($250 for IRAs or other personal retirement
plans). Subsequent investments can be as little as $100.]
The minimum initial investment for each Class is $1,000.
However, for IRAs and other personal retirement plans, the
minimum initial investment is $250. All subsequent investments
must be at least $100. The initial investment must be
accompanied by the Fund's Account Application. The Manager and
Service Agents may impose initial or subsequent investment
minimums which are higher or lower than those specified above
and may impose different minimums for different types of
accounts or purchase arrangements.
[For left margin side bar: Net asset value is determined as
of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time) on each business
day.]
Series shares are sold on a continuous basis. Net asset
value per share of each Class is determined as of the close of
trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), on each business day (which, as used
herein, shall include each day the New York Stock Exchange is
open for business, except Martin Luther King, Jr. Day, Columbus
Day and Veterans' Day). For purposes of determining net asset
value per share, options and futures contracts will be valued 15
minutes after the close of trading on the floor of the New York
Stock Exchange. Net asset value per share of each Class is
computed by dividing the value of the Series' net assets
represented by such Class (i.e., the value of its assets less
liabilities) by the total number of shares of such Class
outstanding. The Series' investments are valued each business
day generally by using available market quotations or at fair
value which may be determined by one or more pricing services
approved by the Board of Trustees. Each pricing service's
procedures are reviewed under the general supervision of the
Board of Trustees. For further information regarding the
methods employed in valuing the Series' investments, see
"Determination of Net Asset Value" in the Fund's Statement of
Additional Information.
If an order is received by the Transfer Agent by the close
of trading on the floor of the New York Stock Exchange
(currently 4:00 p.m., New York time) on a business day, Series
shares will be purchased at the public offering price determined
as of the close of trading on the floor of the New York Stock
Exchange on that day. Otherwise, Series shares will be
purchased at the public offering price determined as of the
close of trading on the floor of the New York Stock Exchange on
the next business day, except where Class A or Class B shares
are purchased through a dealer as provided below.
Orders for the purchase of Class A or Class B shares
received by dealers by the close of trading on the floor of the
New York Stock Exchange on any business day and transmitted to
the Distributor by the close of its business day (normally 5:15
p.m., New York time) will be based on the public offering price
per share determined as of the close of trading on the floor of
the New York Stock Exchange on that day. Otherwise, the orders
will be based on the next determined public offering price. It
is the dealer's responsibility to transmit orders so that they
will be received by the Distributor before the close of its
business day.
Federal regulations require that an investor provide a
certified Taxpayer Identification Number ("TIN") upon opening or
reopening an account. See "Dividends, Distributions and Taxes"
and the Fund's Account Application for further information
concerning this requirement. Failure to furnish a certified TIN
to the Fund could subject the investor to a $50 penalty imposed
by the Internal Revenue Service (the "IRS").
Copies of the Fund's Prospectus and Statement of Additional
Information may be obtained from the Distributor, the Manager,
certain affiliates of the Manager or certain Service Agents, as
well as from the Fund.
[For left margin side bar: Class A shares are sold with a
sales load. There are several ways to reduce or eliminate the
sales load.]
Class A Shares. The public offering price of Class A shares is
the net asset value per share of that Class plus a sales load as
shown below:
TOTAL SALES LOAD
As a % of As a % of Dealer's
offering net asset Reallowance
price per value per as a % of
Class A Class A offering
Amount of Transaction share share price
Less than $100,000 3.00 3.10 2.75
$100,000 to less than $500,000 2.50 2.55 2.25
$500,000 to less than $1,000,0002.00 2.00 1.75
$1,000,000 and above 1.00 1.00 1.00
Full-time employees of NASD member firms and full time
employees of other financial institutions which have entered
into an agreement with the Distributor pertaining to the sale of
Class A shares (or which otherwise have a brokerage-related or
clearing arrangement with an NASD member firm or other financial
institution with respect to sales of Class A shares) may
purchase Class A shares for themselves or for their spouses or
minor children, and accounts opened by a bank, trust company or
thrift institution, acting as a fiduciary, may purchase Class A
shares for themselves or itself, as the case may be, at net
asset value, provided that they have furnished the Distributor
appropriate notification of such status at the time of the
investment and such other information as it may request from
time to time in order to verify eligibility for this privilege.
This privilege also applies to full-time employees of financial
institutions affiliated with NASD member firms whose full-time
employees are eligible to purchase Class A shares at net asset
value. In addition, Class A shares may be purchased at net
asset value for Fund accounts registered under the Uniform Gifts
to Minors Act or Uniform Transfers to Minors Act which are
opened through FCIS. Class A shares also are offered at net
asset value to employees and directors of First Chicago
Corporation, or any of its affiliates and subsidiaries, retired
employees of First Chicago Corporation, or any of its affiliates
and subsidiaries, Board members of a fund advised by the
Manager, including members of the Fund's Board, or the spouse or
minor child of any of the foregoing.
Class A shares will be offered at net asset value without a
sales load to employees participating in qualified or
non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or
programs have a minimum of 250 employees eligible for
participation in such plans or programs or (ii) such plan's or
program's aggregate initial investment in the Fund, and certain
other funds advised by the Manager or Dreyfus exceeds one
million dollars ("Eligible Benefit Plans"). The determination
of the number of employees eligible for participation in such a
plan or program shall be made on the date that Class A shares
are first purchased by or on behalf of employees participating
in such plan or program and on each subsequent January 1st.
Class B Shares. The public offering price for Class B shares is
the net asset value per share of that Class. No initial sales
charge is imposed at the time of purchase. A CDSC is imposed,
however, on certain redemptions of Class B shares as described
under "How to Redeem Fund Shares." FCIS may compensate certain
Service Agents for selling Class B shares at the time of
purchase from its own assets. Proceeds of the CDSC and
distribution fees payable to FCIS, in part, would be used to
defray these expenses.
[For left margin side bar: Class F shares are sold without
a sales load.]
Class F Shares. The public offering price for Class F shares is
the net asset value per share of that Class. No sales charge is
imposed for Class F shares.
Purchasing Shares Through Accounts with the Manager or a Service
Agent. (Applicable to Class A, Class B and Class F Shares).
Investors who desire to purchase Fund shares through their
accounts at the Manager or its affiliates or a Service Agent
should contact such entity directly for appropriate
instructions, as well as for information about conditions
pertaining to the account and any related fees. The Manager and
its affiliates may charge clients direct fees for services
provided to clients as fiduciary or agent in connection with
accounts through which shares are purchased. These fees, if
any, would be in addition to management fees received by the
Manager under the Management Agreement. Service Agents also may
charge clients direct fees for effecting transactions in Class A
or Class B shares. These fees, if any, would be in addition to
fees received by a Service Agent under the Shareholder Services
Plan. Each Service Agent has agreed to transmit to its clients
a schedule of such fees. The Manager and its affiliates may
receive different levels of compensation for selling different
classes of shares. In addition, the Manager and Service Agents
may receive different levels of compensation for selling
different Classes of shares and may impose minimum account and
other conditions, including conditions which might affect the
availability of certain shareholder privileges described in this
Prospectus. It is the responsibility of the Manager and Service
Agents to transmit orders on a timely basis.
Purchasing Shares Through the Distributor. (Class A and Class B
Shares Only; Not Applicable to Class F Shares) Class A and Class
B shares may be purchased directly through the Distributor by
check or wire, or through the TeleTransfer Privilege described
below. The initial investment must be accompanied by the Fund's
Account Application which can be obtained from the Distributor.
Checks should be made payable to "The First Prairie Family of
Funds." Payments to open new accounts which are mailed should
be sent to The First Prairie Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with the
investor's Account Application indicating the name of the Series
and Class of shares being purchased. For subsequent
investments, the investor's Fund account number should appear on
the check and an investment slip should be enclosed and sent to
The First Prairie Family of Funds, P.O. Box 105, Newark, New
Jersey 07101-0105. Neither initial nor subsequent investments
should be made by third party check. A charge will be imposed
if any check used for investment in an investor's account does
not clear. All payments should be in U.S. dollars and, to avoid
fees and delays, should be drawn only on U.S. banks.
Wire payments may be made for the purchase of Class A or
Class B shares if the investor's account is in a commercial bank
that is a member of the Federal Reserve System or any other bank
having a correspondent bank in New York City or Chicago. An
investor should request his bank to transmit immediately
available funds by wire to The Bank of New York, DDA
#8900117656/First Prairie U.S. Government Income
Fund-Intermediate Series--Class A shares, or DDA
#______________/First Prairie U.S. Government Income
Fund-Intermediate Series--Class B shares, as the case may be,
for purchase of shares in the investor's name. The wire must
include the name of the Series being purchased, the investor's
account number (for new accounts, include the investor's TIN
instead), account registration and dealer number, if applicable.
Further information about remitting funds in this manner is
provided in "Payment and Mailing Instructions" on the Fund's
Account Application.
Subsequent investments for Class A or Class B shares also
may be made by electronic transfer of funds from an account
maintained in a bank or other domestic financial institution
that is an Automated Clearing House member. The investor must
direct the institution to transmit immediately available funds
through the Automated Clearing House to The Bank of New York
with instructions to credit the investor's Fund account. The
instructions must specify the investor's Fund account
registration and Fund account number preceded by the digits
"1111."
[For left margin side bar: Reduced sales loads apply to
combined purchases of $50,000 or more of Class A shares and
shares of other eligible First Prairie funds.]
Right of Accumulation--Class A Shares. Reduced sales loads
apply to any purchase of Class A shares, shares of other funds
advised by the Manager which are sold with a sales load or
acquired by a previous exchange of shares purchased with a sales
load and shares of certain other funds advised by Dreyfus which
are sold with a sales load (hereinafter referred to as "Eligible
Funds") by an investor and any related "purchaser" as defined in
the Statement of Additional Information, where the aggregate
investment, including such purchase, is $100,000 or more. If,
for example, an investor previously purchased and still holds
Class A shares of the Fund, or of any other Eligible Fund or
combination thereof, with an aggregate current market value of
$90,000 and subsequently purchases Class A shares of the Series
or an Eligible Fund having a current value of $20,000, the sales
load applicable to the subsequent purchase would be reduced to
2.50% of the offering price (2.55% of the net asset value). All
present holdings of Eligible Funds may be combined to determine
the current offering price of the aggregate investment in
ascertaining the sales load applicable to each subsequent
purchase.
To qualify for reduced sales loads, at the time of a
purchase an investor or his Service Agent must notify the
Dist
ributor if orders are made by wire, or the Transfer Agent if
orders are made by mail. The reduced sales load is subject to
confirmation of an investor's holdings through a check of
appropriate records.
[For left margin side bar: You can purchase additional
Class A shares by telephone after you supply the necessary
information on your Account Application.]
TeleTransfer Privilege. An investor may purchase Class A shares
(minimum $500, maximum $50,000) by telephone if he has checked
the appropriate box and supplied the necessary information on
the Fund's Account Application or has filed an Optional Services
Form with the Transfer Agent. The proceeds will be transferred
between the checking, NOW or bank money market deposit account
(as permitted) designated in one of these documents and the
investor's Fund account. Only such an account maintained in a
domestic financial institution which is an Automated Clearing
House member may be so designated. The Fund may modify or
terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is
contemplated.
Investors who have selected the TeleTransfer Privilege may
request a TeleTransfer purchase of Class A shares by calling
1-800-227-0072 or, if calling from overseas, 1-401-455-3309.
SHAREHOLDER SERVICES
The Exchange Privilege and Auto-Exchange Privilege are available
to shareholders of any Class. The other services and privileges
described under this heading are available only for Class A or
Class B shareholders.
In addition, such services and privileges may not be
available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are
different from those described in this Prospectus. Each
investor should consult his Service Agent in this regard.
[For left margin side bar: There is no charge for exchanges
with certain other First Prairie mutual funds.]
Exchange Privilege. The Exchange Privilege enables an investor
to purchase, in exchange for Class A, Class B or Class F shares
of the Series, shares of the same class of certain other funds
advised by the Manager or Dreyfus, to the extent such shares are
offered for sale in the investor's state of residence. These
funds have different investment objectives that may be of
interest to investors. The Exchange Privilege may be expanded
to permit exchanges between the Fund and other funds that, in
the future, may be advised by the Manager. Investors will be
notified of any such change. If an investor desires to use this
Privilege, he should consult the Manager or the affiliate of the
Manager at which the investor maintains his account, his Service
Agent or the Distributor to determine if it is available and
whether any conditions are imposed on its use.
To use this Privilege, an investor or his Service Agent
acting on his behalf must give exchange instructions, with
respect to Class A or Class B, to the Transfer Agent in writing,
by wire or by telephone, or, with respect to Class F, in
accordance with the instructions pertaining to his account at
the Manager or its affiliates. If an investor previously has
established the Telephone Exchange Privilege, he may telephone
exchange instructions for Class A or Class B shares by calling
1-800-227-0072, or if calling from overseas, 1-401-455-3309.
See "How to Redeem Fund Shares--Procedures." Before any
exchange, the investor must obtain and should review a copy of
the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained from the Distributor,
the Manager or certain affiliates of the Manager or certain
Service Agents. The shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a
value of at least the minimum initial investment required for
the fund into which the exchange is being made. Telephone
exchanges may be made only if the appropriate "YES" box has been
checked on the Account Application, or a separate signed
Optional Services Form is on file with the Transfer Agent. Upon
an exchange into a new account, the following shareholder
services and privileges, as applicable and where available, will
be automatically carried over to the fund into which the
exchange is made: Exchange Privilege, Redemption by Wire or
Telephone, TeleTransfer Privilege and the dividend/capital gain
distribution option (except for the Dividend Sweep Privilege)
selected by the investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to
exchanges of Class A shares into funds sold with a sales load.
No CDSC will be imposed on Class B shares at the time of an
exchange; however, Class B shares acquired through an exchange
will be subject on redemption to the higher CDSC applicable to
the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B shares will be calculated
from the date of the initial purchase of the Class B shares
exchanged. If an investor is exchanging Class A shares into a
fund that charges a sales load, the investor may qualify for
share prices which do not include the sales load or which
reflect a reduced sales load, if the shares of the fund from
which the investor is exchanging were: (a) purchased with a
sales load, (b) acquired by a previous exchange from shares
purchased with a sales load, or (c) acquired through
reinvestment of dividends or distributions paid with respect to
the foregoing categories of shares. To qualify, at the time of
an exchange, the investor must notify the Transfer Agent or the
investor's Service Agent must notify the Distributor. Any such
qualification is subject to confirmation of the investor's
holdings through a check of appropriate records. See
"Shareholder Services" in the Statement of Additional
Information. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice,
to charge shareholders a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund
reserves the right to reject any exchange request in whole or in
part. The Exchange Privilege may be modified or terminated at
any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares
given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize a taxable gain or loss.
[For left margin side bar: You can exchange automatically
Class A, Class B or Class F shares for shares of the same class
of certain other First Prairie funds at regular intervals which
you select.]
Auto-Exchange Privilege. The Auto-Exchange Privilege enables an
investor to invest regularly (on a semi-monthly, monthly,
quarterly or annual basis), in exchange for Class A, Class B or
Class F shares of the Series, in shares of the same class of
certain other funds in the First Prairie Family of Funds or
certain funds advised by Dreyfus of which he is currently an
investor. The amount an investor designates, which can be
expressed either in terms of a specific dollar or share amount
($100 minimum), will be exchanged automatically on the first
and/or fifteenth of the month according to the exchange schedule
that the investor has selected. Shares will be exchanged at the
then-current net asset value; however, a sales load may be
charged with respect to exchanges of Class A shares into funds
sold with a sales load. No CDSC will be imposed on Class B
shares at the time of an exchange; however, Class B shares
acquired through an exchange will be subject on redemption to
the higher CDSC applicable to the exchanged or acquired shares.
The CDSC applicable on redemption of the acquired Class B shares
will be calculated from the date of the initial purchase of the
Class B shares exchanged. See "Shareholder Services" in the
Statement of Additional Information. The right to exercise this
Privilege may be modified or canceled by the Fund or the
Transfer Agent. An investor or the investor's Service Agent may
modify or cancel the investor's exercise of this Privilege at
any time by writing to The First Prairie Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. The Fund may
charge a service fee for the use of this Privilege. No such fee
currently is contemplated. The exchange of shares of one fund
for shares of another is treated for Federal income tax purposes
as a sale of the shares given in exchange by the shareholder
and, therefore, an exchanging shareholder may realize a taxable
gain or loss. For more information concerning this Privilege
and the funds eligible to participate in this Privilege, or to
obtain an Auto-Exchange Authorization Form, please call
toll-free in Illinois 1-800-621-6592, or, outside Illinois
1-800-537-4938 if Fund shares were purchased through FCIS, or
1-800-645-6561 if Fund shares were purchased through the
Distributor.
[For left margin side bar: You can purchase Class A or
Class B shares automatically at regular intervals which you
select.]
Automatic Asset Builder. Automatic Asset Builder permits an
investor to purchase Class A or Class B shares (minimum of $100
per transaction) at regular intervals selected by the investor.
Class A or Class B shares are purchased by transferring funds
from the checking, NOW or bank money market deposit account (as
permitted) designated by the investor. At the investor's
option, the account designated by the investor will be debited
in the specified amount, and Fund shares will be purchased, once
a month, on either the first or fifteenth day, or twice a month,
on both days. Only an account maintained at a domestic
financial institution which is an Automated Clearing House
member may be so designated. To establish an Automatic Asset
Builder account, the investor must file an authorization form
with the Transfer Agent. The necessary authorization form may
be obtained from the Distributor, the Manager, certain
affiliates of the Manager or certain Service Agents. An
investor may cancel this Privilege or change the amount of
purchase at any time by mailing written notification to The
First Prairie Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671, and the notification will be effective three
business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated.
[For left margin side bar: Many Federal payments are
eligible for full or partial direct deposit into your Fund
account to purchase Class A or Class B shares.]
Government Direct Deposit Privilege. Government Direct Deposit
Privilege enables an investor to purchase Class A or Class B
shares (minimum of $100 and maximum of $50,000 per transaction)
by having Federal salary, Social Security or certain veterans',
military or other payments from the Federal government
automatically deposited into the investor's Fund account. An
investor may deposit as much of such payments as he elects. To
enroll in Government Direct Deposit, the investor must file with
the Transfer Agent a completed Direct Deposit Sign-Up Form for
each type of payment the investor desires to include in this
Privilege. The appropriate form may be obtained from the
Distributor, the Manager, certain affiliates of the Manager or
certain Service Agents. Death or legal incapacity will
terminate an investor's participation in this Privilege. An
investor may elect at any time to terminate his participation by
notifying in writing the appropriate Federal agency. Further,
the Fund may terminate an investor's participation upon 30 days'
notice to the investor.
[For left margin side bar: You can withdraw a specified
dollar amount from your Fund account every month or quarter.]
Automatic Withdrawal Plan. The Automatic Withdrawal Plan
permits an investor in Class A or Class B shares to request
withdrawal of a specified dollar amount (minimum of $50) on
either a monthly or quarterly basis if the investor has a $5,000
minimum account. An Application for the Automatic Withdrawal
Plan can be obtained from the Distributor, the Manager or
certain affiliates of the Manager. The Automatic Withdrawal
Plan may be ended at any time by the investor, the Fund or the
Transfer Agent.
Class B shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC.
Purchases of additional Class A shares where a sales load is
imposed concurrently with withdrawals of Class A shares
generally are undesirable.
[For left margin side bar: You can "sweep" your dividends
and capital gain distributions into certain other First Prairie
mutual funds.
Dividend Sweep Privilege. The Dividend Sweep Privilege enables
an investor in Class A or Class B shares to invest automatically
dividends and capital gain distributions, if any, paid by the
Fund in shares of the same Class of another fund in the First
Prairie Family of Funds or certain other funds advised or
administered by Dreyfus of which the investor is a shareholder.
Shares of the other fund will be purchased at the then-current
net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales
load. If an investor is investing in a fund that charges a
sales load, the investor may qualify for share prices which do
not include the sales load or which reflect a reduced sales
load. If an investor is investing in a fund that charges a
CDSC, the shares purchased will be subject to the CDSC, if any,
applicable to the purchased shares. See "Shareholder Services"
in the Statement of Additional Information. For more infor-
mation concerning this Privilege and the funds eligible to
participate in this Privilege, or to request a Dividend Sweep
Authorization Form, investors should call toll free in Illinois
1-800-621-6592; or outside Illinois, 1-800-537-4938 if Fund
shares were purchased through FCIS, or 1-800-645-6561 if Fund
shares were purchased through the Distributor. To cancel this
Privilege, the investor or the investor's Service Agent must
mail written notification to The First Prairie Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a
new fund after cancellation, the investor or the investor's
Service Agent must submit a new authorization form to the
Transfer Agent. Enrollment in or cancellation of this Privilege
is effective three business days following receipt by the
Transfer Agent. This Privilege is available only for existing
accounts and may not be used to open new accounts. Minimum
subsequent investments do not apply. The Fund may modify or
terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated. Shares held under Keogh
plans, IRAs or other retirement plans are not eligible for this
Privilege.
[For left margin side bar: By signing a Letter of Intent to
purchase additional shares within 13 months, you become eligible
for any reduced sales charges applying to the total purchase.]
Letter of Intent--Class A Shares. By signing a Letter of Intent
form, available from the Distributor, the Manager, certain
affiliates of the Manager or certain Service Agents, an investor
becomes eligible for the reduced sales load applicable to the
total number of Eligible Fund shares purchased in a 13-month
period pursuant to the terms and conditions set forth in the
Letter of Intent. A minimum initial purchase of $5,000 is
required. To compute the applicable sales load, the offering
price of shares the investor holds (on the date of submission of
the Letter of Intent) in any Eligible Fund that may be used
toward "Right of Accumulation" benefits described above may be
used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new
purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales
load if the investor does not purchase the full amount indicated
in the Letter of Intent. The escrow will be released when the
investor fulfills the terms of the Letter of Intent by
purchasing the specified amount. If the investor's purchases
qualify for a further sales load reduction, the sales load will
be adjusted to reflect the investor's total purchase at the end
of 13 months. If total purchases are less than the amount
specified, the investor will be requested to remit an amount
equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually
made. If such remittance is not received within 20 days, the
Transfer Agent, as attorney-in-fact pursuant to the terms of the
Letter of Intent, will redeem an appropriate number of Class A
shares held in escrow to realize the difference. Signing a
Letter of Intent does not bind the investor to purchase, or the
Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but the investor must complete
the intended purchase to obtain the reduced sales load. At the
time an investor purchases Eligible Fund shares, he must
indicate his intention to do so under a Letter of Intent.
HOW TO REDEEM FUND SHARES
[For left margin side bar: You can redeem Fund shares at
any time.]
General. An investor may request redemption of his shares at
anytime. Redemption requests for Class A or Class B shares
should be transmitted to the Transfer Agent as described below.
An investor who has purchased Class F shares through his
Fiduciary Account must redeem shares by following instructions
pertaining to such account. It is the responsibility of the
Manager to transmit the redemption order to the Transfer Agent
and credit the investor's account with the redemption proceeds
on a timely basis. When a request is received in proper form,
the Fund will redeem the shares at the next determined net asset
value as described below. If an investor holds Fund shares of
more than one Class, any request for redemption must specify the
Class of shares being redeemed. If an investor fails to specify
the Class of shares to be redeemed or if an investor owns fewer
shares of the Class than specified to be redeemed, the
redemption request may be delayed until the Transfer Agent
receives further instructions from the investor or his Service
Agent.
The Fund imposes no charges (other than any applicable CDSC
with respect to Class B shares) when shares are redeemed.
Service Agents may charge a nominal fee for effecting
redemptions of Class A or Class B shares. The value of the
shares redeemed may be more or less than their original cost,
depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares
redeemed within seven days after receipt by the Transfer Agent
of a redemption request in proper form, except as provided by
the rules of the Securities and Exchange Commission. However,
if an investor has purchased Class A or Class B shares by check,
TeleTransfer Privilege or through Automatic Asset Builder and
subsequently submits a written redemption request to the
Transfer Agent, the redemption proceeds will be transmitted to
the investor promptly upon bank clearance of the investor's
purchase check, TeleTransfer purchase or Automatic Asset Builder
order, which may take up to eight business days or more. In
addition, the Fund will reject requests to redeem Class A or
Class B shares by wire or telephone or pursuant to the
TeleTransfer Privilege for a period of eight business days after
receipt by the Transfer Agent of the purchase check, the
TeleTransfer purchase or the Automatic Asset Builder order
against which such redemption is requested. These procedures
will not apply if the investor's Class A or Class B shares were
purchased by wire payment or if the investor otherwise has a
sufficient collected balance in his Fund account to cover the
redemption request. Prior to the time any redemption is
effective, dividends on such shares will accrue and be payable,
and the investor will be entitled to exercise all other rights
of beneficial ownership. Fund shares will not be redeemed until
the Transfer Agent has received the investor's Account
Application.
The Fund reserves the right to redeem an investor's account
at the Fund's option upon not less than 30 days' written notice
if the account's net asset value is $500 or less and remains so
during the notice period.
Contingent Deferred Sales Charge--Class B Shares. A CDSC
payable to FCIS and other Service Agents is imposed on any
redemption of Class B shares which reduces the current net asset
value of an investor's Class B shares to an amount which is
lower than the dollar amount of all payments by the investor for
the purchase of Class B shares of the Fund held by the investor
at the time of redemption. No CDSC will be imposed to the
extent that the net asset value of the Class B shares redeemed
does not exceed (i) the current net asset value of Class B
shares acquired through reinvestment of dividends or capital
gain distributions, plus (ii) increases in the net asset value
of an investor's Class B shares above the dollar amount of all
the investor's payments for the purchase of Class B shares of
the Fund held by the investor at the time of redemption.
If the aggregate value of Class B shares redeemed has
declined below their original cost as a result of the Series'
performance, a CDSC may be applied to the then-current net asset
value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of
the charge will depend on the number of years from the time you
purchased the Class B shares until the time of redemption of
such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and
deemed to have been made on the first day of the month. The
following table sets forth the rates of the CDSC:
CDSC as a
% of Amount
Year Since Invested or
Purchase Payment Redemption
Was Made Proceeds
First. . . . . . . . . . . . . . . . . . . . . . . . . 3.00
Second . . . . . . . . . . . . . . . . . . . . . . . . 3.00
Third. . . . . . . . . . . . . . . . . . . . . . . . . 2.00
Fourth . . . . . . . . . . . . . . . . . . . . . . . . 2.00
Fifth. . . . . . . . . . . . . . . . . . . . . . . . . 1.00
Sixth. . . . . . . . . . . . . . . . . . . . . . . . . 0.00
In determining whether a CDSC is applicable to a
redemption, the calculation will be made in a manner that
results in the lowest possible rate. It will be assumed that
the redemption is made first of amounts representing shares
acquired pursuant to the reinvestment of dividends and
distributions; then of amounts representing the increase in net
asset value of Class B shares above the total amount of payments
for the purchase of Class B shares made during the preceding
five years; then of amounts representing the cost of shares
purchased five years prior to the redemption; and finally, of
amounts representing the cost of shares held for the longest
period of time within the applicable five-year period.
For example, assume an investor purchased 100 shares at $10
a share for a cost of $1,000. Subsequently, the shareholder
acquired five additional shares through dividend reinvestment.
During the second year after the purchase the investor decided
to redeem $500 of his or her investment. Assuming at the time
of the redemption the net asset value had appreciated to $12 per
share, the value of the investor's shares would be $1,260 (105
shares at $12 per share). The CDSC would not be applied to the
value of the reinvested dividend shares and the amount which
represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate
of 3% (the applicable rate in the second year after purchase)
for a total CDSC of $7.20.
Waiver of CDSC--The CDSC will be waived in connection with (a)
redemptions made within one year after the death or disability,
as defined in Section 72(m)(7) of the Internal Revenue Code of
1986, as amended (the "Code"), of the shareholder, (b)
redemptions by Eligible Benefit Plans, (c) redemptions as a
result of a combination of any investment company with the Fund
by merger, acquisition of assets or otherwise, (d) a
distribution following retirement under a tax-deferred
retirement plan or upon attaining age 70-1/2 in the case of an
IRA or Keogh plan or custodial account pursuant to Section
403(b) of the Code, and (e) redemptions by such shareholders as
the Securities and Exchange Commission or its staff may permit.
If the Fund's Trustees determine to discontinue the waiver of
the CDSC, the disclosure in the Fund's prospectus will be
revised appropriately. Any Fund shares subject to a CDSC which
were purchased prior to the termination of such waiver will have
the CDSC waived as provided in the Fund's prospectus at the time
of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of
redemption the investor must notify the Transfer Agent or the
investor's Service Agent must notify the Distributor or FCIS.
Any such qualification is subject to confirmation of your
entitlement.
[For left margin side bar: The Fund offers a number of
convenient ways to access your Class A or Class B investment.]
Class A and Class B Procedures. An investor who has purchased
Class A or Class B shares may redeem Class A or Class B shares
by using the regular redemption procedure through the Transfer
Agent, by wire or telephone, or through the TeleTransfer
Privilege, as described below. If an investor has given his
Service Agent authority to instruct the Transfer Agent to redeem
shares and to credit the proceeds of such redemption to a
designated account at the Service Agent, the investor may redeem
shares only in this manner and in accordance with a written
redemption request pursuant to the regular redemption procedure
described below. Investors who wish to use the other redemption
methods described below must arrange with their Service Agents
for delivery of the required application(s) to the Transfer
Agent. It is the responsibility of the Service Agent to
transmit the redemption order and credit the investor's account
with the redemption proceeds on a timely basis. Investors are
urged to consult their Service Agents for instructions
concerning redemption of Fund shares held in IRAs or other
personal retirement plans.
An investor's redemption request may direct that the
redemption proceeds be used to purchase shares of other funds
advised by the Manager or advised or administered by Dreyfus
that are not available through the Exchange Privilege. The
applicable CDSC will be charged upon the redemption of Class B
shares. The investor's redemption proceeds will be invested in
shares of the other fund on the next business day. Before
making such a request, the investor must obtain and should
review a copy of the current prospectus of the fund being
purchased. Prospectuses may be obtained from the Manager, the
Distributor or certain Service Agents. The prospectus will
contain information concerning minimum investment requirements
and other conditions that may apply to the investor's purchase.
An investor may redeem or exchange Class A or Class B
shares by telephone if the investor has checked the appropriate
box on the Fund's Account Application or has filed an Optional
Services Form with the Transfer Agent. By selecting a telephone
redemption or exchange privilege, an investor authorizes the
Transfer Agent to act on telephone instructions from any person
representing himself or herself to be the investor, or a
representative of the investor's Service Agent, and reasonably
believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such
as requiring a form of personal identification, to confirm that
instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither
the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions,
investors may experience difficulty in contacting the Transfer
Agent by telephone to request a redemption or exchange of Class
A or Class B shares. In such cases, investors should consider
using the other redemption procedures described herein for Class
A or Class B shares. Use of these other redemption procedures
may result in the investor's redemption request being processed
at a later time than it would have been if telephone redemption
had been used. During the delay, the Series' net asset value
may fluctuate.
Regular Redemption. Under the regular redemption procedure, an
investor may redeem Class A or Class B shares by written
request, indicated the Class of shares being redeemed, mailed to
The First Prairie Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671. Redemption requests must be signed by
each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has
adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted
from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. For
further information with respect to signature-guarantees, please
call the telephone number listed on the cover.
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a
written, signature-guaranteed request.
Redemption by Wire or Telephone. An investor may redeem Class A
or Class B shares by wire or telephone if he has checked the
appropriate box and supplied the necessary information on the
Fund's Account Application or has filed an Optional Services
Form with the Transfer Agent. The redemption proceeds may be
wired ($1,000 minimum) to the investor's bank account or paid by
check. Investors can redeem shares by telephone by calling
1-800-227-0072 or, if calling from overseas, 1-401-455-3309.
The Fund reserves the right to refuse any request made by wire
or telephone, and may limit the amount involved or the number of
telephone redemptions. This Privilege may be modified or
terminated at any time by the Transfer Agent or the Fund. The
Fund's Statement of Additional Information sets forth
instructions for redeeming Class A and Class B shares by wire.
[For left margin side bar: Call 1-800-227-0072 for Tele-
Transfer transactions.]
TeleTransfer Privilege. An investor may redeem Class A or Class
B shares (minimum $500, maximum $50,000) without charge by
telephone if he has checked the appropriate box and supplied the
necessary information on the Fund's Account Application or has
filed an Optional Services Form with the Transfer Agent. The
proceeds will be transferred between the investor's Fund account
and the checking, NOW or bank money market deposit account (as
permitted) designated in one of these documents. Only such an
account maintained in a domestic financial institution which is
an Automated Clearing House member may be so designated.
Redemption proceeds will be on deposit in the investor's account
at an Automated Clearing House member bank ordinarily two days
after receipt of the redemption request. The Fund may modify or
terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is
contemplated.
Investors who have selected the TeleTransfer Privilege may
request TeleTransfer redemptions of Class A or Class B shares by
calling 1-800-227-0072 or, if calling from overseas,
1-401-455-3309.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class A and Class B shares are subject to a Shareholder
Services Plan and Class B shares only are subject to a
Distribution Plan.
Distribution Plan--Under the Distribution Plan, adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays for advertising, marketing and distributing Class B shares
at an annual rate of up to .50 of 1% of the value of the average
daily net assets of Class B. Under the Distribution Plan, the
Fund may make payments to Service Agents, including FCSI and the
Distributor, in respect of these services. The Fund determines
the amounts to be paid to Service Agents. Service Agents
receive such fees in respect of the average daily value of Class
B shares owned by their clients. From time to time, Service
Agents may defer or waive receipt of fees under the Distribution
Plan while retaining the ability to be paid by the Fund under
the Distribution Plan thereafter. The fees payable to Service
Agents under the Distribution Plan for advertising, marketing
and distributing Class B shares are payable without regard to
actual expenses incurred.
Shareholder Services Plan--Under the Shareholder Services Plan,
the Fund pays Service Agents, including FCSI and the
Distributor, for the provision of certain services to the
holders of Class A and Class B shares a fee at the annual rate
of up to .25 of 1% of the value of the average daily net assets
of Class A and Class B. The services provided may include
personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing
reports and other information, and services related to the
maintenance of shareholder accounts. The Fund determines the
amounts to be paid to Service Agents. Each Service Agent is
required to disclose to its clients any compensation payable to
it by the Fund pursuant to the Shareholder Services Plan and any
other compensation payable by their clients in connection with
the investment of their assets in Class A or Class B shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
[For left margin side bar: The Series declares daily and
pays monthly dividends from net investment income. You may
choose whether to receive dividends in cash or reinvest in
additional shares.]
The Series ordinarily declares dividends from net
investment income on each business day. Dividends usually are
paid on the last calendar day of each month, and are
automatically reinvested in additional Series shares at net
asset value or, at the investor's option, paid in cash. The
Series' earnings for Saturdays, Sundays and holidays are
declared as dividends on the preceding business day. If an
investor redeems all shares in the investor's account at any
time during the month, all dividends to which such investor is
entitled will be paid to the investor along with the proceeds of
the redemption. Shares begin accruing income dividends on the
day following the date of purchase. Distributions from net
realized securities gains, if any, generally are declared and
paid once a year, but the Series may make distributions on a
more frequent basis to comply with the distribution requirements
of the Code, in all events in a manner consistent with the
provisions of the Investment Company Act of 1940. The Series
will not make distributions from net realized securities gains
unless capital loss carryovers, if any, have been utilized or
have expired. Investors may choose whether to receive dividends
and distributions in cash or to reinvest in additional Series
shares of the same Class at net asset value without a sales
load. Dividends paid by each Class of shares of the Series will
be calculated at the same time and in the same manner and will
be of the same amount, except that the expenses attributable
solely to Class A, Class B or Class F shares will be borne
exclusively by such Class. Class B shares will receive lower
per share dividends than Class A and Class F shares and Class A
shares will receive lower per share dividends than Class F
shares because of the higher expenses borne by Class B and Class
A, respectively. See "Fee Table."
Dividends derived from interest, together with
distributions from any net realized short-term securities gains
and gains from the sale or other disposition of market discount
bonds, paid by the Series generally are taxable to U.S.
investors as ordinary income, whether or not reinvested in
additional Series shares. Distributions from net realized
long-term securities gains, if any, generally are taxable to
U.S. investors as long-term capital gains for Federal income tax
purposes, regardless of how long shareholders have held their
shares and whether such distributions are received in cash or
reinvested in additional Series shares. The Code provides that
the net capital gains of an individual will not be subject to
Federal income tax at a rate in excess of 28%. Dividends and
distributions may be subject to state and local taxes. No
dividend will qualify for the dividends received deduction
allowable to certain U.S. corporations.
Dividends and distributions attributable to interest from
direct obligations of the United States and paid by the Series
to individuals currently are not subject to tax in most states.
Dividends and distributions attributable to interest from other
securities in which the Series may invest may be subject to
state tax. The Fund will provide shareholders with a statement
which sets forth the percentage of dividends and distributions
paid by the Series that is attributable to interest income from
direct obligations of the United States.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and
gains from the sale or other disposition of market discount
bonds, paid by the Series to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of
30%, unless the foreign investor claims the benefits of a lower
rate specified in a tax treaty. Distributions from net realized
long-term securities gains paid by the Series to a foreign
investor, as well as the proceeds of any redemptions from a
foreign investor's account, regardless of the extent to which
gain or loss may be realized, will not be subject to U.S.
nonresident withholding tax. However, such distributions may be
subject to backup withholding, as described below, unless the
foreign investor certifies his non-U.S. residency status.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares if an investor exchanges
his Class A shares for shares of certain other funds advised by
the Manager within 91 days of purchase and such other fund
reduces or eliminates its otherwise applicable sales load charge
for the purpose of the exchange. In this case, the amount of
the sales load charged the investor for Class A shares, up to
the amount of the reduction of the sales load charged on the
exchange, is not included in the basis of the investor's Class A
shares for purposes of computing gain or loss on the exchange,
and instead is added to the basis of the fund shares received on
the exchange.
Notice as to the tax status of an investor's dividends and
distributions will be mailed to such investor annually. Each
investor also will receive periodic summaries of the investor's
account which will include information as to dividends and
distributions from securities gains, if any, paid during the
year.
[For left margin side bar: If you have not furnished us
with a correct Taxpayer Identification Number, you may be
subject to tax withholding of 31% of all taxable dividends,
distributions and redemption proceeds.]
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of
dividends, distributions from net realized securities gains and
the proceeds of any redemption, regardless of the extent to
which gain or loss may be realized, paid to a shareholder if
such shareholder fails to certify either that the TIN furnished
in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being
subject to backup withholding as a result of a failure to
properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to
institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to
properly report taxable dividend and interest income on a
Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any
tax withheld as a result of backup withholding does not
constitute an additional tax imposed on the record owner of the
account, and may be claimed as a credit on the record owner's
Federal income tax return.
It is expected that the Series will qualify as a "regulated
investment company" under the Code so long as such qualification
is in the best interests of its shareholders. Such
qualification relieves the Series of any liability for Federal
income tax to the extent its earnings are distributed in
accordance with applicable provisions of the Code. In addition,
the Series is subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of
taxable investment income and capital gains.
Each investor should consult his tax adviser regarding
specific questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance of each Class of
shares is calculated on several bases, including current yield,
average annual total return and/or total return. These total
return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. Class A total return
figures include the maximum initial sales charge and Class B
total return figures include any applicable CDSC. These figures
also take into account any applicable service and distribution
fees. As a result, at any given time, the performance of Class
A and Class B should be expected to be lower than that of Class
F and the performance of Class B should be expected to be lower
than that of Class A and Class F. Performance for each Class
will be calculated separately.
[For left margin side bar: Current yield is the Fund's net
investment income over a 30-day period, expressed as an annual
percentage and assuming all income is reinvested.]
Current yield refers to the Series' annualized net invest
investment income per share over a 30-day period, expressed as a
percentage of the maximum offering price, in the case of Class
A, or net asset value, in the case of Class B or Class F, per
share at the end of the period. For purposes of calculating
current yield, the amount of net investment income per share
during that 30-day period, computed in accordance with
regulatory requirements, is compounded by assuming that it is
reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a
second six-month period which, when added to the result for the
first six months, provides an "annualized" yield for an entire
one-year period. Calculations of the Series' current yield may
reflect absorbed expenses pursuant to any undertaking that may
be in effect. See "Management of the Fund."
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the
Series was purchased with an initial payment of $1,000 and that
the investment was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis,
would result in the redeemable value of the investment at the
end of the period. Advertisements of the Series' performance
will include the Series' average annual total return for one-,
five- and ten-year periods, or for shorter time periods
depending upon the length of time the Series has operated.
Computations of average annual total return for periods of less
than one year represent an annualization of the Series' actual
total return for the applicable period.
[For left margin side bar: Total return combines the
income and principal changes for a specified period, assuming
all dividends and distributions are reinvested.]
Total return is computed on a per share basis assumes the
reinvestment of dividends and distributions. Total return
generally is expressed as a percentage rate which is calculated
by combining the income and principal changes for a specified
period and dividing by the maximum offering price, in the case
of Class A, or net asset value, in the case of Class B or Class
F, per share at the beginning of the period. Advertisements may
include the percentage rate of total return or may include the
value of a hypothetical investment at the end of the period
which assumes the application of the percentage rate of total
return. Total return also may be calculated by using the net
asset value per share at the beginning of the period instead of
the maximum offering price per share at the beginning of the
period for Class A shares or without giving effect to any
applicable CDSC at the end of the period for Class B shares.
Calculations based on the net asset value per share do not
reflect the deduction of the sales load which, if reflected,
would reduce the performance quoted.
Performance will vary from time to time and past results
are not necessarily representative of future results. Investors
should remember that performance is a function of portfolio
management in selecting the type and quality of portfolio
securities and is affected by operating expenses. Performance
information, such as that described above, may not provide a
basis for comparison with other investment companies using a
different method of calculating performance.
[For left margin side bar: The Fund may compare its
performance with similar funds or recognized standards.]
Comparative performance information may be used from time
to time in advertising or marketing the Fund's shares, including
data from Lipper Analytical Services, Inc., Bank Rate Monitor*,
N. Palm Beach, Fla. 33408, Bond 20-Bond Index, Moody's Bond
Survey Bond Index, Lehman Brothers Corporate Bond Index,
Morningstar, Inc. and other industry publications.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to
an Agreement and Declaration of Trust (the "Trust Agreement")
dated March 12, 1992, and commenced operations on March 5, 1993.
The Fund is authorized to issue an unlimited number of shares of
beneficial interest, par value $.001 per share. Series shares
are classified into three classes--Class A, Class B and Class F.
Each share has one vote and shareholders will vote in the
aggregate and not by class except as otherwise required by law
or when class voting is permitted by the Board of Trustees.
However, holders of Class A and Class B shares will be entitled
to vote on matters submitted to shareholders pertaining to the
Shareholder Services Plan and only holders of Class B shares
will be entitled to vote on matters submitted to shareholders
pertaining to the Distribution Plan. The Manager has agreed to
vote Fund shares for which it is the record owner according to
voting instructions received from the beneficial holders of such
shares.
To date, the Board of Trustees has authorized the creation
of one series of shares. All consideration received by the Fund
for shares of the Series and all assets in which such
consideration is invested will belong to that Series (subject
only to the rights of creditors of the Fund) and will be subject
to the liabilities related thereto. The income attributable to,
and the expenses of, one Series (and as to classes within a
Series) are treated separately from those of the other Series
(and classes), if any. The Fund has the ability to create, from
time to time, new series without shareholder approval.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Fund. However, the Trust Agreement disclaims shareholder
liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Fund or a Trustee.
The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held
personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the
Fund itself would be unable to meet its obligations, a
possibility which management believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder paying
such liability will be entitled to reimbursement from the
general assets of the Fund.
The Trustees intend to conduct the operations of the Fund
in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Fund. As
discussed under "Management of the Fund" in the Statement of
Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain
circumstances may have the right to call a meeting of
shareholders for the purpose of voting to remove Trustees.
Rule 18f-2 under the Investment Company Act of 1940
provides that any matter required to be submitted under the
provisions of the Investment Company Act of 1940 or applicable
state law or otherwise to the holders of the outstanding voting
securities of an investment company, such as the Fund, will not
be deemed to have been effectively acted upon unless approved by
the holders of a majority of the outstanding shares of each
Series affected by such matter. Rule 18f-2 further provides
that a Series shall be deemed to be affected by a matter unless
it is clear that the interests of such Series in the matter are
identical or that the matter does not affect any interest of
such Series. However, the Rule exempts the selection of
independent accountants and the election of Trustees from the
separate voting requirements of the Rule.
The Transfer Agent maintains a record of each investor's
ownership and sends confirmations and statements of account.
Investor inquiries may be made to the investor's Service
Agent, including the Manager, or by writing to the Fund at the
address shown on the front cover or by calling the appropriate
telephone number.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IN THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUND'S SHARES, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
<PAGE>
APPENDIX
Portfolio Securities
Ginnie Mae Certificate-Ginnie Mae is a wholly-owned corporate
instrumentality of the United States within the Department of
Housing and Urban Development. The National Housing Act of
1934, as amended (the "Housing Act"), authorizes Ginnie Mae to
guarantee the timely payment of the principal of and interest on
certificates that are based on and backed by a pool of mortgage
loans insured by the Federal Housing Administration Act, or
Title V of the Housing Act of 1949 ("FHA Loans"), or guaranteed
by the Veterans' Administration under the Servicemen's
Readjustment Act of 1944, as amended ("VA Loans"), or by pools
of other eligible mortgage loans. The Housing Act provides that
the full faith and credit of the United States government is
pledged to the payment of all amounts that may be required to be
paid under any guarantee. To meet its obligations under such
guarantee, Ginnie Mae is authorized to borrow from the U.S.
Treasury with no limitations as to amount.
Fannie Mae Certificates-Fannie Mae is a Federally chartered and
privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act. Fannie Mae
was originally established in 1938 as a United States government
agency to provide supplemental liquidity to the mortgage market
and was transformed into a stockholder owned and privately
managed corporation by legislation enacted in 1968. Fannie Mae
provides funds to the mortgage market primarily by purchasing
home mortgage loans from local lenders, thereby replenishing
their funds for additional lending. Fannie Mae acquires funds
to purchase home mortgage loans from many capital market
investors that ordinarily may not invest in mortgage loans
directly, thereby expanding the total amount of funds available
for housing.
Each Fannie Mae Certificate will entitle the registered
holder thereof to receive amounts representing such holder's pro
rata interest in scheduled principal payments and interest
payments (at such Fannie Mae Certificate's pass-through rate,
which is net of any servicing and guarantee fees on the
underlying mortgage loans), and any principal prepayments, on
the mortgage loans in the pool represented by such Fannie Mae
Certificate and such holder's proportionate interest in the full
principal amount of any foreclosed or otherwise finally
liquidated mortgage loan. The full and timely payment of
principal of and interest on each Fannie Mae Certificate will be
guaranteed by Fannie Mae, which guarantee is not backed by the
full faith and credit of the United States government.
Freddie Mac Certificates-Freddie Mac is a corporate
instrumentality of the United States created pursuant to the
Emergency Home Finance Act of 1970, as amended (the "FHLMC
Act"). Freddie Mac was established primarily for the purpose of
increasing the availability of mortgage credit for the financing
of needed housing. The principal activity of Freddie Mac
currently consists of the purchase of first lien, conventional,
residential mortgage loans and participation interests in such
mortgage loans and the resale of the mortgage loans so purchased
in the form of mortgage securities, primarily Freddie Mac
Certificates.
Freddie Mac guarantees to each registered holder of a
Freddie Mac Certificate the timely payment of interest at the
rate provided for by such Freddie Mac Certificate, whether or
not received. Freddie Mac also guarantees to each registered
holder of a Freddie Mac Certificate ultimate collection of all
principal of the related mortgage loans, without any offset or
deduction, but, generally, does not guarantee the timely payment
of scheduled principal. Freddie Mac may remit the amount due on
account of its guarantee of collection of principal at any time
after default on an underlying mortgage loan, but not later than
30 days following (i) foreclosure sale, (ii) payment of claim by
any mortgage insurer, or (iii) the expiration of any right of
redemption, whichever occurs later, but in any event no later
than one year after demand has been made upon the mortgagor for
accelerated payment of principal. The obligations of Freddie
Mac under its guarantee are obligations solely of Freddie Mac
and are not backed by the full faith and credit of the United
States government.
Multiclass Pass-Through Securities-The mortgage-related
securities in which the Series may invest include multiclass
pass-through securities collateralized by Ginnie Mae, Fannie Mae
or Freddie Mac Certificates (such collateral collectively
hereinafter referred to as "Mortgage Assets"). Multiclass
pass-through securities can be equity interests in a trust
composed of Mortgage Assets. Payments of principal of and
interest on the Mortgage Assets, and any reinvestment income
thereon, provide the funds to make scheduled distributions on
the multiclass pass-through securities.
In a multiclass pass-through security, a series of bonds or
certificates is issued in multiple classes. Each class of the
multi-class pass-through security, often referred to as a
"tranche," is issued at a specific fixed or floating coupon rate
and has a stated maturity or final distribution date. Principal
prepayments on the Mortgage Assets may cause such securities to
be retired substantially earlier than their stated maturities or
final distribution dates. Interest is paid or accrues on
classes of the multiclass pass-through security on a monthly,
quarterly or semiannual basis and may be paid based on formulae
that cause the security's interest rate to change directly or
inversely to changes in specified indices. The principal of and
interest on the Mortgage Assets may be allocated among the
several classes of a multiclass pass-through security series in
innumerable ways, some of which bear substantially more risk
than others. See "Description of the Fund-Risk Factors" for a
discussion of special considerations relating to the liquidity
of these securities.
Stripped Mortgage-Backed Securities-The mortgage-related
securities in which the Fund may invest include stripped
mortgage-backed securities ("SMBS"), which are derivative
multiclass mortgage securities, issued by agencies or
instrumentalities of the United States government.
SMBS usually are structured with two classes that receive
different proportions of the interest and principal
distributions on a pool of Mortgage Assets. A common type of
SMBS will have one class receiving some of the interest and most
of the principal from the Mortgage Assets, while the other class
will receive most of the interest and the remainder of the
principal. In the most extreme case, one class will receive all
of the interest (the interest only or "IO" class), while the
other class will receive all of the principal (the
principal-only or "PO" class). The yield to maturity on an IO
class is extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying Mortgage
Assets, and a rapid rate of principal payments may have a
material adverse effect on the Series' yield to maturity. If
the underlying Mortgage Assets experience greater than
anticipated prepayments of principal, the Series may fail to
fully recoup its initial investment in these securities even if
the securities are rated in the highest rating category by a
nationally recognized statistical rating organization. See
"Description of the Fund-Risk Factors" for a discussion of
special considerations relating to the liquidity of these
securities.
Investment Techniques
In connection with its investment objective and policies, the
Series may employ, among others, the following investment
techniques which may involve certain risks.
Leverage Through Borrowing-The Series may borrow for investment
purposes. This borrowing, which is known as leveraging,
generally will be unsecured, except to the extent the Series
enters into reverse repurchase agreements described below. The
Investment Company Act of 1940 requires the Series to maintain
continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of
the amount borrowed. If the 300% asset coverage should decline
as a result of market fluctuations or other reasons, the Series
may be required to sell some of its portfolio holdings within
three days to reduce the debt and restore the 300% asset
coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time.
Leveraging may exaggerate the effect on net asset value of any
increase or decrease in the market value of the Series'
portfolio. Money borrowed for leveraging will be subject to
interest costs which may or may not be recovered by appreciation
of the securities purchased; in certain cases, interest costs
may exceed the return received on the securities purchased. The
Series also may be required to maintain minimum average balances
in connection with such borrowing or to pay a commitment or
other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the
stated interest rate.
Among the forms of borrowing in which the Series may engage
is the entry into reverse repurchase agreements with banks,
brokers or dealers. These transactions involve the transfer by
the Series of an underlying debt instrument in return for cash
proceeds based on a percentage of the value of the security.
The Series retains the right to receive interest and principal
payments on the security. At an agreed upon future date, the
Series repurchases the security at principal, plus accrued
interest. In certain types of agreements, there is no agreed
upon repurchase date and interest payments are calculated daily,
often based on the prevailing overnight repurchase rate. The
Series will maintain in a segregated custodial account cash or
U.S. Government securities having a value at least equal to the
aggregate amount of the Series' reverse repurchase obligations,
plus accrued interest, in certain cases, in accordance with
releases promulgated by the Securities and Exchange Commission.
The Securities and Exchange Commission views reverse repurchase
transactions as collateralized borrowings by the Series. These
agreements, which are treated as if reestablished each day, are
expected to provide the Series with a flexible borrowing tool.
Short-Selling-The Series may make short sales, which are
transactions in which the Series sells a security it does not
own in anticipation of a decline in the market value of that
security. To complete such a transaction, the Series must
borrow the security to make delivery to the buyer. The Series
then is obligated to replace the security borrowed by purchasing
it at the market price at the time of replacement. The price at
such time may be more or less than the price at which the
security was sold by the Series. Until the security is
replaced, the Series is required to pay to the lender amounts
equal to any interest which accrues during the period of the
loan. To borrow the security, the Series also may be required
to pay a premium, which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the
broker, to the extent necessary to meet margin requirements,
until the short position is closed out.
Until the Series replaces a borrowed security in connection
with a short sale, the Fund will: (a) maintain daily a
segregated account, containing cash or U.S. Government
securities, at such a level that (i) the amount deposited in the
account plus the amount deposited with the broker as collateral
will equal the current value of the security sold short and (ii)
the amount deposited in the segregated account plus the amount
deposited with the broker as collateral will not be less than
the market value of the security at the time it was sold short;
or (b) otherwise cover the Series' short position.
The Series will incur a loss as a result of the short sale
if the price of the security increases between the date of the
short sale and the date on which the Series replaces the
borrowed security. The Series will realize a gain if the
security declines in price between those dates. This result is
the opposite of what one would expect from a cash purchase of a
long position in a security. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount
of any premium or amounts in lieu of interest the Series may be
required to pay in connection with a short sale.
The Series may purchase call options to provide a hedge
against an increase in the price of a security sold short by the
Series. When the Series purchases a call option it has to pay a
premium to the person writing the option and a commission to the
broker selling the option. If the option is exercised by the
Series, the premium and the commission paid may be more than the
amount of the brokerage commission charged if the security were
to be purchased directly. See "Call and Put Options on Specific
Securities" below.
The Fund anticipates that the frequency of short sales will
vary substantially in different periods, and it does not intend
that any specified portion of the Series' assets, as a matter of
practice, will be invested in short sales. However, no
securities will be sold short if, after effect is given to any
such short sale, the total market value of all securities sold
short would exceed 25% of the value of the Series' net assets.
The Series may not sell short the securities of any single
issuer listed on a national securities exchange to the extent of
more than 5% of the value of the Series' net assets. The Series
may not sell short the securities of any class of an issuer to
the extent, at the time of the transaction, of more than 5% of
the outstanding securities of that class.
In addition to the short sales discussed above, the Series
may make short sales "against the box," a transaction in which
the Series enters into a short sale of a security which the Fund
owns. The proceeds of the short sale will be held by a broker
until the settlement date at which time the Series delivers the
security to close the short position. The Series receives the
net proceeds from the short sale. The Series at no time will
have more than 15% of the value of its net assets in deposits on
short sales against the box. It currently is anticipated that
the Series will make short sales against the box for purposes of
protecting the value of the Series' net assets.
Call and Put Options on Specific Securities-The Series may
invest up to 5% of its assets, represented by the premium paid,
in the purchase of call and put options in respect of specific
securities in which the Series may invest. The Series may write
covered call and put option contracts to the extent of 20% of
the value of its net assets at the time such option contracts
are written. A call option gives the purchaser of the option
the right to buy, and obligates the writer to sell, the
underlying security at the exercise price at any time during the
option period. Conversely, a put option gives the purchaser of
the option the right to sell, and obligates the writer to buy,
the underlying security at the exercise price at any time during
the option period. A covered call option sold by the Series,
which is a call option with respect to which the Series owns the
underlying security, exposes the Series during the term of the
option to possible loss of opportunity to realize appreciation
in the market price of the underlying security or to possible
continued holding of a security which might otherwise have been
sold to protect against depreciation in the market price of the
security. A covered put option sold by the Series exposes the
Series during the term of the option to a decline in price of
the underlying security. A put option sold by the Series is
covered when, among other things, cash or liquid securities are
placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken.
To close out a position when writing covered options, the
Series may make a "closing purchase transaction," which involves
purchasing an option on the same security with the same exercise
price and expiration date as the option which it has previously
written on the security. To close out a position as a purchaser
of an option, the Series may make a "closing sale transaction,"
which involves liquidating the Series' position by selling the
option previously purchased. The Series will realize a profit
or loss from a closing purchase or sale transaction depending
upon the difference between the amount paid to purchase an
option and the amount received from the sale thereof.
The Fund intends to treat options in respect of specific
securities that are not traded on a national securities exchange
and the securities underlying covered call options written by
the Series as illiquid securities.
The Series will purchase options only to the extent
permitted by the policies of state securities authorities in
states where shares of the Series are qualified for offer and
sale.
Futures Transactions-In General-The Fund will not be a commodity
pool. However, as an adjunct to its securities activities, the
Series may engage, to the extent permitted by applicable
regulations, in futures and options on futures transactions, as
described below.
The Series' commodities transactions must constitute bona
fide hedging or other permissible transactions pursuant to
regulations promulgated by the Commodity Futures Trading
Commission (the "CFTC"). In addition, the Series may not engage
in such transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired commodity options,
other than for bona fide hedging transactions, would exceed 5%
of the liquidation value of the Series' assets, after taking
into account unrealized profits and unrealized losses on such
contracts it has entered into; provided, however, that in the
case of an option that is in-the-money at the time of purchase,
the in-the-money amount may be excluded in calculating the 5%.
Pursuant to regulations and/or published positions of the
Securities and Exchange Commission, the Series may be required
to segregate cash in connection with the Series' commodities
transactions in an amount generally equal to the value of the
underlying commodity. The segregation of such assets will have
the effect of limiting the Series' ability to otherwise invest
those assets.
Initially, when purchasing or selling futures contracts the
Series will be required to deposit with its custodian in the
broker's name an amount of cash or cash equivalents up to
approximately 10% of the contract amount. This amount is
subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of
trade may impose their own higher requirements. 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 Series upon termination of the futures position, 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 the 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." At any time prior to the expiration of
a futures contract, the Series may elect to close the position
by taking an opposite position, at the then prevailing price,
which will operate to terminate the Series' existing position in
the contract.
Although the Series intends to purchase or sell futures
contracts only if there is an active market for such contracts,
no assurance can be given that a liquid market will exist for
any particular contract at any particular time. Many 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 or trading may be suspended for specified periods during
the trading day. Futures contract prices could move to the
limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Series to substantial
losses. If it is not possible, or the Series determines not, to
close a futures position in anticipation of adverse price
movements, the Series will 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 offset partially or completely losses on the
futures contract. However, no assurances 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.
In addition, due to the risk of an imperfect correlation
between securities in the Series' portfolio that are the subject
of a hedging transaction and the futures contract used as a
hedging device, it is possible that the hedge will not be fully
effective in that, for example, losses on the portfolio
securities may be in excess of gains on the futures contract or
losses on the futures contract may be in excess of gains on the
portfolio securities that were the subject of the hedge. In an
effort to compensate for the imperfect correlation of movements
in the price of the securities being hedged and movements in the
price of futures contracts, the Series may buy or sell futures
contracts in a greater or lesser dollar amount than the dollar
amount of the securities being hedged if the historical
volatility of the futures contract has been less or greater than
that of the securities. Such "over hedging" or "under hedging"
may adversely affect the Series' net investment results if
market movements are not as anticipated when the hedge is
established.
Successful use of futures by the Series also is subject to
the Manager's ability to predict correctly movements in the
direction of the market or interest rates. For example, if the
Fund has hedged against the possibility of a decline in the
market adversely affecting the value of securities held in its
portfolio and prices increase instead, the Series 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
Series has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of
securities may, but will not necessarily, be at increased prices
which reflect the rising market. The Series may have to sell
securities at a time when it may be disadvantageous to do so.
An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise
price at any time during the option exercise period. The writer
of the option is required upon exercise to assume an offsetting
futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the
option, the assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery
of the accumulated cash balance in the writer's futures margin
account which represents the amount by which the market price of
the futures contract, at exercise, exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price
of the option on the futures contract.
Call options sold by the Series with respect to futures
contracts will be covered by, among other things, entering into
a long position in the same contract at a price no higher than
the strike price of the call option, or by ownership of the
instruments underlying, or instruments the prices of which are
expected to move relatively consistently with, the instruments
underlying the futures contract. Put options sold by the Series
with respect to futures contracts will be covered in the same
manner as put options on specific securities as described above.
Interest Rate Futures Contracts and Options on Interest Rate
Futures Contracts-The Series may invest in interest rate futures
contracts and options on interest rate futures contracts.
The Series may purchase call options on interest rate
futures contracts to hedge against a decline in interest rates
and may purchase put options on interest rate futures contracts
to hedge its portfolio securities against the risk of rising
interest rates.
The Series may sell call options on interest rate futures
contracts to partially hedge against declining prices of
portfolio securities. If the futures price at expiration of the
option is below the exercise price, the Series will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Series'
portfolio holdings. The Series may sell put options on interest
rate futures contracts to hedge against increasing prices of the
securities which are deliverable upon exercise of the futures
contracts. If the futures price at expiration of the option is
higher than the exercise price, the Series will retain the full
amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Series
intends to purchase. If a put or call option sold by the Series
is exercised, the Series will incur a loss which will be reduced
by the amount of the premium it receives. Depending on the
degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures
positions, the Series' losses from existing options on futures
may to some extent be reduced or increased by changes in the
value of its portfolio securities.
The Series also may sell options on interest rate futures
contracts as part of closing purchase transactions to terminate
its options positions. No assurance can be given that such
closing transactions can be effected or that there will be
correlation between price movements in the options on interest
rate futures and price movements in the Series' portfolio
securities which are the subject of the hedge. In addition, the
Series' purchase of such options will be based upon predictions
as to anticipated interest rate trends, which could prove to be
inaccurate.
Future Developments-The Series may take advantage of
opportunities in the area of options and futures contracts and
options on futures contracts and any other derivative investment
which are not presently contemplated for use by the Series or
which are not currently available but which may be developed, to
the extent such opportunities are both consistent with the
Series' investment objective and legally permissible for the
Series. Before entering into such transactions or making any
such investment, the Fund will provide appropriate disclosure in
its prospectus.
Lending Portfolio Securities-From time to time, the Series may
lend securities from its portfolio to brokers, dealers and other
financial institutions needing to borrow securities to complete
certain transactions. Such loans may not exceed 33-1/3% of the
value of the Series' total assets. In connection with such
loans, the Series will receive collateral consisting of cash or
U.S. Government securities which will be maintained at all times
in an amount equal to at least 100% of the current market value
of the loaned securities. The Series can increase its income
through the investment of such collateral. The Series continues
to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned security and receives
interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. The Series might
experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement
with the Series.
Forward Commitments-The Series may purchase securities on a when
issued or forward commitment basis, which means that the price
is fixed at the time of commitment, but delivery and payment
ordinarily take place a number of days after the date of the
commitment to purchase. The Series will make commitments to
purchase such securities only with the intention of actually
acquiring the securities, but the Series may sell these
securities before the settlement date if it is deemed advisable.
The Series will not accrue income in respect of a security
purchased on a forward commitment basis prior to its stated
delivery date.
Securities purchased on a when-issued or forward commitment
basis and certain other securities held in the Series' portfolio
are subject to changes in value (both generally changing in the
same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities
purchased on a when-issued or forward commitment basis may
expose the Series to risk because they may experience such
fluctuations prior to their actual delivery. Purchasing
securities on a when-issued or forward commitment basis can
involve the additional risk that the yield available in the
market when the delivery takes place actually may be higher than
that obtained in the transaction itself. A segregated account
of the Series consisting of cash or U.S. Government securities
at least equal at all times to the amount of the when-issued or
forward commitments will be established and maintained at the
Series' custodian bank. Purchasing securities on a forward
commitment basis when the Series is fully or almost fully
invested may result in greater potential fluctuation in the
value of the Series' net assets and its net asset value per
share.
<PAGE>
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
CLASS A, CLASS B and CLASS F SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
____ __, 1994
This Statement of Additional Information, which is not
a prospectus, supplements and should be read in conjunction with
the current Prospectus of the Intermediate Series (the "Series")
of First Prairie U.S. Government Income Fund (the "Fund"), dated
____ __, 1994, as it may be revised from time to time. To
obtain a copy of the Fund's Prospectus, please write to the Fund
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144,
or call toll free 1-800-346-3621.
The First National Bank of Chicago (the "Manager")
serves as the Fund's investment adviser.
Dreyfus Service Corporation (the "Distributor"), a
wholly-owned subsidiary of The Dreyfus Corporation ("Dreyfus"),
is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . B-5
Management Agreement . . . . . . . . . . . . . . . . . B-7
Purchase of Fund Shares. . . . . . . . . . . . . . . . B-10
Distribution Plan and Shareholder Services Plan. . . . B-11
Redemption of Fund Shares. . . . . . . . . . . . . . . B-13
Shareholder Services . . . . . . . . . . . . . . . . . B-15
Determination of Net Asset Value . . . . . . . . . . . B-18
Portfolio Transactions . . . . . . . . . . . . . . . . B-18
Dividends, Distributions and Taxes . . . . . . . . . . B-19
Performance Information. . . . . . . . . . . . . . . . B-20
Information About the Fund . . . . . . . . . . . . . . B-22
Counsel and Independent Auditors . . . . . . . . . . . B-22
Financial Statements . . . . . . . . . . . . . . . . . B-23
Report of Independent Auditors . . . . . . . . . . . . B-25
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "DESCRIPTION OF THE FUND."
Management Policies
The Series engages in the following practices in
furtherance of its objective.
Options Transactions. The Series may engage in options
transactions, such as purchasing or writing covered call or put
options. The principal reason for writing covered call options
is to realize, through the receipt of premiums, a greater return
than would be realized on the Series' portfolio securities
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 the Series
may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or
increase their option-writing activities.
Options written ordinarily will 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 time 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. The Series may write (a) in-the-money
call options when the Manager expects that the price of the
underlying security will remain stable or decline moderately
during the option period, (b) at-the-money call options when the
Manager expects that the price of the underlying security will
remain stable or advance moderately during the option period and
(c) out-of-the-money call options when the Manager 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 these circumstances,
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 Series' obligation as the writer of an
option continues, the Series may be assigned an exercise notice
by the broker-dealer through which the option was sold,
requiring the Series 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 Series effects a
closing purchase transaction. The Series can no longer effect a
closing purchase transaction with respect to an option once it
has been assigned an exercise notice.
While it may choose to do otherwise, the Series
generally will purchase or write only those options for which
the Manager 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, at times have rendered certain
clearing facilities 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 the
Series is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position.
Futures Contracts and Options on Futures Contracts.
Upon exercise of an option, the writer of the option delivers to
the holder of the option the futures position and the
accumulated balance in the writer's futures margin account,
which represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less
than, in the case of a put, the exercise price of the option on
the futures contract. The potential loss related to the
purchase of options on futures contracts is limited to the
premium paid for the option (plus transaction costs). Because
the value of the option is fixed at the time 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 Fund.
Lending Portfolio Securities. To a limited extent, the
Series may lend its portfolio securities to brokers, dealers and
other financial institutions, provided it receives cash
collateral which at all times is maintained in an amount equal
to at least 100% of the current market value of the securities
loaned. By lending its portfolio securities, the Series can
increase its income through the investment of the cash
collateral. For purposes of this policy, the Series considers
collateral consisting of U.S. Government securities to be the
equivalent of cash. Such loans may not exceed 33-1/3% of the
Series' total assets. From time to time, the Series may return
to the borrower or a third party which is unaffiliated with the
Series, and which is acting as a "placing broker," a part of the
interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently
requires that the following conditions must be met whenever
portfolio securities are loaned: (1) the Series must receive at
least 100% cash collateral 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
Series must be able to terminate the loan at any time; (4) the
Series must receive reasonable interest on the loan, as well as
any interest or other distributions payable on the loaned
securities, and any increase in market value; and (5) the Series
may pay only reasonable custodian fees in connection with the
loan. These conditions may be subject to future modification.
Investment Restrictions. The Series has adopted
investment restrictions numbered 1 through 7 as fundamental
policies. These restrictions cannot be changed without approval
by the holders of a majority (as defined in the Investment
Company Act of 1940, as amended (the "Act")) of the Series'
outstanding voting shares. Investment restrictions numbered 8
through 11 are not fundamental policies and may be changed by
vote of a majority of the Board of Trustees at any time. The
Series may not:
1. Invest in commodities, except that the Series may
purchase and sell options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes.
2. Purchase, hold or deal in real estate, real estate
limited partnership interests, or oil, gas or other mineral
leases or exploration or development programs, but the Series
may purchase and sell securities that are secured by real estate
and may purchase and sell securities issued by companies that
invest or deal in real estate.
3. Borrow money, except to the extent permitted under
the Act. For purposes of this investment restriction, the entry
into options, forward contracts, futures contracts, including
those relating to indexes, and options on futures contracts
shall not constitute borrowing.
4. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
However, the Series may lend its portfolio securities in an
amount not to exceed 33-1/3% of the value of its total assets.
Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission
and the Fund's Board of Trustees.
5. Act as an underwriter of securities of other
issuers.
6. Invest more than 25% of its assets in the
securities of issuers in any single industry, provided that
there shall be no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
7. Issue any senior security (as such term is defined
in Section 18(f) of the Act), except to the extent the
activities permitted in Investment Restriction Nos. 1, 3, 8 and
9 may be deemed to give rise to a senior security.
8. Pledge, mortgage or hypothecate its assets, except
to the extent necessary to secure permitted borrowings and to
the extent related to the deposit of assets in escrow in
connection with writing covered put and call options and the
purchase of securities on a when-issued or delayed-delivery
basis and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures
contracts, including those related to indexes, and options on
futures contracts or indexes.
9. Purchase, sell or write puts, calls or
combinations thereof, except as described in the Fund's
Prospectus and this Statement of Additional Information.
10. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than
15% of the value of the Series' net assets would be so invested.
11. Purchase securities of other investment companies,
except to the extent permitted under the Act.
If a percentage restriction is adhered to at the time
of investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute
a violation of such restriction.
The Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Series
shares in certain states. Should the Fund determine that a
commitment is no longer in the best interests of the Series and
its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of Series shares in the state
involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with
information as to their principal business occupations during at
least the last five years, are shown below. The Trustee who is
deemed to be an "interested person" of the Fund, as defined in
the Act, is indicated by an asterisk.
Trustees and Officers of the Fund
*JOSEPH S. DiMARTINO, President and Trustee. President, Chief
Operating Officer and a Director of Dreyfus,
Executive Vice President and a Director of
the Distributor and an officer, director or
trustee of other investment companies advised
or administered by Dreyfus. He is also a
Director of Noel Group, Inc., Director and
Corporate Member of The Muscular Dystrophy
Association and a Trustee of Bucknell
University. His address is 200 Park Avenue,
New York, New York 10166.
JOHN P. GOULD, Trustee. Distinguished Service Professor of
Economics, and from 1983 to June 1993 Dean,
of the University of Chicago Graduate School
of Business. Since 1988, a Director of
Vulcan Materials Company, a chemicals
manufacturer and producer of construction
aggregates. Since 1986, Director of Argonne-
Chicago Development Corporation, an affiliate
of, and the entity responsible for
commercializing the technology of, both the
University of Chicago and Argonne National
Laboratory. Since 1986, Dean Gould also has
served as a Director of DFA Investment
Dimensions Group, a series mutual fund. His
address is 1101 East 58th Street, Chicago,
Illinois 60637.
RAYMOND D. ODDI, Trustee. Private Consultant. A Director of
Caremark International, Inc. and Medisense,
Inc., companies in the health care industry,
and Baxter Credit Union. From 1978 to 1986,
Senior Vice President of Baxter Inter-
national, Inc., a company engaged in the
production of medical care products. He also
is a member of the Illinois Society of
Certified Public Accountants. His address is
1181 Loch Lane, Lake Forest, Illinois 60045.
Each of the "non-interested" Trustees also is a
trustee of First Prairie Cash Management, First Prairie
Diversified Asset Fund, First Prairie Money Market Fund, First
Prairie Tax Exempt Money Market Fund and First Prairie U.S.
Treasury Securities Cash Management and a director of First
Prairie Tax Exempt Bond Fund, Inc.
The Fund does not pay any remuneration to its officers
and Trustees other than fees and expenses to Trustees who are
not officers, directors, employees or holders of 5% or more of
the outstanding voting securities of the Manager or Dreyfus, or
any affiliate of either of them, which totaled $_____ for the
period from March 5, 1993 (commencement of operations) through
August 31, 1993 for all such Trustees as a group.
For so long as the Fund's plans described in the
section captioned "Distribution Plan and Shareholder Services
Plan" remain in effect, the Trustees of the Fund who are not
"interested persons" of the Fund, as defined in the Act, will be
selected and nominated by the Trustees who are not "interested
persons" of the Fund.
There ordinarily will 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 not less
than two-thirds of the outstanding shares of the Fund 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. Under
the Fund's Agreement and Declaration of Trust, the Trustees are
required to call a meeting of shareholders for the purpose of
voting upon the question of removal of any such Trustee when
requested in writing to do so by the holders of record of not
less than 10% of the Fund's outstanding shares.
Officers of the Fund Not Listed Above
DANIEL C. MACLEAN, Vice President. Vice President and General
Counsel of Dreyfus, Secretary of the Distributor
and an officer or director of other investment
companies advised or administered by Dreyfus.
JEFFREY N. NACHMAN, Vice President and Treasurer. Vice President
Mutual Fund Accounting of Dreyfus and an officer
of other investment companies advised or
administered by Dreyfus.
MARK N. JACOBS, Secretary. Secretary and Deputy General Counsel
of Dreyfus and an officer of other investment
companies advised or administered by Dreyfus.
JEAN FARLEY, Controller. Senior Accounting Manager of the Fund
Accounting Department of Dreyfus and an officer
of other investment companies advised or
administered by Dreyfus.
ROBERT I. FRENKEL, Assistant Secretary. Senior Assistant
General Counsel to Dreyfus and an officer of
other investment companies advised or
administered by Dreyfus.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of
Dreyfus and other investment companies advised or
administered by Dreyfus.
The address of each officer of the Fund is 200 Park
Avenue, New York, New York 10166.
Trustees and officers of the Fund, as a group, owned
less than 1% of the Fund's shares of beneficial interest
outstanding on January 12, 1994.
Donaldson Lufkin Jenrette Securities Corporation Inc.,
P.O. Box 2052, Jersey City, New Jersey 07303, beneficially owned
76% of the Fund's Class A shares outstanding on December 28,
1993 and, therefore, is deemed to be "control person" (as
defined in the Act) of Class A. The Dreyfus Corporation, a New
York corporation located at 200 Park Avenue, New York, New York
10166, beneficially owned 20% of the Fund's Class A shares
outstanding on December 29, 1993.
Eagle & Co., c/o American National Bank, One North
LaSalle Street, Chicago, Illinois 60602-3902, beneficially
owned 98% of the Fund's Class F shares outstanding on December
28, 1993, and, therefore, is deemed to be a "control person" (as
defined in the Act) of Class F.
MANAGEMENT AGREEMENT
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "MANAGEMENT OF THE FUND."
Management Agreement. The Manager provides management
services pursuant to the Management Agreement (the "Agreement")
dated August 18, 1992, as revised, with the Fund, which is
subject to annual approval by (i) the Fund's Board of Trustees
or (ii) vote of a majority (as defined in the Act) of the
outstanding voting securities of the Series, provided that in
either event the continuance also is approved by a majority of
the Trustees who are not "interested persons" (as defined in the
Act) of the Fund or the Manager, by vote cast in person at a
meeting called for the purpose of voting on such approval. The
Agreement is terminable without penalty, on 60 days' notice, by
the Fund's Board of Trustees or by vote of the holders of a
majority of the Series' shares, or, on not less than 90 days'
notice, by the Manager. The Agreement will terminate
automatically in the event of its assignment (as defined in the
Act).
The Manager is responsible for the Series' investment
decisions and manages the Series' investment portfolio of
investments in accordance with the stated policies of the
Series, subject to the approval of the Fund's Board of Trustees.
All purchases and sales are reported for the Trustees' review at
the meeting subsequent to such transactions.
The Manager pays the salaries of all officers and
employees employed by both it and the Fund. The Manager also
may make such advertising and promotional expenditures, using
its own resources, as it from time to time deems appropriate.
The Manager, from time to time, from its own funds,
other than the management fee paid by the Fund, but including
past profits, may make payments for shareholder servicing and
distribution services to the Distributor. The Distributor in
turn may pay part or all of such compensation to securities
dealers or other persons for their servicing or distribution
assistance.
As compensation for the Manager's services, the Fund
has agreed to pay the Manager a monthly management fee at the
annual rate of .60 of 1% of the value of the Fund's average
daily net assets. For the period March 5, 1993 (commencement of
operations) through August 31, 1993, no management fee was paid
by the Fund due to an undertaking by the Manager.
The Manager has engaged Dreyfus to assist it in
providing certain administrative services to the Fund. Pursuant
to its agreement with the Manager, Dreyfus furnishes the Fund
clerical help and accounting, data processing, bookkeeping,
internal auditing and legal services and certain other services
required by the Fund, prepares reports to the Fund's
shareholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities, calculates the net asset value of the Series'
shares and generally assists the Manager in providing for all
aspects of the Fund's operation, other than providing investment
advice. The fees payable to Dreyfus for its services are paid
by the Manager.
The Fund has agreed that the Manager will not be
liable for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to
which the Manager's agreement with the Fund relates, except for
a loss resulting from wilful misfeasance, bad faith or gross
negligence on the part of the Manager in the performance of its
obligations or from reckless disregard by it of its obligations
and duties under its agreement with the Fund.
Expenses and Expense Information. All expenses
incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs,
taxes, interest, loan commitment fees, interest paid on
securities sold short, brokerage fees and commissions, if any,
fees of Trustees who are not officers, directors, employees or
holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue
Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of
independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional
information, and any extraordinary expenses. Class A and Class
B shares are subject to an annual service fee for ongoing
personal services relating to shareholder accounts and services
related to the maintenance of shareholder accounts. In
addition, Class B shares are subject to an annual distribution
fee for advertising, marketing and distributing Class B shares
pursuant to a distribution plan adopted in accordance with Rule
12b-1 under the Act. See "Distribution Plan and Shareholder
Services Plan." Expenses attributable to a particular Series
are charged against the assets of that Series; other expenses of
the Fund are allocated between the Series on the basis
determined by the Board of Trustees, including, but not limited
to, proportionately in relation to the net assets of each
Series. The Fund currently has one Series.
The Manager has agreed that if in any fiscal year the
aggregate expenses of the Series, exclusive of taxes, brokerage,
interest on borrowings and (with the prior written consent of
the necessary state securities commissions) extraordinary
expenses, but including the management fee, exceed the expense
limitation of any state having jurisdiction over the Series, the
Fund may deduct from the payment to be made to the Manager under
the Management Agreement, or the Manager will bear, such excess
expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and
effected or paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is
not subject to reduction as the value of the Series' net assets
increases.
Glass-Steagall Act. For an additional discussion of
the Glass-Steagall Act in connection with the Fund's operations,
see the Fund's Prospectus.
From time to time, legislation has been introduced and
may be reintroduced in Congress, which would permit a bank, a
bank holding company or a subsidiary thereof to organize,
sponsor, control and distribute shares of an investment company
such as the Fund, notwithstanding present restrictions under the
Glass-Steagall Act and the Federal Bank Holding Company Act of
1956. As described herein, the Fund is currently distributed by
the Distributor, and Dreyfus, its parent, sponsors the Fund and
provides it with administrative services. If current
restrictions preventing a bank from legally sponsoring,
organizing, controlling or distributing shares of an investment
company were relaxed, the Fund expects that the Manager would
consider the possibility of offering to perform some or all of
the services now provided by Dreyfus or the Distributor. It is
not possible, of course, to predict whether or in what form such
legislation might be enacted or the terms upon which the Manager
might offer to provide services.
PURCHASE OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "HOW TO BUY FUND SHARES."
The Distributor. The Distributor serves as the
Fund's distributor pursuant to an agreement which is renewable
annually. The Distributor also acts as distributor for the
other funds in the First Prairie Family of Funds, funds in the
Dreyfus Family of Funds and certain other investment companies.
TeleTransfer Privilege. TeleTransfer purchase
orders for Class A and Class B shares may be made between the
hours of 8:00 a.m. and 4:00 p.m., New York time, on any business
day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"),
and the New York Stock Exchange are open, except Martin Luther
King, Jr. Day, Columbus Day and Veterans Day. Such purchases
will be credited to the shareholder's Fund account on the next
bank business day. To qualify to use the TeleTransfer
Privilege, the initial payment for purchase of Class A and Class
B shares must be drawn on, and redemption proceeds paid to, the
same bank and account as are designated in the Account
Application or Optional Services Form on file. If the proceeds
of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-
guaranteed. See "Redemption of Fund Shares--TeleTransfer
Privilege."
Sales Loads--Class A. The scale of sales loads
applies to purchases of Class A shares made by any "purchaser,"
which term includes an individual and/or spouse purchasing
securities for his, her or their own account or for the account
of any minor children, or a trustee or other fiduciary
purchasing securities for a single trust estate or a single
fiduciary account trust estate or a single fiduciary account
(including a pension, profit-sharing or other employee benefit
trust created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code of 1986, as amended (the "Code"))
although more than one beneficiary is involved; or a group of
accounts established by or on behalf of the employees of an
employer or affiliated employers pursuant to an employee benefit
plan or other program (including accounts established pursuant
to Sections 403(b), 408(k), and 457 of the Code); or an
organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of
buying redeemable securities of a registered investment company
and provided that the purchases are made through a central
administration or a single dealer, or by other means which
result in economy of sales effort or expense.
Reopening an Account. An investor in Class A or
Class B may reopen an account with a minimum investment of $100
without filing a new Account Application during the calendar
year the account is closed or during the following calendar
year, provided the information on the old Account Application is
still applicable.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN."
Class A and Class B shares only are subject to a
Shareholder Services Plan and Class B shares only are subject to
a Distribution Plan.
Distribution Plan. Rule l2b-1 (the "Rule") adopted by
the Securities and Exchange Commission under the Act provides,
among other things, that an investment company may bear expenses
of distributing its shares only pursuant to a plan adopted in
accordance with the Rule. The Fund's Board of Trustees has
adopted such a plan (the "Distribution Plan") with respect to
Class B shares pursuant to which the Fund pays for advertising,
marketing and distributing Class B shares. Under the
Distribution Plan, the Fund may make payments to the Manager,
its affiliates, including First Chicago Investment Services,
Inc., the Distributor or certain securities dealers, financial
institutions and other financial industry professionals
(collectively, "Service Agents") in respect of these services.
The Fund's Board of Trustees believes that there is a reasonable
likelihood that the Distribution Plan will benefit the Series
and holders of its Class B shares. In some states, certain
financial institutions effecting transactions in Fund shares may
be required to register as dealers pursuant to state law.
A quarterly report of the amounts expended under the
Distribution Plan, and the purposes for which such expenditures
were incurred, must be made to the Trustees for their review.
In addition, the Distribution Plan provides that it may not be
amended to increase materially the costs which holders of Class
B shares may bear for distribution pursuant to the Distribution
Plan without the approval of the holders of Class B shares and
that other material amendments of the Distribution Plan must be
approved by the Board of Trustees, and by the Trustees who are
neither "interested persons" (as defined in the Act) of the Fund
or the Manager nor have any direct or indirect financial
interest in the operation of the Distribution Plan or in any
agreements entered into in connection with the Distribution
Plan, by vote cast in person at a meeting called for the purpose
of considering such amendments. The Distribution Plan is
subject to annual approval by such vote of the Trustees cast in
person at a meeting called for the purpose of voting on the
Distribution Plan. The Distribution Plan was approved by the
Fund's Board of Trustees, including a majority of the Trustees
who are not "interested persons," at a meeting held on
October 1, 1993. The Distribution Plan is terminable 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 Distribution Plan or in any
agreements entered into in connection with the Distribution
Plan, or by vote of the holders of a majority of Class B shares.
Shareholder Services Plan. The Fund has adopted a
Shareholder Services Plan, pursuant to which the Fund pays the
Distributor for the provision of certain services to the holders
of Class A and Class B shares only.
A quarterly report of the amounts expended under the
Shareholder Services Plan, and the purposes for which such
expenditures were incurred, must be made to the Trustees for
their review. In addition, the Shareholder Services Plan
provides that it may not be amended without approval of the
Board of Trustees, and by the Trustees who are neither
"interested persons" (as defined in the Act) of the Fund nor
have any direct or indirect financial interest in the operation
of the Shareholder Services Plan or in any agreements entered
into in connection with the Shareholder Services Plan, by vote
cast in person at a meeting called for the purpose of
considering such amendments. The Shareholder Services Plan is
subject to annual approval by such vote of the Trustees cast in
person at a meeting called for the purpose of voting on the
Shareholder Services Plan. The Shareholder Services Plan was so
approved on October 1, 1993. The Shareholder Services Plan is
terminable at any time by vote of a majority of the Trustees who
are not "interested persons" and who have no direct or indirect
financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the
Shareholder Services Plan.
Prior Rule 12b-1 Plan. As of _______, 1994, the Fund
terminated its then existing Rule 12b-1 plan, which provided for
payments to be made to Service Agents for advertising, marketing
and/or distributing Class A shares and servicing holders of
Class A shares. For the period March 5, 1993 (commencement of
operations) through August 31, 1993, no payments were made under
the prior Rule 12b-1 plan by the Series pursuant to various
undertakings in effect.
REDEMPTION OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD
BE READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "HOW TO REDEEM FUND SHARES."
Redemption by Wire or Telephone--Class A and
Class B Shares Only. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone
redemption instructions from any person representing himself or
herself to be the investor, or a representative of the
investor's Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Ordinarily, the Fund will
initiate payment for Class A or Class B shares redeemed pursuant
to this Privilege on the next business day after receipt if the
Transfer Agent receives the redemption request in proper form.
Redemption proceeds will be transferred by Federal Reserve wire
only to the commercial bank account specified by the investor on
the Account Application or Optional Services Form. Redemption
proceeds, if wired, must be in the amount of $1,000 or more and
will be wired to the investor's account at the bank of record
designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to
a correspondent bank if the investor's bank is not a member.
Fees ordinarily are imposed by such bank and usually are borne
by the investor. Immediate notification by the correspondent
bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account. Holders of
jointly registered Fund or bank accounts may redeem by wire only
up to $50,000 within any 30-day period. Proceeds of less than
$1,000 will be paid by check and mailed to the investor's
address.
Investors with access to telegraphic equipment
may wire redemption requests for Class A and Class B shares to
the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic
equipment may have the wire transmitted by contacting a TRT
Cables operator at 1-800-654-7171 toll free. Investors should
advise the operator that the above transmittal code must be used
and should also inform the operator of the Transfer Agent's
answer back sign.
TO QUALIFY TO USE THIS PRIVILEGE, THE INITIAL PAYMENT
FOR THE PURCHASE OF CLASS A OR CLASS B SHARES MUST BE DRAWN ON,
AND REDEMPTION PROCEEDS PAID TO, THE SAME BANK AND ACCOUNT AS
ARE DESIGNATED ON THE ACCOUNT APPLICATION OR THE OPTIONAL
SERVICES FORM. IF THE PROCEEDS OF A PARTICULAR REDEMPTION ARE
TO BE WIRED TO AN ACCOUNT WITH ANY OTHER BANK, THE REQUEST MUST
BE IN WRITING AND SIGNATURE-GUARANTEED.
To change the commercial bank or account designated
to receive redemption proceeds, a written request must be sent to
the Transfer Agent. This request must be signed by each
shareholder, with each signature guaranteed as described below
under "Signatures--Class A and Class B Shares Only."
TeleTransfer Privilege--Class A and Class B Shares
Only. Investors should be aware that if they have selected the
TeleTransfer Privilege, any request for a wire redemption of
Class A or Class B shares will be effected as a TeleTransfer
transaction through the Automated Clearing House ("ACH") system
unless more prompt transmittal specifically is requested.
Redemption proceeds will be on deposit in the investor's account
at an ACH member bank ordinarily two business days after receipt
of the redemption request. See "Purchase of Fund
Shares--TeleTransfer Privilege."
Signatures--Class A and Class B Shares Only. Written
redemption requests must be signed by each shareholder,
including each owner of a joint account, and each signature must
be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers,
dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and
savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP") and the Stock
Exchanges Medallion Program. Guarantees must be signed by an
authorized signatory of the guarantor and "Signature-Guaranteed"
must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other
suitable verification arrangements from foreign investors, such
as consular verification. For more information with respect to
signature-guarantees, please call the telephone number listed on
the cover.
Redemption Commitment. The Fund has committed itself
to pay in cash all redemption requests for the Series by any
shareholder of record, limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the value of the
Series' net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the
Securities and Exchange Commission. 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 the Series to
the detriment of the existing shareholders. In such event, the
securities would be valued in the same manner as the Series'
portfolio is valued. If the recipient sold such securities,
brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption
may be suspended or the date of payment postponed (a) during any
period when the New York Stock Exchange is closed (other than
customary weekend and holiday closings), (b) when trading in the
markets the Fund ordinarily utilizes is restricted, or when an
emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's
shareholders.
SHAREHOLDER SERVICES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "SHAREHOLDER SERVICES."
Exchange Privilege. Class A, Class B and Class F
shares of the Series may be exchanged for shares of the
respective class of certain other funds advised by the Manager
or Dreyfus. Shares of the same class of such other funds
purchased by exchange will be purchased on the basis of relative
net asset value per share as follows:
A. Class A shares of funds purchased without a sales
load may be exchanged for Class A shares of other
funds sold with a sales load, and the applicable
sales load will be deducted.
B. Class A shares of funds purchased with or without
a sales load and Class F shares of funds
purchased without a sales load may be exchanged
without a sales load for Class A and Class F
shares, respectively, of other funds sold without
a sales load.
C. Class A shares of funds purchased with a sales
load, Class A shares of funds acquired by a
previous exchange from Class A shares purchased
with a sales load and additional Class A shares
acquired through reinvestment of dividends or
distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be
exchanged for Class A shares of other funds sold
with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the
maximum sales load that could have been imposed
in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without
giving effect to any reduced loads, the
difference will be deducted.
D. Class B shares of any fund may be exchanged for
Class B shares of other funds without a sales
load. Class B shares of any fund exchanged for
Class B shares of another fund will be subject to
the higher applicable contingent deferred sales
charge ("CDSC") of the two funds and, for
purposes of calculating CDSC rates and conversion
periods, will be deemed to have been held since
the date the Class B shares being exchanged were
initially purchased.
To accomplish an exchange under item C above, an
investor must notify the Transfer Agent of the investor's prior
ownership of such Class A shares and the investor's account
number.
To use this Privilege, an investor, or the investor's
Service Agent acting on the investor's behalf, must give
exchange instructions to the Transfer Agent in writing, by wire
or by telephone, or in accordance with the instructions
pertaining to the investor's account at the Manager or its
affiliates. Telephone exchanges may be made only if the
appropriate "YES" box has been checked on the Account
Application, or a separate signed Optional Services Form is on
file with the Transfer Agent. By using this Privilege, the
investor authorizes the Transfer Agent to act on telephonic,
telegraphic or written exchange instructions from any person
representing himself or herself to be the investor, or a
representative of the investor's Service Agent, and reasonably
believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount
involved or the number of telephone exchanges permitted. Shares
issued in certificate form are not eligible for telephone
exchange.
Auto-Exchange Privilege. Auto-Exchange permits an
investor to purchase, in exchange for Class A, Class B or Class
F shares of the Series, shares of the same class of certain
other funds in the First Prairie Family of Funds or certain
funds advised by Dreyfus. This Privilege is available only for
existing accounts. Shares will be exchanged on the basis of
relative net asset value as described above under "Exchange
Privilege." Enrollment in or modification or cancellation of
this Privilege is effective three business days following
notification by the investor. An investor will be notified if
his account falls below the amount designated to be exchanged
under this Privilege. In this case, an investor's account will
fall to zero unless additional investments are made in excess of
the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans
are eligible for this Privilege. Exchanges of IRA shares may be
made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With
respect to all other retirement accounts, exchanges may be made
only among those accounts.
The Exchange Privilege and Auto-Exchange Privilege are
available to shareholders resident in any state in which shares
of the fund being acquired may legally be sold. Shares may be
exchanged only between accounts having identical names and other
identifying designations.
Optional Services Forms and prospectuses of the other
funds may be obtained from the Distributor, 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144. The Fund reserves
the right to reject any exchange request in whole or in part.
The Exchange Privilege or Auto-Exchange Privilege may be
modified or terminated at any time upon notice to shareholders.
Automatic Withdrawal Plan--Class A and Class B Shares
Only. Automatic Withdrawal permits an investor with a $5,000
minimum account to request withdrawal of a specified dollar
amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Class A and
Class B shares, not the yield on the shares. If withdrawal
payments exceed reinvested dividends and distributions, the
investor's Class A and Class B shares will be reduced and
eventually may be depleted. An Automatic Withdrawal Plan may be
established by completing the appropriate application available
from the Distributor, the Manager, certain affiliates of the
Manager or certain Service Agents. There is a service charge of
$.50 for each withdrawal check. Automatic Withdrawal may be
terminated at any time by the investor, the Fund or the Transfer
Agent. Class B shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC.
Dividend Sweep Privilege--Class A and Class B Shares
Only. The Dividend Sweep Privilege allows investors to invest
on the payment date their dividends or dividends and capital
gain distributions, if any, from Class A and Class B shares of
the Fund in shares of the same Class of another fund in the
First Prairie Family of Funds or certain funds advised or
administered by Dreyfus of which the investor is a shareholder.
Shares of the same Class of other funds purchased pursuant to
this Privilege will be purchased on the basis of relative net
asset value per share as follows:
A. Dividends and distributions paid with respect to
Class A shares by a fund may be invested without
imposition of a sales load in Class A shares of
other funds that are offered without a sales
load.
B. Dividends and distributions paid with respect to
Class A shares by a fund which does not charge a
sales load may be invested in Class A shares of
other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Dividends and distributions paid with respect to
Class A shares by a fund which charges a sales
load may be invested in Class A shares of other
funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales
load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which
dividends or distributions are being swept,
without giving effect to any reduced loads, the
difference will be deducted.
D. Dividends and distributions paid with respect to
Class B shares by a fund may be invested without
imposition of any applicable CDSC in Class B
shares of other funds and the Class B shares of
such other funds will be subject on redemption to
any applicable CDSC.
DETERMINATION OF NET ASSET VALUE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "HOW TO BUY FUND SHARES."
Valuation of Portfolio Securities. The Series'
investments are valued each business day using available market
quotations or at fair value as determined by one or more
independent pricing services (collectively, the "Service")
approved by the Board of Trustees. The Service may use
available market quotations, employ electronic data processing
techniques and/or a matrix system to determine valuations. The
Service's procedures are reviewed by the Fund's officers under
the general supervision of the Board of Trustees. Expenses and
fees, including the management fee and expenses under the
Shareholder Services Plan, with respect to the Class A and Class
B shares, and fees pursuant to the Distribution Plan, with
respect to the Class B shares only, are accrued daily and are
taken into account for the purpose of determining the net asset
value of the relevant Class of Series' shares. Because of the
difference in operating expenses incurred by each Class, the per
share net asset value of each Class will differ.
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
PORTFOLIO TRANSACTIONS
The Series' portfolio securities ordinarily are
purchased from and sold to parties acting as either principal or
agent. Newly-issued securities ordinarily are purchased
directly from the issuer or from an underwriter; other purchases
and sales usually are placed with those dealers from which it
appears that the best price or execution can be obtained.
Ordinarily, no brokerage commissions, as such, are paid by the
Fund for such purchases and sales, although the price paid
usually includes an undisclosed compensation to the dealer
acting as agent. The prices paid to underwriters of newly-
issued securities usually include a concession paid by the
issuer to the underwriter, and purchases of after-market
securities from dealers ordinarily are executed at a price
between the bid and asked price. No brokerage commissions have
been paid by the Fund to date.
Transactions are allocated to various dealers by the
Fund's investment personnel in their best judgment. The primary
consideration is prompt and effective execution of orders at the
most favorable price. Subject to that primary consideration,
dealers may be selected for research, statistical or other
services to enable the Manager to supplement its own research
and analysis with the views and information of other securities
firms and may be selected based upon their sales of Fund shares.
Research services furnished by brokers through which
the Fund effects securities transactions may be used by the
Manager in advising other funds it advises and, conversely,
research services furnished to the Manager by brokers in
connection with other funds or accounts the Manager advises may
be used by the Manager in advising the Fund. Although it is not
possible to place a dollar value on these services, it is the
opinion of the Manager that the receipt and study of such
services should not reduce its overall research expenses.
DIVIDENDS, DISTRIBUTIONS AND TAXES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "DIVIDENDS, DISTRIBUTIONS AND TAXES."
The Series intends to qualify as a "regulated
investment company" under the Code, so long as such
qualification is in the best interests of its shareholders. To
qualify as a regulated investment company, the Series must pay
out to its shareholders at least 90% of its net income
(consisting of net investment income from tax exempt obligations
and net short-term capital gain), must derive less than 30% of
its annual gross income from gain on the sale of securities held
for less than three months, and must meet certain asset
diversification and other requirements. Accordingly, the Series
may be restricted in the selling of securities held for less
than three months, and in the utilization of certain of the
investment techniques described in the Prospectus. The Code,
however, allows the Series to net certain offsetting positions
making it easier for the Series to satisfy the 30% test.
Qualification as a regulated investment company relieves the
Series from any liability for Federal income taxes to the extent
its earnings are distributed in accordance with the applicable
provisions of the Code. The term "regulated investment company"
does not imply the supervision of management or investment
practices or policies by any government agency.
Any dividend or distribution paid shortly after an
investor's purchase may have the effect of reducing the
aggregate net asset value of his shares below the cost of his
investment. Such a dividend or distribution would be a return
on investment in an economic sense although taxable as stated in
"Dividends, Distributions and Taxes" in the Prospectus. In
addition, the Code provides that if a shareholder holds shares
for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on
the sale of such shares will be treated as a long-term capital
loss to the extent of the capital gain distribution received.
All or a portion of the gain realized from the
disposition of certain market discount bonds will be treated as
ordinary income under Section 1276. In addition, all or a
portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section
1258. "Conversion transactions" are defined to include certain
option and straddle transactions, transactions marketed or sold
to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized
by the Series from certain financial futures and options
transactions will be treated as 60% long-term capital gain or
loss and 40% short-term capital gain or loss. Gain or loss will
arise upon exercise or lapse of such futures and options as well
as from closing transactions. In addition, any such futures or
options remaining unexercised at the end of the Fund's taxable
year will be treated as sold for their then fair market value,
resulting in additional gain or loss to the Series characterized
in the manner described above.
Offsetting positions held by the Series involving
certain financial futures contracts or options transactions may
be considered, for tax purposes, to constitute "straddles."
"Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of
"straddles" is governed by Section 1092 of the Code, which, in
certain circumstances, overrides or modifies the provisions of
Section 1256. If the Series were treated as entering into
"straddles" by reason of its engaging in financial futures
contracts or options transactions, such "straddles" would be
characterized as "mixed straddles" if the futures or options
comprising a part of such "straddles" were governed by
Section 1256. The Series may make one or more elections with
respect to "mixed straddles." If no election is made, to the
extent the straddle rules apply to positions established by the
Series, losses realized by the Series will be deferred to the
extent of unrealized gain in any offsetting positions.
Moreover, as a result of the straddle rules, short-term capital
loss on "straddle" positions may be recharacterized as long-term
capital loss, and long-term capital gain may be recharacterized
as short-term capital gain or ordinary income.
Investment by the Series in securities issued or
acquired at a discount or providing for deferred interest or for
payment of interest in the form of additional obligations could,
under special tax rules, affect the amount, timing and character
of distributions to shareholders. For example, the Series could
be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were
issued and to distribute such portion in order to maintain its
qualification as a regulated investment company. In such case,
the Series may have to dispose of securities which it might
otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
PERFORMANCE INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "PERFORMANCE INFORMATION."
Class B shares had not been offered as of the date of
the financials and, accordingly, no performance data are
available for Class B.
The current yield for the 30-day period ended August
31, 1993 was ____% for Class A and ____% for Class F, which
reflect the absorption of certain expenses by the Manager and a
waiver of the management fees without which the yield for the
30-day period ended August 31, 1993 would have been ____% for
Class A and ____% for Class F. Current yield is computed
pursuant to a formula which operates as follows: The amount of
expenses accrued for the 30-day period (net of reimbursements)
is subtracted from the amount of the dividends and interest
earned (computed in accordance with regulatory requirements) by
the Series during the period. That result is then divided by
the product of: (a) the average daily number of shares
outstanding during the period that were entitled to receive
dividends, and (b) the maximum offering price, in the case of
Class A, or net asset value, in the case of Class B or Class F,
per share on the last day of the period less any undistributed
earned income per share reasonably expected to be declared as a
dividend shortly thereafter. The quotient is then added to 1,
and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying
the result by 2.
The average annual total return for the ____ year
period ended August 31, 1993 was ____% for Class A and ____% for
Class F. Average annual total return is calculated by
determining the ending redeemable value of an investment
purchased with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends
and distributions), dividing by the amount of the initial
investment, taking the "n"the root of the quotient (where "n" is
the number of years in the period) and subtracting 1 from the
result. A Class's average annual total return figures
calculated in accordance with such formula assume that in the
case of Class A the maximum sales load has been deducted from
the hypothetical initial investment at the time of purchase or
in the case of Class B the maximum applicable CDSC has been paid
upon redemption at the end of the period.
Total return is calculated by subtracting the amount
of the maximum offering price, in the case of Class A, or net
asset value, in the case of Class B or Class F, per share at the
beginning of a stated period from the net asset value per share
at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period),
and dividing the result by the maximum offering price, in the
case of Class A, or net asset value, in the case of Class B or
Class F, per share at the beginning of the period. Total return
also may be calculated based on the net asset value per share at
the beginning of the period for Class A shares or without giving
effect to any applicable CDSC at the end of the period for Class
B shares. In such cases, the calculation would not reflect the
deduction of the sales load, which, if reflected, would reduce
the performance quoted. The total return for the period March
5, 1993 (commencement of operations) through August 31, 1993 for
Class A was ____%, based on maximum offering price per share,
and ____%, based on net asset value per share, and for Class F
was ____%.
INFORMATION ABOUT THE FUND
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "GENERAL INFORMATION."
Each Series share has one vote and, when issued and
paid for in accordance with the terms of the offering, is fully
paid and non-assessable. Series shares have no preemptive or
subscription rights and are freely transferable.
The Fund will send annual and semi-annual financial
statements to all its shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan, 7 Hanover Square, New York,
New York 10004-2696, as counsel for the Fund, has rendered its
opinion as to certain legal matters regarding the due
authorization and valid issuance of the shares of beneficial
interest being sold pursuant to the Fund's Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York
10019, independent auditors, have been selected as auditors of
the Fund.
<PAGE>
FINANCIAL STATEMENTS
[To Be Provided by Amendment]
<PAGE>
FIRST PRAIRIE U.S. GOVERNMENT INCOME FUND
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits - List
(a) Financial Statements:
Included in Part A of the Registration Statement:
Condensed Financial Information*
Included in Part B of the Registration Statement:
Statement of Investments*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Note to Financial Statements*
Report of Ernst & Young Independent Auditors*
Schedule Nos. I through VII and other financial statement
information, for
which provision is made in the applicable accounting regulations
of the
Securities and Exchange Commission, are either omitted because
they are not
required under the related instructions, they are inapplicable,
or the
required information is presented in the financial statements or
notes
which are included in Part B to the Registration Statement.
____________
* To be completed by amendment.
<PAGE>
Item 24. Financial Statements and Exhibits - List
(b) Exhibits:
(1) (a) The Registrant's Agreement and Declaration of
Trust and
Articles of Amendment thereto, are incorporated by
reference
to Exhibit (1) of the Registration Statement on
Form N-1A,
filed on March 13, 1992.
(b) The Registrant's Amended and Restated Agreement
and
Declaration of Trust dated August 10, 1992 is
incorporated
by reference to Exhibit (1)(b) of Pre-Effective
Amendment
No. 2 to the Registration Statement on Form N-1A,
filed on
September 29, 1992.
(2) The Registrant's Amended and Restated By-Laws are
incorporated by reference to Exhibit (2) of
Pre-Effective
Amendment No. 3 to the Registration Statement on
Form N-1A,
filed on January 27, 1993.
(5) The Management Agreement, as revised, is
incorporated by
reference to Exhibit (5) of Post-Effective
Amendment No. 1
to the Registration Statement on Form N-1A, filed
on July
14, 1993.
(6) (a) The Distribution Agreement, as revised, is
incorporated by
reference to Exhibit (6)(a) of Post-Effective
Amendment No.
1 to the Registration Statement on Form N-1A,
filed on July
14, 1993.
(b) Forms of Service Agreements are incorporated by
reference to
Exhibit (6)(b) of Pre-Effective Amendment No. 3 to
the
Registration Statement on Form N-1A, filed on
January 27,
1993.
(c) Form of Distribution Agreement, as revised.*
(8) (a) The Custody Agreement is incorporated by reference
to
Exhibit (8)(a) of Pre-Effective Amendment No. 3 to
the
Registration Statement on Form N-1A, filed on
January 27,
1993.
(9) (a) The Master Administration Agreement, as revised,
is
incorporated by reference to Exhibit (9) of
Post-Effective
Amendment No. 1 to the Registration Statement on
Form N-1A,
filed on July 14, 1993.
(b) Form of Shareholder Services Plan.*
(10) The opinion and consent of Registrant's counsel is
incorporated by reference to Exhibit (10) of
Pre-Effective
Amendment No. 3 to the Registration Statement on
Form N-1A,
filed on January 27, 1993.
(11) Consent of Independent Auditors.*
(15) (a) The Service Plan, as revised, is incorporated by
reference
to Exhibit (15) of Post-Effective Amendment No. 1
to the
Registration Statement on Form N-1A, filed on July
14, 1993.
(b) Form of Distribution Plan.
(16) Yield Computation Schedule, is incorporated by
reference to
Exhibit (16) of Post-Effective Amendment No. 1 to
the
Registration Statement on Form N-1A, filed on July
14, 1993.
Other Exhibits: Powers of Attorney are incorporated by
reference
to the Signature Page of Pre-Effective
Amendment
No. 2 to the Registration Statement on
Form N-1A,
filed on September 29, 1992. An
additional Power
of Attorney is included herein.
Registrant's Certificate of Secretary is
incorporated by reference to Other
Exhibit of Pre-
Effective Amendment No. 3 to the
Registration
Statement on Form N-1A, filed on January
27, 1993.
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not Applicable
Item 26. Number of Holders of Securities
(1) (2)
Title of Class Number of Record Holders
as of December 28, 1993
Class A-Shares of beneficial
interest, par value $.001
per share 3
Class B-Shares of beneficial
interest, par value $.001
per share 0
Class F-Shares of beneficial
interest, par value $.001
per share 2
____________________
* To be filed by Amendment.
Item 27. Indemnification
Reference is made to Article EIGHTH of the Registrant's
Amended
and Restated Agreement and Declaration of Trust
incorporated by
reference to Exhibit (1)(b) of Pre-Effective Amendment
No. 2 to
the Registration Statement filed under the Securities
Act of 1933
on September 29, 1992. The application of these
provisions is
limited by Article 10 of the Registrant's Amended and
Restated
By-Laws incorporated by reference to Exhibit (2) of
Pre-Effective
Amendment No. 3 to the Registration Statement filed
under the
Securities Act of 1933 on January 27, 1993, and the
following
undertaking set forth in the rules promulgated by the
Securities
and Exchange Commission:
Insofar as indemnification for liabilities arising
under the
Securities Act of 1933 may be permitted to trustees,
officers and
controlling persons of the registrant pursuant to the
foregoing
provisions, or otherwise, the registrant has been
advised that in
the opinion of the Securities and Exchange Commission
such
indemnification is against public policy as expressed
in such Act
and is, therefore, unenforceable. In the event that a
claim for
indemnification against such liabilities (other than
the payment
by the registrant of expenses incurred or paid by a
trustee,
officer or controlling person of the registrant in the
successful
defense of any action, suit or proceeding) is asserted
by such
trustee, officer or controlling person in connection
with the
securities being registered, the registrant will,
unless in the
opinion of its counsel the matter has been settled by
controlling
precedent, submit to a court of appropriate
jurisdiction the
question whether such indemnification by it is against
public
policy as expressed in such Act and will be governed by
the final
adjudication of such issue.
Reference is also made to the Distribution Agreement,
as revised.
<PAGE>
Item 28. Business and Other Connections of the Manager
Officers and Directors of the Manager:
The Manager is a commercial bank providing a wide range of
banking and
investment services.
To the knowledge of the Registrant, none of the directors or
executive
officers of the Manager, except those described below, are or
have been, at
any time during the past two years, engaged in any other
business,
profession, vocation or employment of a substantial nature,
except that
certain directors and executive officers of the Manager also hold
or have
held various positions with bank and non-bank affiliates of the
Manager,
including its parent, First Chicago Corporation.
Name Position with the
Manager Principal Occupation or Other
Employment of a Substantial
Nature
Richard L.
Thomas Chairman of the Also serves as Chairman of
Board, Chief the Board, Chief Executive
Executive Officer Officer and President of
and President First Chicago Corporation
John H. Bryan Director Chairman of the Board and
Chief Executive Officer, Sara
Lee Corporation*
Dean L. Buntrock Director Chairman of the Board and
Chief Executive Officer, Waste
Management, Inc.*
Frank W.
Considine Director Honorary Chairman of the Board
and Chairman of the Executive
Committee, American National Can
Company*
James S. Crown Director General Partner, Henry Crown and
Company (Not Incorporated)*
Donald P. Jacobs Director Dean of the J.L. Kellogg
Graduate School of Management,
Northwestern University*
Charles S. Locke Director Chairman of the Board and Chief
Executive Officer, Morton
International, Inc.*
Richard M.
Morrow Director Retired Chairman and Chief
Executive Officer, Amoco
Corporation*
Leo F. Mullin Director Chairman and Chief Executive
Officer, American National
Corporation and Executive Vice
President of First Chicago
Corporation
Earl L. Neal Director Principal, Earl L. Neal &
Associates, a Law firm
James J.
O'Connor Director Chairman and Chief Executive
Officer, Commonwealth Edison
Company*
Jerry K.
Pearlman Director Chairman, President and Chief
Executive Officer, Zenith
Electronics Corporation
Ernestine M.
Raclin Director Chairman of the Board, 1st
Source Corporation*
Jack F. Reichert Director Chairman of the Board, President
and Chief Executive Officer,
Brunswick Corporation
Patrick G. Ryan Director President and Chief Executive
Officer, Aon Corporation*
George A.
Shaefer Director Chairman of the Board, Retired,
and Director, Caterpillar Inc.*
Adele Simmons Director President, John D. and Catherine
T. MacArthur Foundation
Roger W. Stone Director Chairman of the Board, President
and Chief Executive Officer,
Stone Container Corporation*
David J. Vitale Director and Executive Vice President of
Executive Vice First Chicago Corporation*
President
* Serves as a Director of First Chicago Corporation.
<PAGE>
Name Position with the Manager
Marvin J. Alef, Jr. Executive Vice President
John W. Ballantine Executive Vice President
Jerry C. Bradshaw Executive Vice President
John A. Canning, Jr. Executive Vice President
Sherman I. Goldberg Executive Vice President,
General Counsel and Secretary
Donald R. Hollis Executive Vice President
W. G. Jurgensen Executive Vice President and
Chief Financial Officer
Scott P. Marks, Jr. Executive Vice President
J. Mikesell Thomas Executive Vice President
<PAGE>
Item 29. Principal Underwriters
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as principal
underwriter
or exclusive distributor:
1. Comstock Partners 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 Money Market 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 Connecticut 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. The Dreyfus Fund Incorporated
21. Dreyfus Global Investing, Inc.
22. Dreyfus GNMA Fund, Inc.
23. Dreyfus Government Cash Management
24. Dreyfus Growth Allocation Fund, Inc.
25. Dreyfus Growth and Income Fund, Inc.
26. Dreyfus Growth Opportunity Fund, Inc.
27. Dreyfus Institutional Money Market Fund
28. Dreyfus Insured Municipal Bond Fund, Inc.
29. Dreyfus Intermediate Municipal Bond Fund,
Inc.
30. Dreyfus International Equity Fund, Inc.
31. The Dreyfus Leverage Fund, Inc.
32. Dreyfus Life and Annuity Index Fund, Inc.
33. Dreyfus Liquid Assets, Inc.
34. Dreyfus Massachusetts Intermediate Municipal
Bond Fund
35. Dreyfus Massachusetts Municipal Money Market
Fund
36. Dreyfus Massachusetts Tax Exempt Bond Fund
37. Dreyfus Michigan Municipal Money Market Fund,
Inc.
38. Dreyfus Money Market Instruments, Inc.
39. Dreyfus Municipal Bond Fund, Inc.
40. Dreyfus Municipal Cash Management Plus
41. Dreyfus Municipal Money Market Fund, Inc.
42. Dreyfus New Jersey Intermediate Municipal
Bond Fund
43. Dreyfus New Jersey Municipal Bond Fund, Inc.
44. Dreyfus New Jersey Municipal Money Market
Fund, Inc.
45. Dreyfus New Leaders Fund, Inc.
46. Dreyfus New York Insured Tax Exempt Bond Fund
47. Dreyfus New York Municipal Cash Management
48. Dreyfus New York Tax Exempt Bond Fund, Inc.
49. Dreyfus New York Tax Exempt Intermediate Bond
Fund
50. Dreyfus New York Tax Exempt Money Market Fund
51. Dreyfus Ohio Municipal Money Market Fund,
Inc.
52. Dreyfus 100% GNMA Fund, L.P.
53. Dreyfus 100% U.S. Treasury Intermediate Term
Fund, L.P.
54. Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.
55. Dreyfus 100% U.S. Treasury Money Market Fund,
L.P.
56. Dreyfus 100% U.S. Treasury Short Term Fund,
L.P.
57. Dreyfus Pennsylvania Municipal Money Market
Fund
58. Dreyfus Short-Intermediate Government Fund
59. Dreyfus Short-Intermediate Tax Exempt Bond
Fund
60. Dreyfus Short-Term Income Fund, Inc.
61. Dreyfus Strategic Growth, L.P.
62. Dreyfus Strategic Income
63. Dreyfus Strategic Investing
64. Dreyfus Strategic World Investing, L.P.
65. Dreyfus Tax Exempt Cash Management
66. The Dreyfus Third Century Fund, Inc.
67. Dreyfus Treasury Cash Management
68. Dreyfus Treasury Prime Cash Management
69. Dreyfus Variable Investment Fund
70. Dreyfus-Wilshire Target Funds, Inc.
71. Dreyfus Worldwide Dollar Money Market Fund,
Inc.
72. First Prairie Cash Management
73. First Prairie Diversified Asset Fund
74. First Prairie Money Market Fund
75. First Prairie Tax Exempt Bond Fund, Inc.
76. First Prairie Tax Exempt Money Market Fund
77. First Prairie U.S. Government Income Fund
78. First Prairie U.S. Treasury Securities Cash
Management
79. FN Network Tax Free Money Market Fund, Inc.
80. General California Municipal Bond Fund, Inc.
81. General California Municipal Money Market
Fund
82. General Government Securities Money Market
Fund, Inc.
83. General Money Market Fund, Inc.
84. General Municipal Bond Fund, Inc.
85. General Municipal Money Market Fund, Inc.
86. General New York Municipal Bond Fund, Inc.
87. General New York Municipal Money Market Fund
88. Pacific American Fund
89. Peoples Index Fund, Inc.
90. Peoples S&P MidCap Index Fund, Inc.
91. Premier California Insured Municipal Bond
Fund
92. Premier California Municipal Bond Fund
93. Premier GNMA Fund
94. Premier Growth Fund, Inc.
95. Premier Municipal Bond Fund
96. Premier New York Municipal Bond Fund
97. Premier State Municipal Bond Fund
<PAGE>
(b)
Positions and offices Positions and
Name and principal with Dreyfus offices with
business address Service Corporation Registrant
Howard Stein* Chairman of the Board None
Robert H. Schmidt* President and Director None
Joseph S. DiMartino* Executive Vice President Trustee and
President
and Director
Lawrence M. Greene* Executive Vice President None
and Director
Julian M. Smerling* Executive Vice President None
and Director
Elie M. Genadry* Executive Vice President None
Donald A. Nanfeldt* Executive Vice President None
Kevin Flood* Senior Vice President None
Roy Gross* Senior Vice President None
Irene Papadoulis** Senior Vice President None
Diane M. Coffey* Vice President None
Walter V. Harris* Vice President None
William Harvey* Vice President None
William V. Healey* Vice President/ None
Legal Counsel
Adwick Pinnock** Vice President None
George Pirrone* Vice President/Trading None
Karen Rubin Waldmann* Vice President None
Peter D. Schwab* Vice President/New Products None
Michael Anderson* Assistant Vice President None
Carolyn Sobering* Assistant Vice President- None
Trading
Daniel C. Maclean* Secretary Vice
President
Robert F. Dubuss* Treasurer None
Maurice Bendrihem* Controller None
Michael J. Dolitsky* Assistant Controller None
Susan Verbil Goldgraben* Assistant Treasurer None
Christine Pavalos* Assistant Secretary Assistant
Secretary
Broker-Dealer Division of Dreyfus Service Corporation
=====================================================
Positions and offices
with Broker-Dealer Positions and
Name and principal Division of Dreyfus offices with
business address Service Corporation Registrant
Elie M. Genadry* President None
Craig E. Smith* Executive Vice President None
Peter S. Ferrentino Regional Vice President None
San Francisco, CA
W. Richard Francis Regional Vice President None
Palm Harbor, FL
Philip Jochem Regional Vice President None
Warrington, PA
Fred Lanier Regional Vice President None
Atlanta, GA
Robert F. Madaii Regional Vice President None
La Jolla, CA
Joseph Reaves Regional Vice President None
New Orleans, LA
Christian Renninger Regional Vice President None
Germantown, MD
L. Allen Veach Regional Vice President None
Colchester, VT
Kurt Wiessner Regional Vice President None
Minneapolis, MN
Institutional Services Division of Dreyfus Service Corporation
==============================================================
Positions and offices
with Institutional Services Positions and
Name and principal Division of Dreyfus offices with
business address Service Corporation Registrant
Elie M. Genadry* President None
Donald A. Nanfeldt* Executive Vice President None
Stacey Alexander* Vice President None
Eric Almquist* Vice President None
James E. Baskin+++++++ Vice President None
Stephen Burke* Vice President None
Laurel A. Diedrick Burrows*** Vice President None
Charles Cardona** Vice President None
Daniel L. Clawson++++ Vice President None
William E. Findley**** Vice President None
Mary Genet***** Vice President None
Melinda Miller Gordon* Vice President None
Christina Haydt++ Vice President- None
Institutional Sales
Carol Anne Kelty* Vice President- None
Institutional Sales
Gertrude F. Laidig+++++ Vice President None
Kathleen McIntyre Lewis++ Vice President None
Susan M. O'Connor* Vice President- None
Institutional Seminars
Andrew Pearson+++ Vice President- None
Institutional Sales
Jean Heitzman Penny***** Vice President- None
Institutional Sales
Dwight Pierce+ Vice President None
Emil Samman* Vice President- None
Institutional Marketing
Edward Sands* Vice President- None
Institutional Operations
Sue Ann Seefeld++++ Vice President- None
Institutional Sales
Judy Ulrich*** Vice President None
Elizabeth Biordi Wieland* Vice President- None
Institutional Administration
Roberta Hall***** Assistant Vice President- None
Institutional Servicing
Eva Machek***** Assistant Vice President- None
Institutional Sales
Debra Masterpalo* Assistant Vice President None
James Nieland* Assistant Vice President None
Lois Paterson* Assistant Vice President- None
Institutional Operations
William Schalda* Assistant Vice President None
Karen Markovic Shpall++++++ Assistant Vice President None
Emilie Tongalson** Assistant Vice President- None
Institutional Servicing
Tonda Watson**** Assistant Vice President- None
Institutional Sales
<PAGE>
Group Retirement Plans Division of Dreyfus Service Corporation
==============================================================
Positions and offices
with Group Retirement Positions and
Name and principal Plans Division of offices with
business address Dreyfus Service Corporation Registrant
Elie M. Genadry* President None
Robert W. Stone* Executive Vice President None
Paul Allen* Senior Vice President- None
National Sales
George Anastasakos* Vice President None
William Gallagher* Vice President-Sales None
Brent Glading* Vice President-Sales None
Gerald Goz* Vice President-Sales None
Cherith Harrison* Vice President-Sales None
Leonard Larrabee* Vice President and None
Senior Counsel
Samuel Mancino** Vice President-Installation None
Joanna Morris* Vice President-Sales None
Scott Zeleznyk* Vice President-Sales None
Alana Zion* Vice President-Sales None
<PAGE>
____________________________________
* The address of the offices so indicated is 200 Park
Avenue, New York, New York 10166.
** The address of the offices so indicated is 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144.
*** The address of the offices so indicated is 580
California Street, San Francisco, California 94104.
**** The address of the offices so indicated is 3384
Peachtree Road,
Suite 100, Atlanta, Georgia 30326-1106.
***** The address of the offices so indicated is 190 South
LaSalle
Street, Suite 2850, Chicago, Illinois 60603.
+ The address of the offices so indicated is P.O. Box
1657,
Duxbury, Massachusetts 02331.
++ The address of the offices so indicated is 800 West
Sixth Street,
Suite 1000, Los Angeles, California 90017.
+++ The address of the offices so indicated is 11 Berwick
Lane,
Edgewood, Rhode Island 02905.
++++ The address of the offices so indicated is 1700 Lincoln
Street,
Suite 3940, Denver, Colorado 80203.
+++++ The address of the offices so indicated is 6767 Forest
Hill
Avenue, Richmond, Virginia 23225.
++++++ The address of the offices so indicated is 2117 Diamond
Street,
San Diego, California 92109.
+++++++ The address of the offices so indicated is P.O. Box
757,
Holliston, Massachusetts 01746.
<PAGE>
Item 30. Location of Accounts and Records
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data
Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Registrant hereby undertakes
(1) to call a meeting of shareholders for the
purpose of
voting upon the question of removal of a
trustee or
trustees when requested in writing to do so
by the
holders of at least 10% of the Registrant's
outstanding
shares of beneficial interest and in
connection with
such meeting to comply with the provisions of
Section
16(c) of the Investment Company Act of 1940
relating to
shareholder communications.
(2) to furnish each person to whom a prospectus
is delivered
with a copy of its latest annual report to
shareholders,
upon request and without charge, beginning
with the
annual report to shareholders for the fiscal
year ending
January 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant has
duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York on
the 30th day of December, 1993.
FIRST PRAIRIE U.S. GOVERNMENT
INCOME FUND
BY: /s/Joseph S. DiMartino
JOSEPH S. DIMARTINO, PRESIDENT
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, this Amendment to
the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
s/Joseph S. DiMartino* President (Principal 12/30/93
Joseph S. DiMartino Executive Officer)
and Trustee
/s/Jeffrey Nachman* Vice P President and 12/30/93
Jeffrey Nachman Treasurer (Principal
Financial Officer)
/s/Jean Farley* Controller (Principal 12/30/93
Jean Farley Accounting Officer)
/s/John P. Gould* Trustee 12/30/93
John P. Gould
/s/Raymond D. Oddi* Trustee 12/30/93
Raymond D. Oddi
*BY: /s/ Robert I. Frenkel
Robert I. Frenkel
Attorney-in-Fact
