Registration Nos. 33-
811-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No.
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No.
(Check appropriate box or boxes)
PREMIER OPPORTUNITY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212)
922-6130
Daniel C. Maclean, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Approximate Date of Proposed Public Offering: As soon as
practicable after
this Registration Statement is declared effective.
<PAGE>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF
1933
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============
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate
Amount of
Securities Being Price Per Offering
Registration
Being Registered Registered Unit Price
Fee
Shares of Common * * *
$500.00
Stock, par value
$.001 per share
</TABLE>
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* Pursuant to Regulation 270.24f-2 under the Investment
Company Act of
1940, the Registrant hereby elects to register an indefinite
number of shares of its Common Stock.
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The Registrant hereby amends this registration statement on
such date or
dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act
of 1933 or until the registration statement shall become
effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
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<PAGE>
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
1 Cover Cover Page
2 Synopsis 4
3 Condensed Financial Information *
4 General Description of Registrant 7
5 Management of the Fund 28
5(a) Management's Discussion of Fund's
Performance *
6 Capital Stock and Other Securities 6, 53
7 Purchase of Securities Being Offered 30
8 Redemption or Repurchase 42
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
10 Cover Page B-1
11 Table of Contents B-2
12 General Information and History *
13 Investment Objective and Policies B-3
14 Management of the Fund B-14
15 Control Persons and Principal Holders
of Securities B-16
16 Investment Advisory and Other Services B-16
17 Brokerage Allocation B-29
18 Capital Stock and Other Securities B-31
19 Purchase, Redemption and Pricing of
Securities Being Offered B-18,
B-21, B-26
20 Tax Status B-27
21 Underwriters *
22 Performance Information B-30
23 Financial Statements B-32
Items in
Part C of
Form N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-2
26 Number of Holders of Securities C-2
27 Indemnification C-2
28 Business and Other Connections of
Investment Adviser C-3
29 Principal Underwriters C-3
30 Location of Accounts and Records C-4
31 Management Services C-4
32 Undertakings C-4
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*Omitted since answer is negative or inapplicable.
<PAGE>
PROSPECTUS , 1994
PREMIER OPPORTUNITY FUND, INC.
Premier Opportunity Fund, Inc. (the "Fund") is an open-
end, diversified, management investment company, known as a
mutual
fund. Its goal is to provide long-term capital growth. The Fund
invests primarily in equity securities of companies that are
generally disfavored or undervalued in the marketplace, but
which,
in the view of the Fund's investment advisers, have certain
characteristics indicating that those equity securities may
achieve
significant capital growth.
By this Prospectus, the Fund is offering four Classes
of
shares. Class A shares are subject to a sales charge imposed at
the time of purchase. Class B shares are subject to a contingent
deferred sales charge imposed on redemptions made within six
years
of purchase. Class C shares are subject to a 1% contingent
deferred sales charge imposed on redemptions made within the
first
year of purchase. Class R shares are sold without a sales charge
and are offered only to institutional investors acting for
themselves or in a fiduciary, advisory, agency, custodial or
similar capacity, such as banks and qualified or non-qualified
employee benefit plans or other programs, including pension,
profit-sharing and other deferred compensation plans, whether
established by corporations, partnerships, non-profit entities or
state and local governments. Other differences between the
Classes
include the services offered to and the expenses borne by each
Class and certain voting rights, as described herein. These
alternatives are offered so an investor may 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.
You can purchase or redeem all Classes of shares,
except
Class R shares, by telephone using the TeleTransfer Privilege.
The Dreyfus Corporation will serve as the Fund's
investment adviser. The Dreyfus Corporation has engaged Osprey
Funds Management, a Maryland Limited Partnership ("Osprey") to
serve as the Fund's sub-investment adviser and provide day-to-day
management of the Fund's investments. The Dreyfus Corporation
and
Osprey are referred to collectively as the "Advisers."
This Prospectus sets forth concisely information about
the Fund that you 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 1-800-554-4611. When telephoning,
ask
for Operator 666.
Mutual fund shares are not deposits or obligations of,
or
guaranteed or endorsed by, any bank, and are not federally
insured
by the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other agency. The net asset value of funds of this
type will fluctuate from time to time.
<PAGE>
TABLE OF CONTENTS
Page
Fee Table . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL
OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
Class A Class B Class C Class R
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price). . . . 4.50% - - -
Maximum Deferred Sales Charge Imposed on
Redemptions (as a percentage of the
amount subject to charge). . . . . . - 4.00% 1.00% -
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees .75% .75% .75% .75%
12b-1 Fees - .75% .75% -
Other Expenses .___% .___% .___% .___%
Total Fund Operating Expenses .___% .___% .___% .___%
Example:
You would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) except where noted,
redemption at the end of each time period:
1 Year. . $___ $_/$__* $_/$_* $_
3 Years $___ $_/$__* $_ $_
_____________
* Assuming no redemption of shares.
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE
CONSIDERED AS REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER,
WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will
bear, directly or indirectly, the payment of which will reduce
investors' return on an annual basis. Other Expenses and Total
Fund Operating Expenses are based on estimated amounts for the
current fiscal year. Long-term investors in Class B or Class C
shares could pay more in 12b-1 fees than the economic equivalent
of
paying a front-end sales charge. The information in the
foregoing
table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. Certain Service Agents (as
defined below) may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the
foregoing table. See "Management of the Fund," "How to Buy Fund
Shares" and "Distribution Plan and Shareholder Services Plan."
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund
shares; you may choose the Class of shares that best suits your
needs, given the amount of your purchase, the length of time you
expect to hold your shares and any other relevant circumstances.
Each Fund share represents an identical pro rata interest in the
Fund's investment portfolio.
Class A shares are sold at net asset value per share
plus
a maximum initial sales charge of 4.50% 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 4% contingent deferred sales
charge
("CDSC"), which is assessed only if you redeem Class B shares
within six years of purchase. See "How to Buy Fund Shares--Class
B
Shares" and "How to Redeem Fund Shares--Contingent Deferred 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 .75 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.
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 such 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 C shares are subject to a 1% CDSC, which is
assessed only if you redeem Class C shares within one year of
purchase. See "How to Redeem Fund Shares--Class C Shares."
These
shares also are subject to an annual service fee at the rate of
.25
of 1% and an annual distribution fee at the rate of .75 of 1% of
the value of the average daily net assets of Class C. See
"Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class C will cause such Class to have a
higher expense ratio and to pay lower dividends than Class A.
Class R shares may not be purchased directly by
individuals, although eligible institutions may purchase Class R
shares for accounts maintained by individuals. Class R shares
are
sold at net asset value per share only to institutional investors
acting for themselves or in a fiduciary, advisory, agency,
custodial or similar capacity, such as banks and qualified or
non-
qualified employee benefit plans or other programs, including
pension, profit-sharing and other deferred compensation plans,
whether established by corporations, partnerships, non-profit
entities or state and local governments.
The decision as to which Class of shares is more
beneficial to you depends on the amount and the intended length
of
your investment. You should consider whether, during the
anticipated life of your investment in the Fund, the accumulated
distribution fee and CDSC, if any, on Class B or Class C shares
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.
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 or Class C
shares may exceed the initial sales charge on Class A shares
during
the life of the investment. Finally, you should consider the
effect of the CDSC period and any conversion rights of the
Classes
in the context of your own investment time frame. For example,
while Class C shares have a shorter CDSC period than Class B
shares, Class C shares do not have a conversion feature and,
therefore, are subject to an ongoing distribution fee. Thus,
Class
B shares may be more attractive than Class C shares to investors
with longer term investment outlooks. Generally, Class A shares
may be more appropriate for investors who invest $1,000,000 or
more
in Fund shares, but will not be appropriate for investors who
invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
Investment Objective
The Fund's goal is to provide long-term capital growth.
The Fund's investment objective cannot be changed without
approval
by the holders of a majority (as defined in the Investment
Company
Act of 1940, as amended) of its outstanding voting shares. There
can be no assurance that the Fund's investment objective will be
achieved.
Management Policies
The Fund will invest, under normal market conditions,
at
least 80% of the value of its total assets in equity securities
of
domestic and foreign issuers. Under normal market conditions,
the
remainder of the Fund's assets may be invested in debt securities
that management believes offer opportunities for capital growth.
The Fund may invest up to 25% of the value of its total assets in
the securities of foreign issuers. The Fund may invest up to 5%
of
its assets in securities of companies that have been in
continuous
operation for fewer than three years. The Fund's policy is to
purchase marketable securities which are not restricted as to
public sale; however, the Fund may invest up to 15% of the value
of
its net assets in securities as to which a liquid trading market
does not exist. See "Certain Portfolio Securities--Illiquid
Securities" below. Equity securities consist of common stocks,
convertible securities and preferred stocks.
In determining whether the Fund should invest in a
particular equity security, the Advisers will employ a
contrarian,
value-oriented approach, utilizing a "bottom-up" equity selection
process. Unlike a process that seeks equity securities of
companies that are experiencing significant capital growth with
the
prospect that such growth will continue, the process to be used
by
the Fund involves seeking equity securities of companies that are
generally disfavored or undervalued in the marketplace, but
which,
in the view of the Advisers, have certain characteristics
indicating that those equity securities may achieve significant
capital growth. The Advisers consider an equity security to be
disfavored or undervalued if, among other things, that security
is
selling for prices at or very near its lowest historical absolute
price/earnings ratio.
The principal criteria for investment in a particular
debt security will be that the security provide opportunities for
capital growth. The Advisers will evaluate the creditworthiness
of
the issuers of debt instruments in which the Fund invests;
however,
there are no limits on the credit rating given such securities by
a
nationally recognized statistical rating organization. The Fund
may invest in debt securities rated below investment grade by
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch") and
Duff & Phelps, Inc. ("Duff"). Investments rated lower than
investment grade by Moody's, S&P, Fitch and Duff ordinarily
provide
higher yields but involve greater risk because of their
speculative
characteristics. The Fund may invest in obligations rated C by
Moody's or D by S&P, Fitch or Duff, which is such rating
organizations' lowest rating and indicates that the obligation is
in default and interest and/or repayment of principal is in
arrears. See "Risk Factors--Lower Rated Securities" below for a
further discussion of certain risks. The Fund also may invest in
securities which, while not rated, are determined by the Advisers
to be of comparable quality to the rated securities in which the
Fund may invest.
The Fund may invest, in anticipation of investing cash
positions, in money market instruments consisting of U.S.
Government securities, certificates of deposit, time deposits,
bankers' acceptances, short-term investment grade corporate bonds
and other short-term debt instruments, and repurchase agreements,
as set forth under "Certain Portfolio Securities" below. The
Fund
also may hold U.S. Government securities to meet certain asset
segregation requirements. Under normal market conditions, the
Fund
expects to have less than 15% of its assets invested in money
market instruments. However, when the Advisers determine that
adverse market conditions exist, the Fund may adopt a temporary
defensive posture and invest all of its assets in money market
instruments.
The Fund also may engage in various investment
techniques, such as options and futures transactions, lending
portfolio securities, leveraging, short-selling and foreign
currency exchange transactions, each of which involves risk.
Options and futures transactions involve so-called "derivative
securities." For a discussion of such investment techniques and
their related risks, see "Investment Techniques" and "Risk
Factors"
below.
Investment Techniques
In connection with its investment objective and
policies,
the Fund may employ, among others, the following investment
techniques:
Leverage Through Borrowing--The Fund may borrow for investment
purposes. This borrowing, which is known as leveraging,
generally
will be unsecured, except to the extent the Fund enters into
reverse repurchase agreements described below. The Investment
Company Act of 1940 requires the Fund 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 Fund 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 Fund's
portfolio. Money borrowed for leveraging will be subject to
interest costs that 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 Fund
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 Fund may
engage
is the entry into reverse repurchase agreements with banks,
brokers
or dealers. These transactions involve the transfer by the Fund
of
an underlying debt instrument in return for cash proceeds based
on
a percentage of the value of the security. The Fund retains the
right to receive interest and principal payments on the security.
At an agreed upon future date, the Fund 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 Fund will maintain in a segregated
custodial
account cash or U.S. Government securities or other high quality
liquid debt securities at least equal to the aggregate amount of
its 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 Fund. These agreements, which are treated as
if
reestablished each day, are expected to provide the Fund with a
flexible borrowing tool.
Short-Selling--The Fund may make short sales, which are
transactions in which the Fund 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 Fund must borrow the security to
make delivery to the buyer. The Fund 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 Fund. Until
the security is replaced, the Fund is required to pay to the
lender
amounts equal to any dividends or interest which accrue during
the
period of the loan. To borrow the security, the Fund 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 Fund closes its short position or replaces
the
borrowed security, it will: (a) maintain 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 its short position.
The Fund 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 Fund replaces the borrowed
security. The Fund 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
dividends or interest the Fund may be required to pay in
connection
with a short sale.
The Fund may purchase call options to provide a hedge
against an increase in the price of a security sold short by the
Fund. When the Fund 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
Fund,
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 under different market conditions, and it
does not intend that any specified portion of its 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 Fund's net assets. The Fund
will 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 Fund's net assets and will not sell short the
securities of any class of an issuer to the extent, at the time
of
transaction, of more than 5% of the outstanding securities of
that
class.
In addition to the short sales discussed above, the
Fund
may make short sales "against the box," a transaction in which
the
Fund 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 Fund delivers the security to
close the short position. The Fund receives the net proceeds
from
the short sale. The Fund at no time will have more than 15% of
the
value of its net assets in deposits on short sales against the
box.
Call and Put Options on Specific Securities--The Fund 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
(or groups or "baskets" of specific securities) in which the Fund
may invest. The Fund 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
Fund, which is a call option with respect to which the Fund owns
the underlying security or securities, exposes the Fund during
the
term of the option to possible loss of opportunity to realize
appreciation in the market price of the underlying security or
securities or to possible continued holding of a security or
securities which might otherwise have been sold to protect
against
depreciation in the market price thereof. A covered put option
sold by the Fund exposes the Fund during the term of the option
to
a decline in price of the underlying security or securities. A
put
option sold by the Fund 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
Fund may make a "closing purchase transaction," which involves
purchasing an option on the same security or securities with the
same exercise price and expiration date as the option which it
has
previously written. To close out a position as a purchaser of an
option, the Fund may make a "closing sale transaction," which
involves liquidating the Fund's position by selling the option
previously purchased. The Fund 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
Fund as illiquid securities. See "Certain Portfolio Securities--
Illiquid Securities" below.
The Fund will purchase options only to the extent
permitted by the policies of state securities authorities in
states
where shares of the Fund are qualified for offer and sale.
Stock Index Options--The Fund may purchase and write put and call
options on stock indexes listed on U.S. securities exchanges or
traded in the over-the-counter market. A stock index fluctuates
with changes in the market values of the stocks included in the
index.
The effectiveness of purchasing or writing stock index
options will depend upon the extent to which price movements in
the
Fund's investments correlate with price movements of the stock
index selected. Because the value of an index option depends
upon
movements in the level of the index rather than the price of a
particular stock, whether the Fund will realize a gain or loss
from
the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or
market segment, rather than movements in the price of a
particular
stock. Accordingly, successful use by the Fund of options on
stock
indexes will be subject to the Advisers' ability to predict
correctly movements in the direction of the stock market
generally
or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual
stocks.
When the Fund writes an option on a stock index, the
Fund
will place in a segregated account with its custodian or sub-
custodian cash or liquid securities in an amount at least equal
to
the market value of the underlying stock index and will maintain
the account while the option is open or otherwise will cover the
transaction.
Futures Transactions--In General--The Fund is not a commodity
pool.
However, as a substitute for a comparable market position in the
underlying securities and for hedging purposes, the Fund may
engage
in futures and options on futures transactions, as described
below.
The Fund may trade futures contracts and options on
futures contracts in U.S. domestic markets, such as the Chicago
Board of Trade and the International Monetary Market of the
Chicago
Mercantile Exchange, or, to the extent permitted under applicable
law, on exchanges located outside the United States, such as the
London International Financial Futures Exchange and the Sydney
Futures Exchange Limited. Foreign markets may offer advantages
such as trading in commodities that are not currently traded in
the
United States or arbitrage possibilities not available in the
United States. Foreign markets, however, may have greater risk
potential than domestic markets. See "Risk Factors--Foreign
Commodity Transactions" below.
The Fund's 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 Fund 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 Fund's 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
Fund may be required to segregate cash or high quality money
market
instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity.
To the extent the Fund engages in the use of futures and options
on
futures for other than bona fide hedging purposes, the Fund may
be
subject to additional risk.
Initially, when purchasing or selling futures contracts
the Fund 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 Fund 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 index or 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 Fund may elect to close the position by
taking an opposite position, at the then prevailing price, which
will operate to terminate the Fund's existing position in the
contract.
Although the Fund 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
Fund to substantial losses. If it is not possible, or the Fund
determines not, to close a futures position in anticipation of
adverse price movements, the Fund 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 assurance can be given that the price of
the
securities being hedged will correlate with the price movements
in
a futures contract and thus provide an offset to losses on the
futures contract.
In addition, to the extent the Fund is engaging in a
futures transaction as a hedging device, due to the risk of an
imperfect correlation between securities owned by the Fund 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
futures contracts based on indexes, the risk of imperfect
correlation increases as the composition of the Fund's
investments
varies from the composition of the index. 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 Fund 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
Fund's net investment results if market movements are not as
anticipated when the hedge is established.
Successful use of futures by the Fund also is subject
to
the Advisers' ability to predict correctly movements in the
direction of the market. 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 Fund will lose part or all of the benefit
of
the increased value of securities which it has hedged because it
will have offsetting losses in its futures positions. In
addition,
in such situations, if the Fund has insufficient cash, it may
have
to sell securities to meet daily variation margin requirements.
Such sales of securities may, but will not necessarily, be at
increased prices which reflect the rising market. The Fund 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 Fund 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 Fund with respect to
futures contracts will be covered in the same manner as put
options
on specific securities as described above.
Stock Index Futures and Options on Stock Index Futures--The Fund
may purchase and sell stock index futures contracts and options
on
stock index futures contracts.
A stock index future obligates the seller to deliver
(and
the purchaser to take) an amount of cash equal to a specific
dollar
amount times the difference between the value of a specific stock
index at the close of the last trading day of the contract and
the
price at which the agreement is made. No physical delivery of
the
underlying stocks in the index is made. With respect to stock
indexes that are permitted investments, the Fund intends to
purchase and sell futures contracts on the stock index for which
it
can obtain the best price with consideration also given to
liquidity.
The price of stock index futures may not correlate
perfectly with the movement in the stock index because of certain
market distortions. First, all participants in the futures
market
are subject to margin deposit and maintenance requirements.
Rather
than meeting additional margin deposit requirements, investors
may
close futures contracts through offsetting transactions which
would
distort the normal relationship between the index and futures
markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than
margin requirements in the securities market. Therefore,
increased
participation by speculators in the futures market also may cause
temporary price distortions.
Interest Rate Futures Contracts and Options on Interest Rate
Futures Contracts--The Fund may purchase and sell interest rate
futures contracts and options on interest rate futures contracts
as
a substitute for a comparable market position and to hedge
against
adverse movements in interest rates.
To the extent the Fund has invested in interest rate
futures contracts or options on interest rate futures contracts
as
a substitute for a comparable market position, the Fund will be
subject to the investment risks of having purchased the
securities
underlying the contract.
The Fund 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.
If the Fund has hedged against the possibility of an
increase in interest rates adversely affecting the value of
securities held in the Fund's portfolio and rates decrease
instead,
the Fund will lose part or all of the benefit of the increased
value of the securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell
securities to meet daily variation margin requirements at a time
when it may be disadvantageous to do so. These sales of
securities
may, but will not necessarily, be at increased prices which
reflect
the decline in interest rates.
The Fund may sell call options on interest rate futures
contracts to partially hedge against declining prices of its
portfolio securities. If the futures price at expiration of the
option is below the exercise price, the Fund will retain the full
amount of the option premium which provides a partial hedge
against
any decline that may have occurred in the Fund's portfolio
holdings. The Fund 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 contract. If
the futures price at expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the
option
premium which provides a partial hedge against any increase in
the
price of securities which the Fund intends to purchase. If a put
or call option sold by a Fund is exercised, the Fund 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 Fund's losses from existing options
on futures may to some extent be reduced or increased by changes
in
the value of its portfolio securities.
The Fund 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 a correlation
between price movements in the options on interest rate futures
and
price movements in the Fund's portfolio securities which are the
subject of the hedge. In addition, the Fund's purchase of such
options will be based upon predictions as to anticipated interest
rate trends, which could prove to be inaccurate.
Lending Portfolio Securities--From time to time, the Fund 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 Fund's total assets. In connection with such loans,
the Fund will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. The Fund can
increase its income through the investment of such collateral.
The
Fund continues to be entitled to payments in amounts equal to the
interest, dividends and 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
Fund might experience risk of loss if the institution with which
it
has engaged in a portfolio loan transaction breaches its
agreement
with the Fund.
Foreign Currency Transactions--The Fund may engage in currency
exchange transactions to the extent consistent with its
investment
objective or to hedge its portfolio. The Fund will conduct its
currency exchange transactions either on a spot (i.e., cash)
basis
at the rate prevailing in the currency exchange market, or
through
entering into forward contracts to purchase or sell currencies.
A
forward currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which must
be more than two days from the date of the contract, at a price
set
at the time of the contract. Forward currency exchange contracts
are entered into in the interbank market conducted directly
between
currency traders (typically commercial banks or other financial
institutions) and their customers. The Fund also may combine
forward currency exchange contracts with investments in
securities
denominated in other currencies.
The Fund also may maintain short positions in forward
currency exchange transactions, which would involve the Fund
agreeing to exchange an amount of a currency it did not currently
own for another currency at a future date in anticipation of a
decline in the value of the currency sold relative to the
currency
the Fund contracted to receive in the exchange. The Fund will
maintain in a segregated custodial account cash or U.S.
Government
securities or other high quality liquid debt securities at least
equal to the aggregate amount of its short positions, plus
accrued
interest, in certain cases, in accordance with releases
promulgated
by the Securities and Exchange Commission.
Options on Foreign Currency--The Fund may purchase and sell call
and put options on foreign currency for the purpose of hedging
against changes in future currency exchange rates. Call options
convey the right to buy the underlying currency at a price which
is
expected to be lower than the spot price of the currency at the
time the option expires. Put options convey the right to sell
the
underlying currency at a price which is anticipated to be higher
than the spot prices of the currency at the time the option
expires. The Fund may use foreign currency options for the same
purposes as forward currency exchange and futures transactions,
as
described herein. See also "Call and Put Options on Specific
Securities" above and "Currency Futures and Options on Currency
Futures" below.
Currency Futures and Options on Currency Futures--The Fund may
purchase and sell currency futures contracts and options thereon.
See "Call and Put Options on Specific Securities" above. By
selling foreign currency futures, the Fund can establish the
number
of U.S. dollars it will receive in the delivery month for a
certain
amount of a foreign currency. In this way, if the Fund
anticipates
a decline of a foreign currency against the U.S. dollar, the Fund
can attempt to fix the U.S. dollar value of some or all of its
securities that are denominated in that currency. By purchasing
foreign currency futures, the Fund can establish the number of
U.S.
dollars it will be required to pay for a specified amount of a
foreign currency in the delivery month. Thus, if the Fund
intends
to buy securities in the future and expects the U.S. dollar to
decline against the relevant foreign currency during the period
before the purchase is effected, the Fund, for the price of the
currency future, can attempt to fix the price in U.S. dollars of
the securities it intends to acquire.
The purchase of options on currency futures will allow
the Fund, for the price of the premium it must pay for the
option,
to decide whether or not to buy (in the case of a call option) or
to sell (in the case of a put option) a futures contract at a
specified price at any time during the period before the option
expires. If the Fund, in purchasing an option, has been correct
in
its judgment concerning the direction in which the price of a
foreign currency would move as against the U.S. dollar, it may
exercise the option and thereby take a futures position to hedge
against the risk it had correctly anticipated or close out the
option position at a gain that will offset, to some extent,
currency exchange losses otherwise suffered by the Fund. If
exchange rates move in a way the Fund did not anticipate, the
Fund
will have incurred the expense of the option without obtaining
the
expected benefit. As a result, the Fund's profits on the
underlying securities transactions may be reduced or overall
losses
incurred.
Future Developments--The Fund may take advantage of opportunities
in the area of options and futures contracts and options on
futures
contracts and any other derivative investments which are not
presently contemplated for use by the Fund or which are not
currently available but which may be developed, to the extent
such
opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund. Before entering
into such transactions or making any such investment, the Fund
will
provide appropriate disclosure in its prospectus.
Forward Commitments--The Fund 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 Fund will make commitments to
purchase
such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. The Fund will not
accrue income in respect of a security purchased on a when-issued
or forward commitment basis prior to its stated delivery date.
Securities purchased on a when-issued or forward
commitment basis and certain other securities held by the Fund
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 Fund 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 Fund consisting of cash,
cash
equivalents or U.S. Government securities or other high quality
liquid debt securities at least equal at all times to the amount
of
the when-issued or forward commitments will be established and
maintained at the Fund's custodian bank. Purchasing securities
on
a when-issued or forward commitment basis when the Fund is fully
or
almost fully invested may result in greater potential fluctuation
in the value of the Fund's net assets and its net asset value per
share.
Certain Portfolio Securities
Money Market Instruments--The Fund may invest, in the
circumstances
described under "Management Policies," in the following types of
money market instruments.
U.S. Government Securities. The Fund may purchase
securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, which include U.S. Treasury
securities that differ in their interest rates, maturities and
times of issuance. 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. Some obligations issued or guaranteed by
U.S. Government agencies and instrumentalities, for example,
Government National Mortgage Association pass-through
certificates,
are supported by the full faith and credit of the U.S. Treasury;
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, 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, because the U.S. Government is not obligated
to
do so by law.
Bank Obligations. The Fund may purchase certificates
of
deposit, time deposits, bankers' acceptances and other short-term
obligations issued by banks, savings and loan associations and
similar entities with assets in excess of $1 billion.
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited with
it for a specified period of time.
Time deposits are non-negotiable deposits maintained in
a
banking institution for a specified period of time at a stated
interest rate. Time deposits which may be held by the Fund will
not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft drawn on it by a
customer.
These instruments reflect the obligation both of the bank and of
the drawer to pay the face amount of the instrument upon
maturity.
The other short-term obligations may include uninsured, direct
obligations bearing fixed, floating or variable interest rates.
Repurchase Agreements. Repurchase agreements involve
the
acquisition by the Fund of an underlying debt instrument, subject
to an obligation of the seller to repurchase, and the Fund to
resell, the instrument at a fixed price usually not more than one
week after its purchase. Certain costs may be incurred 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
Fund may be delayed or limited.
Commercial Paper and Other Short-Term Corporate
Obligations. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The
commercial paper purchased by the Fund will consist only of
direct
obligations which, at the time of their purchase, are (a) rated
not
lower than Prime-1 by Moody's, A-1 by S&P, F-1 by Fitch or Duff-1
by Duff, (b) issued by companies having an outstanding unsecured
debt issue currently rated not lower than Aa3 by Moody's or AA-
by
S&P, Fitch or Duff, or (c) if unrated, determined by the Advisers
to be of comparable quality to those rated obligations which may
be
purchased by the Fund. The Fund may purchase floating and
variable
rate demand notes and bonds, which are obligations ordinarily
having stated maturities in excess of one year, but which permit
the holder to demand payment of principal at any time or at
specified intervals.
Foreign Government Obligations; Securities of Supranational
Entities--The Fund may invest in obligations issued or guaranteed
by one or more foreign governments or any of their political
subdivisions, agencies or instrumentalities that are determined
by
the Advisers to be of comparable quality to the other obligations
in which the Fund may invest. Such securities also include debt
obligations of supranational entities. Supranational entities
include international organizations designated or supported by
governmental entities to promote economic reconstruction or
development and international banking institutions and related
government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European
Coal
and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Convertible Securities--The Fund may purchase convertible
securities, which are fixed-income securities, such as bonds or
preferred stock, which may be converted at a stated price within
a
specified period of time into a specified number of shares of
common stock of the same or a different issuer. Convertible
securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt
securities. While providing a fixed-income stream (generally
higher in yield than the income derivable from a common stock but
lower than that afforded by a non-convertible debt security), a
convertible security also affords an investor the opportunity,
through its conversion feature, to participate in the capital
appreciation of the common stock into which it is convertible.
In general, the market value of a convertible security
is
the higher of its "investment value" (i.e., its value as a fixed-
income security) or its "conversion value" (i.e., the value of
the
underlying shares of common stock if the security is converted).
As a fixed-income security, the market value of a convertible
security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price
of
a convertible security also is influenced by the market value of
the security's underlying common stock. Thus, the price of a
convertible security generally increases as the market value of
the
underlying stock increases, and generally decreases as the market
value of the underlying stock declines. Investments in
convertible
securities generally entail less risk than investments in the
common stock of the same issuer.
Warrants--The Fund may invest up to 5% of its net assets in
warrants, except that this limitation does not apply to warrants
acquired in units or attached to securities. A warrant is an
instrument issued by a corporation which gives the holder the
right
to subscribe to a specified amount of the corporation's capital
stock at a set price for a specified period of time.
Illiquid Securities--The Fund may invest up to 15% of the value
of
its net assets in securities as to which a liquid trading market
does not exist, provided such investments are consistent with the
Fund's investment objective. Such securities may include
securities that are not readily marketable, such as certain
securities that are subject to legal or contractual restrictions
on
resale, repurchase agreements providing for settlement in more
than
seven days after notice, and certain options traded in the over-
the-counter market and securities used to cover such options. As
to these securities, the Fund is subject to a risk that should
the
Fund desire to sell them when a ready buyer is not available at a
price the Fund deems representative of their value, the value of
the Fund's net assets could be adversely affected.
American, European and Continental Depositary Receipts--The
Fund's
assets may be invested in the securities of foreign issuers in
the
form of American Depositary Receipts ("ADRs") and European
Depositary Receipts ("EDRs"). These securities may not
necessarily
be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a
United States bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. EDRs,
which
are sometimes referred to as Continental Depositary Receipts
("CDRs"), are receipts issued in Europe typically by non-United
States banks and trust companies that evidence ownership of
either
foreign or domestic securities. Generally, ADRs in registered
form
are designed for use in the United States securities markets and
EDRs and CDRs in bearer form are designed for use in Europe. The
Fund may invest in ADRs, EDRs and CDRs through "sponsored" or
"unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the underlying security and a
depositary,
whereas a depositary may establish an unsponsored facility
without
participation by the issuer of the deposited security. Holders
of
unsponsored depositary receipts generally bear all the costs of
such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security
or to pass through voting rights to the holders of such receipts
in
respect of the deposited securities.
Certain Fundamental Policies
The Fund may (i) borrow money to the extent permitted
under the Investment Company Act of 1940; (ii) invest up to 5% of
its total assets in the obligations of any issuer, except that up
to 25% of the value of its total assets may be invested, and
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities may be purchased, without regard to
any such limitation; and (iii) invest up to 25% of the value of
its
total assets in the securities of issuers in a single industry,
provided that there is no such limitation on investments in
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. 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 Fund's outstanding voting shares. See "Investment
Objective and Management Policies--Investment Restrictions" in
the
Fund's Statement of Additional Information.
Certain Additional Non-Fundamental Policies
The Fund may (i) purchase securities of any company
having less than three years' continuous operation (including
operations of any predecessors) if such purchase does not cause
the
value of its investments in all such companies to exceed 5% of
the
value of its total assets; (ii) pledge, hypothecate, mortgage or
otherwise encumber its assets, but only to secure permitted
borrowings; and (iii) 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 Fund's Statement of Additional Information.
Risk Factors
Certain Investment Techniques--The use of investment techniques
such as short-selling, engaging in financial futures and options
transactions, leverage through borrowing, purchasing securities
on
a forward commitment basis and lending portfolio securities
involves greater risk than that incurred by many other funds with
a
similar objective. Using these techniques may produce higher
than
normal portfolio turnover and may affect the degree to which the
Fund's net asset value fluctuates. Higher portfolio turnover
rates
are likely to result in comparatively greater brokerage
commissions
or transaction costs.
The Fund invests for long-term growth rather than
short-
term profits; however, a limited amount of short-term trading can
be expected in order to maintain a flexible portfolio strategy.
In
addition, the possible need to realize cash for redemption of
Fund
shares may make it necessary to sell securities even though such
sales would not otherwise be desirable from an investment
standpoint. Consequently, portfolio turnover may vary from year
to
year, as well as within a year. Moreover, when extraordinary
market conditions prevail, investment strategy may shift rapidly,
in which case higher turnover rates can be expected. The Fund's
ability to engage in certain short-term transactions may be
limited, however, by the requirement that, to qualify as a
regulated investment company, it 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 Fund
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. With exception of the above
requirement, the amount of portfolio activity will not be a
limiting factor when making portfolio decisions. Under normal
market conditions, the portfolio turnover rate of the Fund
generally will not exceed ___%. See "Portfolio Transactions" in
the Fund's Statement of Additional Information.
Equity Securities--You should be aware that equity securities
fluctuate in value, often based on factors unrelated to the value
of the issuer of the securities, and that fluctuations can be
pronounced. The securities of smallcap companies may be subject
to
more abrupt or erratic market movements than larger capitalized
companies, both because the securities typically are traded in
lower volume and because the issuers typically are subject to a
greater degree to changes in earnings and prospects. Changes in
the value of the common stocks in the Fund's portfolio will
result
in changes in the value of the Fund's shares and thus the Fund's
yield and total return to investors.
Fixed-Income Securities--For the portion of the Fund's assets
invested in debt securities, you should be aware that even though
interest-bearing securities are investments which promise a
stable
stream of income, the prices of such securities are inversely
affected by changes in interest rates and, therefore, are subject
to the risk of market price fluctuations. The values of fixed-
income securities also may be affected by changes in the credit
rating or financial condition of the issuing entities.
Lower Rated Securities--You should carefully consider the
relative
risks of investing in the higher yielding (and, therefore, higher
risk) debt securities in which the Fund may invest. These are
securities such as those rated Ba by Moody's or BB by S&P, Fitch
or
Duff or as low as the lowest rating assigned by Moody's, S&P,
Fitch
or Duff. They generally are not meant for short-term investing
and
may be subject to certain risks with respect to the issuing
entity
and to greater market fluctuations than certain lower yielding,
higher rated fixed-income securities. Securities rated Ba by
Moody's are judged to have speculative elements; their future
cannot be considered as well assured and often the protection of
interest and principal payments may be very moderate. Securities
rated BB by S&P, Fitch and Duff are regarded as having
predominantly speculative characteristics and, while such
securities have less near-term vulnerability to default than
other
speculative grade debt, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely interest
and
principal payments. Securities rated C by Moody's are regarded
as
having extremely poor prospects of ever attaining any real
investment standing. Debt securities rated D by S&P, Fitch and
Duff are in default and the payment of interest and/or repayment
of
principal is in arrears. Such debt securities, though high
yielding, are characterized by great risk. See "Appendix" in the
Statement of Additional Information for a general description of
Moody's, S&P, Fitch and Duff securities ratings. The ratings of
Moody's, S&P, Fitch and Duff represent their opinions as to the
quality of the securities which they undertake to rate. It
should
be emphasized, however, that ratings are relative and subjective
and, although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market
value risk of these securities. Therefore, although these
ratings
may be an initial criterion for selection of portfolio
investments,
the Advisers also will evaluate these securities and the ability
of
the issuers of such securities to pay interest and principal.
The
Fund will rely on the Advisers' judgment, analysis and experience
in evaluating the creditworthiness of an issuer. In this
evaluation, the Advisers will take into consideration, among
other
things, the issuer's financial resources, its sensitivity to
economic conditions and trends, and the quality of the issuer's
management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular
issue to reflect subsequent events. Once the rating of a
portfolio
security has been changed, the Fund will consider all
circumstances
deemed relevant in determining whether to continue to hold the
security.
The market price and yield of securities rated Ba or
lower by Moody's and BB or lower by S&P, Fitch and Duff are more
volatile than those of higher rated securities. Factors
adversely
affecting the market price and yield of these securities will
adversely affect the Fund's net asset value. In addition, the
retail secondary market for these securities may be less liquid
than that of higher rated securities; adverse market conditions
could make it difficult at times for the Fund to sell certain
securities or could result in lower prices than those used in
calculating the Fund's net asset value.
The market value of certain lower rated debt securities
tend to reflect specific developments with respect to the issuer
to
a greater extent than do higher rated securities, which react
primarily to fluctuations in the general level of interest rates,
and tend to be more sensitive to economic conditions than are
higher rated securities. Issuers of such debt securities often
are
highly leveraged and may not have available to them more
traditional methods of financing. Therefore, the risk associated
with acquiring the securities of such issuers generally is
greater
than is the case with higher rated securities.
Investing in Foreign Securities--Foreign securities markets
generally are not as developed or efficient as those in the
United
States. Securities of some foreign issuers are less liquid and
more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities
markets
are less than in the United States and, at times, volatility of
price can be greater than in the United States. The issuers of
some of these securities, such as foreign bank obligations, may
be
subject to less stringent or different regulations than are U.S.
issuers. In addition, there may be less publicly available
information about a non-U.S. issuer, and non-U.S. issuers
generally
are not subject to uniform accounting and financial reporting
standards, practices and requirements comparable to those
applicable to U.S. issuers.
Because stock certificates and other evidences of
ownership of such securities usually are held outside the United
States, the Fund will be subject to additional risks which
include
possible adverse political and economic developments, possible
seizure or nationalization of foreign deposits and possible
adoption of governmental restrictions that might adversely affect
the payment of principal, interest and dividends on the foreign
securities or might restrict the payment of principal, interest
and
dividends to investors located outside the country of the
issuers,
whether from currency blockage or otherwise. Custodial expenses
for a portfolio of non-U.S. securities generally are higher than
for a portfolio of U.S. securities.
Since foreign securities often are purchased with and
payable in currencies of foreign countries, the value of these
assets as measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency rates and exchange control
regulations. Some currency exchange costs may be incurred when
the
Fund changes investments from one country to another.
Furthermore, some of these securities may be subject to
brokerage taxes levied by foreign governments, which have the
effect of increasing the cost of such investment and reducing the
realized gain or increasing the realized loss on such securities
at
the time of sale. Income received by the Fund from sources
within
foreign countries may be reduced by withholding or other taxes
imposed by such countries. Tax conventions between certain
countries and the United States, however, may reduce or eliminate
such taxes. All such taxes paid by the Fund will reduce its net
income available for distribution to investors.
Foreign Currency Exchange--Currency exchange rates may fluctuate
significantly over short periods of time. They generally are
determined by the forces of supply and demand in the foreign
exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest
rates
and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency
controls
or political developments in the United States or abroad.
The foreign currency market offers less protection
against defaults in the forward trading of currencies than is
available when trading in currencies occurs on an exchange.
Since
a forward currency contract is not guaranteed by an exchange or
clearinghouse, a default on the contract would deprive the Fund
of
unrealized profits or force the Fund to cover its commitments for
purchase or resale, if any, at the current market price.
Foreign Commodity Transactions--Unlike trading on domestic
commodity exchanges, trading on foreign commodity exchanges is
not
regulated by the CFTC and may be subject to greater risks than
trading on domestic exchanges. For example, some foreign
exchanges
are principal markets so that no common clearing facility exists
and a trader may look only to the broker for performance of the
contract. In addition, unless the Fund hedges against
fluctuations
in the exchange rate between the U.S. dollar and the currencies
in
which trading is done on foreign exchanges, any profits that the
Fund might realize in trading could be eliminated by adverse
changes in the exchange rate, or the Fund could incur losses as a
result of those changes.
Other Investment Considerations--The Fund's net asset value is
not
fixed and should be expected to fluctuate. You should purchase
Fund shares only as a supplement to an overall investment program
and only if you are willing to undertake the risks involved.
Investment decisions for the Fund are made
independently
from those of other investment companies or accounts advised by
the
Advisers. However, if such other investment companies or
accounts
are prepared to invest in, or desire to dispose of, securities of
the type in which the Fund invests at the same time as the Fund,
available investments or opportunities for sales will be
allocated
equitably to each. In some cases, this procedure may adversely
affect the size of the position obtained for or disposed of by
the
Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
Investment Adviser--The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves
as
the Fund's investment adviser. The Dreyfus Corporation is a
wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-
owned subsidiary of Mellon Bank Corporation ("Mellon"). As of
_________ __, 1994, The Dreyfus Corporation managed or
administered
approximately $__ billion in assets for more than ___ million
investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the
overall management of the Fund's affairs under a Management
Agreement with the Fund, subject to the overall authority of the
Fund's Board of Directors in accordance with Maryland law.
The Dreyfus Corporation has engaged Osprey, located at
300 East Lombard Street, Suite 1420, Baltimore, Maryland 21202,
to
serve as the Fund's sub-investment adviser. Osprey is a
registered
investment adviser formed in 1990. As of ______________, 1994,
Osprey managed approximately $___________ in assets for twelve
discretionary accounts and __ other investment companies.
Osprey, subject to the supervision and approval of The
Dreyfus Corporation, provides investment advisory assistance and
the day-to-day management of the Fund's investments, as well as
investment research and statistical information, under a Sub-
Investment Advisory Agreement with The Dreyfus Corporation,
subject
to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. The Fund's primary portfolio
manager
will be Robert K. Jermain. Mr. Jermain is a principal of Osprey
and has been employed by Osprey as a portfolio manager since
October 1990. Prior thereto, he was employed by Monument Capital
Management. The Fund's other portfolio managers are identified
under "Management Arrangements" in the Fund's Statement of
Additional Information.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under
the Federal Bank Holding Company Act of 1956, as amended. Mellon
provides a comprehensive range of financial products and services
in domestic and selected international markets. Mellon is among
the twenty-five largest bank holding companies in the United
States
based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National
Association, Mellon Bank (MD), The Boston Company, Inc., AFCO
Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries,
Mellon
managed more than $130 billion in assets as of July 31, 1994,
including approximately $6 billion in mutual fund assets. As of
July 31, 1994, various subsidiaries of Mellon provided non-
investment services, such as custodial or administration
services,
for more than $___ billion in assets, including $___ billion in
mutual fund assets.
Under the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of
.__
of 1% of the value of the Fund's average daily net assets. Under
the Sub-Investment Advisory Agreement, The Dreyfus Corporation
has
agreed to pay Osprey a monthly fee at the annual rate of .__ of
1%
of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fee and/or
voluntarily
assume certain expenses of the Fund, which would have the effect
of
lowering the overall expense ratio of the Fund and increasing
yield
to investors at the time such amounts are waived or assumed, as
the
case may be. The Fund will not pay The Dreyfus Corporation at a
later time for any amounts it may waive, nor will the Fund
reimburse The Dreyfus Corporation for any amounts it may assume.
[The management fee paid by the Fund is higher than that paid by
most other investment companies.]
Expenses--All expenses incurred in the operation of the Fund will
be borne by the Fund, except to the extent specifically assumed
by
The Dreyfus Corporation. The expenses to be borne by the Fund
will
include: organizational costs, taxes, interest, loan commitment
fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members,
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 independent pricing services, costs of maintaining the
Fund's existence, costs attributable to investor services
(including, without limitation, telephone and personnel
expenses),
costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for
distribution
to existing shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses.
In addition, Class A, Class B and Class C shares may be
subject to certain distribution and service fees. See
"Distribution Plan and Shareholder Services Plan."
The Dreyfus Corporation may pay the Fund's distributor
for shareholder services from The Dreyfus Corporation's own
assets,
including past profits but not including the management fee paid
by
the Fund. The Fund's distributor may use part or all of such
payments to pay Service Agents in respect of these services.
Distributor--The Fund's distributor is Premier Mutual Fund
Services, Inc. (the "Distributor"), located at One Exchange
Place,
Boston, Massachusetts 02109. The Distributor is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a
provider of mutual fund administration services, the parent
company
of which is Boston Institutional Group, Inc.
Custodian and Transfer and Dividend Disbursing Agent--The Bank of
New York, 110 Washington Street, New York, New York 10286, is the
Fund's 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").
HOW TO BUY FUND SHARES
General--Class A shares, Class B shares and Class C shares may be
purchased only by clients of certain financial institutions
(which
may include banks), securities dealers ("Selected Dealers") and
other industry professionals (collectively, "Service Agents"),
except that full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries, directors
of
The Dreyfus Corporation, Board members of a fund advised by The
Dreyfus Corporation, including members of the Fund's Board, or
the
spouse or minor child of any of the foregoing may purchase Class
A
shares directly through the Distributor. Subsequent purchases
may
be sent directly to the Transfer Agent or your Service Agent.
Class R shares are offered only to institutional
investors acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity, such as banks and
qualified
or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and other deferred compensation
plans, whether established by corporations, partnerships, non-
profit entities or state and local governments ("Retirement
Plans"). Class R shares may be purchased for a Retirement Plan
only by a custodian, trustee, investment manager or other entity
authorized to act on behalf of such Plan. Institutions effecting
transactions in Class R shares for the accounts of their clients
may charge their clients direct fees in connection with such
transactions.
When purchasing Fund shares, you must specify which
Class
is being purchased. Stock certificates are issued only upon your
written request. No certificates are issued for fractional
shares.
The Fund reserves the right to reject any purchase order.
Service Agents may receive different levels of
compensation for selling different Classes of shares. Management
understands that some Service Agents may impose certain
conditions
on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable regulatory
authority, may charge their clients direct fees which would be in
addition to any amounts which might be received under the
Distribution Plan or Shareholder Services Plan. Each Service
Agent
has agreed to transmit to its clients a schedule of such fees.
You
should consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. However, the minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and
403(b)(7) Plans with only one participant is $750, with no
minimum
on subsequent purchases. Individuals who open an IRA also may
open
a non-working spousal IRA with a minimum initial investment of
$250. Subsequent investments in a spousal IRA must be at least
$250. The initial investment must be accompanied by the Fund's
Account Application. The Fund reserves the right to offer Fund
shares without regard to minimum purchase requirements to
employees
participating in certain qualified or non-qualified employee
benefit plans or other programs where contributions or account
information can be transmitted in a manner and form acceptable to
the Fund. The Fund reserves the right to vary further the
initial
and subsequent investment minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the
"Code"), imposes various limitations on the amount that may be
contributed to certain Retirement Plans. These limitations apply
with respect to participants at the plan level and, therefore, do
not directly affect the amount that may be invested in the Fund
by
a Retirement Plan. Participants and plan sponsors should consult
their tax advisers for details.
You may purchase Fund shares by check or wire, or, with
the exception of Class R shares, through the TeleTransfer
Privilege
described below. Checks should be made payable to "Premier
Opportunity Fund, Inc." Payments to open new accounts which are
mailed should be sent to Premier Opportunity Fund, Inc., P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your
Account Application indicating which Class of shares is being
purchased. For subsequent investments, your Fund account number
should appear on the check and an investment slip should be
enclosed and sent to Premier Opportunity Fund, Inc., P.O. Box
105,
Newark, New Jersey 07101-0105. Neither initial nor subsequent
investments should be made by third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or
any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The
Bank of New York, together with the applicable Class' DDA # as
shown below, for purchase of Fund shares in your name:
DDA # __________ Premier Opportunity Fund, Inc./Class A
shares;
DDA # __________ Premier Opportunity Fund, Inc./Class B
shares;
DDA # __________ Premier Opportunity Fund, Inc./Class C
shares; or
DDA # __________ Premier Opportunity Fund, Inc./Class R
shares.
The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable.
If your initial purchase of Fund shares is by wire, you should
call 1-800-645-6561 after you have completed the wire payment in
order to obtain your Fund account number. You should include
your Fund account number on the Fund's Account Application and
promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is
received. You may obtain further information about remitting
funds in this manner from your bank. All payments should be made
in U.S. dollars and, to avoid fees and delays, should be drawn
only on U.S. banks. A charge will be imposed if any check used
for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other
domestic financial institution that is an Automated Clearing
House member. You must direct the institution to transmit
immediately available funds through the Automated Clearing House
to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account
registration and Fund account number preceded by the digits
"1111."
The Distributor may pay dealers a fee of up to .5% of
the amount invested through such dealers in Fund shares by
employees participating in qualified or non-qualified employee
benefit plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have a
minimum of 250 employees eligible for participation in such plans
or programs or (ii) such plan's or program's aggregate investment
in the Dreyfus Family of Funds or certain other products made
available by the Distributor to such plans or programs exceeds
one million dollars ("Eligible Benefit Plans"). The
determination of the number of employees eligible for
participation in a plan or program shall be made on the date Fund
shares are first purchased by or on behalf of employees
participating in such plan or program and on each subsequent
January 1st. All present holdings of shares of funds in the
Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each
purchase of Fund shares. The Distributor reserves the right to
cease paying these fees at any time. The Distributor will pay
such fees from its own funds, other than amounts received from
the Fund, including past profits or any other source available to
it.
Fund shares are sold on a continuous basis. Net asset
value per share is determined as of the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New
York time), on each day the New York Stock Exchange is open for
business. For purposes of determining net asset value, options
and futures contracts will be valued 15 minutes after the close
of trading on the floor of the New York Stock Exchange. Net
asset value per share of each Class is computed by dividing the
value of the Fund's 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 Fund's investments are
valued based on market value or, where market quotations are not
readily available, based on fair value as determined in good
faith by the Board of Directors. For further information
regarding the methods employed in valuing the Fund's investments,
see "Determination of Net Asset Value" in the Fund's Statement of
Additional Information.
If an order is received in proper form by the Transfer
Agent or other 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, Fund 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, Fund
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 shares are
purchased through a dealer as provided below.
Orders for the purchase of Fund shares received by
dealers by the close of trading on the floor of the New York
Stock Exchange on any business day and transmitted to the
Distributor or its designee by the close of its business day
(normally 5:15 p.m., New York time) will be based on 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 or its designee
before the close of its business day.
Federal regulations require that you provide a
certified 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 you
to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
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:
<TABLE>
Total Sales Load
<CAPTION>
Amount of Transaction As a % of As a % of Dealers
offering net asset Reallowance as a
price value % of
per share per share offering price
<S> <C> <C> <C>
Less than $50,000 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than
$1,000,000. . . . 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of
$1,000,000 or more of Class A shares. However, if you purchase
Class A shares without an initial sales charge as part of an
investment of at least $1,000,000 and redeem those shares within
two years after purchase, a CDSC of 1.00% will be imposed at the
time of redemption. The terms contained in the section of the
Fund's Prospectus entitled "How to Redeem Fund Shares--Contingent
Deferred Sales Charge--Class B" (other than the amount of the
CDSC and its time periods) are applicable to the Class A shares
subject to a CDSC. Letter of Intent and Right of Accumulation
apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into
an agreement with the Distributor pertaining to the sale of Fund
shares (or which otherwise have a brokerage related or clearing
arrangement with an NASD member firm or financial institution
with respect to the sale of such shares) may purchase Class A
shares for themselves directly or pursuant to an employee benefit
plan or other program, or for their spouses or minor children, at
net asset value, provided that they have furnished the
Distributor with such information as it may request from time to
time in order to verify eligibility for this privilege. This
privilege also applies to full-time employees of financial
institutions affiliated with NASD member firms whose full-time
employees are eligible to purchase Class A shares at net asset
value. In addition, Class A shares are offered at net asset
value to full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries, directors
of The Dreyfus Corporation, Board members of a fund advised by
The Dreyfus Corporation, 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 Eligible
Benefit Plans. Class A shares also may be purchased (including
by exchange) at net asset value without a sales load for Dreyfus-
sponsored IRA "Rollover Accounts" with the distribution proceeds
from a qualified retirement plan or a Dreyfus-sponsored 403(b)(7)
plan, provided that, at the time of such distribution, such
qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan (a)
met the requirements of an Eligible Benefit Plan and all or a
portion of such plan's assets were invested in funds in the
Dreyfus Family of Funds or certain other products made available
by the Distributor to such plans, or (b) invested all of its
assets in certain funds in the Premier Family of Funds or the
Dreyfus Family of Funds or certain other products made available
by the Distributor to such plans.
Class A shares may be purchased at net asset value
through certain broker-dealers and other financial institutions
which have entered into an agreement with the Distributor, which
includes a requirement that such shares be sold for the benefit
of clients participating in a "wrap account" or a similar program
under which such clients pay a fee to such broker-dealer or other
financial institution.
The dealer reallowance may be changed from time to time
but will remain the same for all dealers. The Distributor, at
its expense, may provide additional promotional incentives to
dealers that sell shares of funds advised by The Dreyfus
Corporation which are sold with a sales load, such as Class A
shares. In some instances, those incentives may be offered only
to certain dealers who have sold or may sell significant amounts
of shares. Dealers receive a larger percentage of the sales load
from the Distributor than they receive for selling most other
funds.
Class B Shares--The public offering price for Class B shares is
the 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." The Distributor compensates
certain Service Agents for selling Class B shares at the time of
purchase from the Distributor's own assets. The proceeds of the
CDSC and the distribution fee, in part, are used to defray these
expenses.
Class C Shares--The public offering price for Class C shares is
the 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 redemptions of Class C shares made within the first
year of purchase. See "Class B Shares" above and "How to Redeem
Fund Shares."
Class R Shares--The public offering for Class R shares is the net
asset value per share of that Class.
Right of Accumulation--Class A Shares--Reduced sales loads apply
to any purchase of Class A shares, shares of other funds in the
Premier Family of Funds, shares of certain other funds advised by
The Dreyfus Corporation which are sold with a sales load and
shares acquired by a previous exchange of such shares
(hereinafter referred to as "Eligible Funds"), by you and any
related "purchaser" as defined in the Statement of Additional
Information, where the aggregate investment, including such
purchase, is $50,000 or more. If, for example, you previously
purchased and still hold Class A shares, or shares of any other
Eligible Fund or combination thereof, with an aggregate current
market value of $40,000 and subsequently purchases Class A shares
or shares of an Eligible Fund having a current value of $20,000,
the sales load applicable to the subsequent purchase would be
reduced to 4% of the offering price. All present holdings of
Eligible Funds may be combined to determine the current offering
price of the aggregate investment in ascertaining the sales load
applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of
purchase you or your Service Agent must notify the Distributor if
orders are made by wire, or the Transfer Agent if orders are made
by mail. The reduced sales load is subject to confirmation of
your holdings through a check of appropriate records.
TeleTransfer Privilege (Not Applicable to Class R Shares)--You
may purchase Fund shares (minimum $500, maximum $150,000 per day)
by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent.
The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only
a bank account maintained in a domestic financial institution
which is an Automated Clearing House member may be so designated.
The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
If you have selected the TeleTransfer Privilege, you
may request a TeleTransfer purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this
heading 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. You should consult your Service Agent in this
regard.
Exchange Privilege
The Exchange Privilege enables you to purchase, in
exchange for shares of a Class, shares of the same class of
certain other funds managed or administered by The Dreyfus
Corporation, to the extent such shares are offered for sale in
your state of residence. These funds have different investment
objectives which may be of interest to you. To use this
Privilege, you should consult your Service Agent or call 1-800-
645-6561 to determine if it is available and whether any
conditions are imposed on its use. WITH RESPECT TO CLASS R
SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE ONLY
BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND
SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To use this Privilege, your Service Agent acting on
your behalf must give exchange instructions to the Transfer Agent
in writing, by wire or by telephone. If you previously have
established the Telephone Exchange Privilege, you may telephone
exchange instructions by calling 1-800-221-4060 or, if calling
from overseas, 1-401-455-3306. See "How to Redeem Fund Shares--
Procedures." Before any exchange, you must obtain and should
review a copy of the current prospectus of the fund into which
the exchange is being made. Prospectuses may be obtained by
calling 1-800-645-6561. Except in the case of Personal
Retirement Plans, the shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value
of at least the minimum initial investment required for the fund
into which the exchange is being made. Telephone exchanges may
be made only if the appropriate "YES" box has been checked on the
Account Application, or a separate signed Shareholder Services
Form is on file with the Transfer Agent. Upon an exchange, the
following shareholder services and privileges, as applicable and
where available, will be automatically carried over to the fund
into which the exchange is made: Exchange Privilege, Wire
Redemption Privilege, Telephone Redemption Privilege,
TeleTransfer Privilege and the dividends and distributions
payment option (except for Dividend Sweep) 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 or Class C shares at the time
of an exchange; however, Class B or Class C shares acquired
through an exchange will be subject to the higher CDSC applicable
to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or Class C shares will be
calculated from the date of the initial purchase of the Class B
or Class C shares exchanged, as the case may be. If you are
exchanging Class A shares into a fund that charges a sales load,
you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the
fund from which you are exchanging were: (a) purchased with a
sales load, (b) acquired by a previous exchange from shares
purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange
your Service Agent must notify the Distributor. Any such
qualification is subject to confirmation of your holdings through
a check of appropriate records. See "Shareholder Services" in
the 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, or an exchange on behalf
of a Retirement Plan which is not tax exempt may result in, a
taxable gain or loss.
Auto-Exchange Privilege
Auto-Exchange Privilege enables you to invest regularly
(on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, in shares of the same class of
other funds in the Premier Family of Funds or certain other funds
in the Dreyfus Family of Funds of which you are currently an
investor. With respect to Class R shares held by Retirement
Plans, exchanges pursuant to the Auto-Exchange Privilege may be
made only between a shareholder's Retirement Plan account in one
fund and such shareholder's Retirement Plan account in another
fund. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will
be exchanged automatically on the first and/or fifteenth day of
the month according to the schedule you have selected. Shares
will be exchanged at the then-current 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 or Class C shares at the time of an exchange;
however, Class B or Class C shares acquired through an exchange
will be subject to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the
acquired Class B or Class C shares will be calculated from the
date of the initial purchase of the Class B or Class C shares
exchanged, as the case may be. 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. You may modify or cancel your exercise of this Privilege
at any time by mailing written notification to Premier
Opportunity Fund, Inc., 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, or an exchange on behalf of a Retirement
Plan which is not tax exempt may result in, a taxable gain or
loss. For more information concerning this Privilege and the
funds in the Premier Family of Funds or the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain an
Auto-Exchange Authorization Form, please call toll free 1-800-
645-6561.
Automatic Asset Builder
Automatic Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction)
at regular intervals selected by you. Fund shares are purchased
by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be
debited in the specified amount, and Fund shares will be
purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a
domestic financial institution which is an Automated Clearing
House member may be so designated. To establish an Automatic
Asset Builder account, you must file an authorization form with
the Transfer Agent. You may obtain the necessary authorization
form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase
at any time by mailing written notification to Premier
Opportunity Fund, Inc., 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.
Dividend Options
Dividend Sweep enables you to invest automatically
dividends or dividends and capital gain distributions, if any,
paid by the Fund in shares of the same class of another fund in
the Premier Family of Funds or the Dreyfus Family of Funds of
which you are an investor. 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 you are investing in a fund that
charges a sales load, you may qualify for share prices which do
not include the sales load or which reflect a reduced sales load.
If you are investing in a fund or class that charges a CDSC, the
shares purchased will be subject on redemption to the CDSC, if
any, applicable to the purchased shares. See "Shareholder
Services" in the Statement of Additional Information. Dividend
ACH permits you to transfer electronically on the payment date
dividends or dividends and capital gain distributions, if any,
from the Fund to a designated bank account. Only an account
maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. Banks may
charge a fee for this service.
For more information concerning these privileges, or to
request a Dividend Options Form, please call toll free 1-800-645-
6561. You may cancel these Privileges by mailing written
notification to Premier Opportunity Fund, Inc., P.O. Box 9671,
Providence, Rhode Island 02940-9671. To select a new fund after
cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective
three business days following receipt. These privileges are
available only for existing accounts and may not be used to open
new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs
or other retirement plans are not eligible for Dividend Sweep.
Government Direct Deposit Privilege
Government Direct Deposit Privilege enables you to
purchase Fund shares (minimum of $100 and maximum of $50,000 per
transaction) by having Federal salary, Social Security, or cer-
tain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You
may deposit as much of such payments as you elect. To enroll in
Government Direct Deposit, you must file with the Transfer Agent
a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in this Privilege. The appropriate
form may be obtained by calling 1-800-645-6561. Death or legal
incapacity will terminate your participation in this Privilege.
You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further,
the Fund may terminate your participation upon 30 days' notice to
you.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on
either a monthly or quarterly basis if you have a $5,000 minimum
account. Particular Retirement Plans, including Dreyfus
sponsored retirement plans, may permit certain participants to
establish an automatic withdrawal plan from such Retirement
Plans. Participants should consult their Retirement Plan sponsor
and tax adviser for details. Such a withdrawal plan is different
than the Automatic Withdrawal Plan. An application for the
Automatic Withdrawal Plan can be obtained by calling 1-800-645-
6561. There is a service charge of 50 cents for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by
the shareholder, the Fund or the Transfer Agent. Shares for
which certificates have been issued may not be redeemed through
the Automatic Withdrawal Plan.
Class B and Class C shares withdrawn pursuant to the
Automatic Withdrawal Plan will be subject to any applicable CDSC.
Purchases of additional Class A shares where the sales load is
imposed concurrently with withdrawals of Class A shares generally
are undesirable.
Retirement Plans
The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover
Accounts," 401(k) Salary Reduction Plans and 403(b)(7) Plans.
Plan support services also are available. You can obtain details
on the various plans by calling the following numbers toll free:
for Keogh Plans, please call 1-800-358-5566; for IRAs and IRA
"Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-
800-322-7880.
Letter of Intent--Class A Shares
By signing a Letter of Intent form, which can be
obtained by calling 1-800-645-6561, you become eligible for the
reduced sales load applicable to the total number of Eligible
Fund shares purchased in a 13-month period pursuant to the terms
and conditions set forth in the Letter of Intent. A minimum
initial purchase of $5,000 is required. To compute the
applicable sales load, the offering price of shares you hold (on
the date of submission of the Letter of Intent) in any Eligible
Fund that may be used toward "Right of Accumulation" benefits
described above may be used as a credit toward completion of the
Letter of Intent. However, the reduced sales load will be
applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales
load if you do not purchase the full amount indicated in the
Letter of Intent. The escrow will be released when you fulfill
the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load
reduction, the sales load will be adjusted to reflect your total
purchase at the end of 13 months. If total purchases are less
than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually
paid and the sales load applicable to the aggregate purchases
actually made. If such remittance is not received within 20
days, the Transfer Agent, as attorney-in-fact pursuant to the
terms of the Letter of Intent, will redeem an appropriate number
of Class A shares of the Fund held in escrow to realize the
difference. Signing a Letter of Intent does not bind you to
purchase, or the Fund to sell, the full amount indicated at the
sales load in effect at the time of signing, but you must
complete the intended purchase to obtain the reduced sales load.
At the time you purchase Class A shares, you must indicate your
intention to do so under a Letter of Intent.
HOW TO REDEEM FUND SHARES
General--You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent
as described below. When a request is received in proper form,
the Fund will redeem the shares at the next determined net asset
value as described below. If you hold Fund shares of more than
one Class, any request for redemption must specify the Class of
shares being redeemed. If you fail to specify the Class of
shares to be redeemed or if you own fewer shares of the Class
than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions
from you or your Service Agent.
The Fund imposes no charges (other than any applicable
CDSC) when shares are redeemed directly through the Distributor.
Service Agents or other institutions may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any
certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares
redeemed may be more or less than their original cost, depending
upon the Fund's then-current net asset value.
Distributions from qualified Retirement Plans and
certain non-qualified deferred compensation plans, except
distributions representing returns of non-deductible
contributions to the Retirement Plan, generally are taxable
income to the participant. Distributions from such a Retirement
Plan to a participant prior to the time the participant reaches
age 59-1/2 or becomes permanently disabled may subject the
participant to an additional 10% penalty tax imposed by the IRS.
Participants should consult their tax advisers concerning the
timing and consequences of distributions from a Retirement Plan.
Participants in qualified Retirement Plans will receive a
disclosure statement describing the consequences of a
distribution from such a Plan from the administrator, trustee or
custodian of the Plan, before receiving the distribution. The
Fund will not report to the IRS redemptions of Fund shares by
qualified Retirement Plans or certain non-qualified deferred
compensation plans. The administrator, trustee or custodian of
such Retirement Plans will be responsible for reporting
distributions from such Plans to the IRS.
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 you
have purchased Fund shares by check, by the TeleTransfer
Privilege or through Automatic Asset Builder and subsequently
submit a written redemption request to the Transfer Agent, the
redemption proceeds will be transmitted to you promptly upon bank
clearance of your purchase check, 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 shares 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 your shares were
purchased by wire payment, or if you otherwise have a sufficient
collected balance in your account to cover the redemption
request. Prior to the time any redemption is effective,
dividends on such shares will accrue and be payable, and you will
be entitled to exercise all other rights of beneficial ownership.
Fund shares will not be redeemed until the Transfer Agent has
received your Account Application.
The Fund reserves the right to redeem your account at
its option upon not less than 45 days' written notice if the net
asset value of your account is $500 or less and remains so during
the notice period.
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable
to the Distributor is imposed on any redemption of Class B shares
which reduces the current net asset value of your Class B shares
to an amount which is lower than the dollar amount of all
payments by you for the purchase of Class B shares of the Fund
held by you at the time of redemption. No CDSC will be imposed
to the extent that the 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
your Class B shares above the dollar amount of all your payments
for the purchase of Class B shares held by you 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 Fund's
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 . . . . . . . . . . . . . . . . . . . . . . . . . . 4.00
Second. . . . . . . . . . . . . . . . . . . . . . . . . . 4.00
Third . . . . . . . . . . . . . . . . . . . . . . . . . . 3.00
Fourth. . . . . . . . . . . . . . . . . . . . . . . . . . 3.00
Fifth . . . . . . . . . . . . . . . . . . . . . . . . . . 2.00
Sixth . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00
In determining whether a CDSC is applicable to a
redemption, the calculation will be made in a manner that results
in the lowest possible rate. It will be assumed that the
redemption is made first of amounts representing shares acquired
pursuant to the reinvestment of dividends and distributions; then
of amounts representing the increase in net asset value of Class
B shares above the total amount of payments for the purchase of
Class B shares made during the preceding six years; then of
amounts representing the cost of shares purchased six years prior
to the redemption; and finally, of amounts representing the cost
of shares held for the longest period of time within the
applicable six-year period.
For example, assume an investor purchased 100 shares at
$10 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 4% (the applicable rate in the second year after purchase) for
a total CDSC of $9.60.
Contingent Deferred Sales Charge--Class C Shares--A CDSC of 1%
payable to the Distributor is imposed on any redemption of Class
C shares within one year of the date of purchase. The basis for
calculating the payment of any such CDSC will be the method used
in calculating the CDSC for Class B shares. See "Contingent
Deferred Sales Charge--Class B Shares" above.
Waiver of CDSC--The CDSC applicable to Class B and Class C shares
will be waived in connection with (a) redemptions made within one
year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by
employees participating in Eligible Benefit Plans, (c)
redemptions as a result of a combination of any investment
company with the Fund by merger, acquisition of assets or
otherwise, (d) a distribution following retirement under a tax-
deferred retirement plan or upon attaining age 70-1/2 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 Directors 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 you must notify the Transfer Agent or your Service
Agent must notify the Distributor. Any such qualification is
subject to confirmation of your entitlement.
Procedures--You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or, except for
Class R shares, through the TeleTransfer Privilege or, if you are
a client of a Selected Dealer, through the Selected Dealer. If
you have given your Service Agent authority to instruct the
Transfer Agent to redeem shares and to credit the proceeds of
such redemptions to a designated account at your Service Agent,
you may redeem shares only in this manner and in accordance with
the regular redemption procedure described below. If you wish to
use the other redemption methods described below, you must
arrange with your Service Agent for delivery of the required
application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Service Agents
and institutions. The Fund makes available to certain large
institutions the ability to issue redemption instructions through
compatible computer facilities.
You may redeem or exchange Fund shares by telephone if
you have checked the appropriate box on the Fund's Account
Application or have filed a Shareholder Services Form with the
Transfer Agent. If you select the TeleTransfer Privilege or
telephone exchange privilege, you authorize the Transfer Agent to
act on telephone instructions from any person representing
himself or herself to be you, or a representative of your 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,
you may experience difficulty in contacting the Transfer Agent by
telephone to request a TeleTransfer redemption or an exchange of
Fund shares. In such cases, you should consider using the other
redemption procedures described herein. Use of these other
redemption procedures may result in your redemption request being
processed at a later time than it would have been if TeleTransfer
redemption had been used. During the delay, the Fund's net asset
value may fluctuate.
Regular Redemption. Under the regular redemption
procedure, you may redeem your shares by written request mailed
to Premier Opportunity Fund, Inc., 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.
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.
TeleTransfer Privilege (Not Applicable to Class R
Shares). You may redeem Fund shares (minimum $500 per day) by
telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent.
The proceeds will be transferred between your Fund account and
the bank account designated in one of these documents. Only 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 your account at an
Automated Clearing House member bank ordinarily two days after
receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address.
Holders of jointly registered Fund or bank accounts may redeem
through the TeleTransfer Privilege for transfer to their bank
account only up to $250,000 within any 30-day period. The Fund
reserves the right to refuse any request made by telephone,
including requests made shortly after a change of address, and
may limit the amount involved or the number of such requests.
The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
If you have selected the TeleTransfer Privilege, you
may request a TeleTransfer redemption of Fund shares by
telephoning 1-800-221-4060 or, if calling from overseas, 1-401-
455-3306. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares issued in certificate form, are not
eligible for this Privilege.
Redemption Through a Selected Dealer. If you are a
customer of a Selected Dealer, you may make redemption requests
to your Selected Dealer. If the Selected Dealer transmits the
redemption request so that it is received by the Transfer Agent
prior to the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), the redemption
request will be effective on that day. If a redemption request
is received by the Transfer Agent after the close of trading on
the floor of the New York Stock Exchange, the redemption request
will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so
that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer.
See "How to Buy Fund Shares" for a discussion of additional
conditions or fees that may be imposed upon redemption.
In addition, the Distributor or its designee will
accept orders from Selected Dealers with which it has sales
agreements for the repurchase of shares held by shareholders.
Repurchase orders received by dealers by the close of trading on
the floor of the New York Stock Exchange on any business day and
transmitted to the Distributor or its designee prior to the close
of its business day (normally 5:15 p.m., New York time) are
effected at the price determined as of the close of trading on
the floor of the New York Stock Exchange on that day. Otherwise,
the shares will be redeemed at the next determined net asset
value. It is the responsibility of the Selected Dealer to
transmit orders on a timely basis. The Selected Dealer may
charge the shareholder a fee for executing the order. This
repurchase arrangement is discretionary and may be withdrawn at
any time.
Reinvestment Privilege--Class A Shares. Upon written
request, you may reinvest up to the number of Class A shares you
have redeemed, within 30 days of redemption, at the then-
prevailing net asset value without a sales load, or reinstate
your account for the purpose of exercising the Exchange
Privilege. The Reinvestment Privilege may be exercised only
once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
(CLASS A, CLASS B and CLASS C ONLY)
Class B and Class C shares are subject to a
Distribution Plan and Class A, Class B and Class C shares are
subject to a Shareholder Services Plan.
Distribution Plan--Under the Distribution Plan, adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor for distributing the Fund's Class B and
Class C shares at an annual rate of .75 of 1% of the value of the
average daily net assets of Class B and Class C.
Shareholder Services Plan--Under the Shareholder Services Plan,
the Fund pays the Distributor for the provision of certain
services to the holders of Class A, Class B and Class C shares a
fee at the annual rate of .25 of 1% of the value of the average
daily net assets of Class A, Class B and Class C. The services
provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and providing
services related to the maintenance of such shareholder accounts.
Under the Shareholder Services Plan the Distributor may make
payments to Service Agents in respect of these services. The
Distributor 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, Class B and Class C shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from its net invest-
ment income and distributes net realized securities gains, if
any, once a year, but it may make distributions on a more
frequent basis to comply with the distribution requirements of
the Code, in all events in a manner consistent with the
provisions of the Investment Company Act of 1940. The Fund will
not make distributions from net realized securities gains unless
capital loss carryovers, if any, have been utilized or have
expired. Investors, other than Retirement Plans, may choose
whether to receive dividends and distributions in cash or to
reinvest in additional Fund shares. Dividends and distributions
paid to Retirement Plans are reinvested automatically in
additional Fund shares at net asset value. All expenses are
accrued daily and deducted before declaration of dividends to
investors. Dividends paid by each Class 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 a
particular Class will be borne exclusively by such Class. Class
B and C shares will receive lower per share dividends than Class
A shares which will receive lower per share dividends than
Class R shares because of the higher expenses borne by the
relevant Class. See "Fee Table."
Dividends paid by the Fund to qualified Retirement
Plans or certain non-qualified deferred compensation plans
ordinarily will not be subject to taxation until the proceeds are
distributed from the Retirement Plan. The Fund will not report
dividends paid to such Plans to the IRS. Generally,
distributions from such Retirement Plans, except those
representing returns of non-deductible contributions thereto,
will be taxable as ordinary income and, if made prior to the time
the participant reaches age 59-1/2, generally will be subject to
an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan
(other than certain governmental or church plans) for any taxable
year following the year in which the participant reaches age
70-1/2 is less than the "minimum required distribution" for that
taxable year, an excise tax equal to 50% of the deficiency may be
imposed by the IRS. The administrator, trustee or custodian of
such a Retirement Plan will be responsible for reporting
distributions from such Plans to the IRS. Participants in
qualified Retirement Plans will receive a disclosure statement
describing the consequences of a distribution from such a Plan
from the administrator, trustee or custodian of the Plan prior to
receiving the distribution. Moreover, certain contributions to a
qualified Retirement Plan in excess of the amounts permitted by
law may be subject to an excise tax.
Dividends derived from net investment income, together
with distributions from net realized short-term securities gains
and all or a portion of any gains realized from the sale or other
disposition of certain market discount bonds, paid by the Fund
will be taxable to U.S. shareholders and to certain non-qualified
Retirement Plans as ordinary income whether received in cash or
reinvested in Fund shares. Distributions from net realized long-
term securities gains of the Fund will be taxable to U.S.
shareholders and to certain non-qualified Retirement Plans as
long-term capital gains for Federal income tax purposes,
regardless of how long shareholders have held their Fund shares
and whether such distributions are received in cash or reinvested
in Fund shares. The Code provides that the net capital gain of
an individual generally 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.
Dividends derived from net investment income, together
with distributions from net realized short-term securities gains
and all or a portion of any gains realized from the sale or other
disposition of certain market discount bonds, paid by the Fund to
a foreign investor generally are subject to U.S. nonresident
withholding taxes at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty.
Distributions from net realized long-term securities gains paid
by the Fund 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, generally 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.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will
receive periodic summaries of your account which will include
information as to dividends and distributions from securities
gains, if any, paid during the year. Participants in a
Retirement Plan should receive periodic statements from the
trustee, custodian or administrator of their Plan.
The Code provides for the "carryover" of some or all of
the sales load imposed on Class A shares if an investor exchanges
such shares for shares of another fund advised or administered by
The Dreyfus Corporation within 91 days of purchase and such other
fund reduces or eliminates its otherwise applicable sales load
for the purpose of the exchange. In this case, the amount of the
sales load charged the investor for such shares, up to the amount
of the reduction of the sales load charge on the exchange, is not
included in the basis of such 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.
With respect to individual investors and certain non-
qualified Retirement Plans, 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 consti-
tute 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 Fund 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 Fund 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 Fund is subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax advisers regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class
may be calculated on the basis of average annual total return
and/or total return. These total return figures reflect changes
in the price of 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.
These figures also take into account any applicable service and
distribution fees. As a result, at any given time, the
performance of Class B and Class C should be expected to be lower
than that of Class A and the performance of Class A, Class B and
Class C should be expected to be lower than that of Class R.
Performance for each Class will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment was
purchased with an initial payment of $1,000 and that the
investment was redeemed at the end of a stated period of time,
after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis,
would result in the redeemable value of the investment at the end
of the period. Advertisements of the Fund's performance will
include the Fund's average annual total return for one, five and
ten year periods, or for shorter periods depending upon the
length of time during which the Fund has operated. Computations
of average annual total return for periods of less than one year
represent an annualization of the Fund's actual total return for
the applicable period.
Total return is computed on a per share basis and
assumes the reinvestment of dividends and distributions. Total
return generally is expressed as a percentage rate which is
calculated by combining the income and principal changes for a
specified period and dividing by the net asset value (or maximum
offering price in the case of Class A shares) 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 or Class C shares. Calculations
based on the net asset value per share do not reflect the
deduction of the sales load on the Fund's Class A shares, 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.
You should remember that performance is a function of portfolio
management in selecting the type and quality of portfolio
securities and is affected by operating expenses. Performance
information, such as that described above, may not provide a
basis for comparison with other investments or other investment
companies using a different method of calculating performance.
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.,
Morningstar, Inc., Wilshire 4500 Stock Index, Standard & Poor's
500 Composite Stock Price Index, the Dow Jones Industrial Average
and other industry publications.
GENERAL INFORMATION
The Fund was organized as a corporation under the laws
of Maryland on October 25, 1994, and has not engaged in active
business to the date of this Prospectus. The Fund is authorized
to issue 100 million shares of Common Stock, par value $.001 per
share. The Fund's shares are classified into four classes--Class
A, Class B, Class C and Class R. Each share has one vote and
shareholders will vote in the aggregate and not by class except
as otherwise required by law. However, only holders of Class B
or Class C shares, as the case may be, will be entitled to vote
on matters submitted to shareholders pertaining to its
Distribution Plan.
Unless otherwise required by the Investment Company Act
of 1940, ordinarily it will not be necessary for the Fund to hold
annual meetings of shareholders. As a result, Fund shareholders
may not consider each year the election of Directors or the
appointment of auditors. However, pursuant to the Fund's By-
Laws, the holders of at least 10% of the shares outstanding and
entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Director from office
and for any other purpose. Fund shareholders may remove a
Director by the affirmative vote of a majority of the Fund's
outstanding voting shares. In addition, the Board of Directors
will call a meeting of shareholders for the purpose of electing
Directors if, at any time, less than a majority of the Directors
then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership
and will send you confirmations and statements of account.
Shareholder inquiries may be made by writing to the
Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144.
No person has been authorized to give any information
or to make any representations other than those contained in this
Prospectus and in the Fund's official sales literature in connec-
tion 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>
PREMIER OPPORTUNITY FUND, INC.
CLASS A, CLASS B, CLASS C AND CLASS R
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 Premier Opportunity Fund, Inc. (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.
The Dreyfus Corporation ("Dreyfus") serves as the
Fund's investment adviser. Dreyfus has engaged Osprey Funds
Management, a Maryland Limited Partnership ("Osprey") to serve
as the Fund's sub-investment adviser and provide day-to-day
management of the Fund's investments, subject to the supervision
of Dreyfus. Dreyfus and Osprey are referred to collectively as
the "Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor")
is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . B-3
Management of the Fund . . . . . . . . . . . . . . . . B-14
Management Arrangements . . . . . . . . . . . . . . . B-15
Purchase of Fund Shares. . . . . . . . . . . . . . . . B-18
Distribution Plan and Shareholder Services Plan. . . . B-20
Redemption of Fund Shares. . . . . . . . . . . . . . . B-21
Shareholder Services . . . . . . . . . . . . . . . . . B-22
Determination of Net Asset Value . . . . . . . . . . . B-26
Dividends, Distributions and Taxes . . . . . . . . . . B-27
Portfolio Transactions . . . . . . . . . . . . . . . . B-29
Performance Information. . . . . . . . . . . . . . . . B-30
Information About the Fund . . . . . . . . . . . . . . B-31
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . B-31
Financial Statement. . . . . . . . . . . . . . . . . . B-32
Report of Independent Auditors . . . . . . . . . . . . B-34
Appendix . . . . . . . . . . . . . . . . . . . . . . . B-35
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "Description of the Fund."
Portfolio Securities
Bank Obligations. Domestic commercial banks organized
under Federal law are supervised and examined by the Comptroller
of the Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state
banking authorities but are members of the Federal Reserve
System only if they elect to join. In addition, state banks
whose certificates of deposit ("CDs") may be purchased by the
Fund are insured by the FDIC (although such insurance may not be
of material benefit to the Fund, depending on the principal
amount of the CDs of each bank held by the Fund) and are subject
to Federal examination and to a substantial body of Federal law
and regulation. As a result of Federal or state laws and
regulations, domestic branches of domestic banks whose CDs may
be purchased by the Fund generally are required, among other
things, to maintain specified levels of reserves, are limited in
the amounts which they can loan to a single borrower and are
subject to other regulation designed to promote financial
soundness. However, not all of such laws and regulations apply
to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks,
foreign subsidiaries of domestic banks and domestic and foreign
branches of foreign banks, such as CDs and time deposits
("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms
of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of
domestic banks. These risks include foreign economic and
political developments, foreign governmental restrictions that
may adversely affect payment of principal and interest on the
obligations, foreign exchange controls and foreign withholding
and other taxes on interest income. These foreign branches and
subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and
accounting, auditing and financial record keeping requirements.
In addition, less information may be publicly available about a
foreign branch of a domestic bank or about a foreign bank than
about a domestic bank.
Obligations of United States branches of foreign banks
may be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific
obligation or by Federal or state regulation as well as
governmental action in the country in which the foreign bank has
its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve
requirements imposed by the Federal Reserve System or by the
state in which the branch is located if the branch is licensed
in that state.
In addition, Federal branches licensed by the
Comptroller of the Currency and branches licensed by certain
states ("State Branches") may be required to: (1) pledge to the
regulator, by depositing assets with a designated bank within
the state, a certain percentage of their assets as fixed from
time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a
specified percentage of the aggregate amount of liabilities of
the foreign bank payable at or through all of its agencies or
branches within the state. The deposits of Federal and State
Branches generally must be insured by the FDIC if such branches
take deposits of less than $100,000.
In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign branches of domestic
banks, by foreign subsidiaries of domestic banks, by foreign
branches of foreign banks or by domestic branches of foreign
banks, the Advisers carefully evaluate such investments on a
case-by-case basis.
Repurchase Agreements. The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase
agreement. Repurchase agreements are considered by the staff of
the Securities and Exchange Commission to be loans by the Fund.
In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, the Fund will enter into repurchase
agreements only with domestic banks with total assets in excess
of one billion dollars, or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect
to securities of the type in which the Fund may invest, and will
require that additional securities be deposited with it if the
value of the securities purchased should decrease below the
resale price. The Advisers will monitor on an ongoing basis the
value of the collateral to assure that it always equals or
exceeds the repurchase price. The Fund will consider on an
ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements.
Commercial Paper and Other Short-Term Corporate
Obligations. Variable rate demand notes include variable amount
master demand notes, which are obligations that permit the Fund
to invest fluctuating amounts at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and
the borrower. These notes permit daily changes in the amounts
borrowed. As mutually agreed between the parties, the Fund may
increase the amount under the notes at any time up to the full
amount provided by the note agreement, or decrease the amount,
and the borrower may repay up to the full amount of the note
without penalty. Because these obligations are direct lending
arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus
accrued interest, at any time. Accordingly, where these
obligations are not secured by letters of credit or other credit
support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on
demand. In connection with floating and variable rate demand
obligations, the Advisers will consider, on an ongoing basis,
earning power, cash flow and other liquidity ratios of the
borrower, and the borrower's ability to pay principal and
interest on demand. Such obligations frequently are not rated
by credit rating agencies, and the Fund may invest in them only
if at the time of an investment the borrower meets the criteria
set forth in the Fund's Prospectus for other commercial paper
issuers.
Illiquid Securities. When purchasing securities that
have not been registered under the Securities Act of 1933, as
amended, and are not readily marketable, the Fund will endeavor
to obtain the right to registration at the expense of the
issuer. Generally, there will be a lapse of time between the
Fund's decision to sell any such security and the registration
of the security permitting sale. During any such period, the
price of the securities will be subject to market fluctuations.
However, if a substantial market of qualified institutional
buyers develops pursuant to Rule 144A under the Securities Act
of 1933, as amended, for certain unregistered securities held by
the Fund, the Fund intends to treat such securities as liquid
securities in accordance with procedures approved by the Fund's
Board. Because it is not possible to predict with assurance how
the market for restricted securities pursuant to Rule 144A will
develop, the Fund's Board has directed the Advisers to monitor
carefully the Fund's investments in such securities with
particular regard to trading activity, availability of reliable
price information and other relevant information. To the extent
that, for a period of time, qualified institutional buyers cease
purchasing restricted securities pursuant to Rule 144A, the
Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's portfolio
during such period.
Management Policies
The Fund engages, except as noted, in the following
practices in furtherance of its objective.
Options Transactions. The Fund 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 Fund's 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 Fund 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 Fund may write (a) in-the-money call
options when the Advisers expect 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
Advisers expect 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 Advisers expect 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 Fund's obligation as the writer of an
option continues, the Fund may be assigned an exercise notice by
the broker-dealer through which the option was sold, requiring
the Fund to deliver, in the case of a call, or take delivery of,
in the case of a put, the underlying security against payment of
the exercise price. This obligation terminates when the option
expires or the Fund effects a closing purchase transaction. The
Fund 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 Fund generally
will purchase or write only those options for which the Advisers
believe 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 otherwise may interfere with the timely
execution of customers' orders, will not recur. In such event,
it might not be possible to effect closing transactions in
particular options. If as a covered call option writer the Fund
is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position.
Stock Index Options. The Fund may purchase and write
put and call options on stock indexes listed on securities
exchanges or traded in the over-the-counter market. A stock
index fluctuates with changes in the market values of the stocks
included in the index.
Options on stock indexes are similar to options on
stock except that (a) the expiration cycles of stock index
options are generally monthly, while those of stock options are
currently quarterly, and (b) the delivery requirements are
different. Instead of giving the right to take or make delivery
of a stock at a specified price, an option on a stock index
gives the holder the right to receive a cash "exercise
settlement amount" equal to (i) the amount, if any, by which the
fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value
of the underlying index on the date of exercise, multiplied by
(ii) a fixed "index multiplier." Receipt of this cash amount
will depend upon the closing level of the stock index upon which
the option is based being greater than, in the case of a call,
or less than, in the case of a put, the exercise price of the
option. The amount of cash received will be equal to such
difference between the closing price of the index and the
exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in
return for the premium received, to make delivery of this
amount. The writer may offset its position in stock index
options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire
unexercised.
Futures Contracts and Options on Futures Contracts.
Upon exercise of an option, the writer of the option will
deliver 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.
Foreign Currency Transactions. If the Fund enters into
a currency transaction, it will deposit, if so required by
applicable regulations, with its custodian cash or readily
marketable securities in a segregated account of the Fund in an
amount at least equal to the value of the Fund's total assets
committed to the consummation of the forward contract. If the
value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the
account so that the value of the account will equal the amount
of the Fund's commitment with respect to the contract.
At or before the maturity of a forward contract, the
Fund either may sell a security and make delivery of the
currency, or retain the security and offset its contractual
obligation to deliver the currency by purchasing a second
contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency which it is
obligated to deliver. If the Fund retains the portfolio
security and engages in an offsetting transaction, the Fund, at
the time of execution of the offsetting transaction, will incur
a gain or loss to the extent movement has occurred in forward
contract prices. Should forward prices decline during the
period between the Fund's entering into a forward contract for
the sale of a currency and the date it enters into an offsetting
contract for the purchase of the currency, the Fund will realize
a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to
purchase. Should forward prices increase, the Fund will suffer
a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to
sell.
The cost to the Fund of engaging in currency
transactions varies with factors such as the currency involved,
the length of the contract period and the market conditions then
prevailing. Because transactions in currency exchange usually
are conducted on a principal basis, no fees or commissions are
involved. The use of forward currency exchange contracts does
not eliminate fluctuations in the underlying prices of the
securities, but it does establish a rate of exchange that can be
achieved in the future. If a devaluation generally is
anticipated, the Fund may not be able to contract to sell the
currency at a price above the devaluation level it anticipates.
The requirements for qualification as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the
"Code"), may cause the Fund to restrict the degree to which it
engages in currency transactions. See "Dividends, Distributions
and Taxes."
Lending Portfolio Securities. To a limited extent, the
Fund 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 Fund can
increase its income through the investment of the cash
collateral. For purposes of this policy, the Fund considers
collateral consisting of U.S. Government securities or
irrevocable letters of credit issued by banks whose securities
meet the standards for investment by the Fund to be the
equivalent of cash. From time to time, the Fund may return to
the borrower or a third party which is unaffiliated with the
Fund, 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 Fund 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
Fund must be able to terminate the loan at any time; (4) the
Fund must receive reasonable interest on the loan, as well as
any dividends, interest or other distributions payable on the
loaned securities, and any increase in market value; (5) the
Fund may pay only reasonable custodian fees in connection with
the loan; and (6) while voting rights on the loaned securities
may pass to the borrower, the Fund's Board of Directors must
terminate the loan and regain the right to vote the securities
if a material event adversely affecting the investment occurs.
These conditions may be subject to future modification.
Risk Factors--Lower Rated Securities. The Fund is permitted to
invest in securities rated below Baa by Moody's Investors
Service, Inc. ("Moody's") and below BBB by Standard & Poor's
Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch") and
Duff & Phelps, Inc. ("Duff") and as low as the lowest rating
assigned by Moody's, S&P, Fitch or Duff. Such securities,
though higher yielding, are characterized by risk. See in the
Prospectus "Description of the Fund--Risk Factors--Lower Rated
Securities" for a discussion of certain risks and the "Appendix"
for a general description of Moody's, S&P, Fitch and Duff
ratings. Although ratings may be useful in evaluating the
safety of interest and principal payments, they do not evaluate
the market value risk of these securities. The Fund will rely
on the Advisers' judgment, analysis and experience in evaluating
the creditworthiness of an issuer.
Investors should be aware that the market values of
many of these securities tend to be more sensitive to economic
conditions than are higher rated securities and will fluctuate
over time. These securities are considered by S&P, Moody's,
Fitch and Duff, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation and generally will
involve more credit risk than securities in the higher rating
categories.
Companies that issue certain of these securities often
are highly leveraged and may not have available to them more
traditional methods of financing. Therefore, the risk
associated with acquiring the securities of such issuers
generally is greater than is the case with the higher rated
securities. For example, during an economic downturn or a
sustained period of rising interest rates, highly leveraged
issuers of these securities may not have sufficient revenues to
meet their interest payment obligations. The issuer's ability
to service its debt obligations also may be affected adversely
by specific corporate developments, forecasts, or the
unavailability of additional financing. The risk of loss
because of default by the issuer is significantly greater for
the holders of these securities because such securities
generally are unsecured and often are subordinated to other
creditors of the issuer.
Because there is no established retail secondary market
for many of these securities, the Fund anticipates that such
securities could be sold only to a limited number of dealers or
institutional investors. To the extent a secondary trading
market for these securities does exist, it generally is not as
liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on
market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity
needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack
of a liquid secondary market for certain securities also may
make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing the Fund's securities and
calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of these securities. In such
cases, judgment may play a greater role in valuation because
less reliable, objective data may be available.
These securities may be particularly susceptible to
economic downturns. It is likely that any economic recession
could disrupt severely the market for such securities and may
have an adverse impact on the value of such securities. In
addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities
to repay principal and pay interest thereon and increase the
incidence of default for such securities.
The Fund may acquire these securities during an initial
offering. Such securities may involve special risks because
they are new issues. The Fund has no arrangement with the
Distributor or any other persons concerning the acquisition of
such securities, and the Advisers will review carefully the
credit and other characteristics pertinent to such new issues.
Lower rated zero coupon securities involve special
considerations. The credit risk factors pertaining to lower
rated securities also apply to lower rated zero coupon
securities. Such zero coupon securities carry an additional
risk in that, unlike securities which pay interest throughout
the period to maturity, the Fund will realize no cash until the
cash payment date unless a portion of such securities are sold
and, if the issuer defaults, the Fund may obtain no return at
all on its investment. See "Dividends, Distributions and
Taxes."
Investment Restrictions
The Fund has adopted investment restrictions numbered 1
through 10 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 Fund's outstanding voting shares. Investment
restrictions numbered 11 through 16 are not fundamental policies
and may be changed by vote of a majority of the Fund's Directors
at any time. The Fund may not:
1. Invest more than 5% of its assets in the
obligations of any single issuer, except that up to 25% of the
value of the Fund's total assets may be invested, and securities
issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such
limitation.
2. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of the Fund's total assets.
3. Invest more than 25% of the value of its total
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.
4. Invest in commodities, except that the Fund may
purchase and sell options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes.
5. Purchase, hold or deal in real estate, or oil, gas
or other mineral leases or exploration or development programs,
but the Fund may purchase and sell securities that are secured
by real estate or issued by companies that invest or deal in
real estate or real estate investment trusts.
6. 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 or
indexes shall not constitute borrowing.
7. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
However, the Fund 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 guide-
lines established by the Securities and Exchange Commission and
the Fund's Board of Directors.
8. Act as an underwriter of securities of other
issuers, except to the extent the Fund may be deemed an under-
writer under the Securities Act of 1933, as amended, by virtue
of disposing of portfolio securities.
9. 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. 4, 6, 13
and 14 may be deemed to give rise to a senior security.
10. Purchase securities on margin, but the Fund may
make margin deposits in connection with transactions in options,
forward contracts, futures contracts, including those relating
to indexes, and options on futures contracts or indexes.
11. Purchase securities of any company having less
than three years' continuous operations (including operations of
any predecessor) if such purchase would cause the value of the
Fund's investments in all such companies to exceed 5% of the
value of its total assets.
12. Invest in the securities of a company for the
purpose of exercising management or control, but the Fund will
vote the securities it owns in its portfolio as a shareholder in
accordance with its views.
13. Pledge, mortgage or hypothecate its assets, except
to the extent necessary to secure permitted borrowings and to
the extent related to the purchase of securities on a when-
issued or forward commitment basis and the deposit of assets in
escrow in connection with writing covered put and call options
and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes.
14. Purchase, sell or write puts, calls or
combinations thereof, except as described in the Fund's
Prospectus and Statement of Additional Information.
15. 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 Fund's net assets would be so invested.
16. 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 change 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 Fund
shares in certain states. Should the Fund determine that a
commitment is no longer in the best interest of the Fund and its
shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with
information as to their principal business occupations during at
least the last five years, are shown below. Each Director who
is deemed to be an "interested person" of the Fund, as defined
in the Act, is indicated by an asterisk.
Directors of the Fund
[TO BE INSERTED]
For so long as the Fund's plans described in the
section captioned "Distribution Plan and Shareholder Services
Plan" remain in effect, the Directors of the Fund who are not
"interested persons" of the Fund, as defined in the Act, will be
selected and nominated by the Directors who are not "interested
persons" of the Fund.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief
Operating Officer of the Distributor and an officer of other
investment companies advised or administered by Dreyfus.
From December 1991 to July 1994, she was President and Chief
Compliance Officer of Funds Distributor, Inc., a wholly-
owned subsidiary of The Boston Company, Inc. Prior to
December 1991, she served as Vice President and Controller,
and later as Senior Vice President, of The Boston Company
Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice
President and General Counsel of the Distributor and an
officer of other investment companies advised or
administered by Dreyfus. From February 1992 to July 1994,
he served as Counsel for The Boston Company Advisors, Inc.
From August 1990 to February 1992, he was employed as an
Associate at Ropes & Gray, and prior to August 1990, he was
employed as an Associate at Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer.
Senior Vice President of the Distributor and an officer of
other investment companies advised or administered by
Dreyfus. From 1988 to August 1994, he was Manager of the
High Performance Fabric Division of Springs Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary.
Associate General Counsel of the Distributor and an officer
of other investment companies advised or administered by
Dreyfus. From September 1992 to August 1994, he was an
attorney with the Board of Governors of the Federal Reserve
System.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the
Distributor and an officer of other investment companies
advised or administered by Dreyfus. From July 1988 to
August 1994, he was employed by The Boston Company, Inc.
where he held various management positions in the Corporate
Finance and Treasury areas.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the
Distributor and an officer of other investment companies
advised or administered by Dreyfus. From 1984 to July 1994,
he was Assistant Vice President in the Mutual Fund
Accounting Department of Dreyfus.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President
of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From
January 1992 to July 1994, he was a Senior Legal Product
Manager and, from January 1990 to January 1992, a mutual
fund accountant, for The Boston Company Advisors, Inc.
Prior thereto, he was employed as a licensed realtor at
Furcinito Real Estate, Inc.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President
of the Distributor of an officer of other investment
companies advised or administered by Dreyfus. From March
1992 to July 1994, she was a Compliance Officer for The
Managers Funds, a registered investment company. From March
1990 until September 1991, she was Development Director of
The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National
Affairs.
The address of each officer of the Fund is 200 Park
Avenue, New York, New York 10166.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "Management of the Fund."
Management Agreement. Dreyfus supervises investment
management of the Fund pursuant to the Management Agreement (the
"Management Agreement"), dated _____________, 1994 between
Dreyfus and the Fund. The Management Agreement is subject to
annual approval by (i) the Fund's Board of Directors or (ii)
vote of a majority (as defined in the Act) of the Fund's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Directors who
are not "interested persons" (as defined in the Act) of the Fund
or Dreyfus, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Management Agreement is
terminable without penalty, on 60 days' notice, by the Fund's
Board of Directors or by vote of the holders of a majority of
the Fund's shares, or, upon not less than 90 days' notice, by
Dreyfus. The Management Agreement will terminate automatically
in the event of its assignment (as defined in the Act).
The following persons are officers and/or directors of
Dreyfus: Howard Stein, Chairman of the Board and Chief
Executive Officer; Julian M. Smerling, Vice Chairman of the
Board; Joseph S. DiMartino, President and a director; W. Keith
Smith, Chief Operating Officer and a director; Paul H. Snyder,
Vice President and Chief Financial Officer; Daniel C. Maclean,
Vice President and General Counsel; Barbara E. Casey, Vice
President--Retirement Services; Robert F. Dubuss, Vice
President; Henry D. Gottmann, Vice President--Retail; Elie M.
Genadry, Vice President--Wholesale; Mark N. Jacobs, Vice
President--Fund Legal and Compliance; Jeffrey N. Nachman, Vice
President--Mutual Fund Accounting; Diane M. Coffey, Vice
President--Corporate Communications; Jay R. DeMartine, Vice
President--Marketing; Kirk V. Stumpp, Vice President--New
Product Development; Lawrence S. Kash, Vice Chairman--
Distribution; Philip L. Toia, Vice Chairman--Operations and
Administration; Katherine C. Wickham, Vice President--Human
Resources; Maurice Bendrihem, Controller; and Mandell L. Berman,
Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene,
Abigail Q. McCarthy and David B. Truman, directors.
Dreyfus maintains office facilities on behalf of the
Fund, and furnishes the Fund statistical and research data,
clerical help, accounting, data processing, bookkeeping and
internal auditing and certain other required services. Dreyfus
also may make such advertising and promotional expenditures
using its own resources, as it from time to time deems
appropriate.
Sub-Investment Advisory Agreement. Osprey provides
investment advisory assistance and day-to-day management of the
Fund's investments pursuant to the Sub-Investment Advisory
Agreement dated _________, 1994 between Osprey and Dreyfus. The
Sub-Investment Advisory Agreement is subject to annual approval
by (i) the Fund's Board of Directors or (ii) vote of a majority
(as defined in the Act) of the Fund's outstanding voting
securities, provided that in either event the continuance also
is approved by a majority of the Directors who are not
"interested persons" (as defined in the Act) of the Fund or
Osprey, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Sub-Investment Advisory
Agreement is terminable without penalty, (i) by Dreyfus on 60
days' notice, (ii) by the Fund's Board of Directors or by vote
of the holders of a majority of the Fund's outstanding voting
securities on 60 days' notice, or (iii) upon not less than 90
days' notice, by Osprey. The Sub-Investment Advisory Agreement
will terminate automatically in the event of its assignment (as
defined in the Act).
The sole officer of Osprey is Robert K. Jermain. The
general partners of Osprey are Alex. Brown Management Services,
Inc. and Mako Investments, Inc.
Osprey provides day-to-day management of the Fund's
investments, subject to the supervision of Dreyfus and the Board
of Directors. The Advisers provide the Fund with portfolio
managers who are authorized by the Board of Directors to execute
purchases and sales of securities. The Fund's portfolio
managers are Robert K. Jermain and _________________. The
Advisers maintain research departments with professional
portfolio managers and securities analysts who provide research
services for the Fund as well as for other funds advised by
Dreyfus or Osprey.
Expenses. All expenses incurred in the operation of
the Fund are borne by the Fund, except to the extent
specifically assumed by Dreyfus. The expenses borne by the Fund
include: organizational costs, taxes, interest, loan commitment
fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members,
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 preparing and printing prospectuses and
statements of additional information for regulatory purposes and
for distribution to existing shareholders, costs of
shareholders' reports and meetings, and any extraordinary
expenses.
In addition, Class B and Class C shares are subject to
an annual distribution fee and Class A, Class B and Class C
shares are subject to annual service fees. See "Distribution
Plan and Shareholder Services Plan."
Dreyfus has agreed that if in any fiscal year the
aggregate expenses of the Fund, 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 Fund, the
Fund may deduct from the payment to be made to Dreyfus under the
Management Agreement, or Dreyfus 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 Dreyfus is not
subject to reduction as the value of the Fund's net assets
increases.
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 Premier Family of Funds, for funds in the
Dreyfus Family of Funds and for certain other investment
companies.
Sales Loads--Class A. The scale of sales loads
applies to purchases of Class A shares made by any "purchaser,"
which term includes an individual and/or spouse purchasing
securities for his, her or their own account or for the account
of any minor children, or a trustee or other fiduciary
purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other
employee benefit trust created pursuant to a plan qualified
under Section 401 of the 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.
Set forth below is an example of the method of
computing the offering price of the Class A shares. The example
assumes a purchase of Class A shares aggregating less than
$50,000 subject to the schedule of sales charges set forth in
the Prospectus at a price based upon the net asset value of the
Class A shares.
Net Asset Value per Share $12.50
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $ 0.59
Per Share Offering Price to
the Public $13.09
TeleTransfer Privilege--All Classes, except Class R.
TeleTransfer purchase orders 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. 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 shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on
the Account Application or Shareholder Services Form on file.
If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Fund Shares--
TeleTransfer Privilege--All Classes, except Class R."
Reopening an Account. An investor may reopen an
account with a minimum investment of $100 without filing a new
Account Application during the calendar year the account is
closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
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 B and Class C shares are subject to a
Distribution Plan and Class A, Class B and Class C shares are
subject to a Shareholder Services Plan. In some states, certain
financial institutions effecting transactions in Fund shares may
be required to register as dealers pursuant to state law.
Distribution Plan. Rule 12b-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 Directors has
adopted such a plan with respect to Class B and Class C shares
(the "Plan"). The Fund's Board of Directors believes that there
is a reasonable likelihood that Plan will benefit the Fund and
the holders of Class B and Class C shares.
A quarterly report of the amounts expended under the
Plan, and the purposes for which such expenditures were
incurred, must be made to the Directors for their review. In
addition, the Plan provides that it may not be amended to
increase materially the cost which holders of Class B or Class C
shares may bear pursuant to the Plan without the approval of the
holders of such Classes and that other material amendments of
the Plan must be approved by the Board of Directors and by the
Directors who are not "interested persons" (as defined in the
Act) of the Fund and have no direct or indirect financial
interest in the operation of the Plan or in any agreements
entered into in connection with the Plan, by vote cast in person
at a meeting called for the purpose of considering such
amendments. The Plan is subject to annual approval by such vote
of the Directors cast in person at a meeting called for the
purpose of voting on the Plan. The Plan was so approved by the
Directors at a meeting held on ____________, 1994. The Plan may
be terminated at any time by vote of a majority of the Directors
who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan or by vote
of the holders of a majority of Class B and Class C shares.
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, Class B and Class C shares.
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 Directors for
their review. In addition, the Shareholder Services Plan
provides that it may not be amended without approval of the
Directors, and by the Directors 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 Directors 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
_____________, 1994. The Shareholder Services Plan is
terminable at any time by vote of a majority of the Directors
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.
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."
Stock Certificates; Signatures. Any certificates
representing Fund shares to be redeemed must be submitted with
the redemption request. Written redemption requests must be
signed by each shareholder, including each holder of a joint
account, and each signature must be guaranteed. Signatures on
endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers,
dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and
savings associations as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP") and the Stock
Exchanges Medallion Program. Guarantees must be signed by an
authorized signatory of the guarantor and "Signature-Guaranteed"
must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other
suitable verification arrangements from foreign investors, such
as consular verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers
listed on the cover.
TeleTransfer Privilege--All Classes, except Class R.
Investors should be aware that if they have selected the
TeleTransfer Privilege, any request for a wire redemption 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--
All Classes, except Class R."
Redemption Commitment. The Fund has committed itself
to pay in cash all redemption requests by any shareholder of
record of the Fund, limited in amount during any 90-day period
to the lesser of $250,000 or 1% of the value of the Fund's net
assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in
excess of such amount, the Board of Directors reserves the right
to make payments in whole or in part in securities or other
assets in case of an emergency or any time a cash distribution
would impair the liquidity of the Fund to the detriment of the
existing shareholders. In this event, the securities would be
valued in the same manner as the Fund's portfolio is valued. If
the recipient sold such securities, brokerage charges 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. Shares of any Class of the Fund
may be exchanged for shares of the respective Class of certain
other funds advised or administered by Dreyfus. Shares of the
same Class of such funds purchased by exchange will be purchased
on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered
without a sales load will be made without a sales
load.
B. Shares of funds purchased without a sales load
may be exchanged for shares of other funds sold
with a sales load, and the applicable sales load
will be deducted.
C. Shares of funds purchased with a sales load may
be exchanged without a sales load for shares of
other funds sold without a sales load.
D. Shares of funds purchased with a sales load,
shares of funds acquired by a previous exchange
from shares purchased with a sales load and
additional shares acquired through reinvestment
of dividends or distributions of any such funds
(collectively referred to herein as "Purchased
Shares") may be exchanged for shares of other
funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales
load applicable to the Offered Shares exceeds the
maximum sales load that could have been imposed
in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without
giving effect to any reduced loads, the
difference will be deducted.
E. Shares of funds subject to a contingent deferred
sales charge ("CDSC") that are exchanged for
shares of another fund will be subject to the
higher applicable CDSC of the two funds, and for
purposes of calculating CDSC rates and conversion
periods, if any, will be deemed to have been held
since the date the shares being exchanged were
initially purchased.
To accomplish an exchange under item D above,
shareholders must notify the Transfer Agent of their prior
ownership of fund shares and their account number.
To use this Privilege, 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.
Telephone exchanges may be made only if the appropriate "YES"
box has been checked on the Account Application, or a separate
signed Shareholder 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.
Exchanges of Class R shares held by a Retirement Plan
may be made only between the investor's Retirement Plan account
in one fund and such investor's Retirement Plan account in
another fund.
To establish a personal retirement plan by exchange,
shares of the fund being exchanged must have a value of at least
the minimum initial investment required for the fund into which
the exchange is being made. For Dreyfus-sponsored Keogh Plans,
IRAs and SEP-IRAs with only one participant, the minimum initial
investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and IRAs set up under a Simplified Employee
Pension Plan ("SEP-IRAs") with more than one participant, the
minimum initial investment is $100 if the plan has at least
$1,000 invested among the funds in the Premier Family of Funds
or the Dreyfus Family of Funds. To exchange shares held in a
personal retirement plan account, the shares exchanged must have
a current value of at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the
Fund, shares of the same Class of another fund in the Premier
Family of Funds or the Dreyfus Family of Funds. This Privilege
is available only for existing accounts. With respect to
Class R shares held by a Retirement Plan, exchanges may be made
only between the investor's Retirement Plan account in one fund
and such investor's Retirement Plan account in another fund.
Shares will be exchanged on the basis of relative net asset
value as described above under "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 the investor's
account falls below the amount designated to be exchanged under
this Privilege. In this case, an investor's account will fall
to zero unless additional investments are made in excess of the
designated amount prior to the next Auto-Exchange transaction.
Shares held under 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.
Shareholder Services Forms and prospectuses of the
other funds may be obtained from the Distributor. 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. The Automatic Withdrawal Plan
permits an investor with a $5,000 minimum account to request
withdrawal of a specified dollar amount (minimum of $50) on
either a monthly or quarterly basis. Withdrawal payments are
the proceeds from sales of Fund shares, not the yield on the
shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and
eventually may be depleted. 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. Shares for which certificates have been issued may not
be redeemed through the Automatic Withdrawal Plan.
Dividend Sweep. Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and
capital gain distributions, if any, from the Fund in shares of
the same Class of another fund in the Premier Family of Funds or
the Dreyfus Family of Funds of which the investor is a
shareholder. Shares of the same Class of other funds purchased
pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in
shares of other funds that are offered without a
sales load.
B. Dividends and distributions paid by a fund which
does not charge a sales load may be invested in
shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which
charges a sales load may be invested in shares of
other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares
exceeds the maximum sales load charged by the
fund from which dividends or distributions are
being swept, without giving effect to any reduced
loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a
CDSC and the applicable CDSC, if any, will be
imposed upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans.
The Fund makes available to corporations a variety of prototype
pension and profit-sharing plans including a 401(k) Salary
Reduction Plan. In addition, the Fund makes available Keogh
Plans, IRAs, including SEP-IRAs and IRA "Rollover Accounts," and
403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in
conjunction with a Keogh Plan, a 403(b)(7) Plan or an IRA,
including an SEP-IRA, may request from the Distributor forms for
adoption of such plans.
The entity acting as custodian for Keogh Plans,
403(b)(7) Plans or IRAs may charge a fee, payment of which could
require the liquidation of shares. All fees charged are
described in the appropriate form.
Shares may be purchased in connection with these plans
only by direct remittance to the entity acting as custodian.
Purchases for these plans may not be made in advance of receipt
of funds.
The minimum initial investment for corporate plans,
Salary Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more
than one participant, is $1,000 with no minimum on subsequent
purchases. The minimum initial investment for Dreyfus-sponsored
Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one
participant, is normally $750, with no minimum on subsequent
purchases. Individuals who open an IRA may also open a non-
working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan
and the appropriate form of Custodial Agreement for further
details on eligibility, service fees and tax implications, and
should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "How to Buy Fund Shares."
Valuation of Portfolio Securities. The Fund's
securities, including covered call options written by the Fund,
are valued at the last sale price on the securities exchange or
national securities market on which such securities primarily
are traded. Short-term investments are carried at amortized
cost, which approximates value. Securities not listed on an
exchange or national securities market, or securities in which
there were no transactions, are valued at the average of the
most recent bid and asked prices, except in the case of open
short positions where the asked price is used for valuation
purposes. Bid price is used when no asked price is available.
Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as
determined in good faith by the Fund's Board of Directors.
Expenses and fees of the Fund, including the management fee paid
by the Fund and the distribution and shareholder services fees,
as applicable, are accrued daily and taken into account for the
purpose of determining the net asset value of Fund shares.
Because of the differences in operating expenses incurred by
each Class, the per share net asset value of each Class will
differ.
Restricted securities, as well as securities or other
assets for which market quotations are not readily available, or
are not valued by a pricing service approved by the Board of
Directors, are valued at fair value as determined in good faith
by the Board of Directors. The Board of Directors will review
the method of valuation on a current basis. In making their
good faith valuation of restricted securities, the Directors
generally will take the following factors into consideration:
restricted securities which are securities of the same class of
securities for which a public market exists usually will be
valued at market value less the same percentage discount at
which purchased. This discount will be revised periodically by
the Board of Directors if the Directors believe that it no
longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for
which a public market exists usually will be valued initially at
cost. Any subsequent adjustment from cost will be based upon
considerations deemed relevant by the Board of Directors.
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.
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."
It is expected that the Fund will qualify as a
"regulated investment company" under the Code, as long as such
qualification is in the best interests of its shareholders.
Qualification as a regulated investment company relieves the
Fund 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 net
asset value of the 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 above. In
addition, the Code provides that if a shareholder holds shares
of the Fund 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.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain and loss. However,
a portion of the gain or loss from the disposition of non-U.S.
dollar denominated securities (including debt instruments,
certain financial forward futures and option contracts and
certain preferred stock) may be treated as ordinary income or
loss under Section 988 of the Code. In addition, all or a
portion of any gain realized from the sale or other disposition
of certain market discount bonds will be treated as ordinary
income under Section 1276. Finally, 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 forward, futures,
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, any gain or loss
realized by the Fund from certain futures and forward contracts
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 contracts
and options as well as from closing transactions. In addition,
any such contracts 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 Fund characterized in the manner described above.
Offsetting positions held by the Fund involving
certain contracts or options may constitute "straddles."
"Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, overrides or modifies the
provisions of Section 1256 and 988. As such, all or a portion
of any short-term or long-term capital gain from certain
"straddle" transactions may be recharacterized to ordinary
income. If the Fund were treated as entering into "straddles"
by reason of its engaging in certain forward contracts or
options transactions, such "straddles" would be characterized as
"mixed straddles" if the forward contracts or options
transactions comprising a part of such "straddles" were governed
by Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which
election is made, if any, the results to the Fund may differ.
If no election is made to the extent the "straddle" and
conversion transactions rules apply to positions established by
the Fund, losses realized by the Fund will be deferred to the
extent of unrealized gain in the offsetting position. Moreover,
as a result of the "straddle" rules, short-term capital loss on
"straddle" positions may be recharacterized as long-term capital
loss, and long-term capital gains may be treated as short-term
capital gains or ordinary income.
Investment by the Fund in securities issued or
acquired at a discount, 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 by causing the Fund
to recognize income prior to the receipt of cash payments. For
example, the Fund could be required to accrue a portion of the
discount (or deemed discount) at which the securities were
issued and to distribute such income in order to maintain its
qualification as a regulated investment company. In such case,
the Fund may have to dispose of securities which it might
otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
If the Fund invests in an entity that is classified as
a "passive foreign investment company" ("PFIC") for federal
income tax purposes, the operation of certain provisions of the
Code applying to PFICs could result in the imposition of certain
federal income taxes on the Fund. In addition, gain realized
from the sale or other disposition of PFIC securities may be
treated as ordinary income under Section 1291 of the Code.
PORTFOLIO TRANSACTIONS
Dreyfus assumes general supervision over placing
orders on behalf of the Fund for the purchase or sale of
investment securities. Allocation of brokerage transactions,
including their frequency, is made in Dreyfus' best judgment and
in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt execution of orders at the most
favorable net price. Subject to this consideration, the brokers
selected will include those that supplement the Advisers'
research facilities with statistical data, investment
information, economic facts and opinions. Information so
received is in addition to and not in lieu of services required
to be performed by the Advisers and the Advisers' fees are not
reduced as a consequence of the receipt of such supplemental
information.
Such information may be useful to Dreyfus in serving
both the Fund and other funds which it advises and to Osprey in
serving both the Fund and the other funds or accounts it
advises, and, conversely, supplemental information obtained by
the placement of business of other clients may be useful to the
Advisers in carrying out their obligations to the Fund. Sales
of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle
special executions such as are involved in large block trades or
broad distributions, provided the primary consideration is met.
Large block trades may, in certain cases, result from two or
more funds advised or administered by Dreyfus being engaged
simultaneously in the purchase or sale of the same security.
Certain of the Fund's transactions in securities of foreign
issuers may not benefit from the negotiated commission rates
available to the Fund for transactions in securities of domestic
issuers. When transactions are executed in the over-the-counter
market, the Fund will deal with the primary market makers unless
a more favorable price or execution otherwise is obtainable.
Foreign exchange transactions are made with banks or institu-
tions in the interbank market at prices reflecting a mark-up or
mark-down and/or commission.
Portfolio turnover may vary from year to year as well
as within a year. It is anticipated that in any fiscal year the
turnover rate may approach the ___% level for the Fund; however,
in periods in which extraordinary market conditions prevail, the
Advisers will not be deterred from changing investment strategy
as rapidly as needed, in which case higher turnover rates can be
anticipated which would result in greater brokerage expenses.
The overall reasonableness of brokerage commissions paid is
evaluated by Dreyfus based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
PERFORMANCE INFORMATION
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "Performance Information."
Average annual total return is calculated by
determining the ending redeemable value of an investment
purchased at net asset value (maximum offering price in the case
of Class A) per share with a hypothetical $1,000 payment made at
the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the
initial investment, taking the "n"th root of the quotient (where
"n" is the number of years in the period) and subtracting 1 from
the result. A Class' 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 or Class C 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 Fund's net asset value (maximum offering price in the
case of Class A) per share at the beginning of a stated period
from the net asset value (maximum offering price in the case of
Class A) per share at the end of the period (after giving effect
to the reinvestment of dividends and distributions during the
period and any applicable CDSC), and dividing the result by the
net asset value (maximum offering price in the case of Class A)
per share at the beginning of the period. Total return also may
be calculated based on the net asset value per share at the
beginning of the period instead of the maximum offering price
per share at the beginning of the period for Class A shares or
without giving effect to any applicable CDSC at the end of the
period for Class B or Class C shares. In such cases, the
calculation would not reflect the deduction of the sales load
with respect to Class A shares or any applicable CDSC with
respect to Class B or Class C shares, which, if reflected would
reduce the performance quoted.
INFORMATION ABOUT THE FUND
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "General Information."
Each Fund share has one vote and, when issued and paid
for in accordance with the terms of the offering, is fully paid
and non-assessable. Fund 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York,
New York 10286, is the Fund's 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. Neither The Bank
of New York nor The Shareholder Services Group, Inc. has any
part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
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 common stock
being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New
York 10019, independent auditors, have been selected as auditors
of the Fund.<PAGE>
FINANCIAL STATEMENTS
PREMIER OPPORTUNITY FUND, INC.
Statement of Assets and Liabilities
___________ , 1994
ASSETS
Cash $ .00
Deferred organization initial offering expenses .00
Total Assets $ .00
LIABILITIES
Accrued organization initial offering expenses .00
NET ASSETS applicable to __________
Class A shares of common stock, ____
Class B shares of common stock,
____ Class C shares of common
stock and _________ Class R
shares of common stock ($.001 par value)
issued and outstanding (25,000,000
shares of each Class authorized) . . . . . . . $
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
NET ASSET VALUE and redemption price per
share ($________/________ Class A shares
of common stock issued and outstanding). . . $_____
Sales Charge -- 4.50% of public offering price .____
Maximum Offering Price . . . . . . . . . . . $
Class B Shares
NET ASSET VALUE and redemption price per
share ($________/_______ Class B shares
of common stock issued and outstanding). . . $
Class C Shares
NET ASSET VALUE and redemption price per
share ($_______/______ Class C shares
of common stock issued and outstanding). . . $
Class R Shares
NET ASSET VALUE and redemption price per
share ($_______/________ Class R shares
of common stock issued and outstanding). . . $
NOTE - Premier Opportunity Fund, Inc. (the "Fund") was
incorporated under the laws of the State of Maryland on
October 25, 1994 and has had no operations since that date other
than matters relating to its organization and registration as an
open-end investment company under the Investment Company Act of
1940 and the Securities Act of 1933 and the sale and issuance of
___ Class A shares, ___ Class B shares, ___ Class C shares and
_____ Class R shares of common stock to ________________
("Initial Shares"). Any organization expenses payable by the
Fund have been deferred and will be amortized from the date
operations commence over a period which it is expected that a
benefit will be realized, not to exceed five years. If any of
the Initial Shares are redeemed during the amortization period
by any holder thereof, the redemption proceeds will be reduced
by any unamortized organization expenses in the same proportion
as the number of Initial Shares being redeemed bears to the
number of Initial Shares outstanding at the time of the
redemption.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Directors
Premier Opportunity Fund, Inc.
We have audited the accompanying statement of assets and liabil-
ities of Premier Opportunity Fund, Inc. as of ___________ ,
1994. The statement of assets and liabilities is the responsib-
ility of the Fund's management. Our responsibility is to
express an opinion on the statement of assets and liabilities
based on our audits.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of assets and liabilities is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in each
statement of assets and liabilities. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred
to above presents fairly, in all material respects, the
financial position of Premier Opportunity Fund, Inc. at
_________ , 1994, in conformity with generally accepted
accounting principles.
New York, New York
, 1994
Ernst & Young LLP
<PAGE>
APPENDIX
Description of certain ratings assigned by Standard &
Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch") and Duff &
Phelps, Inc. ("Duff"):
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely
strong.
AA
Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest
and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated
categories.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC and C is regarded as having
predominantly speculative characteristics with respect to
capacity to pay interest and repay principal. BB indicates the
least degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to
default than other speculative grade debt. However, it faces
major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default
but presently has the capacity to meet interest payments and
principal repayments. Adverse business, financial or economic
conditions would likely impair capacity or willingness to pay
interest and repay principal.
CCC
Debt rated CCC has a current identifiable
vulnerability to default, and is dependent upon favorable
business, financial and economic conditions to meet timely
payments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt
subordinated to senior debt which is assigned an actual or
implied CCC rating.
C
The rating C is typically applied to debt subordinated
to senior debt which is assigned an actual or implied CCC- debt
rating.
D
Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may
be modified by the addition of a plus or minus sign to show
relative standing within the major ratings categories.
Commercial Paper Rating
The designation A-1 by S&P indicates that the degree
of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus sign (+)
designation.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what generally are known as high grade bonds. They are
rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal
payments may be very moderate, and therefore not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics
of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Caa
Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca
Bonds which are rated Ca present obligations which are
speculative in a high degree. Such issues are often in default
or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to
show relative standing within the major rating categories,
except in the Aaa category and in categories below B. The
modifier 1 indicates a ranking for the security in the higher
end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial
paper rating assigned by Moody's. Issuers of P-1 paper must
have a superior capacity for repayment of short-term promissory
obligations, and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a range
of financial markets and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated
Prime-2 (P-2) have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many
of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the
issuer's ability to meet the obligations of a specific debt
issue or class of debt. The ratings take into consideration
special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect
the issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade
and of very high credit quality. The obligor's ability to pay
interest and repay principal is very strong, although not quite
as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these
issuers is generally rated F-1+.
A
Bonds rated A are considered to be investment grade
and of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade
and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The
obligor's ability to pay interest and repay principal may be
affected over time by adverse economic changes. However,
business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative.
While bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of
principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable
characteristics, which, if not remedied, may lead to default.
The ability to meet obligations requires an advantageous
business and economic environment.
CC
Bonds rated CC are minimally protected. Default
payment of interest and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of
interest or principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent
default of interest and/or principal payments. Such bonds are
extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the
obligor. DDD represents the highest potential for recovery on
these bonds and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the AAA category covering 12-36 months or the DDD, DD or D
categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations
that are payable on demand or have original maturities of up to
three years, including commercial paper, certificates of
deposit, medium-term notes, and municipal and investment notes.
Although the credit analysis is similar to Fitch's
bond rating analysis, the short-term rating places greater
emphasis than bond ratings on the existence of liquidity
necessary to meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less
in degree than issues rated F-1+.
F-2
Good Credit Quality. Issues carrying this rating have
a satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the F-1+ and F-1 categories.
Duff
AAA
Bonds rated AAA are considered highest credit quality.
The risk factors are negligible, being only slightly more than
for risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality.
Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.
A
Bonds rated A have protection factors which are
average but adequate. However, risk factors are more variable
and greater in periods of economic stress.
BBB
Bonds rated BBB are considered to have below average
protection factors but still considered sufficient for prudent
investment. Considerable variability in risk during economic
cycles.
BB
Bonds rated BB are below investment grade but are
deemed by Duff as likely to meet obligations when due. Present
or prospective financial protection factors fluctuate according
to industry conditions or company fortunes. Overall quality may
move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess
the risk that obligations will not be met when due. Financial
protection factors will fluctuate widely according to economic
cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in quality rating within this
category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade
securities. Such bonds may be in default or have considerable
uncertainty as to timely payment of interest, preferred
dividends and/or principal. Protection factors are narrow and
risk can be substantial with unfavorable economic or industry
conditions and/or with unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet
scheduled principal and/or interest payments.
Plus (+) and minus (-) signs are used with a rating
symbol (except AAA) to indicate the relative position of a
credit within the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper
rating assigned by Duff. Paper rated Duff-1 is regarded as
having very high certainty of timely payment with excellent
liquidity factors which are supported by ample asset protection.
Risk factors are minor.
<PAGE>
PREMIER OPPORTUNITY FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Statement of
Additional Information:
(1) Statement of Assets and Liabilities as of
__________, 1994*
(2) Report of Ernst & Young LLP, Independent
Auditors, dated __________, 1994*
(b) Exhibits:
(1) Articles of Incorporation*
(2) By-Laws*
(5) Form of Management Agreement*
(6) Form of Distribution Agreement*
(8) Form of Custody Agreement*
(9) Shareholder Services Plan*
(10) Opinion, including consent, of Stroock &
Stroock & Lavan*
(11) Consent of Independent Auditors*
(14) Model Retirement Plan and related documents*
(15) Distribution Plan*
Other Exhibit: Secretary's Certificate*
*To be filed by amendment.
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders
Common Stock, par value
$.001 per share
Class A __
Class B __
Class C __
Class R __
Item 27. Indemnification
Reference is made to Article SEVENTH of the
Registrant's
Articles of Incorporation to be filed as Exhibit 1 hereto and to
Section
2-418 of the Maryland General Corporation Law. The application
of these
provisions is limited by Article VIII of the Registrant's By-Laws
to be
filed as Exhibit 2 hereto and by 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
directors, 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, unenforce-
able. 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
director, officer or controlling person of the
registrant in the successful defense of any action,
suit or proceeding) is asserted by such director,
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 also is made to the Distribution Agreement to
be filed as Exhibit 6 hereto.
Item 28. Business and Other Connections of Investment
Adviser.
(a) Investment Adviser - The Dreyfus Corporation
[TO BE PROVIDED]
(b) Sub-Investment Adviser--Osprey Funds Management, a
Maryland Limited Partnership
[TO BE PROVIDED]
Item 29. Principal Underwriters
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as
principal underwriter or exclusive distributor:
[TO BE PROVIDED]
(b) [TO BE PROVIDED]
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 file a post-effective amendment, using financial
statements which need not be certified, within four to six
months from the effective date of Registrant's 1933 Act
Registration Statement.
(2) to call a meeting of shareholders for the purpose
of voting upon the question of removal of a director or
directors when requested in writing to do so by the holders of at
least 10% of the Registrant's outstanding shares of common
stock 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.
(3) 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.
<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 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 25th day of October,
1994.
PREMIER OPPORTUNITY FUND, INC.
(Registrant)
By: /s/Marie E. Connolly
Marie E. Connolly, Principal
Executive Officer
Pursuant to the requirements of the Securities Act of
1933, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.
/s/Marie E. Connolly Principal Executive October 25, 1994
Marie E. Connolly Officer and Chief
Financial and
Accounting Officer
/s/Eric B. Fischman Director October 25, 1994
Eric B. Fischman
