File Nos. 2-68671
811-3087
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. 32 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 32 [X]
(Check appropriate box or boxes.)
DREYFUS APPRECIATION FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, 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)
----
(date) pursuant to paragraph (b)
----
X 60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
DREYFUS APPRECIATION FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Front and Back Cover Pages Cover
2 Risk/Return Summary: Investments, Risks
And Performance 3
3 Risk/Return Summary: Fee Table 5
4 Investment Objectives, Principal Investment
Strategies, and Related Risks 2
5 Management's Discussion of Fund Performance 4
6 Management, Organization and Capital Structure 6
7 Shareholder Information 8
8 Distribution Arrangements 11
9 Financial Highlights Information 7
Items in
Part B of
Form N-1A
- ---------
10 Cover Page, Table of Contents Cover
11 Fund History B-2
12 Description of the Fund and its
Investments and Risks B-2
13 Management of the Fund B-8
14 Control Persons and Principal B-13
Holders of Securities
15 Investment Advisory and Other B-14
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS APPRECIATION FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
16 Brokerage Allocation and Other Practices B-31
17 Capital Stock and Other Securities B-28
18 Purchase, Redemption and Pricing B-18, B-21
of Securities Being Offered
19 Tax Status *
20 Underwriters B-17
21 Calculations of Performance Data B-32
22 Financial Statements B-35
Items in
Part C of
Form N-1A
_________
23 Exhibits C-1
24 Persons Controlled by or Under C-2
Common Control with Registrant
25 Indemnification C-2
26 Business and Other Connections of C-3
Investment Adviser
27 Principal Underwriters C-11
28 Location of Accounts and Records C-13
29 Management Services C-13
30 Undertakings C-13
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
Dreyfus
Appreciation
Fund, Inc.
Investing in large-cap stocks for capital appreciation
PROSPECTUS December 1, 1998
As with all mutual funds, the Securities and Exchange Commission doesn't
guarantee that the information in this prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
state otherwise.
<PAGE>
Contents
THE FUND
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2 Goal/Approach
3 Main Risks
4 Past Performance
5 Expenses
6 Management
7 Financial Highlights
YOUR INVESTMENT
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8 Account Policies
11 Distributions and Taxes
12 Services for Fund Investors
14 Instructions for Regular Accounts
16 Instructions for IRAs
FOR MORE INFORMATION
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Back Cover
What every investor should know about the fund
Information for managing your fund account
Where to learn more about this and other Dreyfus funds
<PAGE>
The Fund
Dreyfus Appreciation Fund, Inc.
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Ticker Symbol: DGAGX
GOAL/APPROACH
The fund seeks long-term capital growth consistent with the preservation of
capital. Its secondary goal is current income. To pursue these goals, the fund
generally invests at least 80% of net assets in the common stock of U.S. and
foreign companies. The fund focuses on "blue-chip" companies with total market
values of more than $5 billion. These established companies have demonstrated
sustained patterns of profitability, strong balance sheets, an expanding global
presence and the potential to achieve predictable, above-average earnings
growth.
In choosing stocks, the fund looks for growth companies. The fund first
identifies economic sectors that they believe will expand over the next three to
five years or longer. Using fundamental analysis, they then seek companies
within these sectors that have proven track records and dominant positions in
their industries. The fund is also alert to companies which it considers
undervalued in terms of earnings, assets or growth prospects. The fund generally
maintains relatively large positions in the securities it purchases.
The fund employs a "buy-and-hold" investment strategy, and seeks to keep annual
portfolio turnover below 15%. As a result, the fund invests for long-term growth
rather than short-term profits.
The fund typically sells a stock when there is a change in a company's business
fundamentals or in the fund's view of company management.
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT (SEE BACK COVER).
Concepts to understand
LARGE COMPANIES: established companies that are considered "known quantities."
Large companies often have the resources to weather economic shifts, though they
can be slower to innovate than small companies.
"BUY-AND-HOLD" STRATEGY: an investment strategy characterized by a low portfolio
turnover rate, which helps reduce the fund's trading costs and minimizes tax
liability by limiting the distribution of capital gains.
<PAGE 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of your investment in the fund will go up
and down, which means that you could lose money.
Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the fund's performance may sometimes be lower or
higher than that of other types of funds (such as those emphasizing smaller
companies). Moreover, since the fund holds large positions in a relatively small
number of stocks, it can be volatile when the large-capitalization sector of the
market is out of favor with investors.
Growth companies are expected to increase their earnings at a certain rate. When
these expectations are not met, investors can punish the stocks inordinately --
even if earnings showed an absolute increase. In addition, growth stocks
typically lack the dividend yield that can cushion stock prices in market
downturns.
Under adverse market conditions, the fund could invest some or all of its assets
in money market securities. Although the fund would do this only in seeking to
avoid losses, it could have the effect of reducing the benefit from any upswing
in the market.
Other potential risks
The fund may invest some assets in options, futures and foreign currencies.
These practices are used primarily to hedge the fund's portfolio but may be used
to increase returns; however, there is the risk that such practices sometimes
may reduce returns or increase volatility.
The Fund
<PAGE 3>
PAST PERFORMANCE
The two tables below show the fund's annual returns and its long-term
performance. The first table shows you how the fund's performance has varied
from year to year. The second compares the fund's performance over time to that
of the S&P 500((reg.tm)), a widely recognized unmanaged index of stock
performance. Both tables assume reinvestment of dividends and distributions. As
with all mutual funds, the past is not a prediction of the future.
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Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q2 '97 +16.35%
WORST QUARTER: Q3 '90 -14.64%
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<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/97
1 Year 5 Years 10 Years
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FUND 27.85% 18.25% 17.17%
S&P 500((reg.tm)) INDEX 33.35% 20.25% 18.02%
</TABLE>
THE FUND'S YEAR-TO-DATE TOTAL RETURN AS OF 6/30/98 WAS 20.94%.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in this fund, but you also have the potential to make money.
<PAGE 4>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Annual fund operating expenses are paid
out of fund assets, so their effect is included in the share price. The fund has
no sales charge (load) or 12b-1 distribution fees.
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.55%
Shareholder services fee 0.25%
Other expenses 0.07%
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TOTAL 0.87%
Expense example
1 Year 3 Years 5 Years 10 Years
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$89 $278 $482 $1,073
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only.
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Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser and sub-investment
adviser for managing the fund's portfolio and assisting in all aspects of the
fund's operations.
SHAREHOLDER SERVICES FEE: a fee of 0.25% paid to the fund's distributor for
shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
The Fund
<PAGE 5>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $110 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $325 billion of assets under management and $1.6 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, the firm
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Fayez Sarofim, president and chairman of Fayez Sarofim & Co., has been the
fund's primary portfolio manager since December 1990. Fayez Sarofim & Co., Two
Houston Center, Suite 2907, Houston, Texas 77010, serves as the fund's
sub-investment adviser. Sarofim managed approximately $39.1 billion in
discretionary separate accounts and provided investment advisory services for
four other investment companies having aggregate assets of approximately $3.1
billion as of December 31, 1997.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's other service providers do not properly process
and calculate date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on the
fund, Dreyfus is working to avoid such problems and to obtain assurances from
service providers that they are taking similar steps.
<PAGE 6>
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods indicated.
"Total return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been independently audited (except where
noted) by Ernst & Young LLP, whose report, along with the fund's financial
statements, is included in the annual report.
<TABLE>
<CAPTION>
(UNAUDITED) SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value,
beginning of period 32.38 25.58 20.55 15.17 14.92 15.15
Investment operations:
Investment income -- net .13 .25 .25 .33 .28 .24
Net realized and unrealized
gains (loss) on investments 6.65 6.87 5.03 5.42 .26 (.14)
Total from investment operations 6.78 7.12 5.28 5.75 .54 .10
Distributions:
Dividends from
investment income -- net -- (.26) (.25) (.34) (.28) (.24)
Dividends in excess of
investment income -- net -- (.00)(1) -- -- -- (.03)
Dividends from net realized
gain on investments -- (.06) -- (.03) (.01) (.03)
Dividends in excess of net
realized gain on investments -- -- -- -- -- (.03)
Total distributions -- (.32) (.25) (.37) (.29) (.33)
Net asset value, end of period 39.16 32.38 25.58 20.55 15.17 14.92
Total return (%) 20.94(2) 27.85 25.68 37.89 3.62 .71
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to
average net assets (%) .44(2) .87 .91 .92 .96 1.07
Ratio of net investment income
to average net assets (%) .38(2) .99 1.34 2.28 1.86 1.66
Portfolio turnover rate (%) 1.37(2) 1.23 4.84 4.51 6.58 9.65
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
($ x 1,000) 2,980,620 1,977,638 845,497 457,267 233,459 237,018
(1) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(2) NOT ANNUALIZED.
</TABLE>
The Fund
<PAGE 7>
Your Investment
ACCOUNT POLICIES
Buying shares
YOU PAY NO SALES CHARGES to invest in this fund. Your price for fund shares is
the fund's net asset value per share (NAV), which is generally calculated as of
the close of trading on the New York Stock Exchange (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the next NAV
calculated after your order is accepted by the fund. The fund's investments are
valued based on market value, or where market quotations are not readily
available, based on fair value as determined in good faith by the fund's board.
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Minimum investments
Initial Additional
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REGULAR ACCOUNTS $2,500 $100
$500 FOR
TELETRANSFER
INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST
YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party
checks cannot be accepted. You may be charged a fee for
any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
TRADITIONAL IRA: an individual retirement account. Your contributions may or may
not be deductible depending on your circumstances. Assets grow tax-deferred;
withdrawals and distributions are taxable in the year made.
SPOUSAL IRA: an IRA funded by a working spouse in the name of a nonworking
spouse.
ROTH IRA: an IRA with non-deductible contributions, and tax-free growth of
assets and distributions, if assets are held for five years and certain other
conditions are met.
EDUCATION IRA: an IRA with nondeductible contributions, and tax-free growth of
assets and distributions, if used to pay qualified educational expenses.
FOR MORE COMPLETE IRA INFORMATION, CONSULT DREYFUS OR YOUR TAX PROFESSIONAL.
<PAGE 8>
Selling shares
YOU MAY SELL SHARES AT ANY TIME. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent. Any
certificates representing fund shares being sold must be returned with your
redemption request. Your order will be processed promptly and you will generally
receive the proceeds within a week.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that if the fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds until it has collected payment, which may take up to eight business
days.
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Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
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CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
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Written sell orders
Some circumstances require that written sell orders be signature guaranteed.
These include:
* amounts of $100,000 or more
* amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Your Investment
<PAGE 9>
ACCOUNT POLICIES (CONTINUED)
General policies
IF YOUR ACCOUNT FALLS BELOW $500, the fund may ask you to increase your balance.
If it is still below $500 after 45 days, the fund may close your account and
send you the proceeds.
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could
adversely affect the fund or its operations, including those from any individual
or group who, in the fund's view, is likely to engage in excessive trading
(usually defined as more than four exchanges out of the fund within a calendar
year)
* refuse any purchase or exchange request in excess of
1% of the fund's total assets
* change or discontinue its exchange privilege, or
temporarily suspend this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to
seven days (generally applies only in cases of very large redemptions, excessive
trading or during unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Third-party investments
If you invest through a third party (rather than directly with Dreyfus), the
policies and fees may be different than those described here. Banks, brokers,
401(k) plans, financial advisers and financial supermarkets may charge
transaction fees and may set different minimum investments or limitations on
buying or selling shares. Consult a representative of your plan or financial
institution if in doubt.
<PAGE 10>
DISTRIBUTIONS AND TAXES
THE FUND PAYS ITS SHAREHOLDERS dividends from its net investment income, and
distributes any net capital gains that it has realized. Each of these
distributions is generally paid once a year. Your distributions will be
reinvested in the fund unless you instruct the fund otherwise. There are no fees
or sales charges on reinvestments.
FUND DIVIDENDS AND DISTRIBUTIONS ARE TAXABLE to most investors (unless your
investment is in an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the fund and
whether you reinvest your distributions or take them as cash. In general,
distributions are taxable as follows:
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Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
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INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
The tax status of the distributions for each calendar year will be detailed in
your annual tax statement from the fund.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Taxes on transactions
Any sale or exchange of fund shares, including through the checkwriting
privilege, may generate a tax liability. Tax-deferred accounts do not generate a
tax liability unless you are taking a distribution or making a withdrawal.
The table at right can provide a guide for your potential tax liability when
selling or exchanging fund shares. "Short-term capital gains" applies to fund
shares sold up to 12 months after buying them. "Long-term capital gains" applies
to shares sold after 12 months.
Your Investment
<PAGE 11>
SERVICES FOR FUND INVESTORS
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application or by
calling 1-800-645-6561.
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
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For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
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For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
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Dreyfus Financial Centers
Through a nationwide network of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning.
Our experienced financial consultants can help you make informed choices and
provide you with personalized attention in handling account transactions. The
Financial Centers also offer informative seminars and events. To find the
Financial Center nearest you, call 1-800-499-3327.
<PAGE 12>
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). There is currently no fee
for exchanges, although you may be charged a sales load when exchanging into any
fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer Privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
Account statements
EVERY DREYFUS INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Retirement plans
Dreyfus offers a variety of retirement plans, including traditional, Roth and
Education IRAs. Here's where you call for information:
* for traditional, rollover, Roth and Education IRAs, call 1-800-645-656
* for SEP-IRAs, 401(k) and 403(b) accounts, call 1-800-322-7880
* for Keogh accounts, call
1-800-358-5566
Your Investment
<PAGE 13>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds P.O. Box 105,
Newark, NJ 07101-0105
By Telephone
WIRE Have your bank send your
investment to The Bank of New York, with these instructions:
* DDA# 8900051906
* the fund name
* your Social Security or tax ID number
* name(s) of investor(s)
Call us to obtain an account number. Return your application.
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* DDA# 8900051906
* the fund name
* your account number
* name(s) of investor(s)
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number and
add ABA# 021000018
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
WITHOUT ANY INITIAL INVESTMENT Check the Dreyfus Step Program option on your
application. Return your application, then complete the additional materials
when they are sent to you.
ALL SERVICES Call us to request a form to add any automatic investing service
(see "Services for Fund Investors"). Complete and return the forms along with
any other required materials.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
----------------------
<PAGE 14>
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see "Account
Policies -- Selling Shares").
Mail your request to: The Dreyfus Family of Funds P.O. Box 9671, Providence, RI
02940-9671
WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.
TELETRANSFER Be sure the fund has your bank account information on file. Call
us to request your transaction. Proceeds will be sent to your bank by electronic
check.
CHECK Call us to request your transaction. A check will be sent to the address
of record.
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request a form to add the plan.
Complete the form, specifying the amount and frequency of withdrawals you would
like.
Be sure to maintain an account balance of $5,000 or more.
----------------
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS FAMILY OF FUNDS
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 15>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check (see "To Open an Account" at left).
By Telephone
-------------
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* DDA# 8900051906
* the fund name
* your account number
* name of investor
* the contribution year
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number and
add ABA# 021000018
TELEPHONE CONTRIBUTION Call to request us to move money from a regular Dreyfus
account to an IRA (both accounts must be held in the same shareholder name).
Automatically
WITHOUT ANY INITIAL INVESTMENT Call us
to request a Dreyfus Step Program form. Complete and return the form along with
your application.
ALL SERVICES Call us to request a form to add an automatic investing service
(see "Services for Fund Investors"). Complete and return the form along with any
other required materials.
All contributions will count as current year.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
<PAGE 16>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required.
Mail in your request (see "To Open an Account" at left).
---------------
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request instructions to establish
the plan.
---------------
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS TRUST CO., CUSTODIAN
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 17>
For More Information
Dreyfus Appreciation Fund, Inc.
-----------------------------
SEC file number: 811-3081
More information on this fund is available free upon
request, including the following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio
holdings and contains a letter from the fund's manager
discussing recent market conditions, economic trends and
fund strategies that significantly affected the fund's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A
current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference (is
legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from:
SEC
http://www.sec.gov
DREYFUS
http://www.dreyfus.com
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1998, Dreyfus Service Corporation 141P0098
<PAGE 18>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1998
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of Dreyfus Appreciation Fund, Inc. (the "Fund"), dated December
1, 1998, 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 one of the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
The Fund's most recent Annual Report and Semi-Annual Report to
Shareholders are separate documents supplied with this Statement of
Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing in the Annual Report are
incorporated by reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Fund..................................... B-2
Management of the Fund...................................... B-8
Management Arrangements..................................... B-14
How to Buy Shares........................................... B-18
Shareholder Services Plan................................... B-20
How to Redeem Shares........................................ B-21
Shareholder Services........................................ B-23
Determination of Net Asset Value............................ B-28
Dividends, Distributions and Taxes.......................... B-28
Portfolio Transactions...................................... B-31
Performance Information..................................... B-32
Information About the Fund.................................. B-33
Counsel and Independent Auditors............................ B-35
Financial Statements and Report of Independent Auditors..... B-35
DESCRIPTION OF THE FUND
The Fund is a Maryland corporation formed on July 30, 1980. The
Fund is an open-end management investment company, known as a mutual fund.
The Fund is a diversified fund, which means that, with respect to 75% of its
total assets, the Fund will not invest more than 5% of its assets in the
securities of any single issuer.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment adviser. Fayez Sarofim & Co. ("Sarofim") serves as the Fund's
sub-investment adviser. Sarofim provides day-to-day management of the
Fund's portfolio, subject to the supervision of Dreyfus. Dreyfus and
Sarofim are referred to collectively as the "Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
Certain Portfolio Securities
In addition to purchasing the common stock of domestic and foreign
companies, the Fund may purchase the portfolio securities described below.
Warrants. A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time.
The Fund may invest up to 2% of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Fund that are sold in
units with, or attached to, other securities.
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
objectives. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days notice, and certain privately negotiated,
non-exchange traded options 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.
Money Market Instruments. When the Advisers determine that
adverse market conditions exist, the Fund may adopt a temporary defensive
position and invest some or all of its assets in money market instruments,
including U.S. Government securities, repurchase agreements, bank
obligations and commercial paper.
Investment Techniques
In addition to the principal investment strategies discussed in
the Fund's prospectus, the Fund also may engage in the investment techniques
described below.
Derivatives. The Fund may invest in, or enter into, derivatives,
such as options.
Derivatives can be volatile and involve various types and degrees
of risk, depending upon the characteristics of the particular derivative and
the portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in derivatives
could have a large potential impact on the Fund's performance.
If the Fund invests in derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses if its
derivatives were poorly correlated with its other investments, or if the
Fund were unable to liquidate its position because of an illiquid secondary
market. The market for many derivatives is, or suddenly can become,
illiquid. Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices for derivatives.
The Fund may write (i.e., sell) covered call option contracts to
the extent of 20% of the value of its net assets at the time such option
contracts are written. A 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, or at a specific
date. 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.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen events,
at times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options.
Successful use by the Fund of options will be subject to Sarofim's
ability to predict correctly movements in the prices of individual stocks or
the stock market generally. To the extent Sarofim's predictions are
incorrect, the Fund may incur losses.
Foreign Currency Transactions. Foreign currency transactions may
be entered into for a variety of purposes, including: to fix in U.S.
dollars, between trade and settlement date, the value of a security the Fund
has agreed to buy or sell; or to hedge the U.S. dollar value of securities
the Fund already owns, particularly if it expects a decrease in the value of
the currency in which the foreign security is denominated.
Foreign currency transactions may involve, for example, the Fund's
purchase of short positions in foreign currencies, which would involve the
Fund agreeing to exchange an amount of a currency it did not currently own
for another currency at a future date in anticipation of a decline in the
value of the currency sold relative to the currency the Fund contracted to
receive in the exchange. The Fund's success in these transactions will
depend principally on Sarofim's ability to predict accurately the future
exchange rates between foreign currencies and the U.S. dollar.
Currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of
investments in different countries, actual or perceived changes in interest
rates and other complex factors, as seen from an international perspective.
Currency exchange rates also can be affected unpredictably by intervention
by U.S. or foreign governments or central banks, or the failure to
intervene, or by currency controls or political developments in the United
States or abroad.
Lending Portfolio Securities. The Fund may lend securities from
its portfolio to brokers, dealers and other financial institutions needing
to borrow securities to complete certain transactions. The Fund continues
to be entitled to payments in amounts equal to the interest or other
distributions payable on the loaned securities which affords the Fund an
opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed 33-
1/3% of the value of the Fund's total assets, and the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal
to at least 100% of the current market value of the loaned securities. Such
loans are terminable by the Fund at any time upon specified notice. The
Fund might experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement with the
Fund.
Borrowing Money. The Fund is permitted to borrow to the extent
permitted under the Investment Company Act of 1940, as amended (the "1940
Act"), which permits an investment company to borrow in an amount up to 33-
1/3% of the value of its total assets. The Fund currently intends to borrow
money only for temporary or emergency (not leveraging) purposes, in an
amount up to 15% of the value of its total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
additional investments.
Investment Restrictions
The Fund's investment objective is a fundamental policy, which
cannot be changed without approval by the holders of a majority (as defined
in the 1940 Act) of the Fund's outstanding voting shares. In addition, the
Fund has adopted investment restrictions numbered 1 through 10 as
fundamental policies. Investment restrictions numbered 11 through 17 are
not fundamental policies and may be changed by a vote of a majority of the
Fund's Board members at any time. The Fund may not:
1. Invest more than 5% of its assets in the obligations of any
single issuer, except that up to 25% of the value of the Fund's total assets
may be invested, and securities issued or guaranteed by the U.S. Government,
or its agencies or instrumentalities may be purchased, without regard to any
such limitation.
2. Hold more than 10% of the outstanding voting securities of
any single issuer. This Investment Restriction applies only with respect to
75% of the Fund's total assets.
3. Concentrate its investments in any particular industry or
industries, except that the Fund may invest up to 25% of the value of its
total assets in a single industry, provided that, when the Fund has adopted
a defensive posture, there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, time deposits and certificates of deposit (including
those issued by foreign branches of domestic banks), and bankers'
acceptances.
4. Invest in commodities, except that the Fund may purchase and
sell options, forward contracts, futures contracts, including those relating
to indices, and options on futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but the Fund may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.
6. Borrow money, except to the extent permitted under the 1940
Act (which currently limits borrowing to no more than 33-1/3% of the value
of the Fund's total assets). For purposes of this investment restriction,
the entry into options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or indices shall
not constitute borrowing.
7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board.
8. Act as an underwriter of securities of other issuers, except
to the extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
9. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 5, 6 and 13 may be deemed to give rise to a
senior security.
10. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
11. Purchase securities of any company having less than three
years' continuous operations (including operations of any predecessor) if
such purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.
12. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
13. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to
the deposit of assets in escrow in connection with writing covered put and
call options and the purchase of securities on a when-issued or forward
commitment basis and collateral and initial or variation margin arrangements
with respect to options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or indices.
14. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of Additional
Information.
15. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid,
if, in the aggregate, more than 15% of the value of the Fund's net assets
would be so invested.
16. Invest in securities of other investment companies, except to
the extent permitted under the 1940 Act.
17. Purchase or retain the securities of any issuer if the
officers or Board members of the Fund or the Advisers who own beneficially
more than 1/2 of 1% of the securities of such issuer together own
beneficially more than 5% of the securities of such issuers.
As a fundamental policy, the Fund may invest, notwithstanding any
other investment restriction (whether or not fundamental), all of the Fund's
assets in the securities of a single open-end management investment company
with substantially the same investment objectives, fundamental policies and
restrictions as the Fund.
If a percentage restriction is adhered to at the time of
investment, a later change in percentage resulting from a change in values
or assets will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Fund shares in certain
states. Should the Fund determine that a commitment is no longer in the
best 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
The Fund's Board is responsible for the management and supervision
of the Fund. The Board approves all significant agreements between the Fund
and those companies that furnish services to the Fund. These companies are
as follows:
The Dreyfus Corporation Investment Adviser
Fayez Sarofim & Co. Sub-Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
Mellon Bank, N.A. Custodian
Board members and officers of the Fund, together with information
as to their principal business occupations during at least the last five
years, are shown below.
Board Members of the Fund
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He is also
a director of Noel Group, Inc., a venture capital company (for which,
from February 1995 until November 1997, he was Chairman of the Board),
The Muscular Dystrophy Association, HealthPlan Services Corporation, a
provider of marketing, administrative and risk management services to
health and other benefit programs, Carlyle Industries, Inc. (formerly,
Belding Heminway, Inc.), a button packager and distributor, Career
Blazers Inc. (formerly, Staffing Resources, Inc.), a temporary
placement agency, and Century Business Services, Inc., a provider of
various outsourcing functions for small and medium sized companies.
For more than five years prior to January 1995, he was President, a
director and, until August 1994, Chief Operating Officer of Dreyfus and
Executive Vice President and a director of Dreyfus Service Corporation,
a wholly-owned subsidiary of Dreyfus and, until August 24, 1994, the
Fund's distributor. From August 1994 until December 31, 1994, he was a
director of Mellon Bank Corporation. He is 55 years old and his
address is 200 Park Avenue, New York, New York 10166.
CLIFFORD L. ALEXANDER, JR., Board Member. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981,
Mr. Alexander served as Secretary of the Army and Chairman of the
Board of the Panama Canal Company, and from 1975 to 1977, he was a
member of the Washington, D.C. law firm of Verner, Liipfert, Bernhard,
McPherson and Alexander. He is a director of American Home Products
Corporation, Cognizant Corporation, a service provider of marketing
information and information technology, The Dun & Bradstreet
Corporation, MCI Communications Corporation, Mutual of America Life
Insurance Company and TLC Beatrice International Holdings, Inc. He is
64 years old and his address is 400 C Street, N.E., Washington, D.C.
20002.
PEGGY C. DAVIS, Board Member. Shad Professor of Law, New York University
School of Law. Professor Davis has been a member of the New York
University law faculty since 1983. Prior to that time, she served for
three years as a judge in the courts of New York State; was engaged
for eight years in the practice of law, working in both corporate and
non-profit sectors; and served for two years as a criminal justice
administrator in the government of the City of New York. She writes
and teaches in the fields of evidence, constitutional theory, family
law, social sciences and the law, legal process and professional
methodology and training. She is 55 years old and her address is c/o
New York University School of Law, 40 Washington Square South, New
York, New York 10012.
ERNEST KAFKA, Board Member. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. He is
Associate Clinical Professor of Psychiatry at Cornell Medical School.
For more than the past five years, Dr. Kafka has held numerous
administrative positions and has published many articles on subjects in
the field of psychoanalysis. He is 64 years old and his address is 23
East 92nd Street, New York, New York 10128.
SAUL B. KLAMAN, Board Member. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist to the Board of Governors of the Federal
Reserve System and on several Presidential Commissions, and has held
numerous consulting and advisory positions in the fields of economics
and housing finance. He is 78 years old and his address is 431B
Dedham Street, The Gables, Newton Center, Massachusetts 02159.
NATHAN LEVENTHAL, Board Member. President of Lincoln Center for the
Performing Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations
of New York City from September 1979 until March 1984 and Commissioner
of the Department of Housing Preservation and Development of New York
City from February 1978 to September 1979. He was an associate and
then a member of the New York law firm of Poletti Freidin Prashker
Feldman and Gartner from 1974 to 1978. He was Commissioner of Rent
and Housing Maintenance for New York City from 1972 to 1973. Mr.
Leventhal also served as Chairman of Citizens Union, an organization
which strives to reform and modernize city and state government from
June 1994 until June 1997. He is 55 years old and his address is 70
Lincoln Center Plaza, New York, New York 10023-6583.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the Fund
who are not "interested persons" of the Fund, as defined in the 1940 Act,
will be selected and nominated by the Board members who are not "interested
persons" of the Fund.
The Fund typically pays its Board members an annual retainer and a
per meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund and by all other funds in
the Dreyfus Family of Funds for which such person is a Board member (the
number of which is set forth in parenthesis next to each Board member's
total compensation) for the year ended December 31, 1997, was as follows:
Total Compensation
Aggregate From Fund and
Name of Board Compensation from Fund Complex Paid
Member Fund* to Board Member
Clifford L. Alexander, Jr. $5,500 $ 88,305 (17)
Peggy C. Davis $6,000 $ 78,750 (15)
Joseph S. DiMartino $7,500 $597,128 (94)
Ernest Kafka $6,000 $ 77,500 (15)
Saul B. Klaman $6,000 $ 78,750 (15)
Nathan Leventhal $6,000 $ 78,750 (15)
_______________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $4,330 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by Dreyfus. She is 40 years old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President
and General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From August
1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. She is
38 years old.
MICHAEL S. PETRUCELLI, Vice President, Assistant Secretary and Assistant
Treasurer. Senior Vice President of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by
Dreyfus. From December 1989 through November 1996, he was employed by
GE Investment Services where he held various financial, business
development and compliance positions. He also served as Treasurer of
the GE Funds and as a Director of GE Investment Services. He is 36
years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by Dreyfus. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was Second
Vice President with Chase Manhattan Bank. She is 30 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 34 years old.
GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by
Dreyfus. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. From September 1983 to May 1994, he was Senior Vice
President and Manager of Client Services and Director of Internal Audit
at The Boston Company, Inc. He is 43 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 35 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From April
1993 to January 1995, he was a Senior Fund Accountant for Investors
Bank & Trust Company. He is 29 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice
President and Senior Associate General Counsel of Funds Distributor,
Inc., and an officer of other investment companies advised or
administered by Dreyfus. From April 1994 to July 1996, he was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, he was employed by Putnam Investments in legal and compliance
capacities. He is 33 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by
Dreyfus. From July 1994 to November 1995, she was a Fund Accountant
for Investors Bank & Trust Company. She is 25 years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From March
1990 to May 1996, she was employed by U.S. Trust Company of New York
where she held various sales and marketing positions. She is 36 years
old.
The address of each officer of the Fund is 200 Park Avenue, New
York, New York 10166.
The Fund's Board members and officers, as a group, owned less than
1% of the Fund's outstanding shares on September 29, 1998.
The following shareholders owned of record 5% or more of the
Fund's shares outstanding as of September 29, 1998: Charles Schwab & Co,
Inc., 101 Montgomery Street, San Francisco, CA 94104-4122 - 13.8%; Boston
Safe Deposit and Trust Company, 1 Cabot Road, Medford, MA 02155-5141 - 7.8%;
and Salomon Smith Barney Inc., 388 Greenwich Street, New York, NY 10013 -
6.3%.
MANAGEMENT ARRANGEMENTS
Investment Advisory Agreement. Dreyfus is a wholly-owned
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Bank Corporation ("Mellon"). Mellon is a publicly owned multibank
holding company incorporated under Pennsylvania law in 1971 and registered
under the Federal Bank Holding Company Act of 1956, as amended. Mellon
provides a comprehensive range of financial products and services in
domestic and selected international markets. Mellon is among the twenty-
five largest bank holding companies in the United States based on total
assets.
Dreyfus provides management services pursuant to the Investment
Advisory Agreement (the "Advisory Agreement") dated August 24, 1994 with the
Fund, which is subject to annual approval by (i) the Fund's Board or (ii)
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund or Dreyfus, by vote cast
in person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement was approved by shareholders on August 3, 1994, and
was last approved by the Fund's Board, including a majority of the Board
members who are not "interested persons" of any party to the Advisory
Agreement, at a meeting held on September 16, 1998. The Advisory Agreement
is terminable without penalty, on not more than 60 days' notice, by the
Fund's Board or by vote of the holders of a majority of the Fund's
outstanding voting shares, or, upon not less than 90 days' notice, by
Dreyfus. The Advisory Agreement will terminate automatically in the event
of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of Dreyfus:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman--Distribution and a director; J. David Officer, Vice
Chairman and a director; Ronald P. O'Hanley III, Vice Chairman; William T.
Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Patrice M. Kozlowski, Vice President--
Corporate Communications; Mary Beth Leibig, Vice President--Human Resources;
Andrew S. Wasser, Vice President--Information Systems; Wendy Strutt, Vice
President; Richard Terres, Vice President; William H. Maresca, Controller;
James Bitetto, Assistant Secretary; Steven F. Newman, Assistant Secretary;
and Mandell L. Berman, Burton C. Borgelt, Frank V. Cahouet and Richard F.
Syron, directors.
Dreyfus 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 to the Fund. Dreyfus also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
Under the Advisory Agreement, the Fund has agreed to pay Dreyfus a
monthly fee at the annual rate set forth below:
Annual Fee as a Percentage of
Total Assets Average Daily Net Assets
0 to $25 million .44 of 1%
$25 million to $75 million .37 of 1%
$75 million to $200 million .33 of 1%
$200 million to $300 million .29 of 1%
$300 million or more .275 of 1%
For the fiscal year ended December 31, 1997, the Fund paid Dreyfus
a monthly advisory fee at the effective annual rate of .29 of 1% of the
value of the Fund's average daily net assets. The advisory fees paid by the
Fund to Dreyfus for the fiscal years ended December 31, 1995, 1996 and 1997
amounted to $1,039,869, $1,936,123 and $4,475,808, respectively.
Sub-Investment Advisory Agreement. Sarofim provides investment
advisory assistance and day-to-day management of the Fund's portfolio
pursuant to the Sub-Investment Advisory Agreement (the "Sub-Advisory
Agreement") dated December 27, 1990 with the Fund, which is subject to
annual approval by (i) the Fund's Board or (ii) vote of a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities,
provided that in either event the continuance also is approved by a majority
of the Fund's Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund of Sarofim, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Fund's Board,
including a majority of the Board members who are not "interested persons"
of any party to the Sub-Advisory Agreement, last approved the Sub-Advisory
Agreement at a meeting held on September 16, 1998. Shareholders approved
the Sub-Advisory Agreement on December 27, 1990. The Sub-Advisory Agreement
is terminable without penalty, on 60 days' notice by the Fund's Board or by
vote of the holders of a majority of the Fund's shares, or, on not less than
90 days' notice, by Sarofim. The Sub-Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
Under the Sub-Advisory Agreement, the Fund has agreed to pay
Sarofim a monthly fee at the annual rate set forth below:
Annual Fee as a Percentage of
Total Assets Average Daily Net Assets
0 to $25 million .11 of 1%
$25 million to $75 million .18 of 1%
$75 million to $200 million .22 of 1%
$200 million to $300 million .26 to 1%
$300 million or more .275 of 1%
For the year ended December 31, 1997, the Fund paid Sarofim a
monthly sub-advisory fee at the effective annual rate of .26 of 1% of the
Fund's average daily net assets. The sub-advisory fees paid by the Fund to
Sarofim for the fiscal years ended December 31, 1995, 1996 and 1997 amounted
to $700,539, $1,591,123 and $4,130,808, respectively.
The following persons are officers and/or directors of Sarofim:
Fayez S. Sarofim, Chairman of the Board, President and a director; Raye G.
White, Executive Vice President, Secretary, Treasurer and a director;
Russell M. Frankel, Russell B. Hawkins, William K. McGee, Jr., Charles E.
Sheedy and Ralph B. Thomas, Senior Vice Presidents; and Nancy V. Daniel and
James A. Reynolds, III, Vice Presidents.
Sarofim provides day-to-day management of the Fund's portfolio of
investments in accordance with the stated policies of the Fund, subject to
the supervision of Dreyfus and the approval of the Fund's Board. Dreyfus
and Sarofim provide the Fund with portfolio managers who are authorized by
the Board to execute purchases and sales of securities. The Fund's
portfolio managers are Russell B. Hawkins, Elaine Rees and Fayez S. Sarofim.
Dreyfus also maintains a research department with a professional staff of
portfolio managers and securities analysts who provide research services for
the Fund and other funds advised by Dreyfus.
Expenses. All expenses incurred in the operation of the Fund are
borne by the Fund, except to the extent specifically assumed by Advisers.
The expenses borne by the Fund include: taxes, interest, loan commitment
fees and distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
Dreyfus or Sarofim or their affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory fees, charges of
custodians, transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal expenses,
costs of independent pricing services, costs of maintaining corporate
existence, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders'
reports and corporate meetings, costs of preparing and printing prospectuses
and statements of additional information for regulatory purposes and for
distribution to existing shareholders, and any extraordinary expenses.
Dreyfus has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of interest, taxes, brokerage fees and (with
the prior written consent of the necessary state securities commissions)
extraordinary expenses, but including the advisory fee, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may
deduct from the payment to be made to Dreyfus under the Advisory Agreement,
or Dreyfus will bear, such excess expense to the extent required by state
law. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.
The Distributor. Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Boston, Massachusetts 02109,
serves as the Fund's distributor on a best efforts basis pursuant to an
agreement which is renewable annually.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus
Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of Dreyfus,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer
and dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-
of-pocket expenses.
Mellon Bank, N.A. (the "Custodian"), Dreyfus's parent, One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, acts as custodian of the Fund's
investments. Under a custody agreement with the Fund, the Custodian holds
the Fund's securities and keeps all necessary accounts and records. For its
custody services, the Custodian receives a monthly fee based on the market
value of the Fund's domestic assets held in custody and receives certain
securities transactions charges.
HOW TO BUY SHARES
The minimum initial investment is $2,500, or $1,000 if you are a
client of a securities dealer, bank, other financial institution or other
industry professional, such as an investment adviser, accountant and estate
planning firm (collectively, "Service Agents"), which maintains an omnibus
account in the Fund and has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100.
However, the minimum initial investment is $750 for Dreyfus-sponsored Keogh
Plans, IRAs (including regular IRAs, spousal IRAs for a non-working spouse,
Roth IRAs, SEP-IRAs, and rollover IRAs) and 403(b)(7) Plans with only one
participant and $500 for Dreyfus-sponsored Education IRAs, with no minimum
for subsequent purchases. The initial investment must be accompanied by the
Account Application. For full-time or part-time employees of Dreyfus or any
of its affiliates or subsidiaries, directors of Dreyfus, Board members of a
fund advised by Dreyfus, including members of the 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 Dreyfus or
any of its affiliates or subsidiaries who elect to have a portion of their
pay directly deposited into their Fund accounts, the minimum initial
investment is $50. The Fund reserves the right to offer Fund shares without
regard to minimum purchase requirements to employees participating in
certain qualified or non-qualified employee benefit plans or other programs
where contributions or account information can be transmitted in a manner
and form acceptable to the Fund. The Fund reserves the right to vary
further the initial and subsequent investment minimum requirements at any
time. Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-Automatic Asset Builderr, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant
to the Dreyfus Step Program described under "Shareholder Services." These
services enable you to make regularly scheduled investments and may provide
you with a convenient way to invest for long-term financial goals. You
should be aware, however, that periodic investment plans do not guarantee a
profit and will not protect an investor against loss in a declining market.
Shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by the
Transfer Agent or other entity authorized to receive orders on behalf of the
Fund. Net asset value per share is determined as of the close of trading on
the floor of the New York Stock Exchange (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open for business. For
purposes of computing net asset value per share, 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 market value as determined in good faith by the Fund's Board.
For further information regarding the methods employed in valuing the Fund's
investments, see "Determination of Net Asset Value."
Dreyfus TeleTransfer Privilege. You may purchase shares by
telephone if you have checked the appropriate box and supplied the necessary
information on the Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred between the
bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution which is
an Automated Clearing House member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any time.
Purchase orders received by 4:00 p.m., New York time, on any business day
that the Transfer Agent and the New York Stock Exchange are open for
business will be credited to the shareholder's Fund account on the next bank
business day following such purchase order. Purchase orders made after 4:00
p.m., New York time, on any business day the Transfer Agent and the New York
Stock Exchange are open for business, or orders made on Saturday, Sunday or
any Fund holiday (e.g., when the New York Stock Exchange is not open for
business), will be credited to the shareholder's Fund account on the second
bank business day following such purchase order. To qualify to use Dreyfus
TeleTransfer Privilege, the initial payment for purchase of Fund shares must
be drawn on, and redemption proceeds paid to, the same bank and account as
are designated on the Account Application or Shareholder Services Form on
file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and signature-
guaranteed. See "How to Redeem Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. You may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund pays the Distributor for the provision of certain services to
shareholders of the Fund a fee at the annual rate of .25 of 1% of the value
of the Fund's average daily net assets. 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. Under the Shareholder Services Plan, the Distributor may make
payments to certain Service Agents in respect of these services. The
Distributor determines the amounts to be paid to Service Agents. If a Fund
shareholder ceases to be a client of a Service Agent, but continues to hold
Fund shares, Dreyfus or its affiliates will be permitted to act as a Service
Agent in respect of such Fund shareholder and receive payments under the
Plan.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Fund's Board for its review. In addition, the
Shareholder Services Plan provides that material amendments of the Plan must
be approved by the Fund's Board and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Shareholder Services Plan
is subject to annual approval by such vote of the Board members cast in
person at a meeting called for the purpose of voting on the Plan. The
Shareholder Services Plan was last so approved on September 16, 1998. The
Shareholder Services Plan is terminable at any time by vote of a majority of
the Board members who are not "interested persons" and have no direct or
indirect financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the Shareholder
Services Plan.
For the period September 17, 1997 (effective date of the
Shareholder Services Plan) through December 31, 1997, $1,210,177 was charged
to the Fund under the Shareholder Services Plan. Under the prior
shareholder services plan (the "Prior Plan"), which was terminated as of
September 17, 1997, the Fund reimbursed (a) the Distributor for payments to
Service Agents for servicing shareholder accounts and (b) Dreyfus, Dreyfus
Service Corporation and any affiliate of either of them for payments made
for servicing shareholder accounts. For the period January 1, 1997 through
September 17, 1997 (termination date), the Fund reimbursed the Distributor $
866,255 and Dreyfus and its affiliates $1,295,312 for servicing shareholder
accounts pursuant to the Prior Plan.
HOW TO REDEEM SHARES
Wire Redemption Privilege. By using this Privilege, you authorize
the Transfer Agent to act on wire, telephone or letter redemption
instructions from any person representing himself or herself to be you 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 by the Transfer Agent of a redemption
request in proper form. Redemption proceeds ($1,000 minimum) will be
transferred by Federal Reserve wire only to the commercial bank account
specified by you on the Account Application or Shareholder Services Form, or
to a correspondent bank if your bank is not a member of the Federal Reserve
System. Fees ordinarily are imposed by such bank and borne by you.
Immediate notification by the correspondent bank to your bank is necessary
to avoid a delay in crediting the funds to your bank account.
If you have access to telegraphic equipment, you 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
If you do not have direct access to telegraphic equipment, you may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. You should advise the operator that the above transmittal
code must be used and should also inform the operator of the Transfer
Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. You may request by telephone that
redemption proceeds be transferred between your Fund account and your bank
account. Only a bank account maintained in a domestic financial institution
which is an Automated Clearing House member may be designated. Redemption
proceeds will be on deposit in your account at an Automated Clearing House
member bank ordinarily two days after receipt of the redemption request.
Holders of jointly registered Fund or bank accounts may redeem through the
Dreyfus TeleTransfer Privilege for transfer to their bank account not more
than $250,000 within any 30-day period. You should be aware that if you
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
your account at an ACH member bank ordinarily two business days after
receipt of the redemption request. See "How to Buy Shares--Dreyfus
TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor, and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. The 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 and is a fundamental policy of the Fund which may not be changed
without shareholder approval. In the case of requests for redemption in
excess of such amount, the Board reserves the right to make payments in
whole or in 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 Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period when the
New York Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. You may purchase, in exchange for shares of the
Fund, shares of certain other funds managed or administered by Dreyfus, to
the extent such shares are offered for sale in your state of residence.
Shares of other funds purchased by exchange will be purchased on the basis
of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales load and
additional shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to herein as
"Purchased Shares") may be exchanged for shares of other funds sold with a
sales load (referred to herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to any
reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, you must notify the
Transfer Agent of your prior ownership of fund shares and your account
number.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "No" box on the Account Application,
indicating that you specifically refuse this Privilege. By using the
Telephone Exchange Privilege, you authorize the Transfer Agent to act on
telephonic instructions (including over The Dreyfus Touchr automated
telephone system) from any person representing himself or herself to be you
and reasonably believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange. No fees currently are charged
shareholders directly in connection with exchanges, although the Fund
reserve the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules
promulgated by the Securities and Exchange Commission.
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.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits you to purchase, in exchange for shares of the Fund, shares of
another fund in the Dreyfus Family of Funds. This Privilege is available
only for existing accounts. Shares will be exchanged on the basis of
relative net asset value as described above under "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is effective
three business days following notification by the investor. You will be
notified if your account falls below the amount designated to be exchanged
under this Privilege. In this case, your 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 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 the 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 the Dreyfus Auto-Exchange Privilege may be modified or terminated at any
time upon notice to shareholders.
Dreyfus-Automatic Asset Builder (R). Dreyfus-Automatic Asset Builder
permits you to purchases 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.
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
U.S. Government automatically deposited into your fund account. You may
deposit as much of such payments as you elect.
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 Automated 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. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan.
Dreyfus Step Program. The Dreyfus Step Program enables you to
purchase Fund shares without regard to the Fund's minimum initial investment
requirements through Dreyfus-Automatic Asset Builderr, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a
Dreyfus Step Program account, you must supply the necessary information on
the Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing your participation in Dreyfus-Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the
case may be, as provided under the terms of such Privilege(s). The Fund may
modify or terminate this Program at any time.
Dreyfus Dividend Options. Dreyfus Dividend Sweep allows you to
invest automatically your 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 you are 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 that charges a
sales load may be invested in shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided, that if the sales load
applicable to the Offered Shares exceeds the maximum sales load charged by
the fund from which dividends or distributions are being swept, without
giving effect to any reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales charge
("CDSC") and the applicable CDSC, if any, will be imposed upon redemption of
such shares.
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 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.
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.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, your shares will be reduced and eventually may be depleted.
Automatic Withdrawal may be terminated 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.
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund
makes available to corporations a variety of prototype pension and profit-
sharing plans including a 401(k) Salary Reduction Plan. In addition, the
Fund makes available Keogh Plans, IRAs (including regular IRAs, spousal IRAs
for a non-working spouse, Roth IRAs, IRAs set up under a Simplified Employee
Pension Plan ("SEP-IRAs"), Education IRAs and IRA "Rollover Accounts"),
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services
also are available.
Investors who wish to purchase Fund shares in conjunction with a
Keogh Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request
from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by
direct remittance to the entity acting as custodian. Purchases for these
plans may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, is $2,500 with no minimum for subsequent purchases. The
minimum initial investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
SEP-IRAs and rollover IRAs) and 403(b)(7) Plans with only one participant
and $500 for Dreyfus-sponsored Education IRAs, with no minimum for
subsequent purchases.
Each investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
Valuation of Portfolio Securities. Portfolio securities,
including covered call options written by the Fund, are valued at the last
sale price on the securities exchange or national securities market on which
such securities primarily are traded. Securities not listed on an exchange
or national securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available. 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 Fund's Board.
Expenses and fees, including the advisory fees and fees pursuant to the
Shareholder Services Plan, 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,
Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that the Fund has qualified for the fiscal
year ended December 31, 1997 as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (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. If the Fund did not qualify as a
regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax.
Any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of his shares
below the cost of his investment. Such a dividend or distribution would be
a return on investment in an economic sense although taxable as stated in
the Prospectus. In addition, the Code provides that if a shareholder has
not held his Fund shares for more than six months or less and has received
a capital gain distribution with respect to such shares, any loss incurred
on the sale of such shares will be treated as long-term capital loss to the
extent of the capital gain distribution received.
Depending upon the composition of the Fund's income, the entire
amount or a portion of the dividends from net investment income may qualify
for the dividends received deduction allowable to qualifying U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income
from the Fund distributed to qualifying corporate shareholders will be
eligible for the dividends received deduction only to the extent that the
Fund's income consists of dividends paid by U.S. corporations. However,
Section 246(c) of the Code provides that if a qualifying corporate
shareholder has disposed of Fund shares held for less than 46 days, which 46
days generally must be during the 90 day period commencing 45 days before
the shares become ex-dividend, and has received a dividend from net
investment income with respect to such shares, the portion designated by the
Fund as qualifying for the dividends received deduction will not be eligible
for such shareholder's dividends received deduction. 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 or losses. However, a portion of any gain
or loss realized from the disposition of certain non-U.S. dollar denominated
securities (including debt instruments, certain forward contracts and option
transactions 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 of the Code.
Finally, all or a portion of any gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258 of the
Code. "Conversion transactions" are defined to include certain forward,
futures, option and straddle transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations to
be issued in the future.
Under Section 1256 of the Code, any gain or loss the Fund realizes
from certain forward contracts and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such contracts and options
as well as from closing transactions. In addition, any such contracts or
options remaining unexercised at the end of the Fund's taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain foreign
currency forward contracts and options may constitute "straddles."
"Straddles" are defined to include "offsetting positions" in actively traded
personal property. The tax treatment of "straddles" is governed by Sections
1092 and 1258 of the Code, which, in certain circumstances, override or
modify the provisions of Sections 1256 and 988 of the Code. As such, all or
a portion of any short- or long-term capital gain from certain "straddle"
and/or conversion transactions may be recharacterized as ordinary income.
If the Fund were treated as entering into "straddles" by reason of
its engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles" were
governed by Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which election is
made, if any, the results to the Fund may differ. If no election is made,
to the extent the "straddle" and conversion transaction rules apply to
positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" and conversion transaction rules,
short-term capital losses on "straddle" positions may be recharacterized as
long-term capital losses, and long-term capital gains on "straddle"
positions may be treated as short-term capital gains or ordinary income.
The Taxpayer Relief Act of 1997 included constructive sale
provisions that generally apply if the Fund either (1) holds an appreciated
financial position with respect to stock, certain debt obligations, or
partnership interests ("appreciated financial position") and then enters
into a short sale, futures, forward, or offsetting notional principal
contract (collectively, a "Contract") respecting the same or substantially
identical property or (2) holds an appreciated financial position that is a
Contract and then acquires property that is the same as, or substantially
identical to, the underlying property. In each instance, with certain
exceptions, the Fund generally will be taxed as if the appreciated financial
position were sold at its fair market value on the date the Fund enters into
the financial position or acquires the property, respectively. Transactions
that are identified as hedging or straddle transactions under other
provisions of the Code can be subject to the constructive sale provisions.
Investment by the Fund in securities issued at a discount or
providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount,
timing and character of distributions to shareholders. For example, the
Fund could be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, the 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
Dreyfus assumes general supervision over placing orders on behalf
of the Fund for the purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in Dreyfus's best
judgment and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt execution of orders at the most favorable
net price. Subject to this consideration, the brokers selected will include
those that supplement the Advisers' research facilities with statistical
data, investment information, economic facts and opinions. Information so
received is in addition to and not in lieu of services required to be
performed by the Advisers and the Advisers' fees are not reduced as a
consequence of the receipt of such supplemental information. Such
information may be useful to Dreyfus in serving both the Fund and other
funds which it advises and to Sarofim in serving both the Fund and the other
funds or accounts it advises, and, conversely, supplemental information
obtained by the placement of business of other clients may be useful to the
Advisers in carrying out their obligations to the Fund.
Sales of Fund shares by a broker may be taken into consideration,
and brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block
trades may, in certain cases, result from two or more funds advised or
administered by Dreyfus being engaged simultaneously in the purchase or sale
of the same security. Certain of the Fund's transactions in securities of
foreign issuers may not benefit from the negotiated commission rates
available to the Fund for transactions in securities of domestic issuers.
When transactions are executed in the over-the-counter market, the Fund will
deal with the primary market makers unless a more favorable price or
execution otherwise is obtainable.
Portfolio turnover may vary from year to year as well as within a
year. The Fund's portfolio turnover rate for the fiscal years ended
December 31, 1996 and 1997 was 4.84% and 1.23%, respectively. In periods in
which extraordinary market conditions prevail, the Advisers will not be
deterred from changing investment strategy as rapidly as needed, in which
case higher turnover rates can be anticipated which would result in greater
brokerage expenses. The overall reasonableness of brokerage commissions
paid is evaluated by Dreyfus based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
In connection with its portfolio securities transactions for the
fiscal years ended December 31, 1995, 1996 and 1997, the Fund paid brokerage
commissions of $163,070, $359,335 and $699,631, 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 $51,480, $55,250 and $100,535 in
fiscal 1995, 1996 and 1997, respectively, none of which was paid to the
Distributor.
The aggregate amount of transactions during the last fiscal year
in securities effected on an agency basis through a broker for, among other
things, research services, and the commissions and concessions related to
such transactions were as follows:
Transaction Commissions and
Amount Concessions
$139,574,773 $127,340
PERFORMANCE INFORMATION
The Fund's average annual total return for the 1, 5 and 10 year
periods ended December 31, 1997 was 27.85%, 18.25% and 17.17%, 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
investments, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
The Fund's total return for the period January 18, 1984 to
December 31, 1997 was 802.78%. Total return is calculated subtracting the
amount of the Fund's net asset value per share at the beginning of a stated
period from the net asset value per share at the end of the period (after
giving effect to the reinvestment of dividends and distributions during the
period), and dividing the result by the net asset value per share at the
beginning of the period.
From time to time, advertising materials for the Fund may refer to
the fact that the Fund currently looks for successful companies with
established brands that are expanding into the world marketplace. From time
to time, advertising materials for the Fund also may refer to the clients of
Sarofim, such as large corporations, states, universities and other
institutions and organizations. From time to time, advertising materials
for the Fund also may refer to Morningstar ratings and related analyses
supporting such ratings.
INFORMATION ABOUT THE FUND
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.
Unless otherwise required by the 1940 Act, 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 Board
members or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Fund to
hold a special meeting of shareholders for purposes of removing a Board
member from office. Fund shareholders may remove a Board member by the
affirmative vote of a majority of the Fund's outstanding voting shares. In
addition, the Board will call a meeting of shareholders for the purpose of
electing Board members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
The Fund is intended to be a long-term investment vehicle and is
not designed to provide investors with a means of speculating on short-term
market movements. A pattern of frequent purchases and exchanges can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund's performance and its shareholders. Accordingly, if
the Fund's management determines that an investor is following a market-
timing strategy or is otherwise engaging in excessive trading, the Fund,
with or without prior notice, may temporarily or permanently terminate the
availability of Fund Exchanges, or reject in whole or part any purchase or
exchange request, with respect to such investor's account. Such investors
also may be barred from purchasing other funds in the Dreyfus Family of
Funds. Generally, an investor who makes more than four exchanges out of the
Fund during any calendar year (for calendar year 1998, beginning on January
15th)or who makes exchanges that appear to coincide with a market-timing
strategy may be deemed to be engaged in excessive trading. Accounts under
common ownership or control will be considered as one account for purposes
of determining a pattern of excessive trading. In addition, the Fund may
refuse or restrict purchase or exchange requests by any person or group if,
in the judgment of the Fund's management, the Fund would be unable to invest
the money effectively in accordance with its investment objective and
policies or could otherwise be adversely affected or if the Fund receives or
anticipates receiving simultaneous orders that may significantly affect the
Fund (e.g., amounts equal to 1% or more of the Fund's total assets). If an
exchange request is refused, the Fund will take no other action with respect
to the shares until it receives further instructions from the investor. The
Fund may delay forwarding redemption proceeds for up to seven days if the
investor redeeming shares is engaged in excessive trading or if the amount
of the redemption request otherwise would be disruptive to efficient
portfolio management or would adversely affect the Fund. The Fund's policy
on excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus Auto-
Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund
may suspend Fund Exchanges temporarily without notice and treat exchange
requests based on their separate components -- redemption orders with a
simultaneous request to purchase the other fund's shares. In such a case,
the redemption request would be processed at the Fund's next determined net
asset value but the purchase order would be effective only at the net asset
value next determined after the fund being purchased receives the proceeds
of the redemption, which may result in the purchase being delayed.
The Fund sends annual and semi-annual financial statements to all
its shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares 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 independent auditors of the
Fund.
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS
The Fund's Annual Report to Shareholders for the fiscal year ended
December 31, 1997 and Semi-Annual Report to Shareholders for the six month
period ended June 30, 1998 are separate documents supplied with this
Statement of Additional Information, and the financial statements,
accompanying notes and report of independent auditors (as to the Annual
Report only) appearing therein are incorporated by reference into this
Statement of Additional Information.
DREYFUS APPRECIATION FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 23. Exhibits. - List
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Articles of Amendment and Restatement are incorporated
by reference to Exhibit (1) of Post-Effective Amendment No. 26 to
the Registration Statement on Form N-1A, filed on February 28,
1995.
(2) Registrant's By-Laws as amended.
(4)(a) Investment Advisory Agreement is incorporated by reference to
Exhibit (5)(a) of Post-Effective Amendment No. 26 to the
Registration Statement on Form N-1A, filed on February 28, 1995.
(4)(b) Sub-Investment Advisory Agreement is incorporated by reference to
Exhibit (5)(b) of Post-Effective Amendment No. 26 to the
Registration Statement on Form N-1A, filed on February 28, 1995.
(5)(a) Distribution Agreement is incorporated by reference to Exhibit
(6)(a) of Post-Effective Amendment No. 26 to the Registration
Statement on Form N-1A, filed on February 28, 1995.
(6)(b) Forms of Shareholder Service Plan Agreements are incorporated by
reference to Exhibit (6)(b) of Post-Effective Amendment No. 29 to
the Registration Statement on Form N-1A, filed on April 26, 1996.
(7) Form of Custody Agreement with Mellon Bank, N.A. is incorporated by
reference to Exhibit (8)(b) of Post-Effective Amendment No. 29 to
the Registration Statement on Form N-1A, filed on April 26, 1996.
(8) Shareholder Services Plan is incorporated by reference to Exhibit
(9) of Post-Effective Amendment No. 31 to the Registration
Statement on Form N-1A, filed on April 22, 1998.
Item 23. Exhibits. - List (continued)
_______ _____________________________________________________
(9) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 26 to
the Registration Statement on Form N-1A, filed on February 28,
1995.
(10) Consent of Independent Auditors.
(14) Financial Data Schedule is incorporated by reference to Exhibit (17)
of Post-Effective Amendment No. 31 to the Registration Statement on
Form N-1A, filed on April 22, 1998.
Other Exhibits
______________
(a) Powers of Attorney are incorporated by reference to other
Exhibits(a) of Post-Effective Amendment No. 31 to the
Registration Statement on Form N-1A, filed on April 22,
1998.
(b) Certificate of Secretary is incorporated by reference to
other Exhibits(b) of Post-Effective Amendment No. 31 to
the Registration Statement on Form N-1A, filed on April
22, 1998.
Item 24. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 25. Indemnification
_______ _______________
Reference is made to Article SEVENTH of the Registrant's
Articles of Incorporation which are incorporated by reference to
Exhibit (1) of Post-Effective Amendment No. 26 to the Fund's
Registration Statement on Form N-1A, filed February 28, 1995 and to
Section 2-418 of the Maryland General Corporation Law. The
application of these provisions is limited by Article VIII of the
Registrant's By-Laws, as amended, filed as Exhibit 2 hereto and by
the following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing
provisions, or
Item 25. Indemnification (Continued)
_______ ___________________________
otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange
Commission such indemnification is against public
policy as express in such Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the registrant of expenses incurred
or paid by a director, officer or controlling
person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by
such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its
counsel the matter has been settled by controlling
precedent, submit to a court of appropriate
jurisdiction the question whether such
indemnification by it is against public policy as
expressed in such Act and will be governed by the
final adjudication of such issue.
Reference is also made to the Distribution Agreement
incorporated by reference to Exhibit (6)(a) of Post-Effective
Amendment No. 26 to the Registration Statement on Form N-1A, filed
on February 28, 1995.
Item 26. 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 and manager for sponsored investment companies
registered under the Investment Company Act of 1940 and as an
investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves
primarily as a registered broker-dealer of shares of investment
companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Investment Advisors, Inc.
another wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and individuals.
Item 26. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
W. KEITH SMITH Senior Vice Chairman:
Chairman of the Mellon Bank, N.A.*;
Board President and Director:
The Bridgewater Land Co., Inc.**;
Mellon Preferred Capital Corporation**;
TBC Securities Co., Inc.**;
Wellington-Medford II Properties, Inc.**;
Chairman, President and Chief Executive Officer:
Shearson Summit Euromanagement, Inc.*;
Shearson Summit EuroPartners, Inc.*;
Shearson Summit Management, Inc.*;
Shearson Summit Partners, Inc.*;
Shearson Venture Capital, Inc.*;
Chairman and Chief Executive Officer:
The Boston Company, Inc.**;
Boston Safe Deposit and Trust Company**;
Boston Group Holdings, Inc.**;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
The Boston Company Asset Management, Inc.**;
Mellon Europe Limited
London, England;
Mellon Global Investing Corp.*;
Mellon Accounting Services, Inc.*;
MGIC-UK Ltd.;
Mellon Capital Management Corporation***;
Chairman:
Mellon Financial Company*;
Buck Consultants, Inc.
1 Pennsylvania Plaza, 29th Floor
New York, New York 10019;
Director and Vice Chairman:
Mellon Financial Services Corporation*;
Mellon Bank Corporation*;
Trustee:
Laurel Capital Advisors, LLP*;
Mellon Equity Associates, LLP*;
Mellon Bond Associates, LLP*;
Past Director:
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138
W. KEITH SMITH Past Trustee:
Chairman of the Board Franklin Portfolio Associates Trust
(continued) 2 International Place, 22nd Floor
Boston, MA 02110
MANDELL L. BERMAN Real estate consultant and private investor:
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034
BURTON C. BORGELT Director:
Director Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880;
Mellon Bank Corporation*;
Mellon Bank, N.A.*
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation*;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Alleghany Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067;
Past Chairman, President and Chief Executive Officer:
Mellon Bank, N.A.*
STEPHEN E. CANTER Chairman and President:
Vice Chairman, Dreyfus Investment Advisors, Inc.****;
Chief Investment Director:
Officer, and a The Dreyfus Trust Company+;
Director Acting Chief Executive Officer:
Founders Asset Management, Inc.
2930 E. 3rd Avenue
Denver, CO 80206
CHRISTOPHER M. CONDRON President and Chief Operating Officer:
President, Chief Mellon Bank, N.A.*;
Executive Officer, President and Director:
Chief Operating Boston Safe Advisors, Inc.**;
Officer and a Vice-Chairman and Director:
Director Mellon Bank Corporation*;
The Boston Company, Inc.**;
Director:
Certus Asset Advisors Corporation++;
Mellon Capital Management Corporation***;
Boston Safe Deposit and Trust Company**;
CHRISTOPHER M. CONDRON Past President and Director:
President, Chief The Boston Company Financial Services, Inc.**;
Executive Officer, Boston Safe Deposit and Trust Company**;
Chief Operating Past President:
Officer and a Director The Boston Company Financial Strategies,
(continued) Inc.**;
Acting Chief Executive Officer:
Founders Asset Management, Inc.
Denver, CO
Past Director:
Mellon Preferred Capital Corporation**;
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138;
Past Chairman, President, and Chief Executive Officer:
The Boston Company Asset Management, Inc.**;
Past Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Past Trustee:
Franklin Portfolio Associates Trust
2 International Place, 22nd Floor
Boston, MA. 02710;
Mellon Bond Associates, LLP*;
Mellon Equity Associates, LLP*;
LAWRENCE S. KASH Executive Vice President:
Vice Chairman- Mellon Bank, N.A.*;
Distribution and a Chairman, President and Director:
Director The Dreyfus Consumer Credit Corporation****;
Trustee, President and Chief Executive Officer:
Laurel Capital Advisors, LLP*;
Director:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
President and Director:
Dreyfus Service Corporation+;
Dreyfus Precious Metals, Inc.+;
Dreyfus Service Organization, Inc.****;
The Boston Company, Inc.**;
Boston Group Holdings, Inc.**;
Chairman and Chief Executive Officer:
Dreyfus Brokerage Services, Inc.
401 North Maple Avenue
Beverly Hills, CA 90210;
Chairman, President and Chief Executive Officer:
The Dreyfus Trust Company+;
The Boston Company Advisors, Inc.
Wilmington, DE.
J. DAVID OFFICER Director:
Vice Chairman Dreyfus Financial Services Corporation*****;
and a Director Dreyfus Investment Services Corporation*****;
Mellon Trust of Florida
2875 Northeast 191st Street
North Miami Beach, Florida 33180;
Mellon Preferred Capital Corporation**;
Boston Group Holdings, Inc.**;
Mellon Trust of New York
1301 Avenue of the Americas - 41st Floor
New York, New York 10019;
Mellon Trust of California
400 South Hope Street
Los Angeles, California 90071-2806;
Dreyfus Insurance Agency of Massachusetts, Inc.
53 State Street
Boston, Massachusetts 02109;
Executive Vice President:
Dreyfus Service Corporation****;
Mellon Bank, N.A.*;
Vice Chairman and Director:
The Boston Company, Inc.**;
President and Director:
RECO, Inc.**;
The Boston Company Financial Services, Inc.**;
Boston Safe Deposit and Trust Company**;
RICHARD F. SYRON Chairman of the Board and Chief Executive Officer:
Director American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance Company
John Hancock Place, Box 111
Boston, Massachusetts 02117;
Thermo Electron Corporation
81 Wyman Street, Box 9046
Waltham, Massachusetts 02254-9046;
American Business Conference
1730 K Street, NW, Suite 120
Washington, D.C. 20006;
Trustee:
Boston College - Board of Trustees
140 Commonwealth Ave.
Chestnut Hill, Massachusetts 02167-3934
RONALD P. O'HANLEY III Director:
Vice Chairman The Boston Company Asset Management, LLC**;
TBCAM Holding, Inc.**;
Franklin Portfolio Holdings, Inc.
Two International Place - 22nd Floor
Boston, Massachusetts 02110;
Mellon Capital Management Corporation***;
Certus Asset Advisors Corporation++;
RONALD P. O'HANLEY III Mellon-France Corporation***;
Vice Chairman Chairman and Director:
(continued) Boston Safe Advisors, Inc.**;
Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Chairman and Trustee:
Mellon Bond Associates, LLP*;
Mellon Equity Associates, LLP*;
Trustee:
Laurel Capital Advisors, LLP*;
Chairman, President and Chief Executive Officer:
Mellon Global Investing Corp.*;
Partner:
McKinsey & Company, Inc.
Boston, Massachusetts
WILLIAM T. SANDALLS, JR. Chairman and Director:
Executive Vice President Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
President and Director:
Dreyfus-Lincoln, Inc.
4500 New Linden Hill Rd.
Wilmington, DE 19808;
Executive Vice President and Chief Financial Officer:
Dreyfus Service Corporation****;
Executive Vice President, Treasurer and Director:
Dreyfus Service Organization, Inc.****;
Director and Treasurer:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
Dreyfus Precious Metals, Inc.+;
Director, Vice President and Treasurer:
The Dreyfus Consumer Credit Corporation****;
The TruePenny Corporation****
Director, Treasurer and Chief Financial Officer:
The Dreyfus Trust Company+;
Past Director and President:
Lion Management, Inc.****;
Dreyfus Partnership Management, Inc.****;
Past Director and Executive Vice President:
Dreyfus Service Organization, Inc.****;
Past Director and Treasurer:
Dreyfus Personal Management, Inc.****
MARK N. JACOBS Director:
Vice President, Dreyfus Service Organization, Inc.****;
General Counsel The Dreyfus Trust Company+;
and Secretary Dreyfus Investment Advisors, Inc.****;
Director and President:
The TruePenny Corporation****;
Past Director, Vice President and Secretary:
Lion Management, Inc.****
MARK N. JACOBS Past Secretary:
Vice President, The TruePenny Corporation****;
General Counsel Dreyfus Investment Advisers****
and Secretary
(Continued)
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
ANDREW S. WASSER Vice President:
Vice President- Mellon Bank Corporation*
Information Services
JAMES BITETTO Secretary:
Assistant Secretary The TruePenny Corporation****;
Assistant Secretary:
Dreyfus Service Corporation****;
Dreyfus Investment Advisers, Inc.****;
Dreyfus Service Organization, Inc.****
STEVEN F. NEWMAN Vice President, Secretary and Director:
Assistant Secretary Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Secretary:
Dreyfus Service Organization, Inc.****
Wendy Strutt None
Vice President
Richard Terres None
Vice President
William H. Maresca Director:
Controller The Dreyfus Trust Company+;
Chief Financial Officer:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Assistant Treasurer:
Dreyfus Service Organization, Inc.****
______________________________________
* The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
** The address of the business so indicated is One Mellon Bank Place,
Boston, Massachusetts, 02108.
*** The address of the business so indicated is 595 Market Street, Suite
3000, San Francisco CA 94105.
**** The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
***** The address of the business so indicated is Union Trust Building,
501 Grant Street, Pittsburgh, PA 15259.
+ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York, 11556-0144.
++ The address of the business so indicated is One Bush Street, Suite
450, San Francisco, CA. 94104.
Item 27. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred 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 Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
70) Dreyfus Premier Insured Municipal Bond Fund
71) Dreyfus Premier Municipal Bond Fund
72) Dreyfus Premier New York Municipal Bond Fund
73) Dreyfus Premier State Municipal Bond Fund
74) Dreyfus Premier Value Fund
75) Dreyfus Short-Intermediate Government Fund
76) Dreyfus Short-Intermediate Municipal Bond Fund
77) The Dreyfus Socially Responsible Growth Fund, Inc.
78) Dreyfus Stock Index Fund, Inc.
79) Dreyfus Tax Exempt Cash Management
80) The Dreyfus Third Century Fund, Inc.
81) Dreyfus Treasury Cash Management
82) Dreyfus Treasury Prime Cash Management
83) Dreyfus Variable Investment Fund
84) Dreyfus Worldwide Dollar Money Market Fund, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Fund, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ ____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial Officer and Assistant
Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York
10166.
Item 28. Location of Accounts and Records
________________________________
1. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
2. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
_______ ___________________
Not Applicable
Item 30. Undertakings
________ ____________
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 2nd day of October, 1998.
DREYFUS APPRECIATION FUND, INC.
BY: /s/MARIE E. CONNOLLY*
____________________________
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
__________________________ _______________________________ ________
/s/Marie E. Connolly* President and Treasurer 10/2/98
______________________________ (Principal Executive Officer)
Marie E. Connolly
/s/Joseph F. Tower, III* Assistant Treasurer (Principal 10/2/98
_____________________________ Financial and Accounting Officer)
Joseph F. Tower, III
/s/Joseph S. DiMartino* Chairman of the Board of 10/2/98
______________________________ Directors
Joseph S. DiMartino
/s/Clifford L. Alexander, Jr.* Director 10/2/98
_____________________________
Clifford L. Alexander, Jr.
/s/Peggy C. Davis* Director 10/2/98
_____________________________
Peggy C. Davis
/s/Ernest Kafka* Director 10/2/98
_____________________________
Ernest Kafka
/s/Saul B. Klaman* Director 10/2/98
_____________________________
Saul B. Klaman
/s/Nathan Leventhal* Director 10/2/98
____________________________
Nathan Leventhal
*BY: /s/ Michael S. Petrucelli
-------------------------
Michael S. Petrucelli,
Attorney-in-Fact
DREYFUS APPRECIATION FUND, INC.
INDEX OF EXHIBITS
(2) By Laws, as amended
(10) Consent of Independent Auditors
Exhibit 2
BY-LAWS
OF
DREYFUS APPRECIATION FUND, INC.
(A Maryland Corporation)
___________
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing
shares of stock shall set forth thereon the statements prescribed by
Section 2-211 of the Maryland General Corporation Law ("General Corporation
Law") and by any other applicable provision of law and shall be signed by
the Chairman of the Board or the President or a Vice President and
countersigned by the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer and may be sealed with the corporate seal. The
signatures of any such officers may be either manual or facsimile signatures
and the corporate seal may be either facsimile or any other form of seal.
In case any such officer who has signed manually or by facsimile any such
certificate ceases to be such officer before the certificate is issued, it
nevertheless may be issued by the corporation with the same effect as if the
officer had not ceased to be such officer as of the date of its issue.
No certificate representing shares of stock shall be issued for
any share of stock until such share is fully paid, except as otherwise
authorized in Section 2-206 of the General Corporation Law.
The corporation may issue a new certificate of stock in place of
any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Board of Directors may require, in its discretion, the
owner of any such certificate or the owner's legal representative to give
bond, with sufficient surety, to the corporation to indemnify it against any
loss or claim that may arise by reason of the issuance of a new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions restricting
the transferability of shares of stock, if any, transfers of shares of stock
of the corporation shall be made only on the stock transfer books of the
corporation by the record holder thereof or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary
of the corporation or with a transfer agent or a registrar, if any, and on
surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of Directors may
fix, in advance, a date as the record date for the purpose of determining
stockholders entitled to notice of, or to vote at, any meeting of
stockholders, or stockholders entitled to receive payment of any dividend or
the allotment of any rights or in order to make a determination of
stockholders for any other proper purpose. Such date, in any case, shall be
not more than 90 days, and in case of a meeting of stockholders not less
than 10 days, prior to the date on which the meeting or particular action
requiring such determination of stockholders is to be held or taken. In
lieu of fixing a record date, the Board of Directors may provide that the
stock transfer books shall be closed for a stated period but not to exceed
20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of, or to vote at, a meeting of
stockholders, such books shall be closed for at least 10 days immediately
preceding such meeting. If no record date is fixed and the stock transfer
books are not closed for the determination of stockholders: (1) The record
date for the determination of stockholders entitled to notice of, or to vote
at, a meeting of stockholders shall be at the close of business on the day
on which the notice of meeting is mailed or the day 30 days before the
meeting, whichever is the closer date to the meeting; and (2) The record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on
the day on which the resolution of the Board of Directors declaring the
dividend or allotment of rights is adopted, provided that the payment or
allotment date shall not be more than 60 days after the date on which the
resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in respect of the
right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share of stock" or "shares of stock"
or "stockholder" or "stockholders" refers to an outstanding share or shares
of stock and to a holder or holders of record of outstanding shares of stock
when the corporation is authorized to issue only one class of shares of
stock and said reference also is intended to include any outstanding share
or shares of stock and any holder or holders of record of outstanding shares
of stock of any class or series upon which or upon whom the Charter confers
such rights where there are two or more classes or series of shares or upon
which or upon whom the General Corporation Law confers such rights
notwithstanding that the Charter may provide for more than one class or
series of shares of stock, one or more of which are limited or denied such
rights thereunder.
5. STOCKHOLDER MEETINGS.
ANNUAL MEETINGS. If a meeting of the stockholders of the
corporation is required by the Investment Company Act of 1940, as amended,
to elect the directors, then there shall be submitted to the stockholders at
such meeting the question of the election of directors, and a meeting called
for that purpose shall be designated the annual meeting of stockholders for
that year. In other years in which no action by stockholders is required
for the aforesaid election of directors, no annual meeting need be held.
SPECIAL MEETINGS. Special stockholder meetings for any
purpose may be called by the Board of Directors or the President and shall
be called by the Secretary for the purpose of removing a Director whenever
the holders of shares entitled to at least ten percent of all the votes
entitled to be cast at such meeting shall make a duly authorized request
that such meeting be called.
The Secretary shall call a special meeting of stockholders
for all other purposes whenever the holders of shares entitled to at least a
majority of all the votes entitled to be cast at such meeting shall make a
duly authorized request that such meeting be called. Such request shall
state the purpose of such meeting and the matters proposed to be acted on
thereat, and no other business shall be transacted at any such special
meeting.
The Secretary shall inform such stockholders of the reasonably estimated
costs of preparing and mailing the notice of the meeting, and upon payment
to the corporation of such costs, the Secretary shall give notice in the
manner provided for below.
PLACE AND TIME. Stockholder meetings shall be held at such
place, either within the State of Maryland or at such other place within the
United States, and at such date or dates as the directors from time to time
may fix.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written or
printed notice of all meetings shall be given by the Secretary and shall
state the time and place of the meeting. The notice of a special meeting
shall state in all instances the purpose or purposes for which the meeting
is called. Written or printed notice of any meeting shall be given to each
stockholder either by mail or by presenting it to the stockholder personally
or by leaving it at his or her residence or usual place of business not less
than 10 days and not more than 90 days before the date of the meeting,
unless any provisions of the General Corporation Law shall prescribe a
different elapsed period of time, to each stockholder at his or her address
appearing on the books of the corporation or the address supplied by the
stockholder for the purpose of notice. If mailed, notice shall be deemed to
be given when deposited in the United States mail addressed to the
stockholder at his or her post office address as it appears on the records
of the corporation with postage thereon prepaid. Whenever any notice of the
time, place or purpose of any meeting of stockholders is required to be
given under the provisions of these by-laws or of the General Corporation
Law, a waiver thereof in writing, signed by the stockholder and filed with
the records of the meeting, whether before or after the holding thereof, or
actual attendance or representation at the meeting shall be deemed
equivalent to the giving of such notice to such stockholder. The foregoing
requirements of notice also shall apply, whenever the corporation shall have
any class of stock which is not entitled to vote, to holders of stock who
are not entitled to vote at the meeting, but who are entitled to notice
thereof and to dissent from any action taken thereat.
STATEMENT OF AFFAIRS. The President of the corporation or,
if the Board of Directors shall determine otherwise, some other executive
officer thereof, shall prepare or cause to be prepared annually a full and
correct statement of the affairs of the corporation, including a balance
sheet and a financial statement of operations for the preceding fiscal year,
which shall be filed at the principal office of the corporation in the State
of Maryland.
QUORUM. At any meeting of stockholders, the presence in
person or by proxy of stockholders entitled to cast one-third of the votes
thereat shall constitute a quorum. In the absence of a quorum, the
stockholders present in person or by proxy, by majority vote and without
notice other than by announcement, may adjourn the meeting from time to
time, but not for a period exceeding 120 days after the original record date
until a quorum shall attend.
ADJOURNED MEETINGS. A meeting of stockholders convened on
the date for which it was called (including one adjourned to achieve a
quorum as provided in the paragraph above) may be adjourned from time to
time without further notice to a date not more than 120 days after the
original record date, and any business may be transacted at any adjourned
meeting which could have been transacted at the meeting as originally
called.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and
if present and acting: the President, a Vice President or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation or, in his or her
absence, an Assistant Secretary, shall act as secretary of every meeting,
but if neither the Secretary nor an Assistant Secretary is present the
chairman of the meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize
another person or persons to act for him by proxy in all matters in which a
stockholder is entitled to participate, whether for the purposes of
determining the stockholder's presence at a meeting, or whether by waiving
notice of any meeting, voting or participating at a meeting, expressing
consent or dissent without a meeting or otherwise. Every proxy shall be
executed in writing by the stockholder or by his or her duly authorized
attorney-in-fact or be in such other form as may be permitted by the
Maryland General Corporation Law, including documents conveyed by electronic
transmission and filed with the Secretary of the corporation. A copy,
facsimile transmission or other reproduction of the writing or transmission
may be substituted for the original writing or transmission for any purpose
for which the original transmission could be used. No unrevoked proxy shall
be valid after 11 months from the date of its execution, unless a longer
time is expressly provided therein. The placing of a stockholder's name on
a proxy pursuant to telephonic or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to verify that such
instructions have been authorized by such stockholder shall constitute
execution of such proxy by or on behalf of such stockholder.
INSPECTORS OF ELECTION. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the
meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not, appoint
one or more inspectors. In case any person who may be appointed as an
inspector fails to appear or act, the vacancy may be filled by appointment
made by the directors in advance of the meeting or at the meeting by the
person presiding thereat. Each inspector, if any, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully
the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the
person presiding at the meeting or any stockholder, the inspector or
inspectors, if any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a certificate of
any fact found by him or them.
VOTING. Each share of stock shall entitle the holder thereof
to one vote, except in the election of directors, at which each said vote
may be cast for as many persons as there are directors to be elected.
Except for election of directors, a majority of the votes cast at a meeting
of stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may come before
a meeting, unless more than a majority of votes cast is required by the
corporation's Articles of Incorporation. A plurality of all the votes cast
at a meeting at which a quorum is present shall be sufficient to elect a
director.
6. INFORMAL ACTION. Any action required or permitted to be
taken at a meeting of stockholders may be taken without a meeting if a
consent in writing, setting forth such action, is signed by all the
stockholders entitled to vote on the subject matter thereof and any other
stockholders entitled to notice of a meeting of stockholders (but not to
vote thereat) have waived in writing any rights which they may have to
dissent from such action and such consent and waiver are filed with the
records of the corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed under the direction of a Board of Directors.
The use of the phrase "entire board" herein refers to the total number of
directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be a natural
person of full age. A director need not be a stockholder, a citizen of the
United States or a resident of the State of Maryland. The initial Board of
Directors shall consist of one person. Thereafter, the number of directors
constituting the entire board shall never be less than three or the number
of stockholders, whichever is less. At any regular meeting or at any
special meeting called for that purpose, a majority of the entire Board of
Directors may increase or decrease the number of directors, provided that
the number thereof shall never be less than three or the number of
stockholders, whichever is less, nor more than twelve and further provided
that the tenure of office of a director shall not be affected by any
decrease in the number of directors.
3. ELECTION AND TERM. The first Board of Directors shall
consist of the director named in the Articles of Incorporation and shall
hold office until the first meeting of stockholders or until his or her
successor has been elected and qualified. Thereafter, directors who are
elected at a meeting of stockholders, and directors who are elected in the
interim to fill vacancies and newly created directorships, shall hold office
until their successors have been elected and qualified, as amended. Newly
created directorships and any vacancies in the Board of Directors, other
than vacancies resulting from the removal of directors by the stockholders,
may be filled by the Board of Directors, subject to the provisions of the
Investment Company Act of 1940, as amended. Newly created directorships
filled by the Board of Directors shall be by action of a majority of the
entire Board of Directors then in office. All vacancies to be filled by the
Board of Directors may be filled by a majority of the remaining members of
the Board of Directors, although such majority is less than a quorum
thereof.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board of
Directors shall fix, except that the first meeting of a newly elected Board
of Directors shall be held as soon after its election as the directors
conveniently may assemble.
PLACE. Meetings shall be held at such place within or
without the State of Maryland as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for
which the time and place have been fixed. Special meetings may be called by
or at the direction of the President or of a majority of the directors in
office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Whenever any notice
of the time, place or purpose of any meeting of directors or any committee
thereof is required to be given under the provisions of the General
Corporation Law or of these by-laws, a waiver thereof in writing, signed by
the director or committee member entitled to such notice and filed with the
records of the meeting, whether before or after the holding thereof, or
actual attendance at the meeting shall be deemed equivalent to the giving of
such notice to such director or such committee member.
QUORUM AND ACTION. A majority of the entire Board of
Directors shall constitute a quorum except when a vacancy or vacancies
prevents such majority, whereupon a majority of the directors in office
shall constitute a quorum, provided such majority shall constitute at least
one-third of the entire Board and, in no event, less than two directors. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as otherwise
specifically provided by the Articles of Incorporation, the General
Corporation Law or these by-laws, the action of a majority of the directors
present at a meeting at which a quorum is present shall be the action of the
Board of Directors.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any
and if present and acting, or the President or any other director chosen by
the Board, shall preside at all meetings.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be
removed for cause or without cause by the stockholders, who may elect a
successor or successors to fill any resulting vacancy or vacancies for the
unexpired term of the removed director or directors.
6. COMMITTEES. The Board of Directors may appoint from among
its members an Executive Committee and other committees composed of one or
more directors and may delegate to such committee or committees, in the
intervals between meetings of the Board of Directors, any or all of the
powers of the Board of Directors in the management of the business and
affairs of the corporation, except the power to amend the by-laws, to
approve any merger or share exchange which does not require stockholder
approval, to authorize dividends, to issue stock (except to the extent
permitted by law) or to recommend to stockholders any action requiring the
stockholders' approval. In the absence of any member of any such committee,
the members thereof present at any meeting, whether or not they constitute a
quorum, may appoint a member of the Board of Directors to act in the place
of such absent member.
7. INFORMAL ACTION. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if a written consent to such action is
signed by all members of the Board of Directors or any such committee, as
the case may be, and such written consent is filed with the minutes of the
proceedings of the Board or any such committee.
Members of the Board of Directors or any committee designated
thereby may participate in a meeting of such Board or committee by means of
a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and shall have a
President, a Secretary and a Treasurer, who shall be elected by the Board of
Directors, and may have such other officers, assistant officers and agents
as the Board of Directors shall authorize from time to time. Any two or
more offices, except those of President and Vice President, may be held by
the same person, but no person shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law
to be executed, acknowledged or verified by two or more officers.
Any officer or agent may be removed by the Board of Directors
whenever, in its judgment, the best interests of the corporation will be
served thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation in the
State of Maryland prescribed by the General Corporation Law is 300 East
Lombard Street, c/o The Corporation Trust Incorporated, Baltimore, Maryland
21202. The name and address of the resident agent in the State of Maryland
prescribed by the General Corporation Law are: The Corporation Trust
Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202.
The corporation shall maintain, at its principal office in the
State of Maryland prescribed by the General Corporation Law or at the
business office or an agency of the corporation, an original or duplicate
stock ledger containing the names and addresses of all stockholders and the
number of shares of each class held by each stockholder. Such stock ledger
may be in written form or any other form capable of being converted into
written form within a reasonable time for visual inspection.
The corporation shall keep at said principal office in the State
of Maryland the original or a certified copy of the by-laws, including all
amendments thereto, and shall duly file thereat the annual statement of
affairs of the corporation prescribed by Section 2-313 of the General
Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and shall be in such form and contain such other words and/or
figures as the Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation or any series thereof shall be
fixed, and shall be subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws is vested
exclusively in the Board of Directors of the corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation
shall indemnify its directors to the fullest extent that indemnification of
directors is permitted by the law. The corporation shall indemnify its
officers to the same extent as its directors and to such further extent as
is consistent with law. The corporation shall indemnify its directors and
officers who while serving as directors or officers also serve at the
request of the corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan to the same extent
as its directors and, in the case of officers, to such further extent as is
consistent with law. The indemnifi-cation and other rights provided by this
Article shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. This Article shall not protect any such
person against any liability to the corporation or any stockholder thereof
to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct").
2. ADVANCES. Any current or former director or officer of the
corporation seeking indemnification within the scope of this Article shall
be entitled to advances from the corporation for payment of the reasonable
expenses incurred by him in connection with the matter as to which he is
seeking indemnification in the manner and to the fullest extent permissible
under the General Corporation Law. The person seeking indemnification shall
provide to the corporation a written affirmation of his good faith belief
that the standard of conduct necessary for indemnification by the
corporation has been met and a written undertaking to repay any such advance
if it should ultimately be determined that the standard of conduct has not
been met. In addition, at least one of the following additional conditions
shall be met: (a) the person seeking indemnification shall provide a
security in form and amount acceptable to the corporation for his or her
undertaking; (b) the corporation is insured against losses arising by reason
of the advance; or (c) a majority of a quorum of directors of the
corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor
parties to the proceeding ("disinterested non-party directors"), or
independent legal counsel, in a written opinion, shall have determined,
based on a review of facts readily available to the corporation at the time
the advance is proposed to be made, that there is reason to believe that the
person seeking indemnification will ultimately be found to be entitled to
indemnification.
3. PROCEDURE. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine,
or cause to be determined, in a manner consistent with the General
Corporation Law, whether the standards required by this Article have been
met. Indemnification shall be made only following: (a) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of disabling
conduct or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person to be
indemnified was not liable by reason of disabling conduct by (i) the vote of
a majority of a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and
agents who are not officers or directors of the corporation may be
indemnified, and reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of Directors or by
contract, subject to any limitations imposed by the Investment Company Act
of 1940, as amended.
5. OTHER RIGHTS. The Board of Directors may make further
provision consistent with law for indemnification and advance of expenses to
directors, officers, employees and agents by resolution, agreement or
otherwise. The indemnification provided by this Article shall not be deemed
exclusive of any other right, with respect to indemnification or otherwise,
to which those seeking indemnification may be entitled under any insurance
or other agreement or resolution of stockholders or disinterested non-party
directors or otherwise.
6. AMENDMENTS. References in this Article are to the General
Corporation Law and to the Investment Company Act of 1940 as from time to
time amended. No amendment of the by-laws shall affect any right of any
person under this Article based on any event, omission or proceeding prior
to the amendment.
Dated: April 8, 1998
Exhibit 10
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our
report dated February 4, 1998, which in incorporated by reference, in this
Registration Statement (Form N-1A No. 2-68671) of Dreyfus Appreciation Fund,
Inc.
ERNST & YOUNG LLP
New York, New York
September 30, 1998
