File No. 2-30806
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. 56 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[ X ]
Amendment No. 56 [ X ]
(Check appropriate box or boxes.)
The Dreyfus Leverage Fund, Inc. (Operating Under the
Name Dreyfus Capital Growth Fund (A Premier Fund))
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212)
922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
---- immediately upon filing pursuant to paragraph (b)
---- on (date) pursuant to paragraph (b)
---- 60 days after filing pursuant to paragraph (a)(i)
---- on January 31, 1995 pursuant to paragraph (a)(i)
---- 75 days after filing pursuant to paragraph (a)(ii)
---- on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new
effective date for a previously filed post-effective amendment.
- ----
Registrant has registered an indefinite number of shares of
its common stock under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the fiscal year ended
September 30, 1994 was filed on November 22, 1994.
The Dreyfus Leverage Fund, Inc. (Operating Under the
Name Dreyfus Capital Growth Fund (A Premier Fund))
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 3
4 General Description of Registrant 4
5 Management of the Fund 14
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 26
7 Purchase of Securities Being Offered 15
8 Redemption or Repurchase 21
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-22
13 Investment Objectives and Policies B-2
14 Management of the Fund B-6
15 Control Persons and Principal B-9
Holders of Securities
16 Investment Advisory and Other B-9
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
The Dreyfus Leverage Fund, Inc. (Operating Under the
Name Dreyfus Capital Growth Fund (A Premier Fund))
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_____
17 Brokerage Allocation B-20, B-21
18 Capital Stock and Other Securities B-22
19 Purchase, Redemption and Pricing B-12, B-13, B-18
of Securities Being Offered
20 Tax Status *
21 Underwriters B-12
22 Calculations of Performance Data B-21
23 Financial Statements B-23
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-4
Common Control with Registrant
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of C-5
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
- ----------------------------------------------------------------
PROSPECTUS JANUARY 31, 1995
DREYFUS CAPITAL GROWTH FUND
(A PREMIER FUND)
- ----------------------------------------------------------------
DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND) (THE
"FUND") IS AN OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT
COMPANY, KNOWN AS A MUTUAL FUND.
ITS GOAL IS CAPITAL GROWTH THROUGH THE USE OF SPECULATIVE
INVESTMENT TECHNIQUES SUCH AS LEVERAGING, SHORT-SELLING AND
OPTIONS TRANSACTIONS, IN
ADDITION TO USUAL INVESTMENT PRACTICES. THE FUND WILL INVEST
PRINCIPALLY IN COMMON STOCKS AND CONVERTIBLE SECURITIES OF
DOMESTIC AND FOREIGN ISSUERS.
INVESTMENTS ALSO MAY BE MADE IN WARRANTS, PREFERRED STOCKS AND
DEBT SECURITIES UNDER CERTAIN MARKET CONDITIONS.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING
DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE
FUND'S PORTFOLIO.
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 JANUARY 31, 1995, 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 1-800-645-6561. 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.
TABLE OF CONTENTS
PAGE
FEE TABLE..................... 3
CONDENSED FINANCIAL INFORMATION....... 3
DESCRIPTION OF THE FUND............. 4
MANAGEMENT OF THE FUND................ 13
HOW TO BUY FUND SHARES.............. 14
SHAREHOLDER SERVICES.......................18
HOW TO REDEEM FUND SHARES..................21
SHAREHOLDER SERVICES PLAN..................24
DIVIDENDS, DISTRIBUTIONS AND TAXES.........24
PERFORMANCE INFORMATION....................25
GENERAL INFORMATION........................26
- ---------------------------------------------------------
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.
- ----------------------------------------------------------------
[This Page Intentionally Left Blank]
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering
price).................................................... 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management
Fees...................................................... .75%
Other Expenses
.......................................................... .37%
Total Fund Operating
Expenses.................................................. 1.12%
EXAMPLE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $41 $65 $90 $162
- ----------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED
AS REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE
ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY
RESULT
IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- ----------------------------------------------------------------
The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will bear,
directly or indirectly, the payment of which will reduce investors' return
on an annual basis. See "Management of the Fund" and "Shareholder Services
Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited
by Ernst & Young LLP, the Fund's independent auditors, whose report
thereon appears in the Statement of Additional Information. Further financial
data
and related notes are included in the Statement of Additional Information,
available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data
for a share of Common Stock outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of year.... $17.00 $18.66 $20.50 $22.21 $14.13 $16.07 $14.31 $17.72 $18.11 $18.53
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net.... .79 .51 .35 .57 .84 .67 .37 .32 .21 .40
Net realized and unrealized gain (loss)
on investments.......... 2.45 4.05 6.61 (4.58) 1.74 (1.73) 3.80 1.83 1.82 (.56)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL FROM
INVESTMENT OPERATIONS... 3.24 4.56 6.96 (4.01) 2.58 (1.06) 4.17 2.15 2.03 (.16)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.55) (.78) (.52) (.41) (.64) (.70) (.76) (.39) (.24) (.69)
Excess dividends from
investment income-net.... -- -- -- -- -- -- -- -- -- (.11)
Dividends from net realized
gain on investments.... (1.03) (1.94) (4.73) (3.66) -- -- -- (1.37) (1.37) (2.22)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS.... (1.58) (2.72) (5.25) (4.07) (.64) (.70) (.76) (1.76) (1.61) (3.02)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of year.... $18.66 $20.50 $22.21 $14.13 $16.07 $14.31 $17.72 $18.11 $18.53 $15.35
======= ======= ======= ======= ====== ======= ======= ======= ====== ======
TOTALINVESTMENTRETURN* 20.71% 27.28% 43.98% (17.64%) 19.15% (6.90%) 30.27% 13.28% 12.04% (1.50%)
RATIOS / SUPPLEMENTALDATA:
Ratios of operating expenses
to average net assets....... .94% .91% .89% .96% 1.04% 1.05% .97% .97% 1.02% 1.03%
Ratios of interest expense, loan commitment fees and
dividends on securities sold short
to average net assets........ .26% .10% .34% .35% .54% .29% .17% .10% .04% .09%
Ratio of net investment income
to average net assets.... 4.12% 2.69% 1.98% 3.91% 5.32% 3.97% 2.13% 1.74% 1.24% 2.10%
Portfolio Turnover Rate... 82.14% 141.21% 123.61% 111.51% 124.30% 89.04% 81.02% 141.67% 102.23% 158.05%
Net Assets, end of year
(000's omitted).... $407,877 $486,244 $631,581 $471,927 $484,105 $400,981 $494,342 $520,895 $596,369 $570,360
*Exclusive of sales charge.
</TABLE>
Further information about the Fund's performance is
contained in the Fund's annual report which may be obtained
without charge by writing to the
address or calling the number set forth on the cover page of
this Prospectus.
<TABLE>
<CAPTION>
DEBT OUTSTANDING
YEAR ENDED SEPTEMBER 30,
- ----------------------------------------------------------------
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount of debt
outstanding at
end of year (in thousands) -- __ $72,500 __ $79,800 __ __ __ -- __
Average amount of debt
outstanding throughout
each year
(in thousands)(1).. $8,227 $3,099 $19,210 $3,865 $17,817 $10,333 $6,913 $6,897 __ $8,531
Average number of shares
outstanding throughout
each year
(in thousands)(2).. 24,141 25,290 29,861 33,406 31,923 29,379 28,190 28,860 -- 36,537
Average amount of debt
per share
throughout each year.. $.34 $.12 $.64 $.12 $.56 $.35 $.25 $.24 __ $.23
(1) Based upon daily outstanding borrowings.
(2) Based upon month-end balances.
</TABLE>
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's goal is to provide you with capital growth
through the use
of speculative investment techniques such as leveraging,
short-selling and options transactions, in addition to usual
investment practices. High yield
or income is not a principal objective of the Fund. 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) of the Fund's outstanding
voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
MANAGEMENT POLICIES
The Fund invests principally in publicly issued common
stocks and securities convertible into common stocks. The Fund
may invest up to 30% of
the value of its net assets in the securities of foreign
companies which are
not publicly traded in the United States and the debt securities
of foreign governments. Investments may be made in warrants,
preferred stocks and debt
securities when management believes that such securities offer
opportunities for capital growth or are desirable in light of
prevailing market or economic
conditions. When management believes that a defensive position
is desirable, the Fund may invest in U.S. Government securities,
investment grade corporate
bonds, commercial paper, certificates of deposit, time deposits,
bankers' acceptances and other short-term bank obligations or
other cash equivalents, and enter into repurchase agreements,
without limitation.
CERTAIN PORTFOLIO SECURITIES
CONVERTIBLE SECURITIES -- The Fund may purchase convertible
securities, which are fixed-income securities that may be
converted at either a stated price or
stated rate into underlying shares of common stock. Convertible
securities have general characteristics similar to both
fixed-income and equity
securities. Although to a lesser extent than with fixed-income
securities generally, the market value of convertible securities
tends to decline as
interest rates increase and, conversely, tends to increase as
interest rates
decline. In addition, because of the conversion feature, the
market value of
convertible securities tends to vary with fluctuations in the
market value of
the underlying common stock, and, therefore, also will react to
variations in
the general market for equity securities. A unique feature of
convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis,
and so may not experience market value declines to the same
extent as the underlying common stock. When the market price of
the underlying common stock
increases, the prices of the convertible securities tend to rise
as a reflection of the value of the underlying common stock.
While no securities investments are without risk, investments in
convertible securities
generally entail less risk than investments in common stock of
the same issuer.
As fixed-income securities, convertible securities are
investments that provide for a stable stream of income with
generally higher yields than
commons stocks. Of course, like all fixed-income securities,
there can be no assurance of current income because the issuers
of the convertible securities
may default on their obligations. Convertible securities,
however, generally
offer lower interest or dividend yields than non-convertible
securities of similar quality because of the potential for
capital appreciation. A convertible security, in addition to
providing fixed income, offers the
potential for capital appreciation through the conversion
feature, which enables the holder to benefit from increases in
the market price of the
underlying common stock. There can be no assurance of capital
appreciation, however, because securities prices fluctuate.
Convertible securities generally are subordinated to
other similar but non-convertible securities of the same issuer,
although convertible bonds, as corporate debt obligations, enjoy
seniority in right of payment to
all equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the subordination
feature,however,
convertible securities typically have lower ratings than similar
non-convertible securities.
MONEY MARKET INSTRUMENTS -- The Fund may invest, in
circumstances described
under "Management Policies" above, 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 of
domestic banks, foreign subsidiaries of domestic banks, foreign
branches of
domestic banks, and domestic and foreign branches of foreign
banks, domestic
savings and loan associations and other banking institutions.
With respect to
such securities issued by foreign branches of domestic banks,
foreign
subsidiaries of domestic banks, and domestic and foreign
branches of foreign
banks, the Fund may be subject to additional investment risks
that are
different in some respects from those incurred by a fund which
invests only
in debt obligations of U.S. domestic issuers. Such risks include
possible
future political and economic developments, the possible
imposition of
foreign withholding taxes on interest income payable on the
securities, the
possible establishment of exchange controls or the adoption of
other foreign
governmental restrictions which might adversely affect the
payment of principa
l and interest on these securities and the possible seizure or
nationalization of foreign deposits.
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 (in no event longer
than seven
days) 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. The Fund will not invest more than 15% of the value
of its net
assets in time deposits that are illiquid and in other illiquid
securities.
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 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.
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 and 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.
INVESTMENT TECHNIQUES
The Fund may engage in various investment techniques,
such as
short-selling, foreign exchange transactions, options and
futures
transactions and lending portfolio securities, each of which
involves risk.
See "Risk Factors" below. Options and futures transactions
involve so-called
"derivative securities."
LEVERAGE THROUGH BORROWING -- The Fund may borrow for investment
purposes.
This borrowing, which is known as leveraging, generally will be
unsecured.
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 which
may or may
not be recovered by appreciation of the securities purchased; in
certain
cases, interest costs may exceed the return received on the
securities
purchased. The 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.
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 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 replaces a borrowed security in
connection with short
sales, the Fund will: (a) maintain daily a segregated account
containing cash
or U.S. Government securities, at such a level that (i) the
amount deposited
in the account plus the amount deposited with the broker as
collateral will
equal the current value of the security sold short and (ii) the
amount
deposited in the segregated account plus the amount deposited
with the broker
as collateral will not be less than the market value of the
security at the
time it was sold short; or (b) otherwise cover 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 "Writing and Purchasing Call Options"
below.
The Fund anticipates that the frequency of short sales
will vary
substantially in different periods, and it does not intend that
any specified
portion of 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
may not sell
short the securities of any single issuer listed on a national
securities
exchange to the extent of more than 2% of the value of the
Fund's net assets,
nor may the Fund sell short the securities of any class of an
issuer to the
extent, at the time of the transaction, of more than 2% of the
outstanding
securities of that class.
In addition to the short sales discussed above, the Fund
also 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 are 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.
WRITING AND PURCHASING CALL OPTIONS -- To earn additional income
on its
portfolio, the Fund may write covered call option contracts and
purchase call
options to the extent of 20% of the value of its net assets at
the time such
option contracts are written or purchased. 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. A covered call option sold by the Fund, which is a call
option with
respect to which the Fund owns the underlying security, exposes
the Fund
during the term of the option
to possible loss of opportunity to realize appreciation in the
market price
of the underlying security or to possible continued holding of a
security
which might otherwise have been sold to protect against
depreciation in the
market price of the security.
The 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.
The Fund may purchase cash-settled options on interest
rate swaps,
interest rate swaps denominated in foreign currency and equity
index swaps in
pursuit of its investment objective. Interest rate swaps involve
the exchange
by the Fund with another party of their respective commitments
to pay or
receive interest (for example, an exchange of floating-rate
payments for
fixed-rate payments) denominated in U.S. dollars or foreign
currency. Equity
index swaps involve the exchange by a Fund with another party of
cash flows
based upon the performance of an index or a portion of an index
of securities
which usually include dividends. A cash-settled option on a swap
gives the
purchaser the right, but not the obligation, in return for the
premium paid,
to receive an amount of cash equal to the value of the
underlying swap as of
the exercise date. These options typically are purchased in
privately
negotiated transactions from financial institutions, including
securities
brokerage firms.
STOCK INDEX OPTIONS -- The Fund may purchase and write call and
put options
on stock indexes listed on national securities exchanges or
traded in the
over-the-counter market as an investment vehicle for the purpose
of realizing
its investment objective or for the purpose of hedging its
portfolio. 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 as a
hedging technique will depend upon the extent to which price
movements in the
Fund's portfolio 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 Dreyfus Corporation's 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 those used in
predicting
changes in the price of individual stocks.
When the Fund writes an option on a stock index, it will
place in a
segregated account with its 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 will otherwise
cover the
transaction. The Fund may invest up to 5% of its net assets,
represented by
the premium paid, in the purchase of call and put options on
stock indexes.
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 considerations also given to
liquidity. The
Fund may use index futures as a substitute for a comparable
market position
in the underlying securities.
The Fund may trade stock index futures contracts and
options on stock
index 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.
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
contract,
assuming all contractual obligations have been satisfied.
Subsequent
payments, known as "variation margin," to and from the broker
will be made
daily as the price of 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." In
addition to the
initial deposit and variation margin, the Fund will maintain in
a segregated
account cash or U.S. Government securities in an amount equal to
the
difference between the total deposit and variation margin
payments and the
contract amount. 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 the contracts 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
Fund's 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.
There can be no assurance of the Fund's successful use
of stock index
futures as a hedging device. Due to the risk of an imperfect
correlation
between securities in the Fund's portfolio that are the subject
of a hedging
transaction and the futures contract used as a hedging device,
it is possible
that the hedge will not be fully effective in that, for example,
losses on
the portfolio securities may be in excess of gains on the
futures contract or
losses on the futures contract may be in excess of gains on the
portfolio
securities that were the subject of the hedge. The risk of
imperfect
correlation increases as the composition of the Fund's portfolio
varies from
the composition of the stock 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 the stock index futures,
the Fund may
buy or sell stock index futures contracts in a greater or lesser
dollar
amount than the dollar amount of the securities being hedged if
the
historical volatility of the stock index futures 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.
In addition to the possibility that there may be an
imperfect
correlation, or no correlation at all, between movements in the
stock index
future and the portion of the portfolio being hedged, 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. Because of the
possibility of price
distortions in the futures market and the imperfect correlation
between
movements in the stock index and movements in the price of stock
index
futures, a correct forecast of general market trends by The
Dreyfus
Corporation still may not result in a successful hedging
transaction.
Successful use of stock index futures by the Fund also
is subject to
The Dreyfus Corporation's 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
stocks held in its
portfolio and stock prices increase instead, the Fund will lose
part or all
of the benefit of the increased value of its stocks 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.
The Fund is not a commodity pool. The Fund's commodities
transactions
must constitute bona fide hedging or other permissible
transactions pursuant
to regulations promulgated by the Commodity Futures Trading
Commission
("CFTC"). In addition, as to transactions undertaken on a
domestic exchange
or board of trade, 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
commodity 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.
The Fund may purchase call and put options on stock
index futures
contracts that are traded on a United States exchange or board
of trade
solely for the purpose of hedging against changes in the value
of its
portfolio securities or other permissible transactions, and not
for purposes
of speculation. An option on a stock index futures contract, as
contrasted
with the direct investment in such a contract, gives the
purchaser the right,
in return for the premium paid, to assume a position in a stock
index futures
contract at a specified exercise price at any time prior to the
expiration
date of the option. The Fund will sell options on stock index
futures
contracts only 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 stock index 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 market trends, which could prove to be inaccurate.
CURRENCY FUTURES AND OPTIONS ON CURRENCY FUTURES -- The Fund may
purchase and
sell currency futures contracts and options thereon. 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 the securities held in its portfolio 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.
FOREIGN CURRENCY TRANSACTIONS -- The Fund may engage in 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 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. This
type of short-selling would be subject to asset segregation
requirements
similar to those described in "Short-Selling" above.
LENDING PORTFOLIO SECURITIES -- From time to time, the Fund may
lend
securities from its portfolio to brokers, dealers and other
institutional
investors needing to borrow securities to complete certain
transactions. Such
loans may not exceed 10% 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 issued by
domestic financial institutions 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 or other distributions payable on the
loaned security
and receives interest on the amount of the loan. Such loans will
be
terminable at any time upon specified notice. The 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.
CERTAIN FUNDAMENTAL POLICIES -- The Fund may: (i) invest up to
5% of the
value of its total assets in securities of any one issuer or
purchase up to
10% of the voting securities of any one issuer; (ii) 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
the Fund's investments in all such companies to exceed 5% of the
value of its
assets; (iii) borrow money to the extent permitted under the
Investment
Company Act of 1940; and (iv) invest up to 25% of its total
assets in a
single industry. 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.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Fund may: (i)
invest up to
15% of its net assets in repurchase agreements providing for
settlement in
more than seven days after notice and in other illiquid
securities; and (ii)
pledge, mortgage, hypothecate or otherwise encumber its assets,
to the extent
necessary to secure permitted borrowings. See "Investment
Objective and
Management Policies -- Investment Restrictions" in the Statement
of
Additional Information.
RISK FACTORS
CERTAIN INVESTMENT TECHNIQUES -- The use of speculative
investment techniques
such as leveraging, short-selling, short-term trading, engaging
in futures
and options and currency transactions and lending portfolio
securities
involves greater risk than that incurred by many other funds
with a similar
objective. These risks are described above under "Investment
Techniques." In
addition, 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. Short-term
gains realized from portfolio transactions are taxable to
shareholders as
ordinary income. 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 in speculative investing.
The Fund's ability to engage in certain short-term
transactions may
be limited by the requirement that, to qualify as a regulated
investment
company, the Fund 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, 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 investment activity will not be
a limiting
factor when making investment decisions.
INVESTING IN FOREIGN SECURITIES -- In making foreign
investments, the Fund
will give appropriate consideration to the following factors,
among others.
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 are not
generally 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
which might
adversely affect the payment of principal and interest on the
foreign
securities or might restrict the payment of principal and
interest to
investors located outside the country of the issuer, 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
earned or
received by the Fund from sources within foreign countries may
be reduced by
withholding and other taxes imposed by such countries. Tax
conventions
between certain countries and the United States, however, may
reduce or elimin
ate such taxes. All such taxes paid by the Fund will reduce its
net income
available for distribution to shareholders.
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 U.S. 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.
Transactions on foreign exchanges may include both commodities
which are
traded on domestic exchanges and those which are not.
OTHER INVESTMENT CONSIDERATIONS -- The Fund's net asset value
per share is
not fixed and should be expected to fluctuate.
Investors 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. Changes in
the value of
the Fund's securities will result in changes in the value of the
Fund's
shares and thus the Fund's yield and total return to investors.
Investment decisions for the Fund are made independently
from those
of the other investment companies advised by The Dreyfus
Corporation.
However, if such other investment companies 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 investment company. 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
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 October 31, 1994, The Dreyfus Corporation managed or
administered
approximately $73 billion in assets for approximately 1.9
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 Fund's primary
portfolio
manager is Howard Stein. He has held that position from June
1969 to
November 1970, and since January 1981, and has been Chief
Executive Officer
of The Dreyfus Corporation since 1965. The Fund's other
portfolio managers
are identified under "Management of the Fund" in the Fund's
Statement of
Additional Information. The Dreyfus Corporation also provides
research
services for the Fund as well as for other funds advised by The
Dreyfus
Corporation through a professional staff of portfolio managers
and securities analysts.
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., AFCOCredit
Corporation and a
number of companies known as Mellon Financial Services
Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon
managed
approximately $201 billion in assets as of September 30, 1994,
including $76
billion in mutual fund assets. As of September 30, 1994, Mellon
through
various subsidiaries, provided non-investment services, such as
custodial or
administration services, for approximately $659 billion in
assets, including
approximately $108 billion in mutual fund assets.
For the fiscal year ended September 30, 1994, the Fund
paid The
Dreyfus Corporation a monthly management fee at the annual rate
of .75 of 1%
of the value of the Fund's average daily net assets. The
management fee is
higher than that paid by most other investment companies. From
time to time,
The Dreyfus Corporation may waive receipt of its fees 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 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
securities
dealers or others in respect of these services.
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.
The Shareholder Services Group, Inc., a subsidiary of
First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671,
is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer
Agent"). The
Bank of New York, 110 Washington Street, New York, New York
10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares can be purchased through the Distributor or
certain securities dealers, banks or other financial
institutions. Share
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.
The minimum initial investment is $2,500, or $1,000 if
you are a
client of a securities dealer, bank or other financial
institution which has
made an aggregate minimum initial purchase for its customers of
$2,500.
Subsequent investments must be at least $100. The initial
investment must be
accompanied by the Fund's Account Application. For 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, the minimum
initial
investment is $1,000. For full-time or part-time employees of
The Dreyfus
Corporation or any of its affiliates or subsidiaries who elect
to have a
portion of their pay directly deposited into their Fund account,
the minimum
initial investment is $50. The Fund reserves the right to offer
Fund shares
without regard to minimum purchase requirements to employees
participating in
certain qualified or non-qualified employee benefit plans or
other programs
where contributions or account information can be transmitted in
a manner and
form acceptable to the Fund. The Fund reserves the right to vary
further the
initial and subsequent investment minimum requirements at any
time.
You may purchase Fund shares by check or wire, or
through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made
payable to "The
Dreyfus Family of Funds," or, if for Dreyfus retirement plan
accounts, to
"The Dreyfus Trust Company, Custodian." Payments to open new
accounts which
are mailed should be sent to The Dreyfus Family of Funds, P.O.
Box 9387,
Providence, Rhode Island 02940-9387, together with your Account
Application.
For subsequent investments, your Fund account number should
appear on the
check and an investment slip should be enclosed and sent to The
Dreyfus
Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105.
For Dreyfus
retirement plan accounts, both initial and subsequent
investments should be
sent to The Dreyfus Trust Company, Custodian, P.O Box 6427,
Providence, Rhode
Island 02940-6427. Neither initial nor subsequent investments
should be made
by third party check. Purchase orders may be delivered in person
only to a
Dreyfus Financial Center . THESE ORDERS WILL BE FORWARDED TO THE
FUND AND
WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of
the nearest
Dreyfus Financial Center, please call one of the telephone
numbers listed
under "General Information."
Wire payments may be made if your bank account is in a
commercial
bank that is a member of the Federal Reserve System or any other
bank having
a correspondent bank in New York City. Immediately available
funds may be
transmitted by wire to The Bank of New York, DDA#
8900119276/Dreyfus Capital
Growth Fund, for purchase of Fund shares in your name. 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,
please call 1-800-645-6561 after completing your wire payment to
obtain your
Fund account number. Please 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 your 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
your Fund account number PRECEDED BY THE DIGITS "1111."
If an order is received 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 (i.e., net asset value per share plus the
applicable
sales load set forth below) determined as of such close of
trading 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 by 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
a business
day and transmitted to the Distributor by the close of its
business day
(normally 5:15 p.m., New York time) will be based on the public
offering
price per share determined as of the close of trading on the
floor of the New
York Stock Exchange on that day. Otherwise, the orders will be
based on the
next determined public offering price. It is the responsibility
of dealers to
transmit orders so that they will be received by the Distributor
before the
close of its business day.
The public offering price is the net asset value per
share plus a
sales load as shown below:
TOTAL SALES LOAD
------------------------------------------
AS A % OF AS A % OF
OFFERING PRICE NET ASSET VALUE
AMOUNT OF TRANSACTION PER SHARE PER SHARE
Less than $100,000. 3.00 3.10
$100,000 to less than $250,000. 2.75 2.80
$250,000 to less than $500,000 2.25 2.30
$500,000 to less than $1,000,000 2.00 2.00
$1,000,000 and over..... 1.00 1.00
Full-time employees of NASD member firms and full-time
employees of
other financial institutions which have entered into an
agreement with the
Distributor pertaining to the sale of Fund shares (or which
otherwise have a
brokerage-related or clearing arrangement with an NASD member
firm or other
financial institution with respect to sales of Fund shares) may
purchase Fund
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 Fund shares at net asset value. In
addition, Fund 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, and the
spouse or minor
child of any of the foregoing.
Fund shares will be offered at net asset value without a
sales load
to employees participating in qualified or non-qualified
employee benefit
plans or other programs where (i) the employers or affiliated
employers
maintaining such plans or programs have a minimum of 250
employees eligible
for participation in such plans or programs, or (ii) such plan's
or program's
aggregate 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"). Plan sponsors,
administrators or
trustees, as applicable, are responsible for notifying the
Distributor when
the relevant requirement is satisfied. The Distributor may pay
dealers a fee
of up to .5% of the amount invested through such dealers in Fund
shares at
net asset value by employees participating in Eligible Benefit
Plans. All
present holdings of shares of funds in the Dreyfus Family of
Funds by an
Eligible Benefit Plan will be aggregated to determine the fee
payable with
respect to each such 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 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) satisfied the requirements set forth under either
clause (i) or
clause (ii) above 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) had all of
its assets invested in funds in the Dreyfus Family of Funds or
certain other
products made available by the Distributor to such plans which
funds or other
products were sold with a sales load.
For the period October 1, 1993 through August 24, 1994,
the Dreyfus Service Corporation, a wholly-owned subsidiary of The
Dreyfus Corporation and
the Fund's distributor during such period, retained $934,357
from sales loads on shares of the Fund. The dealer reallowance
may be changed from time to
time but will remain the same for all dealers. Dreyfus Service
Coporation, 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 the Fund. In some instances, these
incentives may be
offered only to certain dealers who have sold or may sell
significant amounts
of shares.
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
per share, futures contracts and options will be valued 15
minutes after the
close of trading on the floor of the New York Stock Exchange.
Net asset value
per share is computed by dividing the value of the Fund's net
assets (i.e.,
the value of its assets less liabilities) by the total number of
shares
outstanding. The Fund's investments are valued based on market
value or,
where market quotations are not readily available, based on fair
value as
determined in good faith by or in accordance with procedures
fixed by the
Board of Directors. For further information regarding the
methods employed in
valuing Fund investments, see "Determination of Net Asset Value"
in the
Fund's Statement of Additional Information.
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 about
this
requirement. Failure to furnish a certified TIN to the Fund
could subject you
to a $50 penalty imposed by the Internal Revenue Service
("IRS").
RIGHT OF ACCUMULATION -- Reduced sales loads apply to any
purchase of Fund
shares, shares of other funds advised by The Dreyfus Corporation
which are
sold with a sales load or shares acquired by a previous exchange
of shares
purchased with a sales load (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, exceeds
certain amounts. If, for example, you previously purchased and
still hold
shares of the Fund, or of any other Eligible Fund or combination
thereof,
with an aggregate current market value of $90,000 and
subsequently purchase
shares of the Fund or an Eligible Fund having a current value of
$20,000, the
sales load applicable to the subsequent purchase would be
reduced to 2.75% of
the offering price. Al1 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 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.
DREYFUS TELETRANSFER PRIVILEGE -- 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.
Page 17
If you have selected the Dreyfus TELETRANSFER Privilege,
you may
request a Dreyfus TELETRANSFER purchase of Fund shares by
telephoning
1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306.
SHAREHOLDER SERVICES
FUND EXCHANGES -- You may purchase, in exchange for shares of
the Fund,
shares 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 objective which
may be of
interest to you. Fund exchanges may be exercised twice during
the calendar
year as described below. If you desire to use this service,
please call
1-800-645-6561 to determine if it is available and whether any
other
conditions are imposed on its use.
To request an exchange, you must give exchange
instructions to the
Transfer Agent in writing or by telephone. Before any exchange,
you must
obtain and should review a copy of the current prospectus of the
fund into
which the exchange is being made. Prospectuses may be obtained
by calling
1-800-645-6561. Except in the case of Personal Retirement Plans,
the shares
being exchanged must have a current value of at least $500;
furthermore, when
establishing a new account by exchange, shares being exchanged
must have a
value of at least the minimum initial investment required for
the fund into
which the exchange is being made. The ability to issue exchange
instructions
by telephone is given to all Fund shareholders automatically,
unless you
check the relevant "NO" box on the Account Application,
indicating that you
specifically refuse this privilege. The Telephone Exchange
Privilege may be
established for an existing account by written request, signed
by all
shareholders on the account, or by a separate signed Shareholder
Services
Form, also available by calling 1-800-645-6561. If you have
established the
Telephone Exchange Privilege, you may telephone exchange
instructions by
calling 1-800-221-4060 or, if you are calling from overseas,
call
1-401-455-3306. See "How to Redeem Fund Shares _ Procedures."
Upon an
exchange into a new account, the following shareholder services
and
privileges, as applicable and where available, will be
automatically carried
over to the fund into which the exchange is made: Telephone
Exchange
Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, Dreyfus
TELETRANSFER Privilege and the dividend/capital gain
distribution option
(except for Dreyfus 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
into funds
sold with a sales load. If you are exchanging 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 your
exchange you must notify the Transfer Agent. 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 availability of Fund exchanges may be modified or
terminated at any
time upon notice to shareholders.
With respect to any investor who has exchanged into and
out of the
Fund (or the reverse) twice during the calendar year, further
purchase orders
(including those pursuant to exchange instructions) relating to
any shares of
the Fund will be rejected for the remainder of the calendar
year. Management
believes that this policy will enable shareholders to change
their investment
program, while protecting the Fund against disruptions in
portfolio
management resulting from frequent transactions by those
seeking to time market fluctuations. Exchanges made through
omnibus accounts
for various retirement plans are not subject to such limit on
exchanges.
The exchange of shares of one fund for shares of another
is treated
for Federal income tax purposes as a sale of the shares given in
exchange by
the shareholder and, therefore, an exchanging shareholder may
realize a
taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE -- Dreyfus Auto-Exchange
Privilege enables
you to invest regularly (on a semi-monthly, monthly, quarterly
or annual
basis), in exchange for shares of the Fund, in shares of other
funds in the
Dreyfus Family of Funds of which you are currently an investor.
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 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 into funds
sold with a
sales load. See "Shareholder Services" in the Statement of
Additional
Information. The right to exercise this Privilege may be
modified or
cancelled by the Fund or the Transfer Agent. You may modify or
cancel your
exercise of this Privilege at any time by writing to The Dreyfus
Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. The
Fund may
charge a service fee for the use of this Privilege. No such fee
currently is
contemplated. The exchange of shares of one fund for shares of
another is
treated for Federal income tax purposes as a sale of the shares
given in
exchange by the shareholder and, therefore, an exchanging
shareholder may
realize a taxable gain or loss. For more information concerning
this
Privilege and the funds in the Dreyfus Family of Funds eligible
to
participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER -- Dreyfus-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 a Dreyfus-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 this Privilege or change the amount of purchase at any
time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box
9671,
Providence, Rhode Island 02940-9671, or, if for Dreyfus
retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence,
Rhode Island 02940-6427, and the notification will be effective
three
business days following receipt. The Fund may modify or
terminate this
Privilege at any time or charge a service fee. No such fee
currently is
contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE -- Dreyfus
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 certain veterans', military or other payments from
the Federal
government automatically deposited into your Fund account. You
may deposit as
much of such payments as you elect. To enroll in Dreyfus
Government Direct
Deposit, you must file with the Transfer Agent a completed
Direct Deposit
Sign-Up Form for each type of payment that you desire to include
in this
Privilege. The appropriate form may be obtained by calling
1-800-645-6561.
Death or legal incapacity will terminate your participation in
this
Privilege. You may elect at any time to terminate your
participation by
notifying in writing the appropriate Federal agency. Further,
the Fund may
terminate your participation upon 30 days' notice to you.
DREYFUS DIVIDEND OPTIONS -- Dreyfus Dividend Sweep enables you
to invest
automatically dividends or dividends and capital gain
distributions, if any,
paid by the Fund in shares of another fund in 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 that charges a contingent
deferred sales
charge, the shares purchased will be subject on redemption to
the contingent
deferred sales charge, if any, applicable to the purchased
shares. See
"Shareholder Services" in the Statement of Additional
Information. Dreyfus
Dividend ACH permits you to transfer electronically dividends or
dividends
and capital gain distributions, if any, from the Fund to a
designated bank
account. Only such 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 this Privilege and the
funds in the
Dreyfus Family of Funds eligible to participate in 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 The Dreyfus Family of Funds, 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
Dreyfus 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
Dreyfus Dividend Sweep.
DREYFUS PAYROLL SAVINGS PLAN -- Dreyfus Payroll Savings Plan
permits you to
purchase Fund shares (minimum of $100 per transaction)
automatically on a
regular basis. Depending upon your employer's direct deposit
program, you may
have part or all of your paycheck transferred to your existing
Dreyfus
account electronically through the Automatic Clearing House
system at each
pay period. To establish a Dreyfus Payroll Savings Plan account,
you must
file an authorization form with your employer's payroll
department. Your
employer must complete the reverse side of the form and return
it to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island
02940-9671.
You may obtain the necessary authorization form by calling
1-800-645-6561.
You may change the amount of purchase or cancel the
authorization only by
written notification to your employer. It is the sole
responsibility of your
employer, not the Distributor, The Dreyfus Corporation, the
Fund, the
Transfer Agent or any other person, to arrange for transactions
under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate
this
Privilege at any time or charge a service fee. No such fee
currently is
contemplated.
AUTOMATIC WITHDRAWAL PLAN -- The Automatic Withdrawal Plan
permits you to
request withdrawal of a specified dollar amount (minimum of $50)
on either a
monthly or quarterly basis if you have a $5,000 minimum account.
An
application for the Automatic Withdrawal Plan can be obtained by
calling
1-800-645-6561. There is a service charge of 50cents for each
withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by
you, the
Fund or the Transfer Agent. Shares for which certificates have
been issued
may not be redeemed through the Automatic Withdrawal Plan.
Purchases of
additional shares concurrent with withdrawals are generally
undesirable
because sales loads are incurred whenever purchases are made.
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 -- By signing a Letter of Intent form,
available from the
Distributor, 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 under the conditions set forth in the Letter of
Intent. A
minimum initial purchase of $3,000 and minimum subsequent
purchases of $1,000
are 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 shares 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 Fund
shares, you must
indicate your intention to purchase them pursuant to a Letter of
Intent.
Purchases made pursuant to a Letter of Intent will be made at
the
then-current net asset value plus the applicable sales load in
effect at the
time such Letter of Intent was executed.
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.
The Fund imposes no charges when shares are redeemed
directly through
the Distributor. Securities dealers, banks and other financial
institutions
may charge 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 on the Fund's then-current
net asset
value.
The Fund ordinarily will make payment for all shares
redeemed within
seven days after receipt by the Transfer Agent of a redemption
request in
proper form, except as provided by the rules of the Securities
and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK,
BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET
BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER
AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON
BANK CLEARANCE
OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR
DREYFUS-AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR
MORE. IN
ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE
OR TELEPHONE
OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD
OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE
PURCHASE CHECK, THE
DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET
BUILDER ORDER
AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES
WILL NOT APPLY
IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU
OTHERWISE HAVE A
SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE
REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON
SUCH SHARES WILL 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 Distributor will accept orders from dealers with
which it has
sales agreements for the repurchase of shares held by
shareholders.
Repurchase orders received by the dealer prior to the close of
trading on the
floor of the New York Stock Exchange on any business day and
transmitted to
the Distributor prior to the close of its business day (normally
5:15 p.m.,
New York time) are effected at the price determined as of such
close of
trading on 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 dealer to transmit orders on a timely
basis. The dealer
may charge the shareholder a fee for executing the order. This
repurchase
arrangement is discretionary and may be withdrawn at any time.
The Fund reserves the right to redeem your account at
its option upon
not less than 45 days' written notice if your account's net
asset value is
$500 or less and remains so during the notice period.
PROCEDURES -- You may redeem Fund shares by using the regular
redemption
procedure through the Transfer Agent, the Wire Redemption
Privilege, the
Telephone Redemption Privilege, or Dreyfus TELETRANSFER
Privilege. The Fund
makes available to certain large institutions the ability to
issue redemption
instructions through compatible computer facilities.
You may redeem 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 a telephone
redemption
privilege or telephone exchange privilege (which is granted
automatically
unless you refuse it), you authorize the Transfer Agent to act
on telephone
instructions from any person representing himself or herself to
be you, 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 Transfer Agent
or the Fund
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 redemption or exchange of Fund shares. In such cases,
you should
consider using the other redemption procedures described herein.
Use of these
other redemption procedures may result in your redemption
request being
processed at a later time than it would have been if telephone
redemption had
been used. During the delay, the Fund's net asset value may
fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure,
you may redeem
shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box
9671, Providence, Rhode Island 02940-9671 or, if for Dreyfus
retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence,
Rhode Island 02940-6427. Redemption requests may be delivered in
person only
to a Dreyfus Financial Center. THESE REQUESTS WILL BE FORWARDED
TO THE FUND
AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the
location of the
nearest Dreyfus Financial Center, please call one of the
telephone numbers
listed under "General Information." 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. If
you have any questions with respect to signature-guarantees,
please call one
of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to
any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or
telephone that
redemption proceeds (minimum $1,000) be wired to your account at
a bank which
is a member of the Federal Reserve System, or a correspondent
bank if your
bank is not a member. To establish the Wire Redemption
Privilege, you must
check the appropriate box and supply the necessary information
on the Fund's
Account Application or file a Shareholder Services Form with the
Transfer
Agent. You may direct that redemption proceeds be paid by check
(maximum
$150,000 per day)made out to the owners of record and mailed to
your address.
Redemption proceeds of less than $1,000 will be paid
automatically by check.
Holders of jointly registered Fund or bank accounts may have
redemption
proceeds of not more than $250,000 wired within any 30-day
period. You may
telephone redemption requests by calling 1-800-221-4060 or, if
you are
calling from overseas, call 1-401-455-3306. The Fund reserves
the right to
refuse any redemption request, including requests made shortly
after a change
of address, and may limit the amount involved or the number of
such requests.
This Privilege may be modified or terminated at any time by the
Transfer
Agent or the Fund. The Fund's Statement of Additional
Information sets forth
instructions for transmitting redemption requests by wire.
Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for
which
certificates have been issued, are not eligible for this
Privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may redeem Fund shares
(maximum
$150,000 per day) 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. The redemption proceeds will be paid by check
and mailed to
your address. You may telephone redemption instructions by
calling
1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. 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 telephone redemption requests. This
Privilege may
be modified or terminated at any time by the Transfer Agent or
the Fund.
Shares held under Keogh Plans, IRAs or other retirement plans,
and shares for
which certificates have been issued, are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE -- You may redeem Fund shares
(minimum $500)
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 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
of $150,000
per day) and mailed to your address. Holders of jointly
registered Fund or
bank accounts may redeem through the Dreyfus TELETRANSFER
Privilege for
transfer to their bank account not more than $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 Dreyfus TELETRANSFER Privilege,
you may
request a Dreyfus TELETRANSFER redemption of Fund shares by
telephoning
1-800-221-4060 or, if you are calling from overseas, call
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.
REINVESTMENT PRIVILEGE -- You may reinvest up to the number of
shares you
have redeemed, within 30 days of the redemption, at the
then-prevailing net
asset value without a sales charge, or reinstate your account
for the purpose
of exercising the Exchange Privilege. The Reinvestment Privilege
may be
exercised only once.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan
pursuant to which
the Fund reimburses the Distributor an amount not to exceed an
annual rate
of .25 of 1% of the value of the average daily net assets of the
Fund's
shares for certain allocated expenses of providing personal
services and/or
maintaining shareholder accounts. The services provided may
include personal
services relating to shareholder accounts, such as answering
shareholder
inquiries regarding the Fund and providing reports and other
information, and
services related to the maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from net investment
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 Internal Revenue Code of 1986, as amended
(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. You may choose whether to receive dividends and
distributions in cash or to reinvest in additional Fund shares
at net asset
value without a sales load. All expenses are accrued daily and
deducted
before declaration of dividends to investors.
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
as ordinary income whether received in cash or reinvested in
additional Fund
shares. Distributions from net realized long-term securities
gains of the
Fund to U.S. shareholders generally are taxable 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 additional 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.
The Code provides for the "carryover" of some or all of
the sales
load imposed on Fund shares, if you exchange your Fund shares
for shares in
another Dreyfus fund within 91 days after purchase and the other
Dreyfus fund
reduces or eliminates its otherwise applicable load charge for
the purpose of
the exchange. In this case, the amount of your load charge for
the Fund
shares, up to the amount of the reduction of the load charge on
the exchange,
is not included in the basis of your Fund shares for purposes of
computing
gain or loss on the exchange, and instead is added to the basis
of the fund
shares received in the exchange.
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.
Federal regulations generally require the Fund to
withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends,
distributions
from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may
be realized,
paid to a shareholder if such shareholder fails to certify
either that the
TIN furnished in connection with opening an account is correct,
or that such
shareholder has not received notice from the IRS of being
subject to backup
withholding as a result of a failure to properly report taxable
dividend or
interest income on a Federal income tax return. Furthermore, the
IRS may
notify the Fund to institute backup withholding if the IRS
determines a
shareholder's TIN is incorrect or if a shareholder has failed to
properly
report taxable dividend and interest income on a Federal income
tax return.
A TIN is either the Social Security number or employer
identification
number of the record owner of the account. Any tax withheld as a
result of
backup withholding does not constitute an additional tax imposed
on the
record owner of the account, and may be claimed as a credit on
the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has
qualified for the
fiscal year ended September 30, 1994 as a "regulated investment
company"
under the Code. The Fund intends to continue to so qualify if
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
nondeductible
4% excise tax, measured with respect to certain undistributed
amounts of
taxable investment income and capital gains, if any.
You should consult your tax adviser regarding specific
questions as
to Federal, state and local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance is calculated
on the basis
of average annual total return. Advertisements also may include
performance
calculated on the basis of total return.
Average annual total return is calculated pursuant to a
standardized
formula which assumes that an investment in the Fund 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.
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
maximum
offering price 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 may also
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.
Calculations based on the net asset value per share do not
reflect the
deduction of the sales load which, if reflected, would reduce
the performance
quoted.
Performance will vary from time to time and past results
are not
necessarily representative of future results. 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., Standard & Poor's 500 Composite Stock
Price Index,
the Dow Jones Industrial Average, Morningstar, Inc. and other
industry
publications.
GENERAL INFORMATION
The Fund was originally incorporated under Delaware law
in November
1968 and became a Maryland corporation on April 30, 1974. The
Fund, which is
incorporated under the name The Dreyfus Leverage Fund, Inc.,
began operating
under the name Dreyfus Capital Growth Fund (A Premier Fund) on
February 3,
1993. The Fund is authorized to issue 100 million shares of
Common Stock, par
value $1.00 per share. Each share has one vote.
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
the holders
of at least 25% of such shares may require the Fund to hold a
special meeting
of shareholders for any other purpose. Fund shareholders may
remove a
Director by the affirmative vote of a majority of the Fund's
outstanding
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 sends 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, or by calling
toll free
1-800-645-6561. In New York City, call 1-718-895-1206; on Long
Island, call
794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF
THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS
PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
[This Page Intentionally Left Blank]
Capital Growth
Fund (A Premier Fund)
(Lion Logo)
Prospectus
<PAGE>
DREYFUS CAPITAL GROWTH FUND
(A PREMIER FUND)
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 31, 1995
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with
the current Prospectus of Dreyfus Capital Growth
Fund (A Premier Fund) (the "Fund"), dated January 31, 1995, as it
may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment adviser.
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-2
Management of the Fund . . . . . . . . B-6
Management Agreement. . . . . . .. . . . . B-10
Shareholder Services Plan . . . . . . . . . B-11
Purchase of Fund Shares . . . . . . .. . . . B-12
Redemption of Fund Shares . . . . . . . . B-13
Shareholder Services. . . . . . . . . . . . B-15
Determination of Net Asset Value. . . . . . . . B-18
Dividends, Distributions and Taxes. . . . .. . B-18
Portfolio Transactions. . . . . . . . . . . . B-20
Performance Information . . . . . . . . . . B-21
Information About the Fund. . . . . . . . . . . B-22
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . B-22
Financial Statements. . . . . . . . . . . . . . B-23
Report of Independent Auditors. . . . . . . . . B-33
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE
READ IN CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS
ENTITLED "DESCRIPTION OF THE FUND."
Management Policies
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. Such loans
may not exceed 10% of the value of the Fund's total assets. 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.
Writing and Purchasing Call Options. To earn additional
income on its portfolio, the Fund, to a limited extent, may write
covered call options on securities owned by the
Fund ("covered options" or "options") and purchase call options
to close options transactions, as described below.
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, regardless of the market price of the security. The
premium paid to the writer is the consideration for undertaking
the obligations under the option contract. When a
covered call option is written by the Fund, the Fund will make
arrangements with its custodian to segregate the underlying
securities until the option either is exercised,
expires or the Fund closes out the option as described below. A
covered call option sold by the Fund exposes the Fund during the
term of the option to possible loss of
opportunity to realize appreciation in the market price of the
underlying security or to possible continued holding of a
security which might otherwise have been sold to protect
against depreciation in the market price of the security. To
limit this exposure, the value
of the portfolio securities underlying covered call options
written by the Fund will be
limited to an amount not in excess of 20% of the value of the
Fund's net assets at the time such options are written.
To close out a position, the Fund may make a "closing
purchase transaction," which involves purchasing a call option on
the same security with the same exercise price
and expiration date as the option which it has previously written
on a particular security.
The Fund will realize a profit (or loss) from a closing purchase
transaction if the amount
paid to purchase a call option is less (or more) than the amount
received from the sale thereof.
Stock Index Options. The Fund may purchase and sell put
and call options on stock indexes listed on national securities
exchanges or traded in the over-the-counter market as an
investment vehicle for the purpose of realizing its
investment objective or for the purpose of hedging its portfolio.
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 stocks
except that (a) the expiration cycles of stock index options are
monthly, while those of stock options are
currently quarterly, and (b) the delivery requirements are
different. Instead of giving the
right to take or make delivery of 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.
Stock Index Futures and Options on Stock Index Futures.
Upon exercise of an
option, the writer of the option delivers to the holder of the
option the futures position
and the accumulated balance in the writer's futures margin
account, which represents the
amount by which the market price of the futures contract exceeds,
in the case of a call,
or is less than, in the case of a put, the exercise price of the
option on the futures contract.
Foreign Currency Transactions. If the Fund enters into a
hedging transaction, it will deposit, if so required by
applicable regulations, with its custodian or subcustodian 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 portfolio 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."
Investment Restrictions. The Fund has adopted the
following investment restrictions 1 through 12 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 (the "Act")) of the Fund's outstanding voting shares.
Investment restriction number 13 is a non-fundamental policy
which may be changed by vote of a majority of
the Fund's Board members at any time. The Fund may not:
1. Purchase the securities of any issuer if such purchase
would cause more than 5% of the value of its total assets to be
invested in securities of any one issuer (except securities of
the United States Government or any instrumentality thereof) nor
purchase more than 10% of the voting securities of any one
issuer.
2. Purchase securities of any company having less than
three years' continuous operation (including operations of any
predecessors) if such purchase would cause the value of the
Fund's investments in all such companies to exceed 5% of the
value of its assets.
3. Purchase securities of other investment companies,
except as they may be acquired by purchase in the open market
involving no commissions or profits to a sponsor or dealer (other
than the customary broker's commission) or except as they may be
acquired as part of a merger, consolidation or acquisition of
assets.
4. Purchase or retain the securities of any issuer if
those officers or directors of the Fund or its investment adviser
owning individually more than 1/2 of 1% of the securities of such
issuer together own more than 5% of the securities of such
issuer.
5. Purchase, hold or deal in commodities or commodity
contracts, except as set forth under "Stock Index Futures and
Options on Stock Index Futures" in the Prospectus and Statement
of Additional Information, or in real estate (except for
corporate office purposes), but this shall not prohibit the
Fund from investing in marketable securities of
companies engaged in real estate activities or investments.
6. Borrow money, except to the extent permitted under the
Act.
7. Lend any funds or other assets except through the
purchase of a portion of an issue of publicly distributed bonds,
debentures or other debt securities or the purchase of bankers'
acceptances and commercial paper of corporations. However, the
Fund's Board of Directors may, on the request of broker-dealers
or other institutional investors which it deems qualified,
authorize the Fund to lend securities, but only when
the borrower pledges cash collateral to the Fund and agrees to
maintain such collateral so that it amounts at all times to at
least 100% of the value of the securities. Such
security loans will not be made if, as a result, the
aggregate of such loans exceeds 10% of the value of the Fund's
total assets. (See also "Lending Portfolio Securities" in the
Fund's Prospectus and this Statement of Additional Information.)
8. Act as an underwriter of securities of other issuers.
9. Purchase from or sell to any of its officers or
directors or firms of which any of them are members any
securities (other than capital stock of the Fund).
10. Invest in the securities of a company for the purpose
of management or the exercise of control, but the Fund will vote
the securities it owns in its portfolio as a shareholder in
accordance with its own views.
11. Engage in the purchase and sale of put and call
options or in writing such options except as set forth under
"Writing and Purchasing Call Options,"
"Stock Index Options" and "Stock Index Futures and
Options on Stock Index Futures" in the Fund's Prospectus and
Statement of Additional Information.
12. Concentrate its investments in any particular industry
or industries, except that the Fund may invest as much as 25% of
the value of its total assets in a single industry.
13. Pledge, mortgage, hypothecate or otherwise encumber
its assets, except to the extent necessary to secure permitted
borrowings.
The Fund also has undertaken not to purchase warrants
which, valued at the lower of cost or market, would exceed 5% of
the value of the Fund's net assets.
Included within this amount, but not to exceed 2% of the value of
the Fund's net assets, may be warrants which are not listed on
the New York or American Stock Exchange.
Warrants acquired by the Fund in units or attached to securities
shall not be subject to such percentage restriction.
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
that 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 interests 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
JOHN M. FRASER, JR., Director. President of Fraser Associates, a
service company for planning and arranging corporate meetings and
other events. From September 1975 to June 1978, he was Executive
Vice President of Flagship Cruises, Ltd. Prior thereto, he was
Senior Vice President and Resident Director of the Swedish-
American Line for the United States and Canada. His address is
133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Director. Research Fellow, Center for
Business and Government at the John F. Kennedy School of
Government, Harvard University since January 1992. He was Under
Secretary of the Treasury for Finance at the U.S. Treasury
Department from May 1989 to January 1992.
For more than five years prior thereto, he was a Professor of
Finance at the Graduate School of Business Administration of
Harvard University and, from 1985 to 1989, Chairman
of its Advanced Management Program. He is also a director
of MidOcean Reinsurance Co. Ltd., and Cooke & Bieler, Inc.,
investment counselors. His address is 79 John F. Kennedy Street,
Cambridge, Massachusetts 02138.
JAMES F. HENRY, Director. President of the Center for Public
Resources, a non-profit organization principally engaged in the
development of alternatives to business litigation. He was of
counsel to the law firm of Lovejoy, Wasson & Ashton from
October 1975 to December 1976 and from October 1979 to June
1983, and was a partner of that firm from January 1977 to
September 1979. He was President and a director of the Edna
McConnell Clark Foundation, a philanthropic organization
from September 1971 to December 1976. His address is c/o Center
for Public Resources, 366 Madison Avenue, New York, New York
10017.
ROSALIND GERSTEN JACOBS, Director. Director of Merchandise and
Marketing for Corporate Property Investors, a real estate
investment company. She was owner and manager of a merchandise
and marketing consulting firm from 1974 to 1976.
Prior to 1974, she was Vice President of Macy's, New York.
Her address is c/o Corporate Property Investors, 305 East 47th
Street, New York, New York 10017.
*IRVING KRISTOL, Director. Consultant to the Manager on economic
matters. He is also John M. Olin Distinguished Fellow of the
American Enterprise Institute for Public Policy Research,
co-editor of The Public Interest magazine and an author or co-
editor of several books. From 1969 to 1988, he was Professor of
Social Thought at the Graduate School of Business Administration,
New York University; from September 1969 to August 1979, he was
Henry R. Luce Professor of Urban Values at New York
University; from 1975 to 1990, he was a director of Lincoln
National Corporation, an insurance company; and from 1977 to
1990, he was a director of Warner-Lambert Company, a
pharmaceutical and consumer products company.
His address is c/o The Public Interest, 1112 16th Street, N.W.,
Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Director. President and Chief Executive
Officer of Memorial Sloan-Kettering Cancer Center. He was Vice
President for Health Sciences and Director of the Cancer Center
at Columbia University from 1973 to September 1980, and Professor
of Medicine and of Human Genetics and Development at
Columbia University from 1968 to 1982. From 1976 to 1991,
he was a director of Charles H. Revson Foundation. From 1992 to
1993 he was a director of Biotechnology General, Inc., a
biotechnology company. He is also a director of
Pfizer, Inc., a pharmaceutical company, Life Technologies,
Inc., a life science company providing products for cell and
molecular biology and microbiology,
National Health Laboratories, a diagnostic laboratory, and
Tulerik, Inc., a biotechnology company. His address is c/o
Memorial Sloan-Kettering Cancer Center, 1275 York Avenue, New
York, New York 10021.
DR. MARTIN PERETZ, Director. Editor-in-Chief of The New Republic
magazine and a lecturer in social studies at Harvard University,
where he has been a member of the faculty since 1965. He is a
trustee of The Center for Blood Research at the Harvard Medical
School and a director of LeukoSite Inc., a biopharmaceutical
company. From 1988 to 1989, he was a director of Bank
Leumi Trust Company of New York; and from 1988 to 1991, he was a
director of Carmel Container Corporation. His address is c/o The
New Republic, 1220 19th Street, N.W., Washington, D.C. 20036.
BERT W. WASSERMAN, Director. Executive Vice President and Chief
Financial Officer since January 1990 and a director from January
1990 to March 1993 of Time Warner Inc. From 1981 to 1990, he was
a member of the Office of the President and a director of Warner
Communications, Inc. He is a member of the Chemical Bank
National Advisory Board, a trustee of the Baruch School of the
College of the City of New York and a director of The New
Germany Fund. His address is c/o Time Warner Inc., 75
Rockefeller Plaza, New York, New York 10019.
The Fund's Directors are also directors of Dreyfus A Bonds
Plus, Inc., Dreyfus Balanced Fund, Inc., Dreyfus Growth
Opportunity Fund, Inc., Dreyfus Global Bond
Fund, Inc., Dreyfus Growth and Income Fund, Inc. Dreyfus
International Equity Fund, Inc., Dreyfus International Recovery
Fund, Inc. and Dreyfus Money Market Instruments,
Inc. and trustees of Dreyfus Institutional Money Market Fund and
Dreyfus Variable Investment Fund. In addition, Mr. Fraser is a
director of Dreyfus Focus Funds, Inc.;
Mrs. Jacobs is a director of Dreyfus BASIC Money Market Fund and
Dreyfus Strategic Governments Income, Inc. and a trustee of
Dreyfus BASIC U.S. Government Money
Market Fund, Dreyfus California Intermediate Municipal Bond Fund,
Dreyfus Connecticut Intermediate Municipal Bond Fund, Dreyfus
Massachusetts Intermediate Municipal Bond Fund, Dreyfus
Pennsylvania Intermediate Municipal Bond Fund, Dreyfus
Strategic Investing and Dreyfus Strategic Income; and Mr. Glauber
is a director of Dreyfus Asset Allocation Fund, Dreyfus
California Municipal Income, Inc., The Dreyfus
Fund Incorporated, Dreyfus Municipal Income, Inc., Dreyfus New
York Municipal Income, Inc., Dreyfus Short-Term Income Fund, Inc.
and Dreyfus Worldwide Dollar Money Market Fund, Inc., and a
trustee of Dreyfus Short-Intermediate Municipal Bond
Fund and Dreyfus Institutional Short-Term Treasury.
The Fund does not pay any remuneration to its officers.
Fees and expenses of Directors who are paid by the Fund totaled
$51,815 for the fiscal year ended September 30, 1994 for
Directors as a group.
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 the Manager.
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 the
Manager. 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 the Manager.
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 the
Manager. 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 the Manager. 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 the Manager. From 1984 to July 1994, he was
Assistant Vice President in the Mutual Fund Accounting Department
of the Manager.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of
the Distributor and an officer of other investment companies
advised or administered by the Manager. From January 1992 to
July 1994, Senior Legal Product Manager, and from January 1990 to
January 1992, mutual fund accountant, for The Boston Company
Advisors, Inc.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President
of the Distributor and an officer of other investment companies
advised or administered by the Manager. 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.
Directors and officers of the Fund, as a group, owned less
than 1% of the Fund's shares of common stock outstanding on
November 11, 1994.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Management of the Fund."
The Manager provides management services pursuant to the
Management Agreement (the "Agreement") dated August 24, 1994,
with the Fund, which 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 outstanding voting securities of the
Fund, 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 the
Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Board of
Directors, including a majority of the Directors who are not
"interested persons" of any party to the Agreement, approved the
Agreement at a meeting held on May 24, 1994.
Shareholders of the Fund approved the Agreement on August 2,
1994. The 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, on
not less than 90 days' notice, by the Manager. The Agreement
will terminate automatically in the event of its
assignment (as defined in the Act).
The following persons are officers and/or directors of the
Manager: 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, and Secretary ; Jeffrey N. Nachman, Vice
President--Mutual Fund Accounting; Diane M. Coffey, Vice
President-- Corporate Communications; Jay R. DeMartine, Vice
President--Marketing; 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 and David
B. Truman, directors.
The Manager manages the Fund's portfolio of investments in
accordance with the stated policies of the Fund, subject to the
approval of the Fund's Board of Directors.
The Manager is responsible for investment decisions, and provides
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 Thomas A. Frank, Donald C.
Geogerian, Richard B. Hoey, Howard Stein and Wolodymyr Wronskyj.
The Manager also maintains a research department with a
professional staff of portfolio managers and
securities analysts who provide research services for the Fund as
well as for other funds
advised by the Manager. All purchases and sales are reported for
the Board's review at the meeting subsequent to such
transactions.
All expenses incurred in the operation of the Fund are
borne by the Fund, except to the extent specifically assumed by
the Manager. The expenses borne by the Fund include: taxes,
interest, brokerage fees and commissions, if any, fees of certain
Board members, Securities and Exchange Commission fees and state
Blue Sky qualification fees,
advisory fees, charges of registrars and custodians, transfer and
dividend disbursing
agents' fees, outside auditing and legal expenses, costs of
maintaining corporate existence,
costs attributable to investor services, 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
corporate meetings, and any extraordinary expenses.
The Manager maintains office facilities on behalf of the
Fund and furnishes
statistical and research data, clerical help, accounting, data
processing, bookkeeping and
internal auditing and certain other required services.
As compensation for the Manager's services, the Fund has
agreed to pay the Manager a monthly management fee at the annual
rate of .75 of 1% of the value of the
Fund's average daily net assets. The management fees paid by the
Fund to the Manager for the fiscal years ended September 30,
1992, 1993 and 1994 amounted to $3,831,507,
$4,191,498, and $4,509,012, respectively.
The Manager has agreed that if in any fiscal year the
aggregate expenses of the Fund (including the management fee, but
excluding interest, taxes, brokerage fees and,
with the prior written consent of the necessary state securities
commissions, extraordinary
expenses) exceed 1 1/2% of the average value of the Fund's net
assets for the fiscal year,
the Fund may deduct from fees to be paid to the Manager, or the
Manager will bear,
such excess expense. No expense reimbursement was required under
the Agreement for fiscal 1992, 1993 and 1994.
The aggregate of the fees payable to the Manager is not
subject to reduction as the value of the Fund's net assets
increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services Plan."
The Fund has adopted a Shareholder Services Plan (the
"Plan") pursuant to which the Fund reimburses Dreyfus Service
Corporation, a wholly-owned subsidiary of the
Manager, for certain allocated expenses of providing personal
services and/or maintaining
shareholder accounts. The services provided may include personal
services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and
providing reports and other information, and services related to
the maintenance of shareholder accounts.
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 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 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 is terminable at any time by vote of a majority of the
Directors who are not "interested persons" and have no direct or
indirect financial interest in the operation of
the Plan.
For the fiscal year ended September 30, 1994, the Fund
reimbursed Dreyfus Service Corporation $686,581 pursuant to the
Plan.
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 Dreyfus Family of Funds and for certain other
investment companies.
Sales Loads. The scale of sales loads applies to purchases
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.
Fund shares may be purchased at net asset value through the
automatic investment of dividends or capital gain distributions
paid by a fund which charges a sales
load, provided that, if the maximum sales load that could have
been imposed in connection with the purchase of Fund shares
exceeds the sales load applicable to the
fund from which such dividends or capital gain distributions are
being swept, the
difference in sales load will be deducted. See "Shareholder
Privileges--Dreyfus Dividend Sweep."
Offering Price. The method of computing the offering price
for individual sales aggregating less than $100,000, based upon
the price in effect at the close of business on
September 30, 1994, is as follows:
NET ASSET VALUE and redemption price per share. $15.35
Sales load, 3.0 percent of offering price
(approximately 3.1 percent of net asset value per share) .47
Offering price to public. . . . . . . . . . . . $15.82
Dreyfus TeleTransfer Privilege. Dreyfus 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 Dreyfus
TeleTransfer, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to,
the same bank and account as are designated on the Account
Application or Shareholder Services Form on
file. If the proceeds of a particular redemption are to be wired
to an account at any other bank, the request must be in writing
and signature-guaranteed. See "Redemption
of Fund Shares--Dreyfus TeleTransfer Privilege."
Transactions Through Securities Dealers. In some states,
banks or other institutions effecting transactions in Fund shares
may be required to register as dealers pursuant to state law.
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 application is still applicable.
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."
Wire Redemption Privilege. By using this Privilege, the
investor authorizes the Transfer Agent to act on wire or
telephone redemption instructions from any person
representing himself or herself to be the investor and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the
Fund will initiate payment for shares redeemed
pursuant to this Privilege on the next business day after receipt
if the Transfer Agent receives the redemption request in proper
form. Redemption proceeds will be
transferred by Federal Reserve wire only to the commercial bank
account specified by the investor on the Account Application or
Shareholder Services Form. Redemption
proceeds, if wired, must be in the amount of $1,000 or more and
will be wired to the
investor's account at the bank of record designated in the
investor's file at the Transfer
Agent, if the investor's bank is a member of the Federal Reserve
System, or to a correspondent bank if the investor's bank is not
a member. Fees ordinarily are imposed
by such bank and usually are borne by the investor. Immediate
notification by the
correspondent bank to the investor's bank is necessary to avoid a
delay in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire
redemption requests to the Transfer Agent by employing the
following transmittal code which may be used for
domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic
equipment may have the wire transmitted by contacting a TRT
Cables operator at 1-800-654-7171, toll free.
Investors should advise the operator that the above transmittal
code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to
receive redemption proceeds, a written request must be sent to
the Transfer Agent. This request must be
signed by each shareholder, with each signature guaranteed as
described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware
that if they have selected the Dreyfus TeleTransfer Privilege,
any request for a wire redemption will be
effected as a Dreyfus TeleTransfer transaction through the
Automated Clearing House
("ACH") system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily
two business days after receipt of the redemption request. See
"Purchase of Fund Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates
representing Fund shares to be redeemed must be submitted with
the redemption request. Written redemption requests
must be signed by each shareholder, including each owner of a
joint account, and each signature must be guaranteed. Signatures
on endorsed certificates submitted for
redemption also must be guaranteed. The Transfer Agent has
adopted standards and
procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers,
credit unions, national securities
exchanges, registered securities associations, clearing agencies
and savings associations, as
well as from participants in the New York Stock Exchange
Medallion Signature Program,
the Securities Transfer Agents Medallion Program ("STAMP") and
the Stock Exchanges
Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" must appear
with the signature. The Transfer
Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians and may accept
other suitable verification
arrangements from foreign investors, such as consular
verification. For more information
with respect to signature-guarantees, please call one of the
telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to
pay in cash all redemption requests by any shareholder of record,
limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the value of the 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 part in securities or other assets of the Fund in case
of an emergency or any
time a cash distribution would impair the liquidity of the Fund
to the detriment of the
existing shareholders. In such event, the securities would be
valued in the same manner
as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges would be incurred.
Suspension of Redemption. 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."
Fund Exchanges. Shares of 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 any 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 or transferred for shares of other funds
sold with a sales load
(referred to herein as "Offered Shares"), provided
that, if the sales load
applicable to the Offered Shares exceeds the maximum
sales load that
could have been imposed in connection with the
Purchased Shares (at the
time the Purchased Shares were acquired), without
giving effect to any
reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, shareholders
must notify the
Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, an investor must give exchange
instructions to the
Transfer Agent in writing, by wire or by telephone. The ability
to issue exchange
instructions by telephone is given to all Fund shareholders
automatically unless the
investor checks the relevant "no" box on the Account Application,
indicating that the
investor specifically refuses this Privilege. By using the
Telephone Exchange Privilege,
the investor authorizes the Transfer Agent to act on telephone
instructions from any
person representing himself or herself to be the investor, 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 exchanges.
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 Simplified Employee Pension Plans ("SEP-IRAs") with only one
participant, the
minimum initial investment is $750. To exchange shares held in
Corporate Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the
minimum initial
investment is $100 if the Plan has at least $2,500 invested among
the funds in the Dreyfus
Family of Funds. To exchange shares held in Personal Retirement
Plans, the shares
exchanged must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange
Privilege permits an
investor to purchase, in exchange for shares of the Fund, shares
of certain other funds in
the Dreyfus Family of Funds. This Privilege is available only
for existing accounts.
Shares will be exchanged on the basis of relative net asset value
set forth above under
"Fund Exchanges." Enrollment in or modification or cancellation
of this Privilege is
effective three business days following notification by the
investor. An investor will be
notified if his account falls below the amount designated to be
exchanged under this
Privilege. In this case, an investor's account will fall to zero
unless additional investments
are made in excess of the designated amount prior to the next
Auto-Exchange
transaction. Shares held under IRA and other retirement plans
are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA
accounts and from
regular accounts to IRA accounts, but not from IRA accounts to
regular accounts. With
respect to all other retirement accounts, exchanges may be made
only among those
accounts.
Fund Exchanges and Dreyfus Auto-Exchange Privilege are
available to
shareholders resident in any state in which shares of the fund
being acquired may legally
be sold. Shares may be exchanged only between accounts having
identical names and
other identifying designations.
Shareholder Services Forms and prospectuses of the other
funds may be obtained
by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in
whole or in part. The Fund Exchanges service or Dreyfus
Auto-Exchange Privilege may
be modified or terminated at any time upon notice to
shareholders.
Dreyfus Dividend Sweep. Dreyfus 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 another fund in the Dreyfus Family of Funds
of which the investor
is a shareholder. Shares 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 which impose a contingent deferred sales
charge ("CDSC") and
the applicable CDSC, if any, will be imposed upon
redemption of such
shares.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan
permits an investor
with a $5,000 minimum account to request withdrawal of a
specified dollar amount
(minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the
proceeds from sales of Fund shares, not the yield on the shares.
If withdrawal payments
exceed reinvested dividends and distributions, the investor's
shares will be reduced and
eventually may be depleted. 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
pursuant to the Automatic Withdrawal Plan.
Corporate Pension/Profit-Sharing and Personal 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 IRAs set up under SEP-IRAs and IRA
"Rollover Accounts," and
403(b)(7) Plans. Plan support services are also 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 and SEP-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 which acts 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
$2,500, 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 also may 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 as to 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. Portfolio securities
are valued at the last sale
price on the securities exchange or national securities market on
which such securities
primarily are traded. Securities not listed on an exchange or
national securities market,
or securities in which there were no transactions, are valued at
the average of the most
recent bid and asked prices, 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.
Market quotations for foreign securities in foreign currencies
are translated into U.S.
dollars at the prevailing rates of exchange. 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 Board of Directors. Expenses and fees,
including the management
fee, are accrued daily and taken into account for the purpose of
determining the net
asset value of Fund shares.
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."
Management believes that the Fund qualified for the fiscal
year ended September
30, 1994 as a "regulated investment company" under the Code. The
Fund intends to
continue to so qualify if such qualification is in the best
interests of its shareholders. At
present, such qualification relieves the Fund from any liability
for Federal income taxes
to the extent its net investment income and net realized capital
gains are distributed in
accordance with the applicable provisions of the Code. The term
"regulated investment
company" does not imply the supervision of management or
investment practices or
policies by any government agency.
Any dividend or distribution paid shortly after an
investor's purchase may have the
effect of reducing the aggregate net asset value of his shares
below the cost of his
investment. Such a dividend or distribution would be a return on
investment in an
economic sense, although taxable as stated above. In addition,
the Code provides that if
a shareholder holds shares of the Fund for six months (or shorter
period as the Internal
Revenue Service may prescribe by regulation) and has received a
capital gain 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 dividend
received.
Depending on the composition of the Fund's income, all or a
portion of the
dividends paid by the Fund from net investment income may qualify
for the dividends
received deduction allowable to certain U.S. corporate
shareholders ("dividends received
deduction"). In general, dividend income of the Fund distributed
to qualifying corporate
shareholders will be eligible for the dividends received
deduction only to the extent that
(i) the Fund's income consists of dividends paid by U.S.
corporations and (ii) the Fund
would have been entitled to the dividends received deduction with
respect to such
dividend income if the Fund were not a regulated investment
company. The dividends
received deduction for qualifying corporate shareholders may be
further reduced if the
shares of the Fund held by them with respect to which dividends
are received are treated
as debt-financed or deemed to have been held for less than 46
days. In addition, the
Code provides other limitations with respect to the ability of a
qualifying corporate
shareholder to claim the dividends received deduction in
connection with holding Fund
shares.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as
capital gains and losses. However, a portion of the gain or loss
realized from the
disposition of non-U.S. dollar denominated securities (including
debt instruments, certain
financial futures and options, 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, gain or loss realized by
the Fund from certain
financial futures and options transactions (other than those
taxed under Sections 988 and
1258 of the Code) 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
the exercise or lapse of such
futures and options as well as from closing transactions. In
addition, any such futures or
options remaining unexercised at the end of the Fund's taxable
year will be treated as
sold for their then fair market value, resulting in additional
gain or loss to the Fund
characterized in the manner described above.
Offsetting positions held by the Fund involving financial
futures and options may
be considered, for tax purposes, to constitute "straddles."
"Straddles" are defined to
include "offsetting positions" in actively traded personal
property. The tax treatment of
straddles is governed by Sections 1092 and 1258 of the Code,
which, in certain
circumstances overrides or modifies the provisions of Sections
988 and 1256 of the Code.
If a Fund were treated as entering into straddles by reason
of its engaging in
futures or options transactions, such straddles could be
characterized as "mixed straddles"
if the futures or options transactions comprising such straddles
were governed by Section
1256 of the Code. The Fund may make one or more elections with
respect to "mixed
straddles." Depending upon which election is made, if any, the
results to the Fund may
differ. If no election is made, to the extent the straddle rules
apply to positions
established by the Fund, losses realized by the Fund will be
deferred to the extent of
unrealized gain in any offsetting positions. Moreover, as a
result of the straddle and
conversion transaction rules, short-term capital loss on straddle
positions may be
recharacterized as long-term capital loss, and long-term capital
loss may be
recharacterized as short-term capital gain 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 each
year 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.
PORTFOLIO TRANSACTIONS
The Manager assumes general supervision over the placement
of orders on behalf
of the Fund for the purchase or sale of portfolio securities.
Allocation of brokerage
transactions, including their frequency, is made in the best
judgment of the Manager 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
Manager's 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
Manager, and the Manager's fee is not reduced as a consequence of
the receipt of such
supplemental information. Such information may be useful to the
Manager in carrying
out its obligation to the Fund. Brokers also will be selected
because of their 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 in
the Dreyfus Family of
Funds being engaged simultaneously in the purchase or sale of the
same security.
Certain of the Fund's transactions in the 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.
For the fiscal years ended September 30, 1993 and 1994, the
Fund's portfolio
turnover rate was 102.23% and 158.05%, respectively. 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 should not generally exceed 100%; however, in periods in
which extraordinary
market conditions prevail, the Manager 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 the Manager based upon
its knowledge of
available information as to the general level of commissions paid
by other institutional
investors for comparable services.
In connection with its portfolio securities transactions
for the fiscal years ended
September 30, 1992, 1993 and 1994, the Fund paid brokerage
commissions of $1,366,962,
$1,050,842 $1,406,201, respectively, none of which was paid to
the Distributor. The
above figures for brokerage commissions paid do not include gross
spreads and
concessions on principal transactions which, where determinable,
amounted to $1,466,825,
$1,099,649 and $609,493 in fiscal 1992, 1993 and 1994,
respectively, none of which was
paid to the Distributor.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the
section in the Fund's Prospectus entitled "Performance
Information."
The Fund's average annual total return for the one, five
and ten year periods
ended September 30, 1994 was (4.44)%, 8.02% and 12.31%,
respectively. Average
annual total return is calculated by determining the ending
redeemable value of an
investment purchased with a hypothetical $1,000 payment made at
the beginning of the
period (assuming the reinvestment of dividends and
distributions), dividing by the amount
of the initial investment, taking the "n"th root of the quotient
(where "n" is the number of
years in the period) and subtracting 1 from the result.
Total return is calculated by subtracting the amount of the
Fund's maximum
offering price per share at the beginning of a stated period from
the net asset value per
share at the end of the period (after giving effect to the
reinvestment of dividends and
distributions during the period), and dividing the result by the
maximum offering price
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. In such
cases, the calculation
would not reflect the deduction of the sales load which, if
reflected, would reduce the
performance quoted. The Fund's total return for the period June
23, 1969 to
September 30, 1994, based on maximum offering price per share,
was 1,349.93%. Based
on net asset value per share, the Fund's total return was
1,395.18% for this period.
From time to time, the Fund may compare its performance
against inflation with
the performance of other instruments against inflation, such as
short-term Treasury Bills
(which are direct obligations of the U.S. Government) and
FDIC-insured bank money
market accounts. In addition, advertising for the Fund may
indicate that investors may
consider diversifying their investment portfolios in order to
seek protection of the value
of their assets against inflation. From time to time,
advertising materials for the Fund
also may refer to Morningstar ratings and related analyses
supporting the ratings.
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."
The Fund is the oldest Dreyfus fund managed for growth of
capital which has the
ability to use techniques such as leverage, short-selling and
option transactions.
The Fund, which is incorporated under the name The Dreyfus
Leverage Fund,
Inc., began operating under the name Dreyfus Capital Growth Fund
(A Premier Fund)
on February 3, 1993.
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 are of one class
and have equal rights as to dividends and in liquidation. Shares
have no preemptive,
subscription or conversion rights and are freely transferable.
The Fund sends 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 American
Express Information Services Corporation, P.O. Box 9671,
Providence, Rhode Island
02940-9671, acts as 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>
[ARTICLE] 6
[CIK] 0000030156
[NAME] THE DREYFUS LEVERAGE FUND, INC.
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] SEP-30-1994
[PERIOD-END] SEP-30-1994
[INVESTMENTS-AT-COST] 545691
[INVESTMENTS-AT-VALUE] 572618
[RECEIVABLES] 3577
[ASSETS-OTHER] 383
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 576578
[PAYABLE-FOR-SECURITIES] 5274
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 944
[TOTAL-LIABILITIES] 6218
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 513938
[SHARES-COMMON-STOCK] 37161
[SHARES-COMMON-PRIOR] 32177
[ACCUMULATED-NII-CURRENT] (3739)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 33148
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 27013
[NET-ASSETS] 570360
[DIVIDEND-INCOME] 8349
[INTEREST-INCOME] 11032
[OTHER-INCOME] 0
[EXPENSES-NET] 6742
[NET-INVESTMENT-INCOME] 12639
[REALIZED-GAINS-CURRENT] 20592
[APPREC-INCREASE-CURRENT] (41886)
[NET-CHANGE-FROM-OPS] (8655)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (26080)
[DISTRIBUTIONS-OF-GAINS] (72372)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 14069
[NUMBER-OF-SHARES-REDEEMED] 14647
[SHARES-REINVESTED] 5561
[NET-CHANGE-IN-ASSETS] (26009)
[ACCUMULATED-NII-PRIOR] 9701
[ACCUMULATED-GAINS-PRIOR] 84929
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 4509
[INTEREST-EXPENSE] 406
[GROSS-EXPENSE] 6742
[AVERAGE-NET-ASSETS] 601040
[PER-SHARE-NAV-BEGIN] 18.53
[PER-SHARE-NII] .40
[PER-SHARE-GAIN-APPREC] (.56)
[PER-SHARE-DIVIDEND] .80
[PER-SHARE-DISTRIBUTIONS] 2.22
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 15.35
[EXPENSE-RATIO] .010
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1994
COMMON STOCKS-55.7% SHARES VALUE
---------- ------------
<S> <C> <C> <C>
BASIC INDUSTRIES-6.6% Abitibi-Price................... 100,000 (a) $ 1,512,500
Bowater.......................... 100,000 2,912,500
Champion International........... 165,000 6,393,750
Foster Wheeler................... 150,000 5,156,250
Grace....................... (W.R.) 50,000 2,075,000
International Paper.............. 70,000 5,495,000
OM Group......................... 130,000 2,624,375
Stone Container.................. 100,000 (a) 1,950,000
Temple-Inland.................... 100,000 5,525,000
WHX ............................. 150,000 (a) 2,568,750
Witco ........................... 50,000 1,437,500
-----------
37,650,625
-----------
CAPITAL GOODS-5.3% CBI Industries.................... 50,000 1,356,250
Cooper Industries................ 225,000 9,056,250
Greif Brothers, Cl. A............ 90,000 3,903,750
Illinois Tool Works.............. 84,000 3,591,000
Norfolk Southern................. 125,000 7,781,250
WMX Technologies................. 150,000 4,331,250
-----------
30,019,750
-----------
CHEMICALS-2.2% Dow Chemical..................... 100,000 7,825,000
Lubrizol......................... 150,000 4,668,750
-----------
12,493,750
-----------
CONGLOMERATES-.7% Tyco International................ 50,000 2,375,000
Whitman.......................... 100,000 1,675,000
-----------
4,050,000
-----------
CONSUMER CYCLICAL-.6% Bombay........................... 37,200 (a) 492,900
Waban............................ 150,000 (a) 2,943,750
-----------
3,436,650
-----------
CONSUMER STAPLES-18.6% American Home Products........... 276,400 16,584,000
Archer-Daniels-Midland........... 155,000 4,030,000
Bristol-Myers Squibb............. 81,800 4,693,275
Dean Foods....................... 100,000 3,025,000
Genzyme.......................... 45,000 (a) 1,541,250
Gillette......................... 125,000 8,843,750
IBP.............................. 105,000 3,438,750
Johnson & Johnson................ 100,000 5,162,500
Marion Merrell Dow............... 110,000 2,557,500
Merck & Co....................... 564,481 20,039,075
News, ADS........................ 175,000 8,859,375
Pfizer........................... 100,000 6,912,500
Philip Morris Cos................ 300,000 18,337,500
Tyson Foods, Cl. A............... 100,000 2,400,000
-----------
106,424,475
-----------
CREDIT CYCLICAL-.8% Kaufman & Broad Home............. 325,000 4,428,125
-----------
ENERGY-5.5% Arethusa (OFF-Shore) ............ 465,000 (a) 4,940,625
Baker Hughes..................... 250,000 4,656,250
Diamond Shamrock................. 65,000 1,673,750
Dresser Industries............... 320,000 6,480,000
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
----------- ------------
ENERGY (CONTINUED) Global Marine.................... 579,500 (a) $ 2,462,875
Pennzoil......................... 145,000 6,796,875
Rowan Cos........................ 600,000 (a) 4,350,000
-----------
31,360,375
-----------
FINANCIAL-3.3% CNA Financial..................... 125,000 (a) 7,875,000
Equitable of Iowa................ 89,700 3,229,200
Household International.......... 225,000 8,043,750
-----------
19,147,950
-----------
TECHNOLOGY-.2% Comcast UK Cable Partners, Cl. A 50,000 956,250
-----------
TRANSPORTATION-.4% Overseas Shipholding............... 100,000 2,175,000
-----------
UTILITIES-3.7%. Allegheny Power Systems........... 200,000 4,025,000
American Electric Power.......... 125,000 3,921,875
Dominion Resources............... 55,400 2,063,650
General Public Utilities......... 125,000 3,093,750
PacifiCorp....................... 225,000 3,796,875
Public Service Enterprise ....... 150,000 3,937,500
-----------
20,838,650
-----------
FOREIGN-7.8% Aiwa............................. 34,000 843,996
Asahi Tec........................ 20,000 185,873
BBC Brown Boveri AG.............. 11,000 9,483,495
Bridgestone...................... 60,000 938,446
Canon............................ 55,000 965,691
Chubu Steel Plate................ 20,000 141,272
Club Mediterranee................ 60,000 5,203,099
Disco............................ 5,000 165,490
Eurafrance....................... 6,015 2,119,398
Hitachi Chemical................. 90,000 1,080,727
Kanamoto......................... 7,000 211,201
Kyocera.......................... 13,000 928,759
Makino Milling................... 114,000 1,046,822
NEC.............................. 75,000 900,605
Ngk Spark Plug................... 79,000 1,060,242
Nichei........................... 2,200 152,735
Nissho-Iwai...................... 15,000 166,498
Nomura Securities................ 70,000 918,264
Pan Holding...................... 20,000 12,125,580
Promise.......................... 3,000 187,689
Rohm............................. 20,000 871,847
Sega Enterprises................. 13,400 831,584
Sharp............................ 50,000 887,992
Sumitomo......................... 100,000 978,809
Takada Kiko...................... 17,000 185,267
Tokki............................ 16,000 201,816
Tostem........................... 46,000 1,401,816
Yurtec........................... 7,350 171,327
-----------
44,356,340
-----------
TOTAL COMMON STOCKS
(cost $279,775,142)....................................... $317,337,940
============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
<S> <C> <C> <C>
PRINCIPAL
U.S. TREASURY NOTES-27.1% AMOUNT VALUE
----------- -------------
U.S. Treasury Notes,
5 7/8%, 2/15/2004
(cost $ 165,368,054)........... $175,000,000 $154,820,400
PRINCIPAL
AMOUNT
SUBJECT
CALL OPTIONS-.0% TO CALL
-------
Bundesrepublik Deutschland,
6 5/8%, 1/20/1998,
April `95 @ 65.72 (b,c,e)
(cost $89,609) ............. $ 15,000,000 $ 1,937
============
PRINCIPAL
SHORT-TERM INVESTMENTS-17.6% AMOUNT
-------
U.S. Treasury Bills: 3.975%, 10/6/1994................. $ 527,000 $ 526,627
3.1/4%, 10/13/1994............... 11,877,000 (d) 11,859,287
3.20%, 10/20/1994................ 8,066,000 8,046,820
4.27%, 10/27/1994................ 18,295,000 18,236,685
4.1/4%, 11/3/1994................ 46,773,000 46,576,867
4.81%, 11/10/1994................ 1,207,000 1,200,814
3.20%, 11/17/1994................ 14,097,000 14,011,102
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $100,458,202)............ $100,458,202
============
TOTAL INVESTMENTS (cost $545,691,007)....................................... 100.4% $572,618,479
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (.4%) $(2,258,583)
====== ============
NET ASSETS.................................................................. 100.0% $570,359,896
====== ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Denominated in German Deutsche Marks.
(c) Strike price subject to prevailing rate of exchange.
(d) Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
(e) Security restricted as to public resale. Investment in restricted
security, with an aggregate value of $1,937 represents approximately .0%
of net assets:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION PURCHASE PERCENTAGE OF
ISSUER DATE PRICE NET ASSETS VALUATION*
___ ----------- -------- ------------ ----------
<S> <C> <C> <C> <C>
Bundesrepublik Deutschland,
6 5/8%, 1/20/1998, April `95 @ 65.72..... 4/27/94 $.60 .0% $0.02
* The valuation of this security has been determined in good faith under the
direction of the Board of Directors.
STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1994
MARKET VALUE UNREALIZED
NUMBER OF COVERED APPRECIATION
CONTRACTS BY CONTRACTS EXPIRATION AT 9/30/94
__ ----------- -------- ------------ ----------
Standard & Poor's 500 (Short)................ 100 $23,162,500 Dec `94 $85,750
=======
See notes to financial statements.
</TABLE>
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(cost $545,691,007)-see statement..................................... $572,618,479
Cash.................................................................... 314,730
Dividends and interest receivable....................................... 2,714,853
Receivable for investment securities sold............................... 819,201
Receivable for futures variation margin-Note 4(a)....................... 37,500
Receivable for subscriptions to Common Stock............................ 5,177
Prepaid expenses........................................................ 67,937
------------
576,577,877
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 358,178
Payable for investment securities purchased............................. 5,274,311
Payable for Common Stock redeemed....................................... 253,398
Accrued expenses and other liabilities.................................. 332,094 6,217,981
------------ ----------
NET ASSETS ................................................................ $570,359,896
============
REPRESENTED BY:
Paid-in capital......................................................... $525,029,561
Accumulated undistributed investment income-net-Note 1(c)............... 3,333,561
Accumulated undistributed net realized gain on investments.............. 14,983,552
Accumulated net unrealized appreciation on investments
(including $85,750 net unrealized appreciation on financial futures)-Note 4(b) 27,013,222
------------
NET ASSETS at value applicable to 37,160,617 outstanding shares of Common Stock,
equivalent to $15.35 per share (100 million shares of $1 par value authorized) $570,359,896
============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1994
<S> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $11,032,502
Cash dividends (net of $60,381 foreign taxes withheld at source)...... 8,348,759
------------
TOTAL INCOME...................................................... $19,381,261
EXPENSES:
Management fee-Note 3(a).............................................. 4,509,012
Shareholder servicing costs-Note 3(b)................................. 1,389,131
Interest-Note 2....................................................... 405,773
Loan commitment fees-Note 2........................................... 139,901
Custodian fees........................................................ 131,949
Professional fees..................................................... 52,971
Directors' fees and expenses-Note 3(c)................................ 51,815
Prospectus and shareholders' reports.................................. 40,511
Dividends on securities sold short.................................... 15,600
Miscellaneous......................................................... 5,283
------------
TOTAL EXPENSES.................................................... 6,741,946
-----------
INVESTMENT INCOME-NET............................................. 12,639,315
-----------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 4(a):
Long transactions (including options transactions).................... $25,410,671
Short sale transactions............................................... 304,375
Net realized (loss) on forward currency exchange contracts-Note 4(a);
Short transactions.................................................... (3,812,001)
Net realized loss on financial futures-Note 4(a):
Long transactions..................................................... (938,614)
Short transactions.................................................... (372,986)
------------
NET REALIZED GAIN..................................................... 20,591,445
Net unrealized (depreciation) on investments and forward currency
exchange contracts (including $159,026 net unrealized appreciation
on financial futures)................................................. (41,885,909)
-----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (21,294,464)
-----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (8,655,149)
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
----------------------------
1993 1994
------------ -------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 6,946,39 $ 12,639,315
Net realized gain on investments........................................ 78,971,489 20,591,445
Net unrealized (depreciation) on investments for the year............... (21,913,541) (41,885,909)
---------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 64,004,339 (8,655,149)
---------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (6,706,107) (26,079,930)
Net realized gain on investments........................................ (39,095,109) (72,371,864)
---------- -------------
TOTAL DIVIDENDS....................................................... (45,801,216) (98,451,794)
---------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 660,458,934 250,776,376
Dividends reinvested.................................................... 41,429,266 88,813,669
Cost of shares redeemed................................................. (644,617,878) (258,491,934)
---------- -------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 57,270,322 81,098,111
---------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 75,473,445 (26,008,832)
NET ASSETS:
Beginning of year....................................................... 520,895,283 596,368,728
---------- -------------
End of year [including undistributed investment income-net of $9,701,176
in 1993 and distributions in excess of investment income-net of
($3,739,439) in 1994]................................................. $596,368,728 $570,359,896
============ ============
SHARES SHARES
---------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 37,499,322 14,069,123
Shares issued for dividends reinvested.................................. 2,451,375 5,561,247
Shares redeemed......................................................... (36,543,389) (14,647,204)
---------- -------------
NET INCREASE IN SHARES OUTSTANDING.................................... 3,407,308 4,983,166
============ ============
</TABLE>
See notes to financial statements.
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
Reference is made to page 3 of the Fund's Prospectus dated
January 31, 1995.
See notes to financial statements.
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of
1940 ("Act") as a diversified open-end management investment
company. Dreyfus Service Corporation, until August 24, 1994,
acted as the exclusive distributor of the Fund's shares. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus
Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The
Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of
Institutional Administrative Services, Inc., a provider of
mutual fund administrative services, the parent company of which
is Boston Institutional Group, Inc.
(A) PORTFOLIO VALUATION: Investments in securities (including
options and financial futures) are valued at the last sales
price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange
or the national securities market, or securities for which there
were no transactions, are valued at the average of the most
recent bid and asked prices, except for open short positions,
where the asked price is used for valuation purposes. Bid price
is used when no asked price is available.
Securities for which there are no such valuations are valued at
fair value as determined in good faith under the direction of the
Board of Directors.
Short-term investments are carried at amortized cost, which
approximates value. Investments denominated in foreign currencies
are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the
offsetting rate.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain
and loss from securities transactions are recorded on the
identified cost basis. Dividend income is recognized on the
ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is
recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and
dividends from net realized capital gain are normally declared
and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code. To the
extent that net realized capital gain can be offset by capital
loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
In accordance with a recently adopted Statement of Position
(SOP 93-02) certain differences resulting from the classification
of gains/losses recognized on foreign currency transactions for
book and tax purposes and the recording of related distributions
to shareholders have been reclassified. As of October 1, 1993,
the cumulative effect of such differences totalling
$7,073,000 was reclassified from undistributed net investment
income to undistributed net realized gains. In addition, the Fund
reclassified permanent book and tax basis differences relating to
utilization of a capital loss carryforward acquired by the Fund
in connection with a merger with another fund in 1972. As a
result, the Fund reclassified $11,092,000 from
undistributed net realized gains to paid-in capital. These
reclassifications had no effect on net investment income, net
realized gains and net assets.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to
continue to qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by
complying with the applicable provisions of the Internal Revenue
Code, and to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and
excise taxes.
NOTE 2-BANK LINES OF CREDIT:
In accordance with an agreement with a bank, the Fund may
borrow up to $76 million under a short-term unsecured line of
credit. In connection therewith, the Fund has agreed to pay
commitment fees at an annual rate of .375 of 1% on the unused
portion of the first $46 million of the line of credit.
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
No commitment fee is charged on the additional $30 million.
Interest on borrowings is charged at rates which are related to
Federal Funds rates in effect. There were no outstanding
borrowings on September 30, 1994 under the line of credit.
The average daily amount of short-term debt outstanding
during the year ended September 30, 1994 was approximately
$8,531,000, with a related weighted average annualized interest
rate of 4.75% (based upon actual interest expense, not including
commitment fees, for the year). The maximum amount of such debt
outstanding at any time during the year ended September
30, 1994, was $68 million.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of 3/4
of 1% of the average daily value of the Fund's net assets and is
payable monthly. The Agreement provides for an expense
reimbursement from the Manager should the Fund's aggregate
expenses, exclusive of taxes, interest on borrowings (which, in
the view of Stroock & Stroock & Lavan, counsel to the Fund, also
contemplates loan commitment fees and dividends on securities
sold short), brokerage commissions and extraordinary expenses,
exceed 1 1/2% of the average value of the Fund's net assets for
any full fiscal year. No expense reimbursement was
required for the year ended September 30, 1994.
Dreyfus Service Corporation retained $1,004,878 during the
year ended September 30, 1994 from commissions earned on sales of
Fund shares.
(B) Pursuant to the Fund's Shareholder Services Plan, the
Fund reimburses Dreyfus Service Corporation an amount not to
exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for servicing shareholder accounts. The
services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information,
and services related to the maintenance of shareholder accounts.
During the year ended September 30, 1994, the Fund was charged an
aggregate of $686,581 pursuant to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and directors
of the Fund were "affiliated persons," as defined in the Act, of
the Manager and/or Dreyfus Service Corporation. Each director who
is not an "affiliated person" receives an annual fee of $4,500
and an attendance fee of $500 per meeting.
NOTE 4-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment
securities and securities sold short, excluding short-term
securities, forward currency exchange contracts and options
transactions, during the year ended September 30, 1994 is
summarized as follows:
PURCHASES SALES
--------------- ----------------
Long transactions......... $869,505,106 $743,179,408
Short sale transactions... 21,867,500 22,171,875
------------ -----------
TOTAL..................... $891,372,606 $765,351,283
============ ============
The Fund is engaged in short-selling which obligates the Fund
to replace the security borrowed by purchasing the security at
current market value. The Fund would incur a loss 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
would realize a gain if the price of the security declines
between those dates. Until the Fund replaces the borrowed
security, the Fund will maintain daily, a segregated account
with a broker and custodian, of cash and/or U.S. Government
securities sufficient to cover its short position.
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
When executing forward currency exchange contracts, the Fund
is obligated to buy or sell a foreign currency at a specified
rate on a certain date in the future. With respect to sales of
forward currency exchange contracts, the Fund would incur a loss
if the value of the contract increases between the date the
forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract
decreases between those dates. With respect to purchases of
forward currency exchange contracts, the Fund would incur a loss
if the value of the contract decreases between the date the
forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the
contract increases between those dates.
In addition, the following table summarizes the Fund's put
options written transactions for the year ended September 30,
1994:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
---------- ---------- -------- -----------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding September 30, 1993. 9 $ 243,267
Contracts terminated;
Closed.................... 9 243,267 $42,894 $ 200,373
----------- ---------- --------- ----------
Contracts outstanding September 30, 1994.... -- --
========== =========
</TABLE>
As a writer of put options, the Fund receives a premium at
the outset and then bears the market risk of unfavorable changes
in the price of the financial instrument underlying the option.
Generally, the Fund would incur a gain, to the extent of the
premiums, if the price of the underlying financial instrument
increases between the date the option is
written and the date on which the option is terminated.
Generally, the Fund would realize a loss, if the price of the
financial instrument declines between those dates.
The Fund is engaged in trading financial futures contracts.
The Fund is exposed to market risk as a result of changes in the
value of the underlying financial instruments (see the Statement
of Financial Futures). Investments
in financial futures require the Fund to "mark to market" on a
daily basis,
which reflects the change in the market value of the contract at
the close of
each day's trading. Accordingly, variation margin payments are
made or received to reflect daily unrealized gains or losses.
When the contracts are closed, the Fund recognizes a realized
gain or loss. These investments
require initial margin deposits with a custodian, which consist
of cash or cash equivalents, up to approximately 10% of the
contract amount. The amount
of these deposits is determined by the exchange or Board of Trade
on which
the contract is traded and is subject to change. Contracts open
at September 30, 1994 and their related unrealized market
appreciation (depreciation) are set forth in the Statement of
Financial Futures.
(B) At September 30, 1994, accumulated net unrealized
appreciation on investments was $27,013,222, consisting of
$48,356,708 gross unrealized appreciation and $21,343,486 gross
unrealized depreciation.
At September 30, 1994, the cost of investments for Federal
income tax purposes was substantially the same as the cost for
financial reporting purposes (see the Statement of Investments).
DREYFUS CAPITAL GROWTH FUND (A Premier Fund)
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)
We have audited the accompanying statement of assets and
liabilities of
Dreyfus Capital Growth Fund (A Premier Fund), including the
statements of investments and financial futures, as of September
30, 1994, and the related statement of operations for the year
then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and financial
highlights for each of the years indicated therein. These
financial statements and financial highlights are the
responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures
in the financial statements. Our procedures included confirmation
of securities owned as of September 30, 1994 by correspondence
with the custodian
and brokers. An audit also includes assessing the accounting
principles used
and significant estimates made by management, as well as
evaluating the
overall financial statement presentation. We believe that our
audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights
referred to above present fairly, in all material respects, the
financial
position of Dreyfus Capital Growth Fund (A Premier Fund) at
September 30, 1994, the results of its operations for the year
then ended, the changes in
its net assets for each of the two years in the period then
ended, and the
financial highlights for each of the indicated years, in
conformity with
generally accepted accounting principles.
New York, New York
November 8, 1994
THE DREYFUS LEVERAGE FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits. - List
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for each of the
ten years in the period ended September 30, 1994.
Included in Part B of the Registration Statement:
Statement of Investments--September 30, 1994.
Statement of Financial Futures--Septempber 30, 1994
Statement of Assets and Liabilities--September 30, 1994.
Statement of Operations--year ended September 30, 1994.
Statement of Changes in Net Assets--for each
of the two years in the period ended September 30, 1994.
Notes to Financial Statements.
Report of Ernst & Young, Independent Auditors, dated
November 8, 1994.
Schedules No. I through VII and other financial statement
information, for which provision is made in the applicable
accounting
regulations of the Securities and Exchange Commission, are either
omitted because they are not required under the related
instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which
are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
(b) Exhibits:
(1) The Registrant's Articles of Incorporation, as amended,
are incorporated by reference to Exhibit (1) of Post-Effective
Amendment No. 55 to the Registration Statement on Form N-1A,
filed on December 27, 1993.
(2) Registrant's By-Laws, as amended, are incorporated by
reference to Exhibit (2) of the Post-Effective Amendment No. 55
to the Registration Statement on Form N-1A, filed on December 27,
1993.
(5) Management Agreement.
(6) Distribution Agreement.
(8) Amended and Restated Custody Agreement is incorporated
by reference to Exhibit 8 of Post-Effective Amendment No. 55 to
the Registration Statement on Form N-1A, filed on December 27,
1993.
(9) Agreement and Articles of Merger, are incorporated by
reference to Exhibit (9) of Post-Effective Amendment No. 55
to the Registration Statement on Form N-1A, filed on December 27,
1993.
(10) Opinion and consent of Registrant's counsel is
incorporated by reference to Exhibit (10) of Pre-Effective
Amendment No. 2 to the Registration Statement on Form S-5, filed
on June 27, 1974.
(11) Consent of Independent Auditors.
(15) Shareholder Services Plan, as amended.
(16) Schedules of computation of Performance Data, are
incorporated by reference to Exhibit (16) of Post-Effective
Amendment No. 55 to the Registration Statement on Form N-1A,
filed on December 27, 1993.
Item (b) 24. Financial Statements and Exhibits. - List
(continued)
Other Exhibits
(a) Power of Attorney.
(b) Assistant Secretary's Certificate.
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 as of November 21, 1994
Common Stock, 36,079
(Par value $1.00)
Item 27. Indemnification
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is
insured or indemnified in any manner against liability which may
be incurred in such capacity, other than insurance provided by
any director, officer, affiliated person or underwriter for their
own protection, is incorporated by reference to Item 4 of
Part II of Post-Effective Amendment No. 35 to the
Registration Statement on Form N-1A, filed on January 29, 1982.
Reference is also made to the Distribution Agreement.
Item 28. Business and Other Connections of Investment Adviser.
The Dreyfus Corporation ("Dreyfus") and subsidiary
companies comprise a financial service organization whose
business consists primarily of providing investment management
services as the investment adviser, manager and distributor for
sponsored investment companies registered under the Investment
Company Act of 1940 and as an investment adviser to institutional
and individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealter of
shares of investment companies sponsored by Dreyfus and of other
investment companies for which Dreyfus acts as investment
adviser, sub-investment adviser or administrator. Dreyfus
Management, Inc., another
wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser
(continued)
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit
Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International
Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President, and The Dreyfus Trust Company++;
Director Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
JOSEPH S. DiMARTINO Director:
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837;
Vice President and former Treasurer and
Director:
National Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
W. KEITH SMITH Chairman and Chief Executive Officer:
Chief Operating Officer The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
PAUL H. SNYDER Director:
Vice President and Chief Pennsylvania Economy League
Financial Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania;
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman, Distribution Executive Officer:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
LAWRENCE S. KASH Executive Vice President
(cont'd) Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
JAY R. DEMARTINE Chairman of the Board and President:
Vice President, Marketing The Woodbury Society
16 Woodbury Lane
Ogunquit, ME 03907;
Former Managing Director:
Bankers Trust Company
280 Park Avenue
New York, NY 10017;
BARBARA E. CASEY President:
Vice President, Dreyfus Retirement Services;
Retirement Services Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate Communications
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Security Savings
Director Bank, F.S.B.+;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ELIE M. GENADRY President:
Vice President, Institutional Services Division of Dreyfus
Wholesale Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President, Fund
Administration
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice Chairman, Operations Dreyfus Thrift & Commerce****;
and Administration Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President, Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President, Fund The Dreyfus Consumer Credit Corporation*;
Legal and Compliance Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
The Truepenny Corporation*
______________________________________
* The address of the business so indicated is 200 Park
Avenue, New York, New York 10166.
** The address of the business so indicated is 80 Cutter
Mill Road, Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway,
New York, New York 10006.
**** The address of the business so indicated is Five Triad
Center, Salt Lake City, Utah 84180.
+ The address of the business so indicated is Atrium
Building, 80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One
Rockefeller Plaza, New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard
Royal, Luxembourg.
+++++ The address of the business so indicated is Nassau,
Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as principal
underwriter or exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus Michigan Municipal Money Market Fund, Inc.
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) Dreyfus Short-Term Income Fund, Inc.
66) The Dreyfus Socially Responsible Growth Fund, Inc.
67) Dreyfus Strategic Growth, L.P.
68) Dreyfus Strategic Income
69) Dreyfus Strategic Investing
70) Dreyfus Tax Exempt Cash Management
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) First Prairie Cash Management
77) First Prairie Diversified Asset Fund
78) First Prairie Money Market Fund
79) First Prairie Municipal Money Market Fund
80) First Prairie Tax Exempt Bond Fund, Inc.
81) First Prairie U.S. Government Income Fund
82) First Prairie U.S. Treasury Securities Cash Management
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
91) Pacific American Fund
92) Peoples Index Fund, Inc.
93) Peoples S&P MidCap Index Fund, Inc.
94) Premier Insured Municipal Bond Fund
95) Premier California Municipal Bond Fund
96) Premier GNMA Fund
97) Premier Growth Fund, Inc.
98) Premier Municipal Bond Fund
99) Premier New York Municipal Bond Fund
100) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
Marie E. Connolly Director, President and Chief President and
Operating Officer Treasurer
Joseph F. Tower, III Senior Vice President and Chief Assistant
Financial Officer Treasurer
John E. Pelletier Senior Vice President Vice President
and General Counsel and Secretary
Frederick C. Dey Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman Vice President and Associate Vice President
General Counsel and Assistant
Secretary
John J. Pyburn Vice President Assistant
Treasurer
Jean M. O'Leary Assistant Secretary None
Ruth D. Leibert Assistant Vice President Assistant
Secretary
Paul D. Furcinito Assistant Vice President Assistant
Secretary
John W. Gomez Director None
William J. Nutt Director None
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
________ ____________
(1) 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.
(2) To furnish each person to whom a prospectus is
delivered with a copy of the Fund's 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 Amendment to the Registration Statement to be signed
on its behalf by the
undersigned, thereunto duly authorized, in the City of New York,
and State of New York on the 28th day of November, 1994.
THE DREYFUS LEVERAGE FUND, INC.
BY: /s/Marie E. Connolly*
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, this Amendment to the
Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Signatures Title Date
/s/Marie E. Connolly* President (Principal 11/28/94
Marie E. Connolly Executive, Financial
and Accounting
Officer) and Treasurer
/s/John M. Fraser, Jr.* Director 11/28/94
John M. Fraser, Jr.
/s/Robert R. Glauber* Director 11/28/94
Robert R. Glauber
/s/James F. Henry* Director 11/28/94
James F. Henry
/s/Rosalind Gersten Jacobs* Director 11/28/94
Rosalind Gersten Jacobs
/s/Irving Kristol* Director 11/28/94
Irving Kristol
/s/Paul A. Marks* Director 11/28/94
Paul A. Marks
/s/Martin Peretz* Director 11/28/94
Martin Peretz
/s/Bert W. Wasserman* Director 11/28/94
Bert W. Wasserman
*BY:
Eric B. Fischman,
Attorney-in-Fact
EXHIBIT 5
MANAGEMENT AGREEMENT
THE DREYFUS LEVERAGE FUND, INC.
(d/b/a Dreyfus Capital Growth Fund (A Premier Fund))
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers or employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of the Fund's
portfolio in accordance with the Fund's investment objectives
and policies as stated in its Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise the Fund's investments and conduct a
continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. You
will furnish to the Fund such statistical information, with
respect to the investments which the Fund may hold or
contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially
affecting its portfolio and shall expect you, on your own
initiative, to furnish to the Fund from time to time such
information as you may believe appropriate for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; carry such fidelity and other
insurance as may be deemed appropriate and desirable; prepare
reports to the Fund's stockholders, tax returns, reports to and
filings with the Securities and Exchange Commission and state
Blue Sky authorities; calculate the net asset value of the
Fund's shares; and generally assist in all aspects of the Fund's
operations. You shall have the right, at your expense, to
engage other entities to assist you in performing some or all of
the obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
Notwithstanding the above statements, the expenses to
be borne by the Fund include, without limitation, the following:
taxes, interest, brokerage fees and commissions, if any, fees of
Board members who are not your officers, directors or employees
or holders of 5% or more of your outstanding voting securities,
Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory fees, charges of registrars and
custodians, transfer and dividend disbursing agents' fees,
outside auditing and legal expenses, costs of maintaining the
Fund's existence, costs attributable to investor services, costs
of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for
distribution to existing stockholders, costs of stockholders'
reports and meetings, and any extraordinary expenses. The Fund
also will pay the salaries of such of its principal executive
officers as are not also full-time salaried officers or
employees of yours.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund
agrees as an inducement to your undertaking the same that you
shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by the Fund, provided
that nothing herein shall be deemed to protect or purport to
protect you against any liability to the Fund or to its security
holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the annual rate of .75 of 1% of the value of
the Fund's average daily net assets. Net asset value shall be
computed on such days and at such time or times as described in
the Fund's then-current Prospectus and Statement of Additional
Information. Upon any termination of this Agreement before the
end of any month, the fee for such part of a month shall be pro-
rated according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of
termination of this Agreement.
For the purpose of determining fees payable to you,
the value of the Fund's net assets shall be computed in the
manner specified in the Fund's charter documents for the
computation of the value of the Fund's net assets.
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to this Agreement, but excluding
interest, taxes, brokerage and, with the prior written consent
of the necessary state securities commissions, extraordinary
expenses) exceed 1-1/2% of the average value of the Fund's net
assets for the fiscal year, the Fund may deduct from the fees to
be paid hereunder, or you will bear, such excess expense. Your
obligation pursuant hereto will be limited to the amount of your
fees hereunder. 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 Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two
or more companies or accounts managed by you which have
available funds for investment, the available securities will be
allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by the
Fund or the size of the position obtainable for or disposed of
by the Fund.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence on your part in the performance of your
duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your
officer, director, partner, employee or agent, who may be or
become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting
on any business of the Fund, to be rendering such services to or
acting solely for the Fund and not as your officer, director,
partner, employee or agent or one under your control or
direction even though paid by you.
This Agreement shall continue until June 30, 1995, and
thereafter shall continue automatically for successive annual
periods ending on June 30th of each year, provided such
continuance is specifically approved at least annually by
(i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940) of the Fund's outstanding
voting securities, provided that in either event its continuance
also is approved by a majority of the Fund's Board members who
are not "interested persons" (as defined in said Act) of any
party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agree-
ment is terminable without penalty, on 60 days' notice, by the
Fund's Board or by vote of holders of a majority of the Fund's
shares or, upon not less than 90 days' notice, by you. This
Agreement also will terminate automatically in the event of its
assignment (as defined in said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities
(including other investment companies) and that such other
entities may include the name "Dreyfus" as part of their name,
and that your corporation or its affiliates may enter into
investment advisory or other agreements with such other
entities. If you cease to act as the Fund's investment adviser,
the Fund agrees that, at your request, the Fund will take all
necessary action to change the name of the Fund to a name not
including "Dreyfus" in any form or combination of words.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
THE DREYFUS LEVERAGE FUND, INC.
By:____________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
<PAGE>
EXHIBIT 6
DISTRIBUTION AGREEMENT
THE DREYFUS LEVERAGE FUND, INC.
(d/b/a Dreyfus Capital Growth Fund (A Premier Fund))
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
THE DREYFUS LEVERAGE FUND, INC.
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
<PAGE>
EXHIBIT A
Reapproval Date Reapproval Day
June 30, 1996 June 30th
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Condensed Financial Information" and "Custodian, Transfer and
Dividend Disbursing Agent, Counsel and Independent Auditors" and
to the use of our report dated November 8, 1994, in this
Registration Statement (Form N-1A 2-30806) of Dreyfus Capital
Growth Fund.
ERNST & YOUNG LLP
New York, New York
November 23, 1994
<PAGE>
EXHIBIT 15
THE DREYFUS LEVERAGE FUND, INC.
(d/b/a Dreyfus Capital Growth Fund (A Premier Fund))
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan (the "Plan") under which the Fund would reimburse
Dreyfus Service Corporation ("DSC") for certain allocated
expenses of providing personal services and/or maintaining
shareholder accounts to (a) shareholders of each series of the
Fund or class of Fund shares set forth on Exhibit A hereto, as
such Exhibit may be revised from time to time, or (b) if no
series or classes are set forth on such Exhibit, shareholders of
the Fund. The Plan is not to be adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the
"Act"),
and the fee under the Plan is intended to be a "service fee" as
defined in Article III, Section 26 (a "Service Fee"), of the
NASD
Rules of Fair Practice (the "NASD Rules").
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use Fund assets for such purposes.
In voting to approve the implementation of such a
plan,
the Board has concluded, in the exercise of its reasonable
business judgment and in light of applicable fiduciary duties,
that there is a reasonable likelihood that the plan set forth
below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall reimburse DSC an amount not to
exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for its allocated expenses of providing
personal services to shareholders and/or maintaining shareholder
accounts; provided that, at no time, shall the amount paid to
DSC
under this Plan, together with amounts otherwise paid by the
Fund, or each series or class identified on Exhibit A, as a
Service Fee under the NASD Rules, exceed the maximum amount then
payable under the NASD Rules as a Service Fee. The amount of
such reimbursement shall be based on an expense allocation
methodology prepared by DSC annually and approved by the Fund's
Board or on any other basis from time to time deemed reasonable
by the Fund's Board.
2. For the purposes of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of the Fund's net assets.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a
majority
of the Board members 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 this Plan or in any agreements
entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on
the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the
Board,
provided that any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members 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
this Plan or in any agreements entered into in connection with
this Plan.
Dated: June 23, 1993
As Revised: August 24, 1994
<PAGE>
EXHIBIT A
<PAGE>
Other Exhibit (a)
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C.
Dey, Eric B. Fischman, Ruth D. Leibert and John E. Pelletier
and each of them, with full power to act without the other, her
true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for her and in her name, place
and stead, in any and all capacities (until revoked in writing)
to sign any and all amendments to the Registration Statement for
each fund listed on Schedule A attached hereto (including post-
effective amendments and amendments thereto), and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each
and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Marie E. Connolly President and Treasurer
October 26, 1994
<PAGE>
SCHEDULE A
GROUP II
Dreyfus A Bonds Plus, Inc.
Dreyfus Balanced Fund, Inc.
Dreyfus Capital Growth Fund (A Premier Fund)
Dreyfus Global Bond Fund, Inc.
Dreyfus Growth and Income Fund, Inc.
Dreyfus Growth Opportunity Fund, Inc.
Dreyfus Institutional Money Market Fund
Dreyfus International Equity Fund, Inc.
Dreyfus International Recovery Fund, Inc.
Dreyfus Money Market Instruments, Inc.
Dreyfus Variable Investment Fund
<PAGE>
POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints
Frederick C. Dey, Eric B. Fischman, Ruth D. Leibert and John E.
Pelletier and each of
them, with full power to act without the other, his or her true
and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her
name, place and stead, in
any and all capacities (until revoked in writing) to sign any
and all amendments to the Registration Statement for each Fund
listed on Schedule A attached hereto (including post-effective
amendments and amendments
thereto), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of
them, full power and authority to do and perform each and every
act and thing ratifying and confirming all that said
attorneys-in-fact and agents
or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
John M. Fraser, Jr.,
Director/Trustee
Robert R. Glauber,
Director/Trustee
James F. Henry,
Director/Trustee
Rosalind Gersten Jacobs,
Director/Trustee
Irving Kristol,
Director/Trustee
Paul A. Marks,
Director/Trustee
Martin Peretz,
Director/Trustee
Bert W. Wasserman,
Director/Trustee
Date: August 30, 1994
<PAGE>
SCHEDULE A
GROUP II
Dreyfus A Bonds Plus, Inc.
Dreyfus Balanced Fund, Inc.
Dreyfus Capital Growth Fund (A Premier Fund)
Dreyfus Global Bond Fund, Inc.
Dreyfus Growth and Income Fund, Inc.
Dreyfus Growth Opportunity Fund, Inc.
Dreyfus Institutional Money Market Fund
Dreyfus International Equity Fund, Inc.
Dreyfus International Recovery Fund, Inc.
Dreyfus Money Market Instruments, Inc.
Dreyfus Variable Investment Fund
<PAGE>
Other Exhibit (b)
THE DREYFUS LEVERAGE FUND, INC.
Assistant Secretary's Certificate
The undersigned, Eric B. Fischman, Assistant Secretary of
The Dreyfus Leverage Fund, Inc. (the "Fund"), hereby certifies
that set forth below is a copy of the resolution adopted by the
Written Consent of the Fund's
Board members on August 30, 1994, authorizing the signing by
Frederick C. Dey, Eric B. Fischman, Ruth D. Leibert and John E.
Pelletier on behalf of
the proper officers of the Fund pursuant to a power of attorney:
RESOLVED, that the Registration Statement and any and
all amendments and supplements thereto may be signed by any one
of Frederick C. Dey, Eric B. Fischman, Ruth D. Leibert and John
E. Pelletier
as the attorney-in-fact for the proper officers of the Fund,
with full
power of substitution and resubstitution; and that the
appointment of each
of such persons as such attorney-in-fact hereby is authorized
and approved; and that such attorneys-in-fact, and each of them,
shall have full power and authority to do and perform each and
every act and thing
requisite and necessary to be done in connection with such
Registration Statement and any and all amendments and supplements
thereto, as fully to
all intents and purposes as the officer for whom he is acting as
attorney-in-fact, might or could do in person.
IN WITNESS THEREOF, I have hereunto signed my name and
affixed the seal of the Fund on November 28, 1994.
Eric B. Fischman
Assistant
Secretary
(SEAL)
