File No. 2-88822
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. 16 [ X ]
and/or
REGSTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 16 [ X ]
(Check appropriate box or boxes.)
DREYFUS CAPITAL VALUE 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
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
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X on January 31, 1995 pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
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on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended September 30, 1994 was filed on November 30, 1994.
DREYFUS CAPITAL VALUE FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of Registrant 5
5 Management of the Fund 22
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 37
7 Purchase of Securities Being Offered 24
8 Redemption or Repurchase 31
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
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10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-30
13 Investment Objectives and Policies B-2
14 Management of the Fund B-13
15 Control Persons and Principal B-15
Holders of Securities
16 Investment Advisory and Other B-16
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS CAPITAL VALUE FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-28
18 Capital Stock and Other Securities B-30
19 Purchase, Redemption and Pricing B-18; B-21;
of Securities Being Offered B-25
20 Tax Status *
21 Underwriters B-17
22 Calculations of Performance Data B-29
23 Financial Statements B-37
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-16
31 Management Services C-16
32 Undertakings C-16
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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(Lion Logo) DREYFUS CAPITAL VALUE FUND
(A PREMIER FUND)
PROSPECTUS JANUARY 31, 1995
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Dreyfus Capital Value Fund(A Premier Fund)(the "Fund") is an open-end,
diversified, management investment company, known as a mutual fund. Its goal
is to maximize total return, consisting of capital appreciation and current
income. The Fund invests in a wide range of equity and debt securities and
money market instruments.
You can purchase or redeem shares by telephone using Dreyfus TELETRANSFER.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser.
By this Prospectus, Class A and Class B shares of the Fund are being
offered. Class A shares are subject to a sales charge imposed at the time of
purchase and Class B shares are subject to a contingent deferred sales charge
imposed on redemptions made within six years of purchase. Other differences
between the two Classes include the services offered to and the expenses
borne by each Class and certain voting rights, as described herein. The Fund
offers these alternatives so an investor may choose the method of purchasing
shares that is most beneficial given the amount of the purchase, the length
of time the investor expects to hold the shares and other circumstances.
This Prospectus sets forth concisely information about the Fund that you
should know before investing. It should be read and retained for future
reference.
Part B (also known as the Statement of Additional Information), dated
January 31, 1995, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters which may be
of interest to some investors. It has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. For a free copy,
write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call 1-800-645-6561. When telephoning, ask for Operator 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. MUTUAL
FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Fee Table................................................. 3
Condensed Financial Information........................... 4
Alternative Purchase Methods.............................. 5
Description of the Fund................................... 5
Management of the Fund.................................... 22
How to Buy Fund Shares.................................... 24
Shareholder Services...................................... 28
How to Redeem Fund Shares................................. 31
Distribution Plan and Shareholder Services Plan........... 35
Dividends, Distributions and Taxes........................ 35
Performance Information................................... 36
General Information....................................... 37
Page 2
<TABLE>
<CAPTION>
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..................... 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)....... -- 4.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees......................................... .75% .75%
12b-1 Fees.............................................. -- .75%
Other Expenses.......................................... .85% .89%
Total Fund Operating Expenses........................... 1.60% 2.39%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) except where noted, redemption at
the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
<S> <C> <C> <C> <C>
CLASS A:......................... $ 61 $ 93 $128 $226
CLASS B:......................... $ 64 $ 105 $148 $235
ASSUMING NO REDEMPTION OF
CLASS B SHARES:.............. $ 24 $ 75 $128 $235
</TABLE>
*Ten-year figures assume conversion of Class B shares to Class A
shares at end of sixth year following the date of purchase.
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY
RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will bear,
directly or indirectly, the payment of which will reduce investors'
return on an annual basis. Long-term investors in Class B shares could
pay more in 12b-1 fees than the economic equivalent of paying a front-end
sales charge. Certain Service Agents (as defined below) may charge their
clients direct fees for effecting transactions in Fund shares; such fees
are not reflected in the foregoing table. See "Management of the Fund,"
"How to Buy Fund Shares" and "Distribution Plan and Shareholder Services
Plan."
Page 3
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------- -----------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
---------------------------------------------------------------------
PER SHARE DATA 1986(1)(2) 1987(1) 1988(1) 1989(1) 1990(1) 1991 1992 1993 1993(3)
------ ------ ------ ------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year...... $7.25 $9.54 $12.84 $12.68 $14.42 $15.08 $12.97 $12.40 $10.58
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment from Operations:
Investment income_net(4).... .03 .07 .58 .90 .89 .73 .40 .24 .03
Net realized and unrealized gain
(loss) on investments(4).... 2.26 3.59 (.18) 1.60 .61 (.89) (.39) (.62) .71
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS..... 2.29 3.66 .40 2.50 1.50 (.16) .01 (.38) .74
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income--net(4).......... -- (.03) (.15) (.76) (.84) (.99) (.57) (.61) --
Dividends from net realized gain
on investments(4)...... -- (.33) (.41) -- -- (.96) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS..... -- (.36) (.56) (.76) (.84) (1.95) (.57) (.61) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year... $9.54 $12.84 $12.68 $14.42 $15.08 $12.97 $12.41 $11.42 $11.32
====== ======= ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN (5) 31.59%(6) 39.72% 3.29% 20.95% 10.53% (.70%) (.02%) (2.70%)
6.99%(6) RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to
average net assets....... 1.47%(6) 1.50% 1.24% 1.22% 1.20% 1.19% 1.19% 1.23%
1.49%(6) Ratio of dividends and interest
on securities sold short
to average net assets...... -- .15% .13% .03% .26% .49% .39% .45%
.31%(6) Ratio of net investment income
to average net assets...... .45%(6) 2.25% 6.08 6.93% 6.64% 5.58% 2.83% 1.94%
.83%(6) Decrease reflected in above
expense ratios due to
expense reimbursements... .84%(6) .29% -- -- -- -- -- -- --
Portfolio Turnover Rate.... 140.99% 102.16% 56.31% 19.46% 62.84% 154.07% 344.29% 41.78% 41.78%
Net Assets, end of year
(000's Omitted)....... $9,444 $139,796 $502,442 $607,192 $741,267 $755,450 $537,392 $412,316 $30,378
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(1) Per share data restated to reflect a 100% stock dividend at the close of business on February 16, 1990.
(2) From October 10, 1985 (commencement of operations) to September 30, 1986.
(3) From January 15, 1993 (commencement of initial offering) to September 30, 1993.
(4) Per share data for 1986 and 1987 has been restated for comparative purposes.
(5) Exclusive of sales charge.
(6) Not annualized.
</TABLE>
Page 4
Further information about the Fund's performance is contained
in the Fund's annual report which may be obtained without charge by
writing to the address or calling the number set forth on the cover page
of this Prospectus.
ALTERNATIVE PURCHASE METHODS
The Fund offers you two methods of purchasing Fund shares; you
may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your
shares and any other relevant circumstances. Each Class A and Class B
share represents an identical pro rata interest in the Fund's investment
portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of
4.50% of the public offering price imposed at the time of purchase.
The initial sales charge may be reduced or waived for certain purchases.
See "How to Buy Fund Shares _ Class A Shares." These shares are subject
to an annual Shareholder Service service fee at the rate of .25 of 1% of
the value of the average daily net assets of Class A. See "Distribution
Plan and Shareholder Services Plan _ Shareholder Services Plan."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within six years of
purchase. See "How to Buy Fund Shares _ Class B Shares" and "How to
Redeem Fund Shares_Contingent Deferred Sales Charge -- Class B Shares."
These shares also are subject to an annual Shareholder Service service
fee at the rate of .25 of l% of the value of the average daily net
assets of Class B. In addition, Class B shares are subject to an annual
distribution fee at the rate of .75 of 1% of the value of the average
daily net assets of Class B. See "Distribution Plan and Shareholder
Services Plan." The distribution fee paid by Class B will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A. Approximately six years after the date of purchase, Class B
shares automatically will convert to Class A shares, based on the
relative net asset values for shares of each Class, and will no longer be
subject to the distribution fee. Class B shares that have been acquired
through the reinvestment of dividends and distributions will be converted
on a pro rata basis together with other Class B shares, in the proportion
that a shareholder's Class B shares converting to Class A shares bears to
the total Class B shares not acquired through the reinvestment of
dividends and distributions.
The decision as to which Class of shares is more beneficial to
you depends upon the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC on
Class B shares prior to conversion would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any such differential would be offset by the return of Class A. In
this regard, investors qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated continuing
distribution fees on Class B shares may exceed the initial sales charge
on Class A shares during the life of the investment. Generally, Class A
shares may be more appropriate for investors who invest $100,000 or more
in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's goal is to maximize total return, consisting of
capital appreciation and current income. The Fund's investment objective
cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940) of the Fund's outstanding
voting shares. There can be no assurance that the Fund's investment
objective will be achieved.
MANAGEMENT POLICIES
The Fund seeks to achieve its investment objective by
following an asset allocation strategy that contemplates shifts, which
may be frequent, among a wide range of investments and market sectors.
The Fund will invest in equity securities of domestic and foreign
issuers, including
Page 5
common stocks, preferred stocks, convertible
securities and warrants; debt securities of domestic and foreign issuers,
including bonds, debentures and notes; and domestic and foreign money
market instruments. The Fund will not invest more than 65% of its assets
in securities of foreign issuers.
Dreyfus and Comstock Partners, Inc. ("Comstock Partners"), the
Fund's sub-investment adviser (collectively, the "Advisers"), have broad
latitude in selecting the class of investments and market sectors in
which the Fund will invest. The Fund will not be managed as a balanced
portfolio and is not required to maintain a portion of its investments in
each of the Fund's permitted investment types at all times. Thus, during
the course of a business cycle, for example, the Fund may invest solely
in equity securities, debt securities or money market instruments, or in
a combination of these classes of investments. The asset allocation mix
for the Fund will be determined by the Advisers at any given time in
light of their assessment of current economic conditions and investment
opportunities. The asset allocation mix selected will be a primary
determinant of the Fund's investment performance.
EQUITY AND DEBT SECURITIES
The Fund intends to invest in domestic and foreign equity and
debt securities. The Fund generally seeks to invest in securities that
the Advisers have determined offer above average potential for total
return. In making this determination, they take into account factors
including price-earnings ratios, cash flow and the relationship of asset
value to market value of the securities. The Fund will be alert to
companies engaged in restructuring efforts, such as mergers, acquisitions
and divestitures of less profitable units.
The Fund typically purchases a debt security if the Advisers
believe that the yield and potential for capital appreciation of the
security are sufficiently attractive in light of the risks of ownership
of the security. In determining whether the Fund should invest in
particular debt securities, the Advisers consider factors such as: the
price, coupon and yield to maturity; their assessment of the credit
quality of the issuer; the issuer's available cash flow and the related
coverage ratios; the property, if any, securing the obligation; and the
terms of the debt securities, including the subordination, default,
sinking fund and early redemption provisions. They also will review the
ratings, if any, assigned to the securities by Moody's Investors Service,
Inc. or Standard & Poor's Corporation or other recognized rating
agencies. The judgment of the Advisers as to credit quality of a debt
security may differ, however, from that suggested by the ratings
published by a rating service.
The Fund is not subject to any limit on the percentage of its
assets that may be invested in debt securities having a certain rating.
Thus, it is possible that a substantial portion of the Fund's assets may
be invested in debt securities that are unrated or rated in the lowest
categories of the recognized rating services (i.e., securities rated C by
Moody's Investors Service, Inc. or D by Standard & Poor's Corporation).
Low-rated and unrated securities have special risks relating to the
ability of the Fund to receive timely, or perhaps ultimate, payment of
principal and interest. They are considered to have speculative
characteristics and to be of poor quality; some obligations in which the
Fund may invest, such as debt securities rated D by Standard & Poor's
Corporation, may be in default. The Fund intends to invest less than 35%
of its assets in debt securities rated Ba or lower by Moody's Investors
Service, Inc. and BB or lower by Standard & Poor's Corporation. See "Risk
Factors-Lower Rated Securities" below for a discussion of certain risks.
The Fund generally invests in United States equity and debt
securities, including convertible securities, that are listed on
securities exchanges or traded in the over-the-counter market. Foreign
securities in which the Fund may invest may be listed on foreign
securities exchanges or traded in the over-the-counter market. The Fund
may invest in companies whose principal activities are in, or governments
of, emerging markets. For further information about certain portfolio
securities, see "Certain Portfolio Securities" below.
The Fund also may purchase to a limited extent securities
representing the right to receive the capital appreciation above a
certain amount, and other securities representing the right to receive
dividends and all other attributes of beneficial ownership, in respect of
an entity's
Page 6
common stock or other similar instrument. These securities
typically are sold as shares in unit investment trusts. The percentage of
the Fund's assets that may be invested in shares of unit investment
trusts is subject to the limitations set forth in the Investment Company
Act of 1940.
MONEY MARKET INSTRUMENTS
The money market instruments in which the Fund may invest
include: U.S. Government securities; bank obligations, including
certificates of deposit, time deposits and bankers' acceptances and other
short-term obligations of domestic or foreign banks, domestic savings and
loan associations and other banking institutions having total assets in
excess of $1 billion; commercial paper of any rating; and repurchase
agreements involving U.S. Government securities. The Fund may invest up
to 100% of its assets in money market instruments, but at no time will
the Fund's investments in bank obligations, including time deposits,
exceed 25% of its assets. See "Certain Portfolio Securities" below.
INVESTMENT TECHNIQUES
The Fund may engage in various investment techniques, such as
leveraging, short-selling, foreign exchange transactions, options and
futures transactions and lending portfolio securities, each of which
involves risk. See "Risk Factors" below. Options and futures transactions
involve so-called "derivative securities."
LEVERAGE THROUGH BORROWING
The Fund may borrow for investment purposes. This borrowing,
which is known as leveraging, generally will be unsecured, except to the
extent the Fund enters into reverse repurchase agreements described
below. The Investment Company Act of 1940 requires the Fund to maintain
continuous asset coverage (that is, total assets including borrowings,
less liabilities exclusive of borrowings) of 300% of the amount borrowed.
If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell some of
its portfolio holdings within three days to reduce the debt and restore
the 300% asset coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time. Leveraging may
exaggerate the effect on net asset value of any increase or decrease in
the market value of the Fund's portfolio. Money borrowed for leveraging
will be subject to interest costs which may or may not be recovered by
appreciation of the securities purchased; in certain cases, interest
costs may exceed the return received on the securities purchased. The
Fund also may be required to maintain minimum average balances in
connection with such borrowing or to pay a commitment or other fee to
maintain a line of credit; either of these requirements would increase
the cost of borrowing over the stated interest rate.
Among the forms of borrowing in which the Fund may engage is
the entry into reverse repurchase agreements with banks, brokers or
dealers. These transactions involve the transfer by the Fund of an
underlying debt instrument in return for cash proceeds based on a
percentage of the value of the security. The Fund retains the right to
receive interest and principal payments on the security. At an agreed
upon future date, the Fund repurchases the security at principal, plus
accrued interest. In certain types of agreements, there is no agreed upon
repurchase date and interest payments are calculated daily, often based
on the prevailing overnight repurchase rate. The Fund will maintain in a
segregated custodial account cash, cash equivalents or U.S. Government
securities or other high quality liquid debt securities at least equal to
the aggregate amount of its reverse repurchase obligations, plus accrued
interest, in certain cases, in accordance with releases promulgated by
the Securities and Exchange Commission. The Securities and Exchange
Commission views reverse repurchase transactions as collateralized
borrowings by the Fund. These agreements, which are treated as if
reestablished each day, are expected to provide the Fund with a flexible
borrowing tool.
SHORT-SELLING
The Fund may make short sales, which are transactions in which
the Fund sells a security it does not own in anticipation of a decline in
the market value of that security. To complete
Page 7
such a transaction, the Fund must borrow the security to make delivery to
the buyer. The Fund then is obligated to replace the security borrowed by
purchasing it at the market price at the time of replacement. The price
at such time may be more or less than the price at which the security was
sold by the Fund. Until the security is replaced, the Fund is required to
pay to the lender amounts equal to any dividends or interest which accrue
during the period of the loan. To borrow the security, the Fund also may
be required to pay a premium, which would increase the cost of the
security sold. The proceeds of the short sale will be retained by the
broker, to the extent necessary to meet margin requirements, until the
short position is closed out.
Until the Fund replaces a borrowed security in connection with
a short sale, the Fund will: (a) maintain daily a segregated account,
containing cash or U.S. Government securities, at such a level that (i)
the amount deposited in the account plus the amount deposited with the
broker as collateral will equal the current value of the security sold
short and (ii) the amount deposited in the segregated account plus the
amount deposited with the broker as collateral will not be less than the
market value of the security at the time it was sold short; or (b)
otherwise cover its short position.
The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale
and the date on which the Fund replaces the borrowed security. The Fund
will realize a gain if the security declines in price between those
dates. This result is the opposite of what one would expect from a cash
purchase of a long position in a security. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of any
premium or amounts in lieu of dividends or interest the Fund may be
required to pay in connection with a short sale .
The Fund may purchase call options to provide a hedge against
an increase in the price of a security sold short by the Fund. When the
Fund purchases a call option it has to pay a premium to the person
writing the option and a commission to the broker selling the option. If
the option is exercised by the Fund, the premium and the commission paid
may be more than the amount of the brokerage commission charged if the
security were to be purchased directly. See "Call and Put Options on
Specific Securities" below.
The Fund anticipates that the frequency of short sales will
vary substantially in different periods, and it does not intend that any
specified portion of its assets, as a matter of practice, will be
invested in short sales. However, no securities will be sold short if,
after effect is given to any such short sale, the total market value of
all securities sold short would exceed 25% of the value of the Fund's net
assets. The Fund may not sell short the securities of any single issuer
listed on a national securities exchange to the extent of more than 5% of
the value of the Fund's net assets. The Fund may not sell short the
securities of any class of an issuer to the extent, at the time of the
transaction, of more than 5% of the outstanding securities of that class.
In addition to the short sales discussed above, the Fund may
make short sales "against the box," a transaction in which the Fund
enters into a short sale of a security which the Fund owns. The proceeds
of the short sale are held by a broker until the settlement date at which
time the Fund delivers the security to close the short position. The Fund
receives the net proceeds from the short sale. The Fund at no time will
have more than 15% of the value of its net assets in deposits on short
sales against the box.
CALL AND PUT OPTIONS ON SPECIFIC SECURITIES
The Fund may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options in respect of
specific securities (or groups or "baskets" of specific securities) in
which the Fund may invest. The Fund may write covered call and put option
contracts to the extent of 20% of the value of its net assets at the time
such option contracts are written. A call option gives the purchaser of
the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time
during the option period. Conversely, a put option gives the purchaser of
the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time
during the option period. A covered call option sold by the Fund, which
is a call option
Page 8
with respect to which the Fund owns the underlying
security or securities, exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price
of the underlying security or securities or to possible continued holding
of a security or securities which might otherwise have been sold to
protect against depreciation in the market price thereof. A covered put
option sold by the Fund exposes the Fund during the term of the option to
a decline in price of the underlying security or securities. A put option
sold by the Fund is covered when, among other things, cash or liquid
securities are placed in a segregated account with the Fund's custodian
to fulfill the obligation undertaken.
To close out a position when writing covered options, the Fund
may make a "closing purchase transaction," which involves purchasing an
option on the same security or securities with the same exercise price
and expiration date as the option which it has previously written. To
close out a position as a purchaser of an option, the Fund may make a
"closing sale transaction," which involves liquidating the Fund's
position by selling the option previously purchased. The Fund will
realize a profit or loss from a closing purchase transaction depending
upon the difference between the amount paid to purchase an option and the
amount received from the sale thereof.
The Fund intends to treat certain options in respect of
specific securities that are not traded on a securities exchange and the
securities underlying covered call options written by the Fund as
illiquid securities. See "Certain Portfolio Securities _ Illiquid
Securities" below.
The Fund will purchase options only to the extent permitted by
the policies of state securities authorities in states where shares of
the Fund are qualified for offer and sale.
STOCK INDEX OPTIONS
The Fund may purchase and write call and put options on stock
indexes listed on national securities exchanges or traded in the
over-the-counter market as an investment vehicle for the purpose of
realizing its investment objective or for the purpose of hedging its
portfolio. A stock index fluctuates with changes in the market values of
the stocks included in the index.
The effectiveness of purchasing or writing stock index options
will depend upon the extent to which price movements in the Fund's
portfolio correlate with price movements of the stock index selected.
Because the value of an index option depends upon movements in the level
of the index rather than the price of a particular stock, whether the
Fund will realize a gain or loss from the purchase or writing of options
on an index depends upon movements in the level of stock prices in the
stock market generally or, in the case of certain indexes, in an industry
or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on stock
indexes will be subject to the Advisers' ability to predict correctly
movements in the direction of the stock market generally or of a
particular industry. This requires different skills and techniques than
predicting changes in the price of individual stocks.
When the Fund writes an option on a stock index, it will place
in a segregated account with its custodian cash or liquid securities in
an amount at least equal to the market value of the underlying stock
index and will maintain the account while the option is open or will
otherwise cover the transaction.
FUTURES TRANSACTIONS -- IN GENERAL
The Fund is not a commodity pool. However, as a substitute for
a comparable market position in the underlying securities and for hedging
purposes, the Fund may engage in futures and options on futures
transactions, including those relating to indexes, as described below.
The Fund may trade futures contracts and options on futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade
and the International Monetary Market of the Chicago Mercantile Exchange,
or, to the extent permitted under applicable law, on exchanges located
outside the United States, such as the London International Financial
Futures Exchange and the Sydney Futures Exchange Limited. Foreign markets
may offer advantages such as trading in commodities that are not
currently traded in the United States or arbitrage possibilities
Page 9
not available in the United States. Foreign markets, however, may have
greater risk potential than domestic markets. See "Risk Factors _ Foreign
Commodity Transactions" below.
The Fund's commodities transactions must constitute bona fide
hedging or other permissible transactions pursuant to regulations
promulgated by the Commodity Futures Trading Commission (the "CFTC"). In
addition, the Fund may not engage in such transactions if the sum of the
amount of initial margin deposits and premiums paid for unexpired
commodity options, other than for bona fide hedging transactions, would
exceed 5% of the liquidation value of the Fund's assets, after taking
into account unrealized profits and unrealized losses on such contracts
it has entered into; provided, however, that in the case of an option
that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5%. Pursuant to regulations and/or
published positions of the Securities and Exchange Commission, the Fund
may be required to segregate cash or high quality money market
instruments in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting the Fund's ability to
otherwise invest those assets. To the extent the Fund engages in the use
of futures and options on futures for other than bona fide hedging
purposes, the Fund may be subject to additional risk.
Initially, when purchasing or selling futures contracts the
Fund will be required to deposit with its custodian in the broker's name
an amount of cash or cash equivalents up to approximately 10% of the
contract amount. This amount is subject to change by the exchange or
board of trade on which the contract is traded and members of such
exchange or board of trade may impose their own higher requirements. This
amount is known as "initial margin" and is in the nature of a performance
bond or good faith deposit on the contract which is returned to the Fund
upon termination of the futures position, assuming all contractual
obligations have been satisfied. Subsequent payments, known as "variation
margin," to and from the broker will be made daily as the price of the
index or securities underlying the futures contract fluctuates, making
the long and short positions in the futures contract more or less
valuable, a process known as "marking-to-market." At any time prior to
the expiration of a futures contract, the Fund may elect to close the
position by taking an opposite position at the then prevailing price,
which will operate to terminate the Fund's existing position in the
contract.
Although the Fund intends to purchase or sell futures
contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. Many futures exchanges and boards of
trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially
subjecting the Fund to substantial losses. If it is not possible, or the
Fund determines not, to close a futures position in anticipation of
adverse price movements, the Fund will be required to make daily cash
payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may offset
partially or completely losses on the futures contract. However, no
assurance can be given that the price of the securities being hedged will
correlate with the price movements in a futures contract and thus provide
an offset to losses on the futures contract.
In addition, to the extent the Fund is engaging in a futures
transaction as a hedging device, due to the risk of an imperfect
correlation between securities in the Fund's portfolio that are the
subject of a hedging transaction and the futures contract used as a
hedging device, it is possible that the hedge will not be fully effective
in that, for example, losses on the portfolio securities may be in excess
of gains on the futures contract or losses on the futures contract
Page 10
may be in excess of gains on the portfolio securities that were the
subject of the hedge. In futures contracts based on indexes, the risk of
imperfect correlation increases as the composition of the Fund's portfolio
varies from the composition of the index. In an effort to compensate for
the imperfect correlation of movements in the price of the securities
being hedged and movements in the price of futures contracts, the Fund may
buy or sell futures contracts in a greater or lesser dollar amount than
the dollar amount of the securities being hedged if the historical
volatility of the futures contract has been less or greater than that of
the securities. Such "over hedging" or "under hedging" may adversely
affect the Fund's net investment results if market movements are not as
anticipated when the hedge is established.
Successful use of futures by the Fund also is subject to the
Advisers' ability to predict correctly movements in the direction of the
market or interest rates. For example, if the Fund has hedged against the
possibility of a decline in the market adversely affecting the value of
securities held in its portfolio and prices increase instead, the Fund
will lose part or all of the benefit of the increased value of securities
which it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has insufficient
cash, it may have to sell securities to meet daily variation margin
requirements. Such sales of securities may, but will not necessarily, be
at increased prices which reflect the rising market. The Fund may have to
sell securities at a time when it may be disadvantageous to do so.
An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if
the option is a put) at a specified exercise price at any time during the
option exercise period. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if
the option is a call and a long position if the option is a put). Upon
exercise of the option, the assumption of offsetting futures positions by
the writer and holder of the option will be accompanied by delivery of
the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case
of a put, the exercise price of the option on the futures contract.
Call options sold by the Fund with respect to futures
contracts will be covered by, among other things, entering into a long
position in the same contract at a price no higher than the strike price
of the call option, or by ownership of the instruments underlying, or
instruments the prices of which are expected to move relatively
consistently with the instruments underlying, the futures contract. Put
options sold by the Fund with respect to futures contracts will be
covered in the same manner as put options on specific securities as
described above.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES -- The
Fund may purchase and sell stock index futures contracts and options on
stock index futures contracts.
A stock index future obligates the seller to deliver (and the
purchaser to take) an amount of cash equal to a specific dollar amount
times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the
index is made. With respect to stock indexes that are permitted
investments, the Fund intends to purchase and sell futures contracts on
the stock index for which it can obtain the best price with consideration
also given to liquidity.
The Fund may use index futures as a substitute for a
comparable market position in the underlying securities.
There can be no assurance of the Fund's successful use of
stock index futures as a hedging device. In addition to the possibility
that there may be an imperfect correlation, or no correlation at all,
between movements in the stock index future and the portion of the
portfolio being hedged, the price of stock index futures may not
correlate perfectly with the movement in the stock index because of
certain market distortions. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transac-
Page 11
tions which would distort the normal relationship between the index and
futures markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation
by speculators in the futures market also may cause temporary price
distortions. Because of the possibility of price distortions in the
futures market and the imperfect correlation between movements in the
stock index and movements in the price of stock index futures, a correct
forecast of general market trends by the Advisers still may not result
in a successful hedging transaction.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE
FUTURES CONTRACTS -- The Fund may invest in interest rate futures
contracts and options on interest rate futures contracts as a substitute
for a comparable market position and to hedge against adverse movements
in interest rates.
To the extent the Fund has invested in interest rate futures
contracts or options on interest rate futures contracts as a substitute
for a comparable market position, the Fund will be subject to the
investment risks of having purchased the securities underlying the
contract.
The Fund may purchase call options on interest rate futures
contracts to hedge against a decline in interest rates and may purchase
put options on interest rate futures contracts to hedge its portfolio
securities against the risk of rising interest rates.
The Fund may sell call options on interest rate futures
contracts to partially hedge against declining prices of portfolio
securities. If the futures price at expiration of the option is below the
exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings. The Fund may sell put options
on interest rate futures contracts to hedge against increasing prices of
the securities which are deliverable upon exercise of the futures
contract. If the futures price at expiration of the option is higher than
the exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the price
of securities which the Fund intends to purchase. If a put or call option
sold by the Fund is exercised, the Fund will incur a loss which will be
reduced by the amount of the premium it receives. Depending on the degree
of correlation between changes in the value of its portfolio securities
and changes in the value of its futures positions, the Fund's losses from
existing options on futures may to some extent be reduced or increased by
changes in the value of its portfolio securities.
The Fund also may sell options on interest rate futures
contracts as part of closing purchase transactions to terminate its
options positions. No assurance can be given that such closing
transaction can be effected or that there will be a correlation between
price movements in the options on interest rate futures and price
movements in the Fund's portfolio securities which are the subject of the
hedge. In addition, the Fund's purchase of such options will be based
upon predictions as to anticipated interest rate trends, which could
prove to be inaccurate.
FUTURES CONTRACTS BASED ON AN INDEX OF DEBT SECURITIES AND
OPTIONS ON SUCH FUTURES CONTRACTS -- The Fund may purchase and sell
futures contracts based on an index of debt securities and options on
such futures contracts to the extent they currently exist and, in the
future, may be developed. At least one exchange trades futures contracts
on an index of long-term municipal bonds, and the Fund reserves the right
to conduct futures and options transactions based on an index which may
be developed in the future to correlate with price movements in certain
categories of debt securities.
The Fund's investment strategy in employing futures contracts
based on an index of debt securities will be similar to that used by it
in other financial futures transactions. The Fund also may purchase and
write call and put options on such index futures and enter into closing
transactions with respect to such options.
Page 12
CURRENCY FUTURES AND OPTIONS ON CURRENCY FUTURES
The Fund may purchase and sell currency futures contracts and
options thereon. See "Futures Transactions -- In General" and "Call and
Put Options on Specific Securities" above. By selling foreign currency
futures, the Fund can establish the number of U.S. dollars it will
receive in the delivery month for a certain amount of a foreign currency.
In this way, if the Fund anticipates a decline of a foreign currency
against the U.S. dollar, the Fund can attempt to fix the U.S. dollar
value of some or all of the securities held in its portfolio that are
denominated in that currency. By purchasing foreign currency futures, the
Fund can establish the number of U.S. dollars it will be required to pay
for a specified amount of a foreign currency in the delivery month. Thus,
if the Fund intends to buy securities in the future and expects the U.S.
dollar to decline against the relevant foreign currency during the period
before the purchase is effected, the Fund can attempt to fix the price in
U.S. dollars of the securities it intends to acquire.
The purchase of options on currency futures will allow the
Fund, for the price of a premium it must pay for the option, to decide
whether or not to buy (in the case of a call option) or to sell (in the
case of a put option) a futures contract at a specified price at any time
during the period before the option expires. If the Fund, in purchasing
an option, has been correct in its judgment concerning the direction in
which the price of a foreign currency would move as against the U.S.
dollar, it may exercise the option and thereby take a futures position to
hedge against the risk it had correctly anticipated or close out the
option position at a gain that will offset, to some extent, currency
exchange losses otherwise suffered by the Fund. If exchange rates move in
a way the Fund did not anticipate, the Fund will have incurred the
expense of the option without obtaining the expected benefit. As a
result, the Fund's profits on the underlying securities transactions may
be reduced or overall losses incurred.
FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in currency exchange transactions to
protect against uncertainty in the level of future exchange rates in
connection with hedging and other non-speculative strategies involving
specific settlement transactions. The Fund will conduct its currency
exchange transactions either on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market, or through entering into
forward contracts to purchase or sell currencies. A forward currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which must be more than two days from the date
of the contract, at a price set at the time of the contract. Transaction
hedging is the purchase or sale of forward currency with respect to
specific receivables or payables of the Fund generally arising in
connection with the purchase or sale of its portfolio securities. These
contracts are entered into in the interbank market conducted directly
between currency traders (typically commercial banks or other financial
institutions) and their customers.
OPTIONS ON FOREIGN CURRENCY
The Fund may purchase and sell call and put options on foreign
currency for the purpose of hedging against changes in future currency
exchange rates. Call options convey the right to buy the underlying
currency at a price which is expected to be lower than the spot price of
the currency at the time the option expires. Put options convey the right
to sell the underlying currency at a price which is anticipated to be
higher than the spot prices of the currency at the time the option
expires. The Fund may use foreign currency options for the same purposes
that it could use currency forward and futures transactions as described
herein. See also "Call and Put Options on Specific Securities" above.
LENDING PORTFOLIO SECURITIES
From time to time, the Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. Such loans may not
exceed 33-1/3% of the value of the Fund's total assets. In connection
with such
Page 13
loans, the Fund will receive collateral consisting of cash,
U.S. Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. The Fund can increase its
income through the investment of such collateral. The Fund continues to
be entitled to payments in amounts equal to the interest, dividends or
other distributions payable on the loaned security and receives interest
on the amount of the loan. Such loans will be terminable at any time upon
specified notice. The Fund might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
FUTURE DEVELOPMENTS
The Fund may take advantage of opportunities in the area of
options and futures contracts and options on futures contracts and any
other derivative investments which are not presently contemplated for use
by the Fund or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Fund's investment objective and legally permissible for the Fund. Before
entering into such transactions or making any such investment, the Fund
will provide appropriate disclosure in its prospectus.
FORWARD COMMITMENTS
The Fund may purchase securities on a when-issued or forward
commitment basis, which means that delivery and payment take place a
number of days after the date of the commitment to purchase. The payment
obligation and the interest rate that will be received on a when-issued
security are fixed at the time the Fund enters into the commitment. The
Fund will make commitments to purchase such securities only with the
intention of actually acquiring the securities, but the Fund may sell
these securities before the settlement date if it is deemed advisable.
The Fund will not accrue income in respect of a security purchased on a
when-issued or forward commitment basis prior to its stated delivery
date.
Securities purchased on a when-issued or forward commitment
basis and certain other securities held in the Fund's portfolio are
subject to changes in value (both generally changing in the same way,
i.e., appreciating when interest rates decline and depreciating when
interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Securities purchased on a when-issued or forward
commitment basis may expose the Fund to risks because they may experience
such fluctuations prior to their actual delivery. Purchasing securities
on a when-issued or forward commitment basis can involve the additional
risk that the yield available in the market when the delivery takes place
actually may be higher than that obtained in the transaction itself. A
segregated account of the Fund consisting of cash, cash equivalents or
U.S. Government securities or other high quality liquid debt securities
at least equal at all times to the amount of the when-issued or forward
commitments will be established and maintained at the Fund's custodian
bank. Purchasing securities on a when-issued or forward commitment basis
when the Fund is fully or almost fully invested may result in greater
potential fluctuations in the value of the Fund's net assets and its net
asset value per share.
CERTAIN PORTFOLIO SECURITIES
SECURITIES OF EMERGING MARKETS ISSUERS
Emerging markets will include any countries (i) having an
"emerging stock market" as defined by the International Finance
Corporation; (ii) with low- to middle-income economies according to the
World Bank; or (iii) listed in World Bank publications as developing.
Currently, the countries not included in these categories are Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden,
Switzerland, the United Kingdom and the Unites States. Issuers whose
principal activities are in countries with emerging markets include
issuers: (1) organized under the laws of, (2) whose securities have their
primary trading market in, (3) deriving at least 50% of their revenues
Page 14
or profits from goods sold, investments made, or services performed in, or
(4) having at least 50% of their assets located in, a country with an
emerging market.
In emerging markets, the Fund may purchase debt securities
issued or guaranteed by foreign governments, including participations in
loans between foreign governments and financial institutions, and
interests in entities organized and operated for the purpose of
restructuring the investment characteristics of instruments issued or
guaranteed by foreign governments ("Sovereign Debt Obligations"). These
include Brady Bonds, Structured Securities and Loan Participations and
Assignments (as defined below).
BRADY BONDS. Brady Bonds are debt obligations created through
the exchange of existing commercial bank loans to foreign entities for
new obligations in connection with debt restructurings under a plan
introduced by former U.S. Secretary of the Treasury , Nicholas F.Brady.
Brady Bonds have been issued only relatively recently, and,
accordingly do not have a long payment history. They may be
collateralized or uncollateralized and issued in various currencies
(although most are U.S. dollar-denominated). They are actively traded in
the over-the-counter secondary market.
STRUCTURED SECURITIES. Structured Securities are interests in
entities organized and operated solely for the purpose of restructuring
the investment characteristics of Sovereign Debt Obligations. This type
of restructuring involves the deposit with or purchase by an entity, such
as a corporation or trust, of specified instruments (such as commercial
bank loans or Brady Bonds) and the issuance by that entity of one or more
classes of securities ("Structured Securities") backed by, or
representing interests in, the underlying instruments. The cash flow on
the underlying instruments may be apportioned among the newly-issued
Structured Securities to create securities with different investment
characteristics such as varying maturities, payment priorities and
interest rate provisions, and the extent of the payments made with
respect to Structured Securities is dependent on the extent of the cash
flow on the underlying instruments. Because Structured Securities of the
type in which the Fund anticipates it will invest typically involve no
credit enhancement, their credit risk generally will be equivalent to
that of the underlying instruments.
The Fund is permitted to invest in a class of Structured
Securities that is either subordinated or unsubordinated to the right of
payment of another class. Subordinated Structured Securities typically
have higher yields and present greater risks than unsubordinated
Structured Securities.
Certain issuers of Structured Securities may be deemed to be
"investment companies" as defined in the Investment Company Act of 1940.
As a result, the Fund's investment in these Structured Securities may be
limited by the restrictions contained in the Investment Company Act of
1940.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in
fixed and floating rate loans ("Loans") arranged through private
negotiations between an issuer of Sovereign Debt Obligations and one or
more financial institutions ("Lenders"). The Fund's investments in Loans
are expected in most instances to be in the form of participations in
Loans ("Participations") and assignments of all or a portion of Loans
("Assignments") from third parties. The government that is the borrower
on the Loan will be considered by the Fund to be the issuer of a
Participation or Assignment. The Fund's investment in Participations
typically will result in the Fund having a contractual relationship only
with the Lender and not with the borrower. The Fund will have the right
to receive payments of principal, interest and any fees to which it is
entitled only from the Lender selling the Participation and only upon
receipt by the Lender of the payments from the borrower. In connection
with purchasing Participations, the Fund generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement
relating to the Loan, nor any rights of set-off against the borrower, and
the Fund may not directly benefit from any collateral supporting the Loan
in which it has purchased the Participation. As a result, the Fund may be
subject to the credit risk of both the bor-
Page 15
rower and the Lender that is selling the Participation. In the event of
the insolvency of the Lender selling a Participation, the Fund may be
treated as a general creditor of the Lender and may not benefit from any
set-off between the Lender and the borrower. Certain Participations may be
structured in a manner designed to avoid purchasers of Participations
being subject to the credit risk of the Lender with respect to the
Participation, but even under such a structure, in the event of the
Lender's insolvency, the Lender's servicing of the Participation may be
delayed and the assignability of the Participation impaired. The Fund will
acquire Participations only if the Lender interpositioned between the
Fund and the borrower is a Lender having total assets of more than
$25 billion and whose senior unsecured debt is rated investment grade or
higher (i.e., Baa/BBB or higher).
CONVERTIBLE SECURITIES
A convertible security is a fixed-income security that may be
converted at either a stated price or stated rate into underlying shares
of common stock. Convertible securities have general characteristics
similar to both fixed-income and equity securities. Although to a lesser
extent than with fixed-income securities generally, the market value of
convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition,
because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the
underlying common stock, and therefore, also will react to variations in
the general market for equity securities. A unique feature of convertible
securities is that as the market price of the underlying common stock
declines, convertible securities tend to trade increasingly on a yield
basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying
common stock increases, the prices of the convertible securities tend to
rise as a reflection of the value of the underlying common stock. While
no securities investments are without risk, investments in convertible
securities generally entail less risk than investments in common stock of
the same issuer.
As fixed-income securities, convertible securities are
investments that provide for a stable stream of income with generally
higher yields than common stocks. Of course, like all fixed-income
securities, there can be no assurance of current income because the
issuers of the convertible securities may default on their obligations.
Convertible securities, however, generally offer lower interest or
dividend yields than non-convertible securities of similar quality
because of the potential for capital appreciation. A convertible
security, in addition to providing fixed income, offers the potential for
capital appreciation through the conversion feature, which enables the
holder to benefit from increases in the market price of the underlying
common stock. There can be no assurance of capital appreciation, however,
because securities prices fluctuate.
Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in
right of payment to all equity securities, and convertible preferred
stock is senior to common stock, of the same issuer. Because of the
subordination feature, however, convertible securities typically have
lower ratings than similar non-convertible securities.
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.
CLOSED-END INVESTMENT COMPANIES
The Fund may invest in securities issued by closed-end
investment companies which principally will invest in securities of
foreign issuers. Under the Investment Company Act of 1940, the Fund's
investment in such securities, with certain exceptions, currently is
limited to (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Fund's net assets with respect to any one
investment company and (iii) 10% of the Fund's net assets in the
aggregate.
Page 16
Investments in the securities of other investment companies
may involve duplication of advisory fees and certain other expenses.
ILLIQUID SECURITIES
The Fund may invest up to 15% of the value of its net assets
in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain options
traded in the over-the-counter market and securities used to cover such
options. As to these securities, the Fund is subject to a risk that
should the Fund desire to sell them when a ready buyer is not available
at a price the Fund deems representative of their value, the value of the
Fund's net assets could be adversely affected.
U.S. GOVERNMENT SECURITIES
Securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities include U.S. Treasury securities, which
differ in their interest rates, maturities and times of issuance.
Treasury Bills have initial maturities of one year or less; Treasury
Notes have initial maturities of one to ten years; and Treasury Bonds
generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks,
by the right of the issuer to borrow from the Treasury; others, such as
those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S.
Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law. The
Fund will invest in such securities only when it is satisfied that the
credit risk with respect to the issuer is minimal.
ZERO COUPON U.S. TREASURY SECURITIES
The Fund may invest in zero coupon U.S. Treasury securities,
which are Treasury Notes and Bonds that have been stripped of their
unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. The Fund also may invest in zero coupon securities issued by
financial institutions which constitute a proportionate ownership of the
issuer's pool of underlying U.S. Treasury securities. A zero coupon
security pays no interest to its holder during its life and is sold at a
discount to its face value at maturity. The amount of the discount
fluctuates with the market price of the security. The market prices of
zero coupon securities generally are more volatile than the market prices
of securities that pay interest periodically and are likely to respond to
a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
REPURCHASE AGREEMENTS
Repurchase agreements involve the acquisition by the Fund of
an underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price,
usually not more than one week after its purchase. Certain costs may be
incurred by the Fund in connection with the sale of the securities if the
seller does not repurchase them in accordance with the repurchase
agreement. In addition, if bankruptcy proceed-
Page 17
ings are commenced with respect to the seller of the securities,
realization on the securities by the Fund may be delayed or limited.
BANK OBLIGATIONS
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time (in no event longer
than seven days) at a stated interest rate.
Certificates of deposit are negotiable certificates evidencing
the obligation of a bank to repay funds deposited with it for a specified
period of time.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These and
other short-term instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The
other short-term obligations may include uninsured, direct obligations
bearing fixed, floating or variable interest rates.
COMMERCIAL PAPER
Commercial paper consists of short-term, unsecured promissory
notes issued to finance short-term credit needs.
CERTAIN FUNDAMENTAL POLICIES
The Fund may (i) borrow money to the extent permitted under
the Investment Company Act of 1940; (ii) pledge, mortgage and hypothecate
its assets, but only to secure permitted borrowings and to the extent
related to the deposit of assets in escrow in connection with portfolio
transactions; (iii) invest up to 5% of its total assets in the
obligations of any issuer, except that up to 25% of the value of the
Fund's total assets may be invested, and obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities may be
purchased, without regard to any such limitation; and (iv) invest up to
25% of its total assets in the securities of issuers in any industry,
provided that there shall be no such limitation on investments in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. This paragraph describes fundamental policies that
cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940) of the Fund's outstanding
voting shares. See "Investment Objective and Management Policies _
Investment Restrictions" in the Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICY
The Fund may invest up to 15% of the value of its net assets
in repurchase agreements providing for settlement in more than seven days
after notice and in other illiquid securities. See "Investment Objective
and Management Policies--Investment Restrictions" in the Statement of
Additional Information.
RISK FACTORS
CERTAIN INVESTMENT TECHNIQUES
The use of investment techniques such as short-selling,
engaging in financial futures and options and currency transactions,
leverage through borrowing, purchasing securities on a forward commitment
basis and lending portfolio securities and the purchase of Sovereign Debt
Obligations involves greater risk than that incurred by many other funds
with a similar objective. These risks are described above under
"Investment Techniques" and "Certain Portfolio Securities." In addition,
using these techniques may produce higher than normal portfolio turnover
and may affect the degree to which the Fund's net asset value fluctuates.
Higher portfolio turnover rates are likely to result in comparatively
greater brokerage commissions or transaction costs. Short-term gains
realized from portfolio transactions are taxable to shareholders as
ordinary income. See "Portfolio Transactions" in the Statement of
Additional Information.
The Fund's ability to engage in certain short-term
transactions may be limited by the requirement that, to qualify as
regulated investment company, it must earn less than 30% if its
Page 18
gross income from the disposition of securities held for less than three
months. This 30% test limits the extent to which the Fund may sell
securities held for less than three months, effect short sales of
securities held for less than three months, write options expiring in
less than three months and invest in certain futures contracts, among
other strategies. However, portfolio turnover will not otherwise be a
limiting factor in making investment decisions.
INVESTING IN FOREIGN SECURITIES
In making foreign investments, the Fund will give appropriate
consideration to the following factors, among others.
Foreign securities markets generally are not as developed or
efficient as those in the United States. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable
U.S. issuers. Similarly, volume and liquidity in most foreign securities
markets are less than in the United States and, at times, volatility of
price can be greater than in the United States. The issuers of some of
these securities, such as foreign bank obligations, may be subject to
less stringent or different regulation than are U.S. issuers. In
addition, there may be less publicly available information about a
non-U.S. issuer, and non-U.S. issuers generally are not subject to
uniform accounting and financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers.
Many countries providing investment opportunities for the Fund
have experienced substantial, and in some periods extremely high, rates
of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have adverse effects on the
economies and securities markets of certain of these countries. In an
attempt to control inflation, wage and price controls have been imposed
in certain countries.
Because stock certificates and other evidences of ownership of
such securities usually are held outside the United States, the Fund will
be subject to additional risks which include possible adverse political
and economic developments, possible seizure or nationalization of foreign
deposits and possible adoption of governmental restrictions which might
adversely affect the payment of principal and interest on the foreign
securities or might restrict the payment of principal and interest to
investors located outside the country of the issuer, whether from
currency blockage or otherwise. Custodial expenses for a portfolio of
non-U.S. securities generally are higher than for a portfolio of U.S.
securities.
By investing in Sovereign Debt Obligations, the Fund will be
exposed to the direct or indirect consequences of political, social and
economic changes in various countries. Political changes in a country may
affect the willingness of a foreign government to make or provide for
timely payments of its obligations. The country's economic status, as
reflected, among other things, in its inflation rate, the amount of its
external debt and its gross domestic product, will also affect the
government's ability to honor its obligations.
No established secondary markets may exist for many of the
Sovereign Debt Obligations in which the Fund may invest. Reduced
secondary market liquidity may have an adverse effect on the market price
and the Fund's ability to dispose of particular instruments when
necessary to meet its liquidity requirements or in response to specific
economic events such as a deterioration in the creditworthiness of the
issuer. Reduced secondary market liquidity for certain Sovereign Debt
Obligations also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing its portfolio. Market
quotations are generally available on many Sovereign Debt Obligations
only from a limited number of dealers and may not necessarily represent
firm bids of those dealers or prices for actual sales.
Since foreign securities often are purchased with and payable
in currencies of foreign countries, the value of these assets as measured
in U.S. dollars may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. Some currency exchange
costs may be incurred when the Fund changes investments from one country
to another.
Page 19
Furthermore, some of these securities may be subject to
brokerage taxes levied by foreign governments, which have the effect of
increasing the cost of such investment and reducing the realized gain or
increasing the realized loss on such securities at the time of sale.
Income received by the Fund from sources within foreign countries may be
reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States, however, may
reduce or eliminate such taxes. All such taxes paid by the Fund will
reduce its net income available for distribution to shareholders.
FOREIGN CURRENCY EXCHANGE
Currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply
and demand in the foreign exchange markets and the relative merits of
investments in different countries, actual or perceived changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably
by intervention by U.S. or foreign governments or central banks or the
failure to intervene or by currency controls or political developments in
the U.S. or abroad.
The foreign currency market offers less protection against
defaults in the forward trading of currencies than is available when
trading in currencies occurs on an exchange. Since a forward currency
contract is not guaranteed by an exchange or clearinghouse, a default on
the contract would deprive the Fund of unrealized profits or force the
Fund to cover its commitments for purchase or resale, if any, at the
current market price.
FOREIGN COMMODITY TRANSACTIONS
Unlike trading on domestic commodity exchanges, trading on
foreign commodity exchanges is not regulated by the CFTC and may be
subject to greater risks than trading on domestic exchanges. For example,
some foreign exchanges are principal markets so that no common clearing
facility exists and a trader may look only to the broker for performance
of the contract. In addition, unless the Fund hedges against fluctuations
in the exchange rate between the U.S. dollar and the currencies in which
trading is done on foreign exchanges, any profits that the Fund might
realize in trading could be eliminated by adverse changes in the exchange
rate, or the Fund could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not.
LOWER RATED SECURITIES
You should carefully consider the relative risks of investing
in the higher yielding (and, therefore, higher risk) debt securities in
which the Fund may invest without limitation when management believes
that such securities offer opportunities for capital growth. Management's
decision to invest in these securities is not subject to shareholder
approval. These are securities such as those rated Ba by Moody's
Investors Service, Inc. or BB by Standard & Poor's Corporation or as low
as the lowest rating assigned by Moody's Investors Service, Inc. or
Standard & Poor's Corporation. They generally are not meant for
short-term investing and may be subject to certain risks with respect to
the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. Obligations rated Ba by
Moody's Investors Service, Inc. are judged to have speculative elements;
their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Obligations rated BB by Standard & Poor's Corporation are regarded as
having predominantly speculative characteristics and, while such
obligations have less near-term vulnerability to default than other
speculative grade debt, they face major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payment.
Obligations rated C by Moody's Investors Service, Inc. are regarded as
having extremely poor prospects of ever attaining any real investment
standing. Obligations rated D by Standard &
Page 20
Poor's Corporation are in default and the payment of interest and/or
repayment of principal is in arrears. Such obligations, though high
yielding, are characterized by great risk. See "Appendix" in the
Statement of Additional Information for a general description of Moody's
Investors Service, Inc. and Standard & Poor's Corporation securities
ratings. The ratings of Moody's Investors Service, Inc. and Standard &
Poor's Corporation represent their opinions as to the quality of the
securities which they undertake to rate. It should be emphasized, however,
that ratings are relative and subjective and, although ratings may be
useful in evaluating the safety of interest and principal payments, they
do not evaluate the market value risk of these securities. Therefore,
although these ratings may be an initial criterion for selection of
portfolio investments, the Advisers also will evaluate these securities
and the ability of the issuers of such securities to pay interest and
principal. The Fund's ability to achieve its investment objective may be
more dependent on the Advisers' credit analysis than might be the case
for a fund that invested in higher rated securities. Once the rating of a
portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold
the security.
The market price and yield of debt securities rated Ba or
lower by Moody's Investors Service, Inc. and BB or lower by Standard &
Poor's Corporation are more volatile than those of higher rated
securities. Factors adversely affecting the market price and yield of
these securities will adversely affect the Fund's net asset value. In
addition, the retail secondary market for these securities may be less
liquid than that of higher rated securities; adverse market conditions
could make it difficult at times for the Fund to sell certain securities
or could result in lower prices than those used in calculating the Fund's
net asset value.
The market values of certain lower rated debt securities tend
to reflect individual corporate developments to a greater extent than do
higher rated securities, which react primarily to fluctuations in the
general level of interest rates, and tend to be more sensitive to
economic conditions than are higher rated securities. Companies that
issue such securities often are highly leveraged and may not have
available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally
is greater than is the case with higher rated securities.
The Fund may invest in lower rated zero coupon securities and
pay-in-kind bonds (bonds which pay interest through the issuance of
additional bonds), which involve special considerations. These securities
may be subject to greater fluctuations in value due to changes in
interest rates than interest-bearing securities and thus may be
considered more speculative than comparably rated interest-bearing
securities. See "Other Investment Considerations" below, and "Investment
Objective and Management Policies_Risk Factors_Lower Rated Securities"
and "Dividends, Distributions and Taxes" in the Statement of Additional
Information.
OTHER INVESTMENT CONSIDERATIONS
The Fund's net asset value is not fixed and should be expected
to fluctuate. You should purchase Fund shares only as a supplement to an
overall investment program and only if you are willing to undertake the
risks involved.
For the portion of the Fund's portfolio invested in equity
securities, investors should be aware that equity securities fluctuate in
value, often based on factors unrelated to the value of the issuer of the
securities, and that fluctuations can be pronounced. Changes in the value
of the Fund's portfolio securities, regardless of whether the securities
are equity or debt, will result in changes in the value of a Fund share
and thus the Fund's yield and total return to investors.
For the portion of the Fund's portfolio invested in debt
securities, investors should be aware that even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price
fluctuations. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuing
entities. See "Lower Rated Securities" above.
Page 21
Federal income tax law requires the holder of a zero coupon
security or of certain pay-in-kind bonds to accrue income with respect to
these securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, the Fund may be required to distribute such income
accrued with respect to these securities and may have to dispose of
portfolio securities under disadvantageous circumstances in order to
generate cash to satisfy these distribution requirements.
Investment decisions for the Fund are made independently from
those of the other investment companies or accounts advised by Dreyfus or
Comstock Partners. However, if such other investment companies or
accounts are prepared to invest in, or desire to dispose of, securities
of the type in which the Fund invests at the same time as the Fund,
available investments or opportunities for sales will be allocated
equitably to each. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
Dreyfus, located at 200 Park Avenue, New York, New York 10166,
was formed in 1947 and serves as the Fund's investment adviser. Dreyfus
is a wholly-owned subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As of
October 31, 1994, Dreyfus managed or administered approximately $73
billion in assets for more than 1.9 million investor accounts nationwide.
Dreyfus supervises and assists in the overall management of
the Fund's affairs under an Investment Advisory Agreement with the Fund,
subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
Mellon's principal wholly-owned subsidiaries are Mellon Bank, N.A.,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston
Company, Inc., AFCOCredit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed $201 billion in assets as of September
30, 1994, including $76 billion in mutual fund assets. As of September
30, 1994, Mellon, through various subsidiaries, provided non-investment
services, such as custodial and administration services, for
approximately $659 billion in assets including approximately $108 billion
in mutual fund assets.
Under the terms of the Investment Advisory Agreement, the Fund
has agreed to pay Dreyfus an annual fee, payable monthly, as set forth
below:
ANNUAL FEE AS A PERCENTAGE OF
AVERAGE NET ASSETS AVERAGE DAILY NET ASSETS
------------------ -----------------------------
0 up to $25 million................. .60 of 1%
$25 up to $75 million............... .50 of 1%
$75 up to $200 million.............. .45 of 1%
$200 up to $300 million............. .40 of 1%
In excess of $300 million........... .375 of 1%
For the fiscal year ended September 30, 1994, the Fund paid
Dreyfus a monthly investment advisory fee at the effective annual rate of
.42 of 1% of the value of the Fund's average daily net assets.
Dreyfus may pay the Fund's distributor for shareholder
services from Dreyfus' own assets, including past profits but not
including the investment advisory fee paid by the Fund. The
Page 22
Fund's distributor may use part or all of such payments to pay
Services Agents in respect of these services.
SUB-INVESTMENT ADVISER
Comstock Partners, a registered investment adviser located at
10 Exchange Place, Suite 2010, Jersey City, New Jersey 07302-3913, was
formed in 1986 and serves as the Fund's sub-investment adviser. As of
July 31, 1994, Comstock Partners managed approximately $1.1 billion in
assets for three investment companies and several discretionary accounts.
Comstock Partners, subject to the supervision and approval of
Dreyfus, provides investment advisory assistance and the day-to-day
management of the Fund's portfolio, as well as research and statistical
information under a Sub-Investment Advisory Agreement with the Fund,
subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. Investment decisions for the Fund are made
by the Investment Policy Committee of Comstock Partners and no person is
primarily responsible for making recommendations to that committee. See
"Management of the Fund" in the Fund's Statement of Additional
Information. Comstock Partners and Dreyfus also provide research services
for the Fund as well as for other funds advised by Comstock Partners or
Dreyfus through their respective professional staffs of portfolio
managers and securities analysts.
Stanley Salvigsen, Chairman of the Board and Chief Executive
Officer of Comstock Partners and Charles L. Minter, Vice Chairman and
Chief Operating Officer of Comstock Partners are portfolio managers of
the Fund. In the October 1986 issue of Institutional Investor, Mr.
Salvigsen was selected as the leading portfolio strategist during the
preceding 12-month period, as determined by a survey of the opinions of
research or investment managers at a selected group of large money
management organizations. Subsequent to 1986, Mr. Salvigsen has not been
evaluated in connection with this survey, which considers only
brokerage-firm analysts. Mr. Salvigsen's past performance, or opinions of
others as to the quality of such performance, is no guarantee of future
performance by the Fund.
Under the terms of the Sub-Investment Advisory Agreement, the
Fund has agreed to pay Comstock Partners an annual fee, payable monthly,
as set forth below:
ANNUAL FEE AS A PERCENTAGE OF
AVERAGE NET ASSETS AVERAGE DAILY NET ASSETS
---------------------- -----------------------------
0 up to $25 million................. .15 of 1%
$25 up to $75 million............... .25 of 1%
$75 up to $200 million.............. .30 of 1%
$200 up to $300 million............. .35 of 1%
In excess of $300 million........... .375 of 1%
For the fiscal year ended September 30, 1994, the Fund paid
Comstock Partners a monthly sub-investment advisory fee at the effective
annual rate of .33 of 1% of the value of the Fund's average daily net
assets.
EXPENSES
The aggregate fee paid to the Advisers is higher than that
paid by most other investment companies. From time to time, Dreyfus
and/or Comstock Partners may waive receipt of their fees and/or
voluntarily assume certain expenses of the Fund, which would have the
effect of lowering the overall expense ratio of the Fund and increasing
yield to investors at the time such amounts are waived or assumed, as the
case may be. The Fund will not pay Dreyfus or Comstock Partners at a
later time for any amounts which may be waived, nor will the Fund
reimburse Dreyfus and/or Comstock Partners for any amounts which may be
assumed.
DISTRIBUTOR
The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
Page 23
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN
The Shareholder Services Group, Inc., a subsidiary of First
Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is
the Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent").
The Bank of New York, 110 Washington Street, New York, New York 10286, is
the Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares can be purchased through the Distributor or
certain financial institutions (which may include banks), securities
dealers and other industry professionals (collectively, "Service Agents")
that have entered into agreements with the Distributor. Service Agents
may receive different levels of compensation for selling different
Classes of shares.
Management understands that some Service Agents may impose
certain conditions on their clients which are different from those
described in this Prospectus, and, to the extent permitted by applicable
regulatory authority, may charge their clients direct fees which would be
in addition to any amounts which might be received under the Shareholder
Services Plan. Each Service Agent has agreed to transmit to its clients a
schedule of such fees. You should consult your Service Agent in this
regard.
When purchasing Fund shares, you must specify whether the
purchase is for Class A or Class B shares. Stock certificates are issued
only upon your written request. No certificates are issued for fractional
shares. The Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are
a client of a Service Agent which has made an aggregate minimum initial
purchase for its customers of $2,500. Subsequent investments must be at
least $100. The initial investment must be accompanied by the Fund's
Account Application. For full-time or part-time employees of 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 account, the
minimum initial investment is $50. Full-time employees of Comstock
Partners may purchase Fund shares without regard to minimum initial
investment requirements. The Fund reserves the right to offer Fund shares
without regard to minimum purchase requirements to employees
participating in certain qualified or non-qualified employee benefit
plans or other programs where contributions or account information can be
transmitted in a manner and form acceptable to the Fund. The Fund
reserves the right to vary further the initial and subsequent investment
minimum requirements at any time.
You may purchase Fund shares by check or wire, or through the
Dreyfus TELETRANSFER Privilege described below. Checks should be made
payable to "The Dreyfus Family of Funds," or, if for Dreyfus retirement
plan accounts, to "The Dreyfus Trust Company, Custodian." Payments to
open new accounts which are mailed should be sent to The Dreyfus Family
of Funds, P.O. Box 9387, Providence, Rhode Island 02940-9387, together
with your Account Application indicating which Class of shares is being
purchased. For subsequent investments, your Fund account number should
appear on the check and an investment slip should be enclosed and sent to
The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105.
For Dreyfus retirement plan accounts, both initial and subsequent
investments should be sent to The Dreyfus Trust Company, Custodian, P.O.
Box 6427, Providence, Rhode Island 02940-6427. Neither additional nor
subsequent investments should be made by third party check. Purchase
orders may be delivered in person only to a Dreyfus Financial Center.
THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON
RECEIPT THEREBY. For the location of the nearest Dreyfus Financial
Center, please call one of the telephone numbers listed under "General
Information."
Page 24
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York,
DDA#8900119551/ Dreyfus Capital Value Fund _ Class A shares or
DDA#8900115181/ Dreyfus Capital Value Fund _ Class B shares, as the case
may be, for purchase of Fund shares in your name. The wire must include
your Fund account number (for new accounts, your Taxpayer Identification
Number ("TIN") should be included instead), account registration and
dealer number, if applicable. If your initial purchase of Fund shares is
by wire, please call 1-800-645-6561 after completing your wire payment to
obtain your Fund account number. Please include your Fund account number
on the Fund's Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the
Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be drawn only
on U.S. banks. A charge will be imposed if any check used for investment
in your account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through
compatible computer facilities.
Subsequent investments also may be made by electronic transfer
of funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct
the institution to transmit immediately available funds through the
Automated Clearing House to The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and your Fund account number PRECEDED BY THE DIGITS "1111."
Fund shares are sold on a continuous basis. Net asset value
per share is determined as of the close of trading on the floor of the
New York Stock Exchange (currently 4:00 p.m., New York time), on each day
the New York Stock Exchange is open for business. For purposes of
determining net asset value, options and futures contracts will be valued
15 minutes after the close of trading on the floor of the New York Stock
Exchange. Net asset value per share of each Class is computed by dividing
the value of the Fund's net assets represented by such Class (i.e., the
value of its assets less liabilities) by the total number of shares of
such Class outstanding. The Fund's investments are valued based on market
value, or where market quotations are not readily available, based on
fair value as determined in good faith by the Board of Directors. For
further information regarding the methods employed in valuing Fund
investments, see "Determination of Net Asset Value" in the Fund's
Statement of Additional Information.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the Fund's Account Application for further information
concerning this requirement. Failure to furnish a certified TIN to the
Fund could subject you to a $50 penalty imposed by the Internal Revenue
Service (the "IRS").
If an order is received by the Transfer Agent or other agent
by the close of trading on the floor of the New York Stock Exchange
(currently 4:00 p.m., New York time) on any business day, Fund shares
will be purchased at the public offering price determined as of such
close of trading on the floor of the New York Stock Exchange on that day.
Otherwise, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the New York Stock
Exchange on the next business day, except where shares are purchased
through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the New York Stock Exchange on any
business day and transmitted to the Distributor or its designee by the
close of its business day (normally 5:15 p.m., New York time) will be
based on the public offering price per share determined as of the close
of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the orders will be based on the next determined public
offering price. It is the dealers' responsibility to transmit orders so
that they will be received by the Distributor or its designee before the
close of its business day.
Page 25
CLASS A SHARES
The public offering price for Class A shares is the net asset
value per share of that Class plus a sales load as shown below:
<TABLE>
<CAPTION>
TOTAL SALES LOAD
---------------------------------------
AS A % OF AS A % OF DEALERS' REALLOWANCE
OFFERING PRICE NET ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
------------------------------ --------------- ----------------- ----------------
<S> <C> <C> <C>
Less than $50,000............... 4.50 4.70 4.25
$50,000 to less than $100,000... 4.00 4.20 3.75
$100,000 to less than $250,000... 3.00 3.10 2.75
$250,000 to less than $500,000... 2.50 2.60 2.25
$500,000 to less than $1,000,000... 2.00 2.00 1.75
$1,000,000 to less than $3,000,000... 1.00 1.00 1.00
$3,000,000 to less than $5,000,000... .50 .50 .50
$5,000,000 and over................... .25 .25 .25
</TABLE>
If you were an actual beneficial owner of Fund shares held in
a Fund account on April 16, 1987, you may purchase Class A shares for
that Fund account without a sales load.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
Fund shares) may purchase Class A shares for themselves directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children at net asset value, provided that they have
furnished the Distributor with such information it may request from time
to time in order to verify eligibility for this privilege. This privilege
also applies to full-time employees of financial institutions affiliated
with NASD member firms whose full-time employees are eligible to purchase
Class A shares at net asset value. In addition, Class A shares are
offered at net asset value to full-time employees of Comstock Partners
and full-time or part-time employees of Dreyfus or any of its affiliates
or subsidiaries, 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. Class A shares purchased in connection with the Dreyfus Managed
Portfolio program will be purchased at net asset value.
Class A shares will be offered at net asset value without a
sales load to employees participating in qualified or non-qualified
employee benefit plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have a minimum of
250 employees eligible for participation in such plans or programs or
(ii) such plan's or program's aggregate investment in the Dreyfus Family
of Funds or certain other products made available by the Distributor to
such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). Plan sponsors, administrators or trustees, as applicable, are
responsible for notifying the Distributor when the relevant requirement
is satisfied. The Distributor may pay dealers a fee of up to .5% of the
amount invested through such dealers in Class A shares at net asset value
by employees participating in Eligible Benefit Plans. All present
holdings of shares of funds in the Dreyfus Family of Funds by Eligible
Benefit Plans will be aggregated to determine the fee payable with
respect to each such purchase of Class A shares. The Distributor reserves
the right to cease paying these fees at any time. The Distributor will
pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Class A shares also may be purchased (including by exchange)
at net asset value without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified
retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided that, at
the time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) satisfied the requirements set forth
under either clause (i) or clause (ii) above and all or a portion of such
plan's assets were invested in funds in the Dreyfus Family of Funds or
certain other products
Page 26
made available by the Distributor to such plans,
or (b) had all of its assets invested in funds in the Dreyfus Family of
Funds or certain other products made available by the Distributor to such
plans which funds or other products were sold with a sales load.
For the period October 1, 1993 through August 24, 1994,
Dreyfus Service Corporation and for the period August 25, 1994 through
September 30, 1994, the Distributor retained $278,876.85 and $2,008.36,
respectively, from sales loads on Class A shares. The dealer reallowance
may be changed from time to time but will remain the same for all
dealers. The Distributor, at its expense, may provide additional
promotional incentives to dealers that sell shares of funds advised by
Dreyfus which are sold with a sales load, such as the Fund. In some
instances, these incentives may be offered only to certain dealers who
have sold or may sell significant amounts of shares. Dealers receive a
larger percentage of the sales load from the Distributor than they
receive for selling most other funds.
CLASS B SHARES
The public offering price for Class B shares is the net asset
value per share of that Class. No initial sales charge is imposed at the
time of purchase. A CDSC is imposed, however, on certain redemptions of
Class B shares as described under "How to Redeem Fund Shares." The
Distributor compensates certain Service Agents for selling Class B shares
at the time of purchase from the Distributor's own assets. The proceeds
of the CDSC and the distribution fee, in part, are used to defray these
expenses. For the period October 1, 1993 through August 24, 1994, Dreyfus
Service Corporation and for the period August 25, 1994 through September
30, 1994, the Distributor retained $278,877 and $2,008, respectively,
from the CDSC on Class B shares.
RIGHT OF ACCUMULATION -- CLASS A SHARES
Reduced sales loads apply to any purchase of Class A shares,
shares of certain other funds advised by Dreyfus which are sold with a
sales load or shares acquired by a previous exchange of shares purchased
with a sales load (hereinafter referred to as "Eligible Funds"), by you
and any related "purchaser" as defined in the Statement of Additional
Information, where the aggregate investment, including such purchase, is
$50,000 or more. If, for example, you previously purchased and still hold
Class A shares of the Fund, or of any other Eligible Fund or combination
thereof, with an aggregate current market value of $40,000 and
subsequently purchase Class A shares of the Fund or an Eligible Fund
having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of a purchase
you or your Service Agent must notify the Distributor if orders are made
by wire, or the Transfer Agent if orders are made by mail. The reduced
sales load is subject to confirmation of your holdings through a check of
appropriate records.
DREYFUS TELETRANSFER PRIVILEGE
You may purchase Fund shares (minimum $500, maximum $150,000
per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the bank account designated in one
of these documents and your Fund account. Only a bank account maintained
in a domestic financial institution which is an Automated Clearing House
member may be so designated. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you
may request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Page 27
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for Class A or Class B shares of
the Fund, shares of the same Class in certain other funds managed or
administered by Dreyfus, to the extent such shares are offered for sale
in your state of residence. These funds have different investment
objectives which may be of interest to you. If you desire to use this
service, you should consult your Service Agent or call 1-800-645-6561 to
determine if it is available and whether any conditions are imposed on
its use.
To request an exchange, you or your Service Agent acting on
your behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. Before any exchange, you must obtain and should
review a copy of the current prospectus of the fund into which the
exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of Personal Retirement Plans, the
shares being exchanged must have a current value of at least $500;
furthermore, when establishing a new account by exchange, the shares
being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
The ability to issue exchange instructions by telephone is given to all
fund shareholders automatically, unless you check the relevant "NO" box
on the Account Application, indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account or by a separate signed Shareholder Services Form, also available
by calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
See "How to Redeem Fund Shares_Procedures." Upon an exchange into a new
account, the following shareholder services and privileges, as applicable
and where available, will be automatically carried over to the fund into
which the exchange is made: Telephone Exchange Privilege, Dreyfus
TELETRANSFER Privilege and the dividend/capital gain distribution option
(except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B shares at the time of an exchange; however, Class B shares
acquired through an exchange will be subject on redemption to the higher
CDSC applicable to the exchanged or acquired shares. The CDSC applicable
on redemption of the acquired Class B shares will be calculated from the
date of the initial purchase of the Class B shares exchanged. If you are
exchanging Class A shares into a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which
reflect a reduced sales load, if the shares of the fund from which you
are exchanging were: (a) purchased with a sales load, (b) acquired by a
previous exchange from shares purchased with a sales load, or (c)
acquired through reinvestment of dividends or distributions paid with
respect to the foregoing categories of shares. To qualify, at the time of
an exchange you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your holdings through a check of appropriate records. See "Shareholder
Services" in the Statement of Additional Information. No fees currently
are charged shareholders directly in connection with exchanges, although
the Fund reserves the right, upon not less than 60 days' written notice,
to charge shareholders a nominal fee in accordance with rules promulgated
by the Securities and Exchange Commission. The Fund reserves the right to
reject any exchange request in whole or in part. The availability of Fund
exchanges may be modified or terminated at any time upon notice to
shareholders.
Page 28
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest
regularly (on a semimonthly, monthly, quarterly or annual basis), in
exchange for Class A or Class B shares of the Fund, in shares of the same
Class of certain other funds in the Dreyfus Family of Funds of which you
are currently an investor. The amount you designate, which can be
expressed either in terms of a specific dollar or share amount ($100
minimum), will be exchanged automatically on the first and/or fifteenth
of the month according to the schedule you have selected. Shares will be
exchanged at the then-current net asset value; however, a sales load may
be charged with respect to exchanges of Class A shares into funds sold
with a sales load. No CDSC will be imposed on Class B shares at the time
of an exchange; however, the Class B shares acquired through an exchange
will be subject on redemption to the higher CDSC applicable to the
exchanged shares or acquired shares. The CDSC applicable on redemption of
the acquired Class B shares will be calculated from the date of the
initial purchase of the Class B shares exchanged. See "Shareholder
Services" in the Statement of Additional Information. The right to
exercise this Privilege may be modified or cancelled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege
at any time by writing to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee
for the use of this Privilege. No such fee currently is contemplated. The
exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss. For more information concerning this Privilege and
the funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form,
please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-Automatic Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring
funds from the bank account designated by you. At your option, the bank
account designated by you will be debited in the specified amount, and
Fund shares will be purchased, once a month, on either the first or
fifteenth day, or twice a month, on both days. Only an account maintained
at a domestic financial institution which is an Automated Clearing House
member may be so designated. To establish a Dreyfus-Automatic Asset
Builder account, you must file an authorization form with the Transfer
Agent. You may obtain the necessary authorization form by calling
1-800-645-6561. You may cancel your participation in this Privilege or
change the amount of purchase at any time by mailing written notification
to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island
02940-9671, or, if for Dreyfus retirement plan accounts, to The Dreyfus
Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island
02940-6427, and the notification will be effective three business days
following receipt. The Fund may modify or terminate this Privilege at any
time or charge a service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. There is a service charge of 50cents for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by you, the
Fund or the Transfer Agent. Shares for which stock certificates have been
issued may not be redeemed through the Plan.
Page 29
Class B shares withdrawn pursuant to the Automatic Withdrawal
Plan will be subject to any applicable CDSC. Purchases of additional
Class A shares where the sales load is imposed concurrently with
withdrawals of Class A shares generally are undesirable. Any
correspondence with respect to the Automatic Withdrawal Plan should be
addressed to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671, or, if for Dreyfus retirement plan accounts, to
The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode
Island 02940-6427.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically
dividends or dividends and capital gain distributions, if any, paid by
the Fund in shares of the same Class of another fund in the Dreyfus
Family of Funds of which you are a shareholder. Shares of the other fund
will be purchased at the then-current net asset value; however, a sales
load may be charged with respect to investments in Class A shares of a
fund sold with a sales load. If you are investing in a fund that charges
a sales load, you may qualify for share prices which do not include the
sales load or which reflect a reduced sales load. If you are investing in
a fund or class that charges a CDSC, the shares purchased will be subject
on redemption to the CDSC, if any, applicable to the purchased shares.
See "Shareholder Services" in the Statement of Additional Information.
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.
For more information concerning these privileges and the funds
in The Dreyfus Family of Funds eligible to participate in this Privilege,
or to request a Dividend Options Form, please call toll free
1-800-645-6561. You may cancel these privileges by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671. To select a new fund after cancellation, you
must submit a new Dividend Options Form. Enrollment in or cancellation of
these privileges is effective three business days following receipt.
These privileges are available only for existing accounts and may not be
used to open new accounts. Minimum subsequent investments do not apply
for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement
plans are not eligible for this Privilege.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to
purchase Fund shares (minimum of $100 and maximum of $50,000 per
transaction) by having Federal salary, Social Security, or certain
veterans', military or other payments from the Federal government
automatically deposited into your Fund account. You may deposit as much
of such payments as you elect. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate
your participation by notifying in writing the appropriate Federal
agency. Further, the Fund may terminate your participation upon 30 days'
notice to you.
DREYFUS 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.
Your employer must complete the reverse side of the form and return it to
The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island
Page 30
02940-9671. You may obtain the necessary authorization form by calling
1-800-645-6561. You may change the amount of purchase or cancel the
authorization only by written notification to your employer. It is the
sole responsibility of your employer, not the Distributor, Dreyfus, the
Fund, the Transfer Agent or any other person, to arrange for transactions
under the Dreyfus Payroll Savings Plan. The Fund may modify or terminate
this Privilege at any time or charge a service fee. No such fee currently
is contemplated.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
LETTER OF INTENT -- CLASS A SHARES
By signing a Letter of Intent form, available by calling
1-800-645-6561, you become eligible for the reduced sales load applicable
to the total number of Eligible Fund shares purchased in a 13-month
period pursuant to the terms and under the conditions set forth in the
Letter of Intent. A minimum initial purchase of $5,000 is required. To
compute the applicable sales load, the offering price of shares you hold
(on the date of submission of the Letter of Intent) in any Eligible Fund
that may be used toward "Right of Accumulation" benefits described above
may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares held in escrow to realize
the difference. Signing a Letter of Intent does not bind you to purchase,
or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent.
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your Class A or Class B shares
at any time. Redemption requests should be transmitted to the Transfer
Agent as described below. When a request is received in proper form, the
Fund will redeem the shares at the next determined net asset value as
described below. If you hold Fund shares of more than one Class, any
request for redemption must specify the Class of shares being redeemed.
If you fail to specify the Class of shares to be redeemed or if you own
fewer shares of the Class than specified to be redeemed, the redemption
request may be delayed until the Transfer Agent receives further
instructions from you or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed directly through the Distributor. Service Agents
may charge a nominal fee for effecting redemptions of Fund shares. Any
certificates representing Fund shares being redeemed must be submit-
Page 31
ted with the redemption request. The value of the shares redeemed may
be more or less than their original cost, depending on the Fund's
then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY DREYFUS TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC
ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE
TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU
PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER
PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO
EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS
TO REDEEM SHARES PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A
PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE
PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE
DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED
BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE
IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY
REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES
A CDSC payable to the Distributor is imposed on any redemption
of Class B shares which reduces the current net asset value of your Class
B shares to an amount which is lower than the dollar amount of all
payments by you for the purchase of Class B shares of the Fund held by
you at the time of redemption. No CDSC will be imposed to the extent that
the net asset value of the Class B shares redeemed does not exceed (i)
the current net asset value of Class B shares acquired through
reinvestment of dividends or capital gain distributions, plus (ii)
increases in the net asset value of your Class B shares above the dollar
amount of all your payments for the purchase of Class B shares of the
Fund held by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has
declined below their original cost as a result of the Fund's performance,
a CDSC may be applied to the then-current net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
YEAR SINCE PURCHASE CDSC AS A % OF AMOUNT
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
------------------- --------------------------------
First............................... 4.00
Second.............................. 4.00
Third............................... 3.00
Fourth.............................. 3.00
Fifth............................... 2.00
Sixth............................... 1.00
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the
increase in net asset value of Class B shares above the total amount of
payments for the purchase of Class B shares made during the
Page 32
preceding six years; then of amounts representing the cost of shares
purchased six years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time
within the applicable six-year period.
For example, assume an investor purchased 100 shares at $10
per share for a cost of $1,000. Subsequently, the shareholder acquired 5
additional shares through dividend reinvestment. During the second year
after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value
had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4%
(the applicable rate in the second year after purchase) for a total CDSC
of $9.60.
WAIVER OF CDSC
The CDSC will be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code"),
of the shareholder, (b) redemptions by Eligible Benefit Plans, (c)
redemptions as a result of a combination of any investment company with
the Fund by merger, acquisition of assets or otherwise, (d) a
distribution following retirement under a tax-deferred retirement plan or
attaining age 70-1/2 in the case of an IRA or Keogh plan or custodial
account pursuant to section 403(b) of the Code and (e) redemptions by
such shareholders as the Securities and Exchange Commission or its staff
may permit. If the Directors of the Fund determine to discontinue the
waiver of the CDSC, the disclosure in the Fund's prospectus will be
revised appropriately. Any Fund shares subject to a CDSC which were
purchased prior to the termination of such waiver will have the CDSC
waived as provided in the Fund's prospectus at the time of the purchase
of such shares.
To qualify for a waiver of the CDSC, at the time of redemption
you must notify the Transfer Agent or your Service Agent must notify the
Distributor. Any such qualification is subject to confirmation of your
entitlement.
PROCEDURES
You may redeem shares by using the regular redemption
procedure through the Transfer Agent or through the Dreyfus TELETRANSFER
Privilege. Other redemption procedures may be in effect for investors who
effect transactions in Fund shares through Service Agents. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
Your redemption request may direct that the redemption
proceeds be used to purchase shares of other funds advised or
administered by Dreyfus that are not available through the Fund Exchanges
service. The applicable CDSC will be charged upon the redemption of Class
B shares. Your redemption proceeds will be invested in shares of the
other fund on the next business day. Before you make such a request, you
must obtain and should review a copy of the current prospectus of the
fund being purchased. Prospectuses may be obtained by calling
1-800-645-6561. The prospectus will contain information concerning
minimum investment requirements and other conditions that may apply to
your purchase.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the
Dreyfus TELETRANSFER Privilege or telephone exchange privilege (which is
granted automatically unless you refuse it), you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you, or a representative of your Service Agent,
and reasonably believed by the Transfer Agent to be genuine. The Fund
will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not fol-
Page 33
low such procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Fund
nor the Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a Dreyfus TELETRANSFER redemption or exchange of Fund shares. In
such cases, you should consider using the other redemption procedures
described herein. Use of these other redemption procedures may result in
your redemption request being processed at a later time than it would
have been if Dreyfus TELETRANSFER redemption had been used. During the
delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION
Under the regular redemption procedure, you may redeem your
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement
plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Written redemption requests must
specify the Class of shares being redeemed. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS
WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest Dreyfus Financial Center, please
call of one of the telephone numbers listed under "General Information."
Redemption requests must be signed by each shareholder, including each
owner of a joint account, and each signature must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
If you have any questions with respect to signature-guarantees, please
call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
DREYFUS TELETRANSFER PRIVILEGE
You may redeem Fund shares (minimum $500) by telephone if you
have checked the appropriate box and supplied the necessary information
on the Fund's Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred between
your Fund account and the bank account designated in one of these
documents. Only such an account maintained in a domestic financial
institution which is an Automated Clearing House member may be so
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of
the redemption request or, at your request, paid by check (maximum
$150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus
TELETRANSFER Privilege for transfer to their bank account not more than
$250,000 within any 30-day period. The Fund reserves the right to refuse
any request made by telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of
such requests. The Fund may modify or terminate this Privilege at any
time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you
may request a Dreyfus TELETRANSFER redemption of Fund shares by
telephoning 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. Shares of the Fund held under Keogh Plans, IRAs or other
Dreyfus retirement plans, and shares issued in certificate form, are not
eligible for this Privilege.
REINVESTMENT PRIVILEGE -- CLASS A
You may reinvest up to the number of Class A shares you have
redeemed, within 30 days of redemption, at the then-prevailing net asset
value without a sales load, or reinstate your
Page 34
account for the purpose of exercising the Exchange Privilege. The
Reinvestment Privilege may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class A and Class B shares are subject to a Shareholder
Services Plan and Class B shares only are subject to a Distribution Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, the Fund pays the Distributor
for distributing the Fund's Class B shares at an annual rate of .75 of 1%
of the value of the average daily net assets of Class B.
SHAREHOLDER SERVICES PLAN
Under the Shareholder Services Plan, the Fund pays the
Distributor for the provision of certain services to the holders of Class
A and Class B shares a fee at an annual rate of up to .25 of 1% of the
value of the average daily net assets of Class A and Class B. The
services provided may include providing 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 Service Agents in
respect of these services. The Distributor determines the amounts to be
paid to Service Agents. Each Service Agent is required to disclose to its
clients any compensation payable to it by the Fund pursuant to the
Shareholder Services Plan and any other compensation payable by their
clients in connection with the investment of their assets in Class A or
Class B shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from net investment income
and distributes net realized securities gains, if any, once a year, but
it may make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner
consistent with the provisions of the Investment Company Act of 1940. The
Fund will not make distributions from net realized securities gains
unless capital loss carryovers, if any, have been utilized or have
expired. You may choose whether to receive dividends and distributions in
cash or to reinvest in additional shares of the same class at net asset
value without a sales load. All expenses are accrued daily and are
deducted before the declaration of dividends. Dividends paid by each Class
will be calculated at the same time and in the same manner and will be of
the same amount, except that the expenses attributable solely to Class A
or Class B will be borne exclusively by such Class. Class B shares will
receive lower per share dividends than Class A shares because of the
higher expenses borne by Class B. See "Fee Table."
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund will be taxable to U.S.
shareholders as ordinary income whether received in cash or reinvested in
additional Fund shares. Distributions from net realized long-term
securities gains of the Fund will be taxable to U.S. shareholders as
long-term capital gains, regardless of how long shareholders have held
their Fund shares and whether such distributions are received in cash or
reinvested in additional Fund shares. The Code provides that the net
capital gain of an individual generally will not be subject to Federal
income tax at a rate in excess of 28%. Dividends, together with
distributions may be subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund to a foreign investor
generally are subject to U.S. nonresident withholding taxes at the rate
of 30%, unless the foreign investor claims the benefit of a lower rate
specified in a tax treaty. Distributions from net realized long-
Page 35
term securities gains paid by the Fund to a foreign investor as well as
the proceeds of any redemptions from a foreign investor's account,
regardless of the extent to which gain or loss may be realized, generally
will not be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during
the year.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares, if you exchange your Class A shares
for shares in another Dreyfus fund within 91 days after purchase and the
other Dreyfus fund reduces or eliminates its otherwise applicable load
charge for the purpose of the exchange. In this case, the amount of sales
load charged the investor for Class A shares, up to the amount of the
reduction of the sales load charged, on the exchange, is not included in
the basis of such investor's Class A shares for purposes of computing
gain or loss on the exchange, and instead is added to the basis of the
fund shares received in the exchange.
Federal regulations generally require the Fund to withhold and
remit to the U.S. Treasury 31%, of dividends, distributions from net
realized securities gains of the Fund and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to
backup withholding as a result of a failure to properly report taxable
dividend or interest income on a Federal income tax return. Furthermore,
the IRS may notify the Fund to institute backup withholding if the IRS
determines that a shareholder's TIN is incorrect or if a shareholder has
failed to properly report dividend and interest income on a Federal
income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified
for the fiscal year ended September 30, 1994 as a "regulated investment
company" under the Code. The Fund intends to continue to so qualify if
such qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income tax
to the extent its earnings are distributed in accordance with applicable
provisions of the Code. In addition, the Fund is subject to a
non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of
shares is calculated on the basis of average annual total return.
Advertisements also may include performance calculated on the basis of
total return. These total return figures reflect changes in the price of
the shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. Class A average annual total
return figures include the maximum initial sales charge and Class B
average annual total return figures include any applicable CDSC. These
figures also take into account any applicable service and distribution
fees. As a result, at any given time, the performance of Class B should
be expected to be lower than that of Class A. Performance for each Class
will be calculated separately.
Page 36
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the Fund was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to
the reinvestment of dividends and distributions during the period. The
return is expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value of the
investment at the end of the period. Advertisements of the Fund's
performance will include the average annual total return of Class A and
Class B for one, five and ten year periods, or for shorter time periods
depending upon the length of time during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
maximum offering price per share at the beginning of the period.
Advertisements may include the percentage rate of total return or may
include the value of a hypothetical investment at the end of the period
which assumes the application of the percentage rate of total return.
Total return also may be calculated by using the net asset value per
share at the beginning of the period instead of the maximum offering
price per share at the beginning of the period for Class A shares or
without giving effect to any applicable CDSC at the end of the period for
Class B shares. Calculations based on the net asset value per share do not
reflect the deduction of the applicable sales charge which, if reflected,
would reduce the performance quoted.
Performance will vary from time to time and past results are
not necessarily representative of future results. You should remember
that performance is a function of portfolio management in selecting the
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time to
time in advertising or marketing the Fund's shares, including data from
Lipper Analytical Services, Inc., Standard & Poor's 500 Composite Stock
Price Index, the Dow Jones Industrial Average, Morningstar, Inc. and
other industry publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on December 3,
1983, and commenced operations on October 10, 1985. On February 3, 1993,
the Fund, which is incorporated under the name Dreyfus Capital Value
Fund, Inc., began operating under the name Dreyfus Capital Value Fund (A
Premier Fund). The Fund is authorized to issue 200 million shares of
Common Stock, par value $.01 per share. The Fund's shares are classified
into two classes. Each share has one vote and shareholders will vote in
the aggregate and not by class except as otherwise required by law.
However, holders of Class A and Class B shares will be entitled to vote
on matters submitted to shareholders pertaining to the Shareholder
Services Plan and only holders of Class B shares will be entitled to vote
on matters submitted to shareholders pertaining to the Distribution Plan.
Unless otherwise required by the Investment Company Act of
1940, ordinarily it will not be necessary for the Fund to hold annual
meetings of shareholders. As a result, Fund shareholders may not consider
each year the election of Directors or the appointment of auditors.
However, pursuant to the Fund's By-Laws, the holders of at least 10% of
the shares outstanding and entitled to vote may require the Fund to hold
a special meeting of shareholders for purposes of removing a Director
from office and the holders of at least 25% of such shares may require
the Fund to hold a special meeting of shareholders for any other purpose.
Fund shareholders may remove a Director by the affirmative vote of a
majority of the Fund's outstanding voting shares. In addition, the Board
of Directors will call a meeting of shareholders
Page 37
for the purpose of electing Directors if, at any time, less than a
majority of the Directors then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by
calling toll free 1-800-645-6561. In New York City, call 1-718-895-1206;
on Long Island, call 794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 38
DREYFUS CAPITAL VALUE FUND (A PREMIER FUND)
CLASS A AND CLASS B SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 31, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Capital Value Fund (A Premier Fund) (the "Fund"), dated January
31, 1995, as it may be revised from time to time. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser. Comstock Partners, Inc. ("Comstock Partners") serves as the
Fund's sub-investment adviser. Dreyfus and Comstock Partners are referred
to collectively as the "Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . .B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . .B-13
Investment Advisory Agreements. . . . . . . . . . . . . . . .B-16
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . .B-18
Distribution Plan and Shareholder Services Plan . . . . . . .B-20
Redemption of Fund Shares . . . . . . . . . . . . . . . . . .B-21
Shareholder Services. . . . . . . . . . . . . . . . . . . . .B-22
Determination of Net Asset Value. . . . . . . . . . . . . . .B-25
Dividends, Distributions and Taxes. . . . . . . . . . . . . .B-26
Portfolio Transactions. . . . . . . . . . . . . . . . . . . .B-28
Performance Information . . . . . . . . . . . . . . . . . . .B-29
Information About the Fund. . . . . . . . . . . . . . . . . .B-30
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . .B-30
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . .B-32
Financial Statements. . . . . . . . . . . . . . . . . . . . .B-37
Report of Independent Auditors. . . . . . . . . . . . . . . .B-50
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
Portfolio Securities
Bank Obligations. Domestic commercial banks organized under Federal
law are supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to have their
deposits insured by the Federal Deposit Insurance Corporation (the "FDIC").
Domestic banks organized under state law are supervised and examined by
state banking authorities but are members of the Federal Reserve System
only if they elect to join. In addition, state banks whose certificates of
deposit ("CDs") may be purchased by the Fund are insured by the FDIC
(although such insurance may not be of material benefit to the Fund,
depending upon the principal amount of the CDs of each bank held by the
Fund) and are subject to Federal examination and to a substantial body of
Federal law and regulation. As a result of Federal or state laws and
regulations, domestic branches of domestic banks generally are required,
among other things, to maintain specified levels of reserves, are limited
in the amounts which they can loan to a single borrower and are subject to
other regulation designed to promote financial soundness. However, not all
such laws and regulations apply to foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of foreign
banks, such as CDs and time deposits ("TDs"), may be general obligations of
the parent banks in addition to the issuing branches, or may be limited by
the terms of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of domestic
banks. These risks include foreign economic and political developments,
foreign governmental restrictions that may adversely affect payment of
principal and interest on the obligations, foreign exchange controls and
foreign withholding and other taxes on interest income. Foreign branches
and subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as mandatory
reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a
foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent banks in addition to the issuing branches, or may
be limited by the terms of a specific obligation and by Federal or state
regulation as well as governmental action in the country in which the
foreign bank has its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which the branch
is located if the branch is licensed in that state. In addition, Federal
branches licensed by the Comptroller of the Currency and branches licensed
by certain states ("State Branches") may be required to: (1) pledge to the
regulator, by depositing assets with a designated bank within the state, a
certain percentage of their assets as fixed from time to time by the
appropriate regulatory authority; and (2) maintain assets within the state
in an amount equal to a specified percentage of the aggregate amount of
liabilities of the foreign bank payable at or through all of its agencies
or branches within the state. The deposits of Federal and State Branches
generally must be insured by the FDIC if such branches take deposits of
less than $100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, foreign subsidiaries
of domestic banks, foreign branches of foreign banks or domestic branches
of foreign banks, the Advisers carefully evaluate such investments on a
case-by-case basis.
The Fund may purchase CDs issued by banks, savings and loan
associations and similar institutions with less than $1 billion in assets,
the deposits of which are insured by the FDIC, provided the Fund purchases
any such CD in a principal amount of not more than $100,000, which amount
would be fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC. Interest payments on
such a CD are not insured by the FDIC. The Fund will not own more than one
such CD per such issuer.
Brady Bonds. Collateralized Brady Bonds may be fixed rate par bonds
or floating rate discount bonds, which are generally collateralized in full
as to principal due at maturity by U.S. Treasury zero coupon obligations
which have the same maturity as the Brady Bonds. Interest payments on
these Brady Bonds generally are collateralized by cash or securities in an
amount that, in the case of fixed rate bonds, is equal to at least one year
of rolling interest payments or, in the case of floating rate bonds,
initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at that time and is adjusted at regular
intervals thereafter. Certain Brady Bonds are entitled to "value recovery
payments" in certain circumstances, which in effect constitute supplemental
interest payments but generally are not collateralized. Brady Bonds are
often viewed as having three or four valuation components: (i) the
collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest
payments; and (iv) any uncollateralized repayment of principal at maturity
(these uncollateralized amounts constitute the "residual risk"). In the
event of a default with respect to Collateralized Brady Bonds as a result
of which the payment obligations of the issuer are accelerated, the U.S.
Treasury zero coupon obligations held as collateral for the payment of
principal will not be distributed to investors, nor will such obligations
be sold and the proceeds distributed. The collateral will be held by the
collateral agent to the scheduled maturity of the defaulted Brady Bonds,
which will continue to be outstanding, at which time the face amount of the
collateral will equal the principal payments which would have then been due
on the Brady Bonds in the normal course. In addition, in light of the
residual risk of Brady Bonds and, among other factors, the history of
defaults with respect to commercial bank loans by public and private
entities of countries issuing Brady Bonds, investments in Brady Bonds are
to be viewed as speculative.
Debt restructurings totalling more than $80 billion have been
implemented under the Brady Plan to date in Argentina, Bolivia, Costa Rica,
Mexico, Nigeria, the Philippines, Uruguay and Venezuela, with the largest
proportion of Brady Bonds having been issued to date by Argentina, Mexico
and Venezuela. Most Argentine and Mexican Brady Bonds and a significant
portion of the Venezuelan Brady Bonds issued to date are Collateralized
Brady Bonds with interest coupon payments collateralized on a rolling-
forward basis by funds or securities held in escrow by an agent for the
bondholders. Of the other issuers of Brady Bonds, Bolivia, Nigeria, the
Philippines and Uruguay have to date issued Collateralized Brady Bonds.
Brazil has announced plans to issue Brady Bonds in respect of approximately
$44 billion of bank debt.
Loan Participation and Assignments. When the Fund purchases
Assignments from Lenders it will acquire direct rights against the borrower
on the Loan (as such terms, and other capitalized terms used in this
paragraph, are defined in the Prospectus). Because Assignments are
arranged through private negotiations between potential assignees and
potential assignors, however, the rights and obligations acquired by the
Fund as the purchaser of an Assignment may differ from, and be more limited
than, those held by the assigning Lender. The assignability of certain
Sovereign Debt Obligations is restricted by the governing documentation as
to the nature of the assignee such that the only way in which the Fund may
acquire an interest in a Loan is through a Participation and not an
Assignment. The Fund may have difficulty disposing of Assignments and
Participations because to do so it will have to assign such securities to a
third party. Because there is no established secondary market for such
securities, the Fund anticipates that such securities could be sold only to
a limited number of institutional investors. The lack of an established
secondary market may have an adverse impact on the value of such securities
and the Fund's ability to dispose of particular Assignments or
Participations when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the borrower. The lack of an established secondary
market for Assignments and Participation also may make it more difficult
for the Fund to assign a value to these securities for purposes of valuing
the Fund's portfolio and calculating its net asset value. The Fund will
not invest more than 15% of the value of its net assets in Loan
Participation and Assignments that are illiquid, and in other illiquid
securities.
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities acquired
by the Fund under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be
loans by the Fund. In an attempt to reduce the risk of incurring a loss on
a repurchase agreement, the Fund will enter into repurchase agreements only
with domestic banks with total assets in excess of one billion dollars, or
primary government securities dealers reporting to the Federal Reserve Bank
of New York, with respect to securities of the type in which the Fund may
invest, and will require that additional securities be deposited with it if
the value of the securities purchased should decrease below the resale
price. The Advisers will monitor on an ongoing basis the value of the
collateral to assure that it always equals or exceeds the repurchase price.
The Fund will consider on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements.
Illiquid Securities. If a substantial market of qualified institutional
buyers develops pursuant to Rule 144A under the Securities Act of 1933,
as amended, for certain restricted securities held by the Fund, teh Fund
intends to treat such securities as liquid securities in accordance with
procedures approved by the Fubd's Board of Directors. Because it is not
possible to predict with assurance how the market for restricted securities
pursuant to Rule 144A will develop, the Fund's Board of Directors has directed
the Advisers to monitor carefully the Fund's investments in such securities
with particular regard to trading activity, availability of reliable price
inforamtion and other relevant information. To the extent taht for a period
of time, qualified institutional buyers cease purchasing restricted securities
pursuant to Rule 144A, the Fund's investing in such securities may have the
effect of increasing the level of illiquidity in the Fund's portfolio during
such period.
Investment Techniques
Option Transactions. The Fund may engage in options transactions,
such as purchasing or writing covered call or put options. The principal
reason for writing covered call options is to realize, through the receipt
of premiums, a greater return than would be realized on the Fund's
portfolio securities alone. In return for a premium, the writer of a
covered call option forfeits the right to any appreciation in the value of
the underlying security above the strike price for the life of the option
(or until a closing purchase transaction can be effected). Nevertheless,
the call writer retains the risk of a decline in the price of the
underlying security. Similarly, the principal reason for writing covered
put options is to realize income in the form of premiums. The writer of a
covered put option accepts the risk of a decline in the price of the
underlying security. The size of the premiums that the Fund may receive
may be adversely affected as new or existing institutions, including other
investment companies, engage in or increase their option-writing
activities.
Options written ordinarily will have expiration dates between one and
nine months from the date written. The exercise price of the options may
be below, equal to or above the market values of the underlying securities
at the time the options are written. In the case of call options, these
exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. The Fund may write (a) in-the-money call
options when the Advisers expect that the price of the underlying security
will remain stable or decline moderately during the option period, (b)
at-the-money call options when the Advisers expect that the price of the
underlying security will remain stable or advance moderately during the
option period and (c) out-of-the-money call options when the Advisers
expect that the premiums received from writing the call option plus the
appreciation in market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price,
the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put
options (the reverse of call options as to the relation of exercise price
to market price) may be utilized in the same market environments that such
call options are used in equivalent transactions.
So long as the Fund's obligation as the writer of an option continues,
the Fund may be assigned an exercise notice by the broker-dealer through
which the option was sold, requiring the Fund to deliver, in the case of a
call, or take delivery of, in the case of a put, the underlying security
against payment of the exercise price. This obligation terminates when the
option expires or the Fund effects a closing purchase transaction. The
Fund can no longer effect a closing purchase transaction with respect to an
option once it has been assigned an exercise notice.
An option position may be closed out only if a secondary market for an
option of the same series exists on a recognized national securities
exchange or in the over-the-counter market. Because of this fact and
current trading conditions, the Fund expects to purchase only call or put
options issued by the Options Clearing Corporation. The Fund expects to
write options on national securities exchanges and in the over-the-counter
market.
While it may choose to do otherwise, the Fund generally will purchase
or write only those options for which the Advisers believe there is an
active secondary market so as to facilitate closing transactions. There is
no assurance that sufficient trading interest to create a liquid secondary
market on a securities exchange will exist for any particular option or at
any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated
trading activity or order flow, or other unforeseen events, at times have
rendered certain clearing facilities inadequate and resulted in the
institution of special procedures, such as trading rotations, restrictions
on certain types of orders or trading halts or suspensions in one or more
options. There can be no assurance that similar events, or events that may
otherwise interfere with the timely execution of customers' orders, will
not recur. In such event, it might not be possible to effect closing
transactions in particular options. If as a covered call option writer the
Fund is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise or it
otherwise covers its position.
Stock Index Options. The Fund may purchase and write put and call
options on stock indexes listed on national securities exchanges or traded
in the over-the-counter market as an investment vehicle for the purpose of
realizing its investment objective or for the purpose of hedging its
portfolio. A stock index fluctuates with changes in the market values of
the stocks included in the index.
Options on stock indexes are similar to options on stock except that
(a) the expiration cycles of stock index options are monthly, while those
of stock options are currently quarterly, and (b) the delivery requirements
are different. Instead of giving the right to take or make delivery of
stock at a specified price, an option on a stock index gives the holder the
right to receive a cash "exercise settlement amount" equal to (i) the
amount, if any, by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing
value of the underlying index on the date of exercise, multiplied by (ii) a
fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the stock index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the option. The amount of cash received will be
equal to such difference between the closing price of the index and the
exercise price of the option expressed in dollars times a specified
multiple. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a
closing transaction on an exchange or it may let the option expire
unexercised.
Interest Rate Futures Contracts and Options on Interest Rate Futures
Contracts. Upon exercise of an option, the writer of the option will
deliver to the holder of the option the futures position and the
accumulated balance in the writer's futures margin account, which
represents the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract. The potential loss
related to the purchase of an option on interest rate futures contracts is
limited to the premium paid for the option (plus transaction costs).
Because the value of the option is fixed at the point of sale, there are no
daily cash payments to reflect changes in the value of the underlying
contract; however, the value of the option does change daily and that
change would be reflected in the net asset value of the Fund.
Foreign Currency Transactions. The Fund may not hedge with respect to
a particular currency to an extent greater than the aggregate market value
(at the time of making such sale) of the securities held in its portfolio
denominated or quoted in or currently convertible into that particular
currency. If the Fund enters into a hedging transaction, the Fund will
deposit with its custodian cash or readily marketable securities in a
segregated account of the Fund in an amount at least equal to the value of
the Fund's total assets committed to the consummation of the forward
contract. If the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the account so
that the value of the account will equal the amount of the Fund's
commitment with respect to the contract. Hedging transactions may be made
from any foreign currency into U.S. dollars or into other appropriate
currencies.
At or before the maturity of a forward contract, the Fund either may
sell a portfolio security and make delivery of the currency, or retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Fund will obtain, on the
same maturity date, the same amount of the currency which it is obligated
to deliver. If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or a loss to the extent that
movement has occurred in forward contract prices. Should forward prices
decline during the period between the Fund's entering into a forward
contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will realize
a gain to the extent the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The cost to the Fund of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because transactions in
currency exchange are usually conducted on a principal basis, no fees or
commissions are involved. The use of forward currency exchange contracts
does not eliminate fluctuations in the underlying prices of the securities,
but it does establish a rate of exchange that can be achieved in the
future.
If a devaluation is generally anticipated, the Fund may not be able to
contract to sell the currency at a price above the devaluation level it
anticipates. The requirements for qualification as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"),
may cause the Fund to restrict the degree to which it engages in currency
transactions. See "Dividends, Distributions and Taxes."
Unit Investment Trust Purchases. Under the Investment Company Act of
1940, as amended (the "Act"), the Fund's purchases of securities of unit
investment trusts are limited, subject to certain exceptions, to a maximum
of (i) 3% of the total outstanding voting stock of any one unit investment
trust, (ii) 5% of the value of the Fund's total assets with respect to the
purchase of the securities of any one unit investment trust and (iii) 10%
of the value of the Fund's total assets with respect to the Fund's
aggregate purchases of securities of unit investment trusts.
Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral. For
the purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities or irrevocable letters of credit issued by banks
whose securities meet the standards for investment by the Fund to be the
equivalent of cash. Such loans may not exceed 33 1/2% of the value of the
Fund's total assets. From time to time, the Fund may return to the
borrower or a third party which is unaffiliated with the Fund, and which is
acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(i) the Fund must receive at least 100% cash collateral from the borrower;
(ii) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (iii) the Fund
must be able to terminate the loan at any time; (iv) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; (v) the Fund may pay only reasonable custodian fees in
connection with the loan; and (vi) while voting rights on the loaned
securities may pass to the borrower, the Fund's Directors must terminate
the loan and regain the right to vote the securities if a material event
adversely affecting the investment occurs. These conditions may be subject
to future modification.
Risk Factors-Lower Rated Securities. The Fund is permitted to invest
in securities rated below Baa by Moody's Investors Service, Inc.
("Moody's") and below BBB by Standard & Poor's Corporation ("S&P"). Such
securities, though higher yielding, are characterized by risk. See
"Description of the Fund--Risk Factors--Lower Rated Securities" in the
Prospectus for a discussion of certain risks and "Appendix" for a general
description of Moody's and S&P ratings. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these securities. The Fund will rely on
the Advisers' judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Advisers will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, its operating history,
the quality of the issuer's management and regulatory matters. It also is
possible that a rating agency might not timely change the rating on a
particular issue to reflect subsequent events. Once the rating of a
security in the Fund's portfolio has been changed, the Advisers will
consider all circumstances deemed relevant in determining whether the Fund
should continue to hold the security.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities and will fluctuate over time. These securities are
considered by S&P and Moody's, on balance, as predominantly speculative
with respect to capacity to pay interest and repay principal in accordance
with the terms of the obligation and generally will involve more credit
risk than securities in the higher rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with higher rated
securities. For example, during an economic downturn or a sustained period
of rising interest rates, highly leveraged issuers of these securities may
experience financial stress. During such periods, such issuers may not
have sufficient revenues to meet their interest payment obligations. The
issuer's ability to service its debt obligations also may be affected
adversely by specific corporate developments or the issuer's inability to
meet specific projected business forecasts, or the unavailability of
additional financing. The risk of loss because of default by the issuer is
significantly greater for the holders of these securities because such
securities generally are unsecured and often are subordinated to other
creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Advisers anticipate that such securities could be
sold only to a limited number of dealers or institutional investors. To
the extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's portfolio and
calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic
downturns. It is likely that any economic recession could disrupt severely
the market for such securities and may have an adverse impact on the value
of such securities. In addition, it is likely that any such economic
downturn could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon and increase the
incidence for default for such securities.
The Fund may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues. The
Fund has no arrangement with the Distributor or any other persons
concerning the acquisition of such securities, and the Advisers will review
carefully the credit and other characteristics pertinent to such new
issues.
Lower rated zero coupon securities and pay-in-kind bonds, in which the
Fund may invest up to 5% of its total assets, involve special
considerations. Such zero coupon securities, pay-in-kind or delayed
interest bonds carry an additional risk in that, unlike bonds which pay
interest throughout the period to maturity, the Fund will realize no cash
until the cash payment date unless a portion of such securities are sold
and, if the issuer defaults, the Fund may obtain no return at all on its
investment. See "Dividends, Distributions and Taxes."
Investing in Sovereign Debt Obligations of Emerging Market Countries.
Investing in Sovereign Debt Obligations involves economic and political
risks. The Sovereign Debt Obligations in which the Fund will invest in
most cases pertain to countries that are among the world's largest debtors
to commercial banks, foreign governments, international financial
organizations and other financial institutions. In recent years, the
governments of some of these countries have encountered difficulties in
servicing their external debt obligations, which led to defaults on certain
obligations and the restructuring of certain indebtedness. Restructuring
arrangements have included, among other things, reducing and rescheduling
interest and principal payments by negotiating new or amended credit
agreements or converting outstanding principal and unpaid interest to Brady
Bonds, and obtaining new credit to finance interest payments. Certain
governments have not been able to make payments of interest on or principal
of Sovereign Debt Obligations as those payments have come due. Obligations
arising from past restructuring agreements may affect the economic
performance and political and social stability of those issuers. The
ability of governments to make timely payments on their obligations is
likely to be influenced strongly by the issuer's balance of payments,
including export performance, and its access to international credits and
investments. A country whose exports are concentrated in a few commodities
could be vulnerable to a decline in the international prices of one or more
of those commodities. Increased protectionism on the part of a country's
trading partners also could adversely affect the country's exports and
diminish its trade account surplus, if any. To the extent that a country
receives payment for its exports in currencies other than dollars, its
ability to make debt payments denominated in dollars could be adversely
affected.
To the extent that a country develops a trade deficit, it will need to
depend on continuing loans from foreign governments, multilateral
organizations or private commercial banks, aid payments from foreign
governments and on inflows of foreign investment. The access of a country
to these forms of external funding may not be certain, and a withdrawal of
external funding could adversely affect the capacity of a government to
make payments on its obligations. In addition, the cost of servicing debt
obligations can be affected by a change in international interest rates
since the majority of these obligations carry interest rates that are
adjusted periodically based upon international rates.
Central banks and other governmental authorities which control the
servicing of Sovereign Debt Obligations may not be willing or able to
permit the payment of the principal or interest when due in accordance with
the terms of the obligations. As a result, the issuers of Sovereign Debt
Obligations may default on their obligations. Defaults on certain
Sovereign Debt Obligations have occurred in the past. Holders of certain
Sovereign Debt Obligations may be requested to participate in the
restructuring and rescheduling of these obligations and to extend further
loans to the issuers. There interests of holders of Sovereign Debt
Obligations could be adversely affected in the course of restructuring
arrangements or by certain other factors referred to below. Furthermore,
some of the participants in the secondary market for Sovereign Debt
Obligations also may be directly involved in negotiating the terms of these
arrangements and, therefore, may have access to information not available
to other market participants.
The Fund is permitted to invest in Sovereign Debt Obligations that are
not current in the payment of interest or principal or are in default, so
long as the Advisers believe it to be consistent with the Fund's investment
objectives. The Fund may have limited legal recourse in the event of a
default with respect to certain Sovereign Debt Obligations it holds.
Bankruptcy, moratorium and other similar laws applicable to issuers of
Sovereign Debt Obligations may be substantially different from those
applicable to issuers of private debt obligations. The political context,
expressed as the willingness of an issuer of Sovereign Debt Obligations to
meet the terms of the debt obligation, for example, is of considerable
importance. In addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of securities
issued by foreign governments in the event of default under commercial bank
loan agreements.
Another factor bearing on the ability of a country to repay Sovereign
Debt Obligations is the level of the country's international reserves.
Fluctuations in the level of these reserves can affect the amount of
foreign exchange readily available for external debt payments and, thus,
could have a bearing on the capacity of the country to make payments on its
Sovereign Debt Obligations.
Expropriation, confiscatory taxation, nationalization, political,
economic or social instability or other similar developments, such as
military coups, have occurred in the past in countries in which the Fund
will invest and could adversely affect the Fund's assets should these
conditions or events recur.
Foreign investment in certain Sovereign Debt Obligations is restricted
or controlled to varying degrees. These restrictions or controls at times
may limit or preclude foreign investment in certain Sovereign Debt
Obligations and increase the costs and expenses of the Fund. Certain
countries in which the Fund will invest require governmental approval prior
to investments by foreign persons, limit the amount of investment by
foreign persons in a particular issuer, limit the investment by foreign
persons only to a specific class of securities of an issuer that may have
less advantageous rights than the classes available for purchase by
domiciliaries of the countries and/or impose additional taxes on foreign
investors.
In addition, if a deterioration occurs in a country's balance of
payments, the country could impose temporary restrictions on foreign
capital remittances. The Fund could be adversely affected by delays in, or
a refusal to grant, any required governmental approval for repatriation of
capital, as well as by the application to the Fund of any restrictions on
investments. Investing in local markets may require the Fund to adopt
special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to the Fund.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 16 as
fundamental policies. These restrictions cannot be changed without
approval by the holders of a majority (as defined in the Act) of the Fund's
outstanding voting shares. Investment restriction number 17 is not a
fundamental policy and may be changed by a vote by a majority of the
Directors at any time. The Fund may not:
1. Purchase the securities of any issuer (other than a bank) if such
purchase would cause more than 5% of the value of its total assets to be
invested in securities of such issuer, or invest more than 15% of its
assets in the obligations of any one bank, 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 such limitations.
2. Purchase the securities of any issuer if such purchase would
cause the Fund to hold more than 10% of the outstanding voting securities
of such issuer. This restriction applies only with respect to 75% of the
Fund's assets.
3. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.
4. Purchase securities of closed-end investment companies except (a)
in the open market where no commission except the ordinary broker's
commission is paid, which purchases are limited to a maximum of (i) 3% of
the total voting stock of any one closed-end investment company, (ii) 5% of
its net assets with respect to any one closed-end investment company and
(iii) 10% of its net assets in the aggregate, or (b) those received as part
of a merger or consolidation. The Fund may not purchase or retain securities
issued by open-end investment companies other than itself.
5. Purchase or retain the securities of any issuer if the officers
or Directors of the Fund, Dreyfus or Comstock Partners who individually 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 issuer.
6. Invest in commodities, except that the Fund may purchase or sell
futures contracts, including those relating to indexes, and options on
futures contract or indexes, or purchase, hold or deal in real estate, but
this shall not prohibit the Fund from investing in securities of companies
engaged in real estate activities or investments.
7. Borrow money except to the extent permitted under the Act. For
purposes of this investment restriction, the entry into options futures
contracts, including those relating to indexes, and options on futures
contracts or indexes shall not constitute borrowing.
8. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with portfolio transactions, such
as in connection with writing covered options and the purchase of
securities on a when-issued or delayed-delivery basis and collateral and
initial or variation margin arrangements with respect to options, futures
contracts, including those relating to indexes, and options on futures
contracts or indexes, or in connection with the purchase of any securities
on margin for purposes of Investment Restriction No. 12.
9. Make loans to others, except through the purchase of debt
obligations or the entry into repurchase agreements. However, the Fund may
lend its portfolio securities in any amount not to exceed 33 1/2% of the value
of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of Directors.
10. 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.
11. 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.
12. Purchase securities on margin, but the Fund may obtain such
short-term credit as may be necessary for the clearance of purchases and
sales of securities.
13. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and this Statement of
Additional Information.
14. Invest more than 25% of its assets in investments in any
particular industry or industries, provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
15. Purchase warrants in excess of 2% of net assets. For purposes of
this restriction, such warrants shall be valued at the lower of cost or
market, except that warrants acquired by the Fund in units or attached to
securities shall not be included within this 2% restriction.
16. Invest in interests in oil, gas or mineral exploration or
development programs.
17. 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 that 15% of the value of the Fund's net assets would
be so invested.
If a percentage restriction is adhered to at the time an investment is
made, a later increase 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
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors of the Fund
*DAVID W. BURKE, Director. Consultant to Dreyfus since August 1994. From
October 1990 to August 1994, Vice President and Chief Administrative
Officer of Dreyfus. From 1977 to 1990, Mr. Burke was involved in the
management of national television news, as Vice President and
Executive Vice President of ABC News, and subsequently as President of
CBS News. His address is 200 Park Avenue, New York, New York 10166.
HODDING CARTER, III, Director. President of MainStreet, a television
production company. Since 1991, a syndicated columnist for United
Media Syndicate-NEA. From 1985 to 1986, he was editor and chief
correspondent of "Capitol Journal," a weekly Public Broadcasting
System ("PBS") series on Congress. From 1981 to 1984, he was
anchorman and chief correspondent for PBS' "Inside Story," a regularly
scheduled half-hour critique of press performance. From 1977 to July
1980, Mr. Carter served as Assistant Secretary of State for Public
Affairs and as Department of State spokesman. His address is
MainStreet, 918 Sixteenth Street, N.W., Washington, D.C. 20006.
EHUD HOUMINER, Director. Since July 1991, Professor and Executive-in
Residence at the Columbia Business School, Columbia University and,
since February 1992, a Consultant to Bear, Stearns & Co. Inc.,
investment bankers. He was President and Chief Executive Officer of
Philip Morris USA, manufacturers of consumer products, from December
1988 until September 1990. He also is a Director of Avnet Inc. His
address is c/o Columbia Business School, Columbia University, Uris
Hall, Room 526, New York, New York 10027.
RICHARD C. LEONE, Director. President of The Twentieth Century Fund, a tax
exempt research foundation engaged in economic, political and social
policy studies. Since April 1990, Chairman, and since April 1988, a
Commissioner of The Port Authority of New York and New Jersey. A
member in 1985, and from January 1986 to January 1989, Managing
Director of Dillon, Read & Co. Inc. and from May 1982 to December
1984, President of Atlantic Inc., a wholly-owned subsidiary of Amerada
Hess Corporation. Mr. Leone is also a director of Resource Mortgage
Capital, Inc. His address is 41 East 70th Street, New York, New York
10021.
HANS C. MAUTNER, Director. Chairman, Trustee and Chief Executive Officer
of Corporate Property Investors, a real estate investment company.
Since January 1986, a Director of Julius Baer Investment Management,
Inc., a wholly-owned subsidiary of Julius Baer Securities, Inc. His
address is 305 East 47th Street, New York, New York 10017.
JOHN E. ZUCCOTTI, Director. President and Chief Executive Officer of
Olympia & York Companies (U.S.A.), and a member of its Board of
Directors since the inception of a Board on July 27, 1993. From 1986
to 1990, he was a partner in the law firm of Brown & Wood and from
1978 to 1986, a partner in the law firm of Tufo & Zuccotti. First
Deputy Mayor of the City of New York from December 1975 to June 1977,
and Chairman of the City Planning Commission for the City of New York
from 1973 to 1975. Mr. Zuccotti is also a Director of Empire Blue
Cross & Blue Shield, Catellus Development Corporation a real estate
development corporation, and Starrett Housing, a construction
development and management of real estate corporation. His address is
237 Park Avenue, New York, New York 10017.
The Fund's "non-interested" Directors are also directors of Dreyfus
Insured Municipal Bond Fund, Inc., Dreyfus Municipal Bond Fund, Inc.,
Dreyfus Municipal Money Market Fund, Inc., Dreyfus New Leaders Fund, Inc.,
Dreyfus Strategic Municipal Bond Fund, Inc. and Dreyfus Strategic
Municipals, Inc., and trustees of Dreyfus California Tax Exempt Money
Market Fund. Mr. Houminer is also a director of Dreyfus Focus Funds, Inc.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Directors of the Fund who are not "interested persons" of the Fund, as
defined in the Act, will be selected and nominated by the Directors who are
not "interested persons" of the Fund.
The Fund does not pay any remuneration to its officers and Directors
other than fees and expenses to Directors who are not "interested persons"
(as defined in the Act) of the Fund, which totalled $36,866 for the fiscal
year ended September 30, 1994 for all such Directors as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From December 1991 to
July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., a wholly-owned subsidiary of The Boston Company,
Inc. Prior to December 1991, she served as Vice President and
Controller, and later as Senior Vice President, of The Boston Company
Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From February 1992 to July
1994, he served as Counsel for The Boston Company Advisors, Inc. From
August 1990 to February 1992, he was employed as an Associate at Ropes &
Gray, and prior to August 1990, he was employed as an Associate at
Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of
Springs Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From September 1992 to
August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System.
JOSEPH S. TOWER,III, Assistant Treasurer. Senior Vice President, Treasurer
and Chief Financial Officer of the Distributor and an officer of other
investment companies advised or administered by Dreyfus. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the Distributor and
an officer of other investment companies advised or administered by
Dreyfus. From 1984 to July 1994, he was Assistant Vice President in
the Mutual Fund Accounting Department of Dreyfus.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From January 1992 to July 1994, he was a
Senior Legal Product Manager and from January 1990 to January 1992, he
was mutual fund accountant for The Boston Company Advisors, Inc.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From March 1992 to July 1994, she was a
Compliance Officer for The Manager Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
The address of all officers of the Fund is 200 Park Avenue, New York,
New York 10166.
As of November 16, 1994: Merrill Lynch Pierce Fenner & Smith Inc. was
the owner of 31.10% of the Fund's outstanding Class A shares and 38.6% of
the Fund's outstanding Class B shares and is deemed to be a "control
person" as defined in the Act.
Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of common stock outstanding on November 16, 1994.
INVESTMENT ADVISORY AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Investment Advisory Agreement. Dreyfus provides investment advisory
services pursuant to the Investment Advisory Agreement (the "Agreement")
dated August 24, 1994, as amended, between Dreyfus and the Fund, which is
subject to annual approval by (i) the Fund's Board of Directors or (ii)
vote of a majority (as defined in the Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Directors who are not "interested persons"
(as defined in the Act) of the Fund or Dreyfus, by vote cast in person at a
meeting called for the purpose of voting such approval. Shareholders last
approved the Agreement on August 4, 1994. The Board of Directors,
including a majority of the Directors who are not "interested persons" of
any party to the Agreement, last approved the Agreement at a meeting held
on October 24, 1994. The Agreement is terminable without penalty, on 60
days' notice, by the Fund's Board of Directors or by vote of the holders of
a majority of the Fund's outstanding voting shares, or, upon not less than
90 days' notice, by Dreyfus. The Agreement will terminate automatically in
the event of its assignment (as defined in the Act).
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.
As compensation for Dreyfus' services to the Fund, the Fund pays
Dreyfus a monthly investment advisory fee at the annual rate as set forth
in the Fund's Prospectus. The investment advisory fee paid for the fiscal
years ended September 30, 1992, 1993 and 1994 amounted to $2,642,560,
$1,922,869 and $2,118,758, respectively.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; Julian M.
Smerling, Vice Chairman of the Board; Joseph S. DiMartino, President and a
director; W. Keith Smith, Chief Operating Officer and a director; Paul H.
Snyder, Vice President and Chief Financial Officer; Daniel C. Maclean, Vice
President and General Counsel; Barbara E. Casey, Vice President--Retirement
Services; Robert F. Dubuss, Vice President; Henry D. Gottmann, Vice
President--Retail; Elie M. Genadry, Vice President--Wholesale; Mark N.
Jacobs, Vice President--Fund Legal and Compliance and Secretary; Jeffrey N.
Nachman, Vice President--Mutual Fund Accounting; Diane Coffey, Vice President-
- -Corporate Communications; Jay DeMartine, Vice President--Marketing; Lawrence
S. Kash, Vice Chairman--Distribution; Philip L. Toia, Vice Chairman--
Operations and Administration; Katherine C. Wickham, Vice President--Human
Resources;
Maurice Bendrihem, Controller; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and David B. Truman, directors.
Sub-Investment Advisory Agreement. The Sub-Investment Advisory
Agreement dated April 28, 1987, as amended, between the Fund and Comstock
Partners is subject to annual approval by (i) the Fund's Board of Directors
or (ii) vote of a majority (as defined in the Act) of the Fund's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Directors who are not
"interested persons" (as defined in the Act) of the Fund or Comstock
Partners, by vote cast in person at a meeting called for the purpose of
voting on such approval. Shareholders last approved the Sub-Investment
Advisory Agreement on September 11, 1992. The Board of Directors,
including a majority of the Directors who are not "interested persons" of
any party to the Sub-Investment Advisory Agreement, last approved the
Sub-Investment Advisory Agreement at a meeting held on October 24, 1994.
The Sub-Investment Advisory Agreement is terminable without penalty, on not
more than 60 days' notice, by the Fund's Board of Directors 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 Comstock Partners. The Sub-Investment
Advisory Agreement will terminate automatically in the event of its
assignment (as defined in the Act).
As compensation for Comstock Partners' services to the Fund, the Fund
pays Comstock Partners a monthly sub-investment advisory fee at an annual
rate as set forth in the Fund's Prospectus. The sub-investment advisory
fee paid for the fiscal years ended September 30, 1992, 1993 and 1994
amounted to $2,167,560, $1,447,869 and $1,643,758, respectively.
The following persons are the principals of Comstock Partners:
Stanley D. Salvigsen, Chairman of the Board and Chief Executive Officer;
Charles L. Minter, Vice Chairman of the Board and Chief Operating Officer;
and Edward A. Leskowicz, Jr., Vice President, Treasurer and Chief Financial
Officer.
Comstock Partners 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 of Directors. Dreyfus and Comstock Partners provide the Fund with
Portfolio managers who are authorized by the Board of Directors to execute
purchases and sales of securities. The Fund's Portfolio managers are
Thomas A. Frank, Charles L. Minter, Elaine Rees, Stanley D. Salvigsen,
Richard C. Shields and Howard Stein. Dreyfus also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for the Fund as well as for other
funds advised by Dreyfus. All purchases and sales are reported for the
Directors' review at the meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Advisers. The
expenses borne by the Fund include: taxes, interest, loan commitment fees,
dividends and interest paid on securities sold short, brokerage fees and
commissions, if any, fees of certain Directors, Comstock Partners or any of
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 maintaining
corporate existence, costs of independent pricing services, costs attributable
to investor services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and corporate meetings and any
extraordinary expenses. Class A and Class B shares are subject to an annual
service fee for ongoing personal services relating to shareholder accounts and
services related to the maintenance of shareholder accounts. In addition,
Class B shares are subject to an annual distribution fee for advertising,
marketing and distributing Class B shares pursuant to a distribution plan
adopted in accordance with Rule 12b-1 under the Act. See "Distribution Plan
and Shareholder Services Plan".
The Advisers have agreed that if, in any fiscal year, the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest and (with the
prior written consent of the necessary state securities commissions)
extraordinary expenses, but including the investment advisory and
sub-investment advisory fees, exceed the expense limitation of any state
having jurisdiction over the Fund, the Fund may deduct from the fees to be
paid to the Advisers, or the Advisers will bear, such excess expense to the
extent required by state law. For each fiscal year of the Fund, the
Advisers will each pay or bear such excess equally to the extent of .15 of
1% or $37,500, whichever is less, and Dreyfus will pay or bear the
remainder. 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.
During the fiscal year ended September 30, 1994, no expense reimbursement
was required pursuant to such limitation.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 A.M. and 4:00 P.M., New York time, on
any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open. Such purchases will be credited to the
shareholder's Fund account on the next bank business day. To qualify to
use the 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 "Redemption of Fund
Shares--Dreyfus TeleTransfer Privilege."
Sales Loads--Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) although more than one beneficiary is involved; or a group of
accounts established by or on behalf of the employees of an employer or
affiliated employers pursuant to an employee benefit plan or other program
(including accounts established pursuant to Sections 403(b), 408(k), and
457 of the Code); or an organized group which has been in existence for
more than six months, provided that it is not organized for the purpose of
buying redeemable securities of a registered investment company and
provided that the purchases are made through a central administration or a
single dealer, or by other means which result in economy of sales effort or
expense.
Offering Prices
Based upon the Fund's net asset value at the close of business on
September 30, 1994 the maximum offering price of the Fund's shares would
have been as follows:
Class A Shares:
NET ASSET VALUE per share...................................... $11.88
Sales load for individual sales of shares aggregating less
than $50,000 - 4.5 percent of offering price
(approximately 4.7 percent of net asset value per share)..... .56
------
Offering price to public....................................... $12.44
======
Class B Shares:
NET ASSET VALUE, redemption price and offering
price to public*............................................. $11.69
======
_______________________________________
*Class B Shares are subject to a contingent deferred sales charge on
certain redemptions, see "How to Redeem Fund Shares" in the Fund's
Prospectus.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."
Class A and Class B shares are subject to a Shareholder Services Plan
and Class B shares only are subject to a Distribution Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the Act provides, among other things, that an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board
of Directors has adopted such a plan (the "Distribution Plan") with respect
to Class B shares, pursuant to which the Fund pays the Distributor for
distributing the Fund's Class B shares. The Fund's Board of Directors
believes that there is a reasonable likelihood that the Distribution Plan
will benefit the Fund and holders of its Class B shares. In some states,
certain financial institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law.
A quarterly report of the amounts expended under the Distribution
Plan, and the purposes for which such expenditures were incurred, must be
made to the Directors for its review. In addition, the Distribution Plan
provides that it may not be amended to increase materially the costs which
holders of Class B shares may bear for distribution pursuant to the
Distribution Plan without such shareholders' approval and that other
material amendments of the Distribution Plan must be approved by the Board
of Directors, and by the Directors who are not "interested persons" (as
defined in the Act) of the Fund and have no direct or indirect financial
interest in the operation of the Distribution Plan or in any agreements
entered into in connection with the Distribution Plan, by vote cast in
person at a meeting called for the purpose of considering such amendments.
The Distribution Plan is subject to annual approval by such vote of the
Directors cast in person at a meeting called for the purpose of voting on
the Distribution Plan. The Distribution Plan was last approved by the
Board of Directors, including a majority of the Directors who are not
"interested persons," at a meeting held on October 24, 1994. The
Distribution Plan may be terminated at any time by vote of a majority of
the Directors who are not "interested persons" and have no direct or
indirect financial interest in the operation of the Distribution Plan or in
any agreements entered into in connection with the Distribution Plan, or by
vote of the holders of a majority of Class B shares.
For the fiscal year ended September 30, 1994, $566,157 was charged to
the Fund, with respect to Class B shares under the Distribution Plan.
Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund pays the Distributor for the
provision of certain services to the holders of Class A and Class B shares.
Under the Shareholder Services Plan, the Distributor may make payments to
certain financial institutions, securities dealers and other financial
industry professionals (collectively, "Service Agents") in respect of these
services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Directors for their review. In addition, the
Shareholder Services Plan provides that it may not be amended without
approval of the Board of Directors, and by the Directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the Shareholder
Services Plan, by vote cast in person at a meeting called for the purpose
of considering such amendments. The Shareholder Services Plan is subject
to annual approval by such vote of the Directors cast in person at a
meeting called for the purpose of voting on the Shareholder Services Plan.
The Shareholder Services Plan was so approved on October 24, 1994. The
Shareholder Services Plan is terminable at any time by vote of a majority
of the Directors who are not "interested persons" and who have no direct or
indirect financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the Shareholder
Services Plan.
For the fiscal year ended September 30, 1994, $1,065,453 was charged
to the Fund, with respect to Class A shares, and $188,719 was charged to
the Fund, with respect to Class B shares, under the Shareholder Services
Plan.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Stock Certificates; Signatures. Any stock certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each owner of a joint account, and each signature must be guaranteed. 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.
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege."
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Directors reserves the right to make payments in whole
or part in securities or other assets of the Fund in case of an emergency
or any time a cash distribution would impair the liquidity of the Fund to
the detriment of the existing shareholders. In such event, the securities
would be valued in the same manner as the Fund's portfolio is valued. If
the recipient sold such securities, brokerage charges would be incurred.
In connection with a redemption request where the Fund delivers in-kind
securities instead of cash on settlement date to a Texas investor, the
in-kind securities delivered will be readily marketable securities.
Suspension of Redemption. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Class A and Class B shares of the Fund may be
exchanged for shares of the respective Class of certain other funds advised
or administered by Dreyfus. Shares of the same Class of such other funds
purchased by exchange will be purchased on the basis of relative net asset
value per share as follows:
A. Class A shares of funds purchased without a sales load may be
exchanged for Class A shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
B. Class A shares of funds purchased with or without a sales load
may be exchanged without a sales load for Class A shares of other
funds sold without a sales load.
C. Class A shares of funds purchased with a sales load, Class A
shares of funds acquired by a previous exchange from Class A
shares purchased with a sales load, and additional Class A shares
acquired through reinvestment of dividends or distributions of
any such funds (collectively referred to herein as "Purchased
Shares") may be exchanged for Class A shares of other funds sold
with a sales load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the Offered Shares
exceeds the maximum sales load that could have been imposed in
connection with the Purchased Shares (at the time the Purchased
Shares were acquired), without giving effect to any reduced
loads, the difference will be deducted.
D. Class B shares of any fund may be exchanged for Class B shares of
other funds without a sales load. Class B shares of any fund
exchanged for Class B shares of another fund will be subject to
the higher applicable contingent deferred sales charged ("CDSC")
of the two funds and, for purposes of calculating CDSC rates and
conversion periods, will be deemed to have been held since the
date the Class B shares being exchanged were initially purchased.
To accomplish an exchange under item C above, shareholders must notify
the Transfer Agent of their prior ownership of such Class A shares and
their account number.
To request an exchange, an investor or the investor's Service Agent
acting on his behalf 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 the
investor checks the relevant "No" box ont he Account Application,
indicating that the investor specifically refuses this Privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer
Agent to act on telephonic, telegraphic instructions from any person
representing himself or herself to be the investor or a representative of
the investor's Service Agent, and reasonably believed by the Transfer Agent
to be genuine. Telephone exchanges may be subject to limitations as to the
amount involved or the number of telephone exchanges permitted. Shares
issued in certificate form are not eligible for telephone exchange.
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 shares of the same Class of the fund into which the
exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs and IRAs
set up under a Simplified Employee Pension Plan ("SEP-IRAs") with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among shares of the same Class of the funds in the
Dreyfus Family of Funds. To exchange shares held in Personal Retirement
Plans, the shares exchanged must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange permits an
investor to purchase, in exchange for Class A or Class B shares of the
Fund, shares of the same Class 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. An investor will be notified if his account
falls below the amount designated to be exchanged under this Privilege. In
this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement
plans are eligible for this Privilege. Exchanges of IRA shares may be made
between IRA accounts and from regular accounts to IRA accounts, but not
from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
Fund exchanges and Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows
investors to invest on the payment date their dividends or dividends and
capital gain distributions, if any, from the Fund in the shares of the same
Class of another fund in the Dreyfus Family of Funds of which the investor
is a shareholder. Shares of the same Class of other funds purchased
pursuant to this privilege will be purchased on the basis of relative net
asset value per share as follows:
A. Dividends and distributions paid with respect to Class A shares
by a fund may be invested without imposition of a sales load in
Class A shares of other funds that are offered without a sales
load.
B. Dividends and distributions paid with respect to Class A shares
by a fund which does not charge a sales load may be invested in
Class A shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Dividends and distributions paid with respect to Class A shares
by a fund which charges a sales load may be invested in Class A
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load charged by
the fund from which dividends or distributions are being swept,
without giving effect to any reduced loads, the difference will
be deducted.
D. Dividends and distributions paid with respect to Class B shares
by a fund may be invested without imposition of a sales load in
Class B shares of other funds and the applicable CDSC, if any,
will not be imposed upon redemption of such shares.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits a
shareholder with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares, not
the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the shareholder's shares will be reduced and
eventually may be depleted. There is a service charge of $.50 for each
withdrawal check. Automatic Withdrawal may be terminated at any time by
the shareholder, the Fund or the Transfer Agent. Shares for which stock
certificates have been issued may not be redeemed pursuant to the Automatic
Withdrawal Plan. Class B shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC.
Corporate Pension/Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
are also available.
Shareholders 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 which acts as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs, with more than one participant, is
$2,500, with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum investment of $250.
The shareholder should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details as to
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. Portfolio securities are valued at
the last sale price on the securities exchange or national securities
market on which such securities are primarily traded. Securities not
listed on an exchange or national securities market, or securities in which
there were no transactions, are valued at the average of the most recent
bid and asked prices, except in the case of open short positions where the
asked price is used for valuation purposes. Bid price is used when no
asked price is available. Short-term investments are carried at amortized
cost, which approximates value. Market quotations for foreign securities
in foreign currencies are translated into U.S. dollars at the prevailing
rates of exchange. Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as determined
in good faith by the Board of Directors. Expenses and fees, including
advisory fees and, with respect to the Class A and Class B shares, fees
under the Shareholder Services Plan and, with respect to the Class B shares
only, fees under the Distribution Plan, are accrued daily and taken into
account for the purpose of determining the net asset value of the relevant
Class of shares. Because of the difference in operating expenses incurred
by each Class, the per share net asset value of each Class will differ.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management believes that the Fund qualified as a "regulated investment
company" under the ("Code") in fiscal 1994 and the Fund intends to continue
to so qualify if such qualification is in the best interests of its
shareholders. As a regulated investment company, the Fund will pay no
Federal income tax on net investment income and net realized capital gains
to the extent that such income and gains are distributed to shareholders.
To qualify as a regulated investment company, the Fund must distribute at
least 90% of its net income (consisting of net investment income and net
short-term capital gain if any, to its shareholders), must derive less than
30% of its annual gross income from gain on the sale of securities held for
less than three months, and must meet certain asset diversification and
other requirements. Accordingly, the Fund may be restricted in the selling
of securities held for less than three months, and in the utilization of
certain of the investment techniques described in the Prospectus under
"Description of the Fund--Investment Techniques." The Code however, allows
the Fund to net certain offsetting positions making it easier for the Fund
to satisfy the 30% test. The term "regulated investment company" does not
imply the supervision of management or investment practices or policies by
any government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the aggregate net asset value of his shares
below the cost of his investment. Such a dividend or distribution would be
a return on investment in an economic sense, although taxable as stated
above. In addition, the Code provides that if a shareholder holds shares
of the Fund for six months or less and has received a capital gain dividend
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
dividend received.
Depending on the composition of the Fund's income, dividends paid by
the Fund from net investment income may qualify for the dividends received
deduction allowable to certain U.S. corporate shareholders ("dividends
received deduction"). In general, dividend income of the Fund distributed
to qualifying corporate shareholders will be eligible for the dividends
received deduction only to the extent that (i) the Fund's income consists
of dividends paid by U.S. corporations and (ii) the Fund would have been
entitled to the dividends received deduction with respect to such dividend
income if the Fund were not a regulated investment company. The dividends
received deduction for qualifying corporate shareholders may be further
reduced if the shares of the Fund held by them with respect to which
dividends are received are treated as debt-financed or deemed to have been
held for less than 46 days. In addition, the Code provides other
limitations with respect to the ability of a qualifying corporate
shareholder to claim the dividends received deduction in connection with
holding Fund shares.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains or losses. However, a portion of the gain or
loss realized from the disposition of non-U.S. dollar denominated
securities (including debt instruments, certain financial futures and
options 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 the gain realized from the disposition of certain market
discount bonds will be treated as ordinary income under Section 1276.
Finally, all or a portions of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258. "Conversion transactions" are defined to include certain forward,
futures, options 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 financial futures and options transactions other than those
taxed under Section 988 of the Code, will be treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss. Gain or loss
will arise upon exercise or lapse of such futures and options as well as
from closing transactions. In addition, any such futures or options
remaining unexercised at the end of the Fund's taxable year will be treated
as sold for their then fair market value, resulting in additional gain or
loss to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain forward
currency exchange contracts or options may be considered, for tax purposes,
to constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Sections
1256 and 988 of the Code. As such all or a portion of any short-term or
long term capital gain from certain "straddle" transactions maybe
recharacterized as ordinary income.
If a Fund were treated as entering into "straddles" by reason of its
engaging in forward currency exchange contracts or options transactions,
such "straddles" could 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." 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" rules, short-term capital loss on
"straddle" positions may be recharacterized as long-term capital loss, and
long-term capital gain may be treated as short-term capital gain or
ordinary income.
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 supervises the placement of orders on behalf of the Fund for
the purchase or sale of portfolio securities. Allocation of brokerage
transactions, including their frequency, is made in the best judgment of
the Advisers 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
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 manages and to Comstock Partners in serving both the
Fund and the other accounts it manages, 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.
Brokers also are 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 in the Dreyfus
Family of Funds being engaged simultaneously in the purchase or sale of the
same security. Certain of the Fund's transactions in securities of foreign
issuers may not benefit from the negotiated commission rates available to
the Fund for transactions in securities of domestic issuers. Portfolio
turnover may vary from year to year, as well as within a year. It is
anticipated that in any fiscal year, the turnover rate generally should not
exceed 100%; however, in periods in which extraordinary market conditions
prevail, the Advisers will not be deferred from changing investment
strategy as rapidly as needed, in which case, higher turnover rates can be
anticipated. Higher turnover rates are likely to result in comparatively
greater brokerage expenses. The overall reasonableness of brokerage
commissions paid is evaluated by the Advisers based upon their 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 1992, 1993 and 1994, the Fund paid brokerage commissions
of $997,260, $940,251 and $448,986, 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 $610,071, $207,750 and $488,390 for the
fiscal years ended 1992, 1993 and 1994, respectively, none of which was
paid to the Distributor. When transactions are executed in the
over-the-counter market the Fund deals with the primary market makers
unless a more favorable price or execution otherwise is obtainable.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The offering of Class B shares commenced on January 15, 1993 and,
accordingly, only limited performance data are available for Class B.
The average annual total return for Class A for the 1 and 5 year
periods ended September 30, 1994 was 1.35% and 1.59%, respectively. The
average annual total return for Class A for the 8.975 year period from
October 10, 1985 (commencement of operations) through September 30, 1994
was 10.68%. The average annual total return for Class A for the 7.427 year
period from the date of the effectiveness of the Fund's current investment
objective, fundamental investment policies and investment restrictions
(April 28, 1987) through September 30, 1994 was 6.24%. The average annual
total return for Class B for the one year period ended September 30, 1994
was 1.35%. The average annual total return for Class B for the 1.710 year
period from January 15, 1993 (commencement of initial offering of Class B
shares) through September 30, 1994 was 5.01%. Average annual total return
is calculated by determining the ending redeemable value of an investment
purchased with a hypothetical $1,000 payment made at the beginning of the
period (assuming the reinvestment of dividends and distributions), dividing
by the amount of the initial investment, taking the "n"th root of the
quotient (where "n" is the number of years in the period) and subtracting 1
from the result. A Class's average annual total return figures calculated
in accordance with such formula assume that in the case of Class A the
maximum sales load has been deducted from the hypothetical initial
investment at the time of purchase or in the case of Class B the maximum
applicable CDSC has been paid upon redemption at the end of the period.
Total return is calculated by subtracting the amount of the maximum
offering price per share at the beginning of a stated period from the net
asset value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period), and
dividing the result by the maximum offering price per share at the
beginning of the period. Total return also may be calculated based on the
net asset value per share at the beginning of the period instead of the
maximum offering price per share at the beginning of the period for Class A
shares or without giving effect to any applicable CDSC at the end of the
period for Class B shares. In such cases, the calculation would not
reflect the deduction of the sales load with respect to Class A shares or
any applicable CDSC with respect to Class B shares, which, if reflected,
would reduce the performance quoted. The total return for Class A for the
period April 28, 1987 to September 30, 1994, based on maximum offering
price per share, was 56.71%. Based on net asset value per share, the total
return for Class A was 64.14% for this period. Total return for Class A
for the period October 10, 1985 and ending on September 30, 1994 based on
maximum offering price per share was 148.64%. Based on net asset value,
the total return for Class A was 160.31% for this period. The total return
for Class B for the period January 15, 1993 (commencement of offering Class
B shares) through September 30, 1994, after giving effect to the maximum
CDSC per share, was 8.72%. The total return for Class B, without giving
effect to the maximum CDSC, was 12.72% for this period.
Comparative performance may be used from time to time in advertising
the Fund's shares, including data from Lipper Analytical Services, Inc.,
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average, Money Magazine Morningstar ratings and related analyses supporting
the ratings and other industry publications.
From time to time, the Fund may compare its performance against
inflation with the performance of other instruments against inflation, such
as short-term Treasury Bills (which are direct obligations of the U.S.
Government) and FDIC-insured bank money market accounts. In addition,
advertising for the Fund may indicate that investors may consider
diversifying their investment portfolios in order to seek protection of the
value of their assets against inflation. The Fund's advertising materials
also may refer to the integration of the world's securities markets,
discuss the investment opportunities available worldwide and mention the
increasing importance of an investment strategy including foreign
investments.
From time to time in advertising the Fund's shares, information may be
provided as to Comstock Partners' analysis of various conditions that may
affect the economy. Comstock Partners currently views the economy as being
affected by a rolling recession which involves different industries and
geographical areas at different times. In addition, advertising materials
for the Fund may refer to or discuss then-current or past economic or
financial conditions, development and/or events, including those relating
to the more than 500 point drop of the Dow Jones Industrial Average on
October 19, 1987. 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
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and nonassessable.
Fund shares have no preemptive or subscription rights and are freely
transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's Transfer and Dividend Disbursing Agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
portfolio securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of Common Stock being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the
Fund.
APPENDIX
Description of Standard & Poor's Corporation's ("S&P") and Moody's
Investors Service, Inc. ("Moody's") ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB, B, CCC, CC, C
Bonds rated BB, B, CCC, CC and C are regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the lowest degree of speculation and C the
highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposure to adverse conditions.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade bonds. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, they
are not likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to bonds subordinated to senior
debt which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC- rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus designation to show relative standing
within the major ratings categories.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.
A
Issues assigned this rating are regarded as having the greatest
capacity for timely payments. Issues in this category are delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major ratings categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
<TABLE>
CLASS A CLASS B
------------------------------ ----------------------------------------
% Return Reflecting
% Return % Return Applicable Contingent
Reflecting Assuming No Deferred Sales
% Return Without Maximum Initial Redemption Charge Upon
PERIOD ENDED 9/30/94 Sales Charge Sales Charge (4.5%) PERIOD ENDED 9/30/94 Redemption*
- ------------------- ------------- ------------------ ------------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
1 Year 6.14% 1.35 % 1 Year 5.35% 1.35%
5 Years 2.53 1.59 From Inception (1/15/93) 7.25 5.01
From 4/28/87** 6.90 6.24
From Inception (10/10/85) 11.25 10.68
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class A shares of the
Dreyfus Capital Value Fund on 10/10/85 (Inception Date) to a $10,000
investment made in the Standard & Poor's 500 Composite Stock Price Index on
that date. For comparative purposes the value of the Index on 9/30/85 is used
as the beginning value on 10/10/85. All dividends and capital gain
distribution are reinvested.
The Fund's performance takes into account the maximum initial sales charge on
Class A shares and all other applicable fees and expenses. The Standard &
Poor's 500 Composite Stock Price Index is a widely accepted, unmanaged index
of overall stock market performance which does not take into account charges,
fees and other expenses. Further information relating to Fund performance is
contained in the Condensed Financial Information section of the Prospectus
and elsewhere in this report.
* Maximum contingent deferred sales charge for Class B shares is 4% and is
reduced to 0% after six years.
** Fund changed its investment objective as of April 28, 1987. The Fund's
Average Annual Total Return since this date, taking into account the Fund's
maximum initial sales charge was 6.75% and without taking into account the
maximum initial sales charge was 7.02%.
DREYFUS CAPITAL VALUE FUND (A Premier Fund) SEPTEMBER 30, 1994
BROAD SECTOR ALLOCATION
[EXHIBIT B] [EXHIBIT C]
LONG POSITIONS STOCKS SOLD SHORT
Sector allocations in the pie chart are broader groupings than are listed in
the Report's Statement of Investments. Portfolio composition is subject to
change at any time.
ASSET ALLOCATION
<TABLE>
LONG SHORT*
<S> <C> <C> <C>
Common Stocks.................... 28.9% Common Stocks.................... 19.5%
Put Options...................... 4.0
Convertible Bonds................ 0.9
Bonds............................ 21.2
Cash Equivalents................. 45.0
-
------
100.0%
</TABLE>
* Note that the Put Options held in the long positions expand the Fund's
effective short exposure to fifty percent.
<TABLE>
TEN LARGEST POSITIONS
LONG SHORT
<S> <C> <C> <C>
German Securities; Bundesrepublik Philip Morris.................... 0.9%
Deutschland, 8.50%, 4/22/1996............... 7.9% Schering-Plough.................. 0.8
Newmont Mining................... 6.4 Dean Witter, Discover & Co....... 0.7
Austrian Securities; Republic Lilly (Eli) & Co................. 0.7
of Austria, 4.50%, 2/12/2000............... 4.7 T. Rowe Price Associates......... 0.6
Freeport-McMoRan Schwab (Charles)................. 0.6
Copper & Gold, Cl. A....................... 4.2 Quaker Oats..................... 0.6
Placer Dome................................ 3.8 Kansas City Southern Industries.. 0.6
German Securities; Bundesrepublik.......... General Mills.................... 0.6
Deutschland, 9%, 10/20/2000............... 3.2 Kellogg.......................... 0.6
American Barrick Resources....... 2.9
Homestake Mining................. 2.5
German Securities; Bundesrepublik
Deutschland, 8.875%, 12/20/2000........... 2.4
Danish Securities; Kingdom of
Denmark, 4.25%, 9/30/1999.................. 2.2
</TABLE>
All percentages shown above are based on Total Net Assets.
<TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1994
COMMON STOCKS - 28.9% SHARES VALUE
_______ _______
<S> <C> <C> <C>
BASIC INDUSTRIES - 26.5%
Agriculture-.7% IMC Fertilizer Group............(a) 85,000 $3,782,500
----------
Gold Mining- 19.5% Amax Gold......................... 120,500 918,813
American Barrick Resources....... 562,200 14,968,575
Ashanti Goldfields..............(a,b) 125,000 2,515,625
Cambior.......................... 150,000 2,346,718
Hecla Mining.....................(a) 313,500 4,153,875
Homestake Mining................. 595,800 12,660,750
Newmont Gold..................... 200,000 8,750,000
Newmont Mining................... 722,400 32,508,000
Placer Dome...................... 766,400 19,255,800
Royal Oak Mines..................(a) 400,000 1,800,000
-----------
99,878,156
-----------
Metals-6.3% ASARCO............................ 35,000 1,150,625
Freeport-McMoRan Copper & Gold, Cl. A 860,000 21,500,000
Goldcorp Investments, Cl. A ..... 237,860 1,572,679
Impala Platinum Holdings, A.D.R.. 15,000 361,275
Inco............................. 165,000 4,970,625
Pegasus Gold..................... 150,000 2,475,000
-----------
32,030,204
-----------
TOTAL BASIC INDUSTRIES........... 135,690,860
============
RESTRUCTURING - 2.4%
Energy-.5% Baker Hughes...................... 150,000 2,793,750
-----------
Foods and Beverages-.4% Dole Food......................... 68,200 1,892,550
-----------
Railroads-.8% Santa Fe Pacific.................(a) 192,300 4,350,788
-----------
Retail-.7% K mart............................ 187,000 3,342,625
-----------
TOTAL RESTRUCTURING.............. 12,379,713
==========
TOTAL COMMON STOCKS
(cost $107,782,245)............ $148,070,573
============
CONTRACTS
SUBJECT
PUT OPTIONS-4.0% TO PUT
_______
Brokerage Basket;
November `94 @ $95.............(i) 130,000 $1,679,600
Japanese Yen;
December `94 @ $90............. 150,000 4,500
Standard & Poor's 500 Index Flex Options:
June `95 @ $450................ 46,500 691,688
September `95 @ $450........... 66,000 1,113,750
December `95 @ $450............ 122,000 2,272,250
Standard & Poor's 500 Index:
December `94 @ $460............ 225,500 2,311,375
December `94 @ $465............ 9,000 99,000
March `95 @ $450............... 193,500 1,983,375
June `95 @ $450................ 172,500 2,436,562
December `95 @ $450............ 71,500 1,251,250
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
PRINCIPAL
AMOUNT
SUBJECT
PUT OPTIONS (CONTINUED) TO PUT VALUE
_______ _______
U.S. Treasury Bonds;
6.25%, 8/15/2023:
March `95 @ $89.406..........(i) $24,700,000 $2,380,586
April `95 @ $87.406..........(i) 52,500,000 3,986,719
-----------
TOTAL PUT OPTIONS
(cost $24,797,847)............. $20,210,655
============
PRINCIPAL
CONVERTIBLE BONDS-.9% AMOUNT
_______
Retail; Pepgro, 6%
(cost $3,034,000)...............(c) $ 193,625 $ 4,550,177
===========
BONDS-21.2%
Foreign Governments: Austrian Securities;
Republic of Austria,
4.50%, 2/12/2000...........(d) $ 24,932,039 $24,104,295
Danish Securities;
Kingdom of Denmark,
4.25%, 9/30/1999...........(d) 11,650,485 11,135,534
German Securities;
Bundesrepublik Deutschland:
8.50%, 4/22/1996..........(e) 39,019,671 40,291,712
9%, 10/20/2000............(e) 15,401,483 16,544,273
8.875%, 12/20/2000........(e) 11,609,158 12,406,708
Netherlands Securities;
Netherlands Government,
7.25%, 7/15/1999..........(f) 3,742,084 3,742,084
----------
TOTAL BONDS
(cost $105,990,875)............ $108,224,606
=============
SHORT-TERM INVESTMENTS-43.3%
U.S. Treasury Bills: 4.20%, 10/6/94.................... $ 29,674,000 $ 29,656,690
4.21%, 10/13/94.................. 18,201,000 18,175,434
4.34%, 10/20/94.................. 70,766,000 70,603,943
4.35%, 10/27/94.................. 5,108,000 5,091,958
4.51%, 11/10/94.................. 342,000 340,286
4.55%, 11/25/94...............(g,h) 98,265,000 97,582,482
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $221,450,793)............ $221,450,793
=============
TOTAL INVESTMENTS (cost $463,055,760)....................................... 98.3% $502,506,804
===== =============
CASH AND RECEIVABLES (NET).................................................. 1.7% $ 8,732,936
===== =============
NET ASSETS.................................................................. 100.0% $ 511,239,740
====== =============
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September
30, 1994, this security amounted to $2,515,625 or .5% of net assets.
(c) Denominated in South African Rand.
(d) Denominated in Swiss Francs.
(e) Denominated in German Marks.
(f) Denominated in Dutch Guilder.
(g) Partially held by broker as collateral for open short positions.
(h) Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
(i) Securities restricted as to public resale. Investments in restricted
securities, with an aggregate market value of $8,046,905, represents
approximately 1.6% of net assets:
</TABLE>
<TABLE>
ACQUISITION PURCHASE PERCENTAGE OF
PUT OPTIONS: DATE PRICE NET ASSETS VALUATION*
______ _____ ________ ______
<S> <C> <C> <C> <C>
Brokerage Basket**
November `94 @ $95....................... 11/10/93 $7.10 .33 fair value
U.S. Treasury Bonds:
6.25%, 8/15/2023 March `95@ $89.406...... 3/30/94 .06 .47 fair value
6.25%, 8/15/2023 April `95@ $87.406...... 4/8/94 .06 .78 fair value
*The valuation of these securities has been determined in good faith under the direction of the Board of Directors.
**Consists of Common Stocks of six publicly traded brokerage firms.
</TABLE>
<TABLE>
STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1994
MARKET VALUE UNREALIZED
NUMBER OF COVERED APPRECIATION
FINANCIAL FUTURES SOLD SHORT; CONTRACTS BY CONTRACTS EXPIRATION AT 9/30/94
______ _______ _______ _______
<S> <C> <C> <C> <C>
Standard & Poor's 500........................ 291 $(67,402,875) December `94$ 1,484,100
==========
</TABLE>
See notes to financial statements.
<TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF SECURITIES SOLD SHORT SEPTEMBER 30, 1994
COMMON STOCKS-19.5% SHARES VALUE
------------- ------------
<S> <C> <C> <C>
Auto Related-.7% Breed Technologies .............. 18,000 $ 585,000
Chrysler......................... 22,000 987,250
Ford Motor....................... 40,000 1,110,000
General Motors................... 20,000 937,500
-------------
3,619,750
-------------
Consumers-6.2% Anheuser-Busch................... 5,700 289,987
Avon Products.................... 5,600 334,600
B.A.T. Industries, A.D.R......... 23,100 320,512
Bausch & Lomb.................... 11,600 452,400
Campbell Soup.................... 48,400 1,911,800
Coca-Cola........................ 53,100 2,581,988
Colgate-Palmolive................ 15,600 904,800
General Mills.................... 52,000 3,003,000
Heinz........................(H.J.) 35,900 1,314,838
Hershey Foods.................... 40,000 1,800,000
Kellogg.......................... 50,000 2,868,750
NIKE, Cl. B...................... 10,000 588,750
PepsiCo.......................... 38,100 1,262,062
Philip Morris.................... 74,500 4,553,812
Quaker Oats...................... 40,000 3,060,000
Reebok International............. 38,900 1,390,675
Rubbermaid....................... 60,300 1,605,488
Sara Lee......................... 81,000 1,822,500
Tambrands........................ 18,000 670,500
Wrigley,(Wm), Jr................. 20,000 815,000
-------------
31,551,462
-------------
Drugs & Medical-2.3% Lilly (Eli) & Co................. 58,000 3,356,750
Merck & Co....................... 48,900 1,735,950
Schering-Plough.................. 56,000 3,976,000
Upjohn........................... 70,000 2,388,750
-------------
11,457,450
-------------
Finance-6.5% Bear Stearns..................... 116,750 1,868,000
Berkshire Hathaway............... 115 2,179,250
Chase Manhattan.................. 78,000 2,700,750
Chemical Banking................. 43,000 1,505,000
Conseco.......................... 22,000 987,250
Dean Witter, Discover & Co....... 93,000 3,499,125
First USA........................ 53,000 1,861,625
Franklin Resources............... 49,000 1,831,375
Kansas City Southern Industries......... 86,000 3,042,250
Merrill Lynch.................... 49,000 1,696,625
Morgan Stanley Group............. 31,000 1,925,875
Paine Webber Group............... 88,000 1,265,000
Salomon.......................... 67,000 2,646,500
Schwab (Charles)................. 105,000 3,110,625
T. Rowe Price Associates......... 98,000 3,283,000
-------------
33,402,250
-------------
Health Care-.1% U.S. HealthCare................. 15,000 698,437
-------------
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF SECURITIES SOLD SHORT (CONTINUED) SEPTEMBER 30, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
---------- ------------
Hotels & Motels-.2% Hospitality Franchise Systems....... 40,000 $ 1,255,000
-------------
Machinery-Construction & Material-.3% Clark Equipment..................... 19,000 1,315,750
-------------
Railroads-.5% Burlington Northern................. 52,000 2,613,000
-------------
Restaurants-.8% Lone Star Steakhouse/Saloon......... 82,500 2,093,437
Outback Steakhouse................. 74,500 2,113,938
-------------
4,207,375
-------------
Retail-1.2% Home Depot........................ 54,733 2,298,786
Staples.......................... 62,500 2,054,688
Wal-Mart Stores.................. 81,000 1,893,375
-------------
6,246,849
-------------
Technology-.2% American Power Conversion......... 47,000 942,938
-------------
Telecommunications-.5% Hong Kong Telecom, A.D.R.......... 114,000 2,294,250
-------------
TOTAL SECURITIES SOLD SHORT
(proceeds $102,879,028)........ $99,604,511
============
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $463,055,760)-see statement..................................... $502,506,804
Cash.................................................................... 1,169,679
Receivable from broker for proceeds on securities sold short............ 102,879,028
Dividends and interest receivable....................................... 4,476,125
Receivable for subscriptions to Common Stock............................ 2,638,668
Receivable for futures variation margin-Note 3(a)....................... 109,125
Prepaid expenses........................................................ 74,216
-------------
613,853,645
LIABILITIES:
Due to investment adviser............................................... $ 347,267
Due to sub-investment adviser........................................... 138,520
Securities sold short, at value
(proceeds $102,879,028)-see statement................................. 99,604,511
Payable for Common Stock redeemed....................................... 1,723,447
Payable to broker for loss on securities sold short..................... 275,119
Accrued expenses........................................................ 525,041 102,613,905
------------ -------------
NET ASSETS ................................................................ $511,239,740
============
REPRESENTED BY:
Paid-in capital......................................................... $570,082,041
Accumulated undistributed investment income-net......................... 9,771,962
Accumulated net realized (loss) on investments, securities sold short,
and foreign currency transactions....................................... (113,069,404)
Accumulated net unrealized appreciation on investments, securities sold short, and
foreign currency transactions (including $1,484,100 net unrealized appreciation on
financial futures)-Note 3(b).......................................... 44,455,141
-------------
NET ASSETS at value......................................................... $511,239,740
============
Shares of Common Stock outstanding:
Class A Shares
(200 million shares of $.01 par value authorized)..................... 33,890,302
============
Class B Shares
(200 million shares of $.01 par value authorized)..................... 9,283,752
============
NET ASSET VALUE per share:
Class A Shares
($402,708,228 / 33,890,302 shares).................................... $11.88
=======
Class B Shares
($108,531,512 / 9,283,752 shares)..................................... $11.69
=======
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1994
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $16,851,878
Cash dividends (net of $61,831 foreign taxes withheld at source)...... 1,580,372
-----------
TOTAL INCOME...................................................... $18,432,250
EXPENSES:
Investment advisory fee-Note 2(a)..................................... 2,118,758
Sub-investment advisory fee_Note 2(a)................................ 1,643,758
Dividends on securities sold short.................................... 1,963,950
Shareholder servicing costs-Note 2(c)................................. 1,913,663
Distribution fees (Class B shares)-Note 2(b).......................... 566,157
Prospectus and shareholders' reports.................................. 114,598
Custodian fees........................................................ 90,489
Registration fees..................................................... 85,157
Professional fees..................................................... 64,749
Directors' fees and expenses-Note 2(d)................................ 36,866
Miscellaneous......................................................... 10,935
-----------
TOTAL EXPENSES.................................................... 8,609,080
------------
INVESTMENT INCOME-NET............................................. 9,823,170
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3(a):
Long transactions (including options transactions and foreign
currency transactions)............................................ $ (2,349,778)
Short sale transactions............................................... (5,416,826)
Net realized (loss) on forward currency exchange contracts-Note 3(a);
Short transactions.................................................... (1,450,559)
_____________
NET REALIZED (LOSS)................................................... (9,217,163)
Net unrealized appreciation on investments, securities sold short
and foreign currency transactions (including $1,484,100 net unrealized
appreciation on financial futures)...................................... 26,168,303
___________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 16,951,140
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $26,774,310
===========
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
__________________________
1993 1994
_______ _______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 8,659,940 $ 9,823,170
Net realized (loss) on investments...................................... (53,300,398) (9,217,163)
Net unrealized appreciation on investments for the year................. 23,538,065 26,168,303
______________ ____________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... (21,102,393) 26,774,310
_______________ _____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (24,015,956) (8,633,848)
Class B shares........................................................ -- (913,770)
_______________ ____________
TOTAL DIVIDENDS................................................... (24,015,956) (9,547,618)
_______________ ____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 109,775,771 116,664,797
Class B shares........................................................ 31,906,887 85,400,651
Dividends reinvested:
Class A shares........................................................ 13,132,836 4,857,514
Class B shares........................................................ -- 489,988
Cost of shares redeemed:
Class A shares........................................................ (203,749,885) (147,154,408)
Class B shares........................................................ (644,618) (8,939,968)
_______________ ______________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS. (49,579,009) 51,318,574
_______________ ______________
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (94,697,358) 68,545,266
NET ASSETS:
Beginning of year....................................................... 537,391,832 442,694,474
______________ ______________
End of year [including distributions in excess of investment income-net;
($3,712,318) in 1993 and undistributed investment income-net;
$9,771,962 in 1994]................................................... $442,694,474 $511,239,740
============ ============
</TABLE>
<TABLE>
SHARES
----------------------------------------------------------------------
CLASS A CLASS B
------------------------ -------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
_______________________ ________________________
1993 1994 1993* 1994
------- ------- ------- ------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 9,514,487 9,919,385 2,737,990 7,342,835
Shares issued for dividends reinvested. 1,235,490 411,308 -- 41,951
Shares redeemed........................ (17,939,682) (12,560,968) (55,064) (783,960)
------------- ------------- ---------- ------------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING.......... (7,189,705) (2,230,275) 2,682,926 6,600,826
------------- ------------- ---------- -----------
* From January 15, 1993 (commencement of initial offering) to September 30,
1993.
See notes to financial statements.
</TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
FINANCIAL HIGHLIGHTS
Reference is made to page 2 of the Funds Prospectus dated January 31, 1995.
See notes to financial statements.
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. The Dreyfus
Corporation ("Dreyfus") serves as the Fund's investment adviser. Comstock
Partners, Inc. ("Comstock Partners") serves as the Fund's sub-investment
adviser. Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus,
until August 24, 1994, acted as the distributor of the Fund's shares.
Effective August 24, 1994, Dreyfus became a direct subsidiary of Mellon Bank,
N. A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
The Fund offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within six years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Short-term investments are carried at amortized cost, which approximates
value. Investments denominated in foreign currencies are translated to U.S.
dollars at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized on securities transactions, the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books, and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in
exchange rate.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain, if any, are normally declared and paid annually, but the Fund
may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code. This may result in
distributions that are in excess of investment income-net and net realized
gain on a fiscal year basis. To the extent that net realized capital gain can
be offset by capital loss carryovers, it is the policy of the Fund not to
distribute such gain.
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In accordance with a recently adopted Statement of Position (SOP 93-02)
certain differences resulting from the classification of gains/losses
recognized on foreign currency transactions for book and tax purposes and the
recording of related distributions to shareholders have been reclassified. As
of October 1, 1993, the cumulative effect of such differences totalling
$13,157,901 was reclassified to undistributed net investment income from
undistributed net realized gains. This reclassification had no effect on net
investment income, net realized gains and net assets.
During the year ended September 30, 1994, the Fund reclassified $50,827
charged to undistributed investment income-net in prior years to paid-in
capital.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately
$113,400,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to September 30,
1994. The carryover does not include net realized securities losses from
November 1, 1993 through September 30, 1994 which are treated, for Federal
income tax purposes, as arising in fiscal 1995. If not applied, $9,100,000 of
the carryover expires in fiscal 1999, $29,800,000 expires in fiscal 2000,
$17,800,000 expires in fiscal 2001 and $56,700,000 expires in fiscal 2002.
NOTE 2-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACT
IONS WITH AFFILIATES:
(A) Fees payable by the Fund pursuant to the provisions of an Investment
Advisory Agreement with Dreyfus and a Sub-Investment Advisory Agreement with
Comstock Partners (together "Agreements") are payable monthly, computed on
the average daily value of the Fund's net assets at the following
annual rates:
<TABLE>
AVERAGE NET ASSETS DREYFUS COMSTOCK PARTNERS
__________________ _____________ ____________________
<S> <C> <C>
0 up to $25 million......................................... .60 of 1% .15 of 1%
$25 up to $75 million....................................... .50 of 1% .25 of 1%
$75 up to $200 million...................................... .45 of 1% .30 of 1%
$200 up to $300 million..................................... .40 of 1% .35 of 1%
In excess of $300 million................................... .375 of 1% .375 of 1%
</TABLE>
The Agreements further provide that the Fund may deduct from the fee to be
paid to Dreyfus and Comstock Partners, or Dreyfus and Comstock Partners will
bear such excess expense, to the extent required by state law, should the
Fund's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings (which, in the view of Stroock & Stroock & Lavan, counsel to the
Fund, also contemplates dividends and interest accrued on securities sold
short), and extraordinary expenses, exceed the limitation of any state
having jurisdiction over the Fund. The most stringent state expense
limitation applicable to the Fund presently requires reimbursement in
any full fiscal year that such expenses (exclusive of distribution expenses
and certain expenses as described above) exceed 2 1/2% of the first $30
million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Fund's net assets in accordance with
California "blue sky" regulations. No expense reimbursement was required for
the year ended September 30, 1994.
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Dreyfus Service Corporation retained $276,868 during the year ended
September 30, 1994 from commissions earned on sales of Fund shares.
Dreyfus Service Corporation retained $204,660 during the year ended
September 30, 1994 from contingent deferred sales charges imposed upon
redemptions of the Fund's Class B Shares.
(B) On August 4, 1994, Fund's shareholders approved the adoption of a new
Distribution Plan with respect to Class B shares (the "Class B Distribution
Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the Class B
Distribution Plan, effective August 24, 1994, the Fund pays the Distributor
for distributing the Fund's Class B shares at an annual rate of .75 of 1% of
the value of the average daily net assets of Class B.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Fund pay Dreyfus Service Corporation at
an annual rate of .75 of 1% of the value of the Fund's Class B shares average
daily net assets, for the costs and expenses in connection with advertising,
marketing and distributing the Fund's Class B shares. Dreyfus Service
Corporation made payments to one or more Service Agents based on the value of
the Fund's Class B shares owned by clients of the Service Agent.
During the year ended September 30, 1994, $80,755 was charged to the Fund
pursuant to the Class B Distribution Plan and $485,402 was charged to the
Fund pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Fund pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amount to be paid to Service Agents. For the year ended September 30, 1994,
$1,065,453 and $188,719 were charged to the Fund pursuant to the Class A and
Class B shares, respectively, pursuant to the Shareholder Service Plan.
(D) Prior to August 24, 1994 certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of Dreyfus or Comstock
Partners. Each director who is not an "affiliated person" receives an annual
fee of $4,500 and an attendance fee of $500 per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The following summarizes the aggregate amount of purchases and sales
of investment securities and securities sold short, excluding short-term
securities, financial futures, forward currency exchange contracts and option
transactions during the year ended September 30, 1994:
<TABLE>
PURCHASES SALES
_________________ -------------
<S> <C> <C>
Long transactions................................................ $ 108,336,956 $114,718,175
Short sale transactions.......................................... 41,521,978 66,838,451
_________________ ---------------
TOTAL.......................................................... $ 149,858,934 $181,556,626
=================== ================
</TABLE>
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at
current market value. The Fund would incur a loss if the price of the
security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund would realize a gain if the
price of the security declines between those dates. Until the
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Fund replaces the borrowed security, the Fund will maintain daily, a
segregated account with a broker and custodian, of cash and/or U.S.
Government securities sufficient to cover its short position. Securities sold
short at September 30, 1994 and their related market values and proceeds are
set forth in the Statement of Securities Sold Short.
When executing forward currency exchange contracts, the Fund is obligated
to buy or sell a foreign currency at a specified rate on a certain date in
the future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is open and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is open and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates. At September 30, 1994, no forward currency
exchange contracts were outstanding.
The Fund is engaged in trading financial futures contracts. The Fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments (see the Statement of Financial Futures). Investments
in financial futures require the Fund to "mark to market" on a daily basis,
which reflects the change in market value of the contracts at the close of
each day's trading. Accordingly, variation margin payments are made or
received to reflect daily unrealized gains or losses. When the contracts are
closed, the Fund recognizes a realized gain or loss. These investments
require initial margin deposits with a custodian, which consist of cash or
cash equivalents, up to approximately 10% of the contract amount. The amount
of these deposits is determined by the exchange or Board of Trade on which
the contract is traded and is subject to change. Contracts open at September
30, 1994 and their related unrealized market appreciation are set forth in
the Statement of Financial Futures.
The Fund is engaged in trading restricted options, which are not exchange
traded. The Fund's exposure to credit risk associated with counter party
nonperformance on these investments is typically limited to the unrealized
gains inherent in such investments that are recognized in the Statement of
Assets and Liabilities.
(B) At September 30, 1994, accumulated net unrealized appeciation on
investments was $44,455,141, consisting of $60,109,023 gross unrealized
appreciation and $15,653,882 gross unrealized depreciation.
At September 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS CAPITAL VALUE FUND (A PREMIER FUND)
We have audited the accompanying statement of assets and liabilities of
Dreyfus Capital Value Fund (A Premier Fund), including the statements of
investments, financial futures and securities sold short, as of September 30,
1994, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended, and financial highlights for each of the years indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Capital Value Fund (A Premier Fund) at September 30,
1994, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[ERNST AND YOUNG SIGNATURE]
New York, New York
November 8, 1994
DREYFUS CAPITAL VALUE FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from October
10, 1985 (commencement of operations) to September 30, 1986
and for each of the fiscal years ended September 30, 1987,
1988, 1989, 1990, 1991, 1992, 1993 and 1994.
Included in Part B of the Registration Statement:
Statement of Investments--September 30, 1994
Statement of Financial Futures --September 30, 1994
Statement of Securities Sold Short--September 30, 1994
Statement of Assets and Liabilities--September 30, 1994
Statement of Operations--year ended September 30, 1994
Statement of Changes in Net Assets--for each of the
years ended September 30, 1993 and 1994
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
November 8, 1994
Schedules No. I through VII and other financial statement information, for
which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either omitted because they are not
required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes
thereto which are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Amended and Restated Charter and Articles
Supplementary are incorporated by reference to Exhibit (1)(b) of
Post-Effective Amendment No. 15 to the Registration Statement on
Form N-1A, filed on January 28, 1994.
(2) Registrant's By-Laws, as amended April 28, 1992, are incorporated
by reference to Exhibit (2) of Post-Effective Amendment No. 12 to
the Registration Statement on Form N-1A, filed on October 30,
1992.
(4) Specimen certificate for the Registrant's securities is
incorporated by reference to Exhibit (4) of Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on March 27, 1986.
(5)(a) Investment Advisory Agreement
(b) Sub-Investment Advisory Agreement is incorporated by reference to
Exhibit (5) of Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A, filed on November 2, 1992.
(6)(a) Distribution Agreement.
(b) Forms of Service Agreement are incorporated by reference to
Exhibit 6 of Post-Effective Amendment No. 3, to the Registration
Statement on Form N-1A, filed on March 5, 1987.
(8)(a) Amended and Restated Custody Agreement dated August 18, 1989 is
incorporated by reference to Exhibit 8(a) of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A, filed
on January 26, 1990.
(b) Sub-Custodian Agreements.
(c) Foreign Sub-Custodian Agreements are incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 7 to the Registration
Statement on Form N-1A, filed on January 26, 1990.
(9) Shareholder Services Plan.
(10) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A, filed on August 27, 1985.
(11) Consent of Independent Auditors.
(15) Distribution Plan.
(16) Schedules of Computation of Performance Data are incorporated by
reference to Exhibit 16 of Post-Effective Amendment No. 15 to the
Post-Effective Amendment No. 15 filed on January 28, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney.
(b) Certificate of Secretary is incorporated by reference to
Other Exhibits (b) of Post-Effective Amendment No. 6 to
the Registration Statement on Form N-1A, filed on
January 25, 1989.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of November 16, 1994
______________ _____________________________
Common Stock 19,284
(Par value $.01) 4,329
Class A Shares
Class B Shares
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is indemnified,
is incorporated by reference to Item 27 of Part C of Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-1A, filed
on August 27, 1985.
Reference is also made to the Distribution Agreement filed as
Exhibit (6)(a).
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, manager and distributor for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of
shares of investment companies sponsored by Dreyfus and of other
investment companies for which Dreyfus acts as investment
adviser, sub-investment adviser or administrator. Dreyfus
Management, Inc., another wholly-owned subsidiary, provides
investment management services to various pension plans,
institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International
Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President and The Dreyfus Trust Company++;
Director Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
JOSEPH S. DiMARTINO Director:
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837;
Vice President and former Treasurer and
Director:
National Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
W. KEITH SMITH Chairman and Chief Executive Officer:
Chief Operating Officer The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
PAUL H. SNYDER Director:
Vice President and Chief Pennsylvania Economy League
Financial Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania;
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman, Distribution Executive Officer:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
LAWRENCE S. KASH Executive Vice President
(cont'd) Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
JAY R. DEMARTINE Chairman of the Board and President:
Vice President, Marketing The Woodbury Society
16 Woodbury Lane
Ogunquit, ME 03907;
Former Managing Director:
Bankers Trust Company
280 Park Avenue
New York, NY 10017;
BARBARA E. CASEY President:
Vice President, Dreyfus Retirement Services;
Retirement Services Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate Communications
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Security Savings
Director Bank, F.S.B.+;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ELIE M. GENADRY President:
Vice President, Institutional Services Division of Dreyfus
Wholesale Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President, Fund
Administration
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice Chairman, Operations Dreyfus Thrift & Commerce****;
and Administration Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President, Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President, Fund The Dreyfus Consumer Credit Corporation*;
Legal and Compliance Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
The Truepenny Corporation*
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 28. (b) Business and Other Connections of Sub-Investment Adviser
(continued)
Comstock Partners, Inc. (the "Sub-Investment Adviser") serves as the
Fund's sub-investment adviser. The Sub-Investment Adviser is a registered
investment adviser organized in 1986.
Officers and Directors of Sub-Investment Adviser
Name and Position
With Sub-Investment
Adviser Other Businesses
EDWARD A. LESKOWICZ, Jr. Vice President, Treasurer
Vice President, Treasurer, and Chief Financial Officer:
and Chief Financial Officer Comstock Partners
Strategy Fund, Inc.;
Prior to joining the
Sub-Investment Adviser, Vice
President-Operations
Gabelli Funds, Inc.
655 Third Avenue
New York, NY 10017;
STANLEY D. SALVIGSEN Chairman of the Board and Chief
Chairman of the Board and Executive Officer:
Chief Executive Officer Comstock Partners
Strategy Fund, Inc.;
Prior to joining the
Sub-Investment Adviser, Chief
Investment Strategist:
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
250 Vesey Street
World Financial Center
New York, NY 10281;
Portfolio Manager:
Dreyfus Variable Investment
Fund--Asset Allocation
Portfolio
CHARLES L. MINTER Director, Vice President and
Vice Chairman and Secretary:
Chief Operating Officer Comstock Partners
Strategy Fund, Inc.;
Prior to joining the
Sub-Investment Adviser, Vice
President Equity Institutional
Sales:
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
250 Vesey Street
World Financial Center
New York, NY 10281;
Portfolio Manager:
Dreyfus Variable Investment
Fund--Asset Allocation
Portfolio
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Cash Management
13) Dreyfus Cash Management Plus, Inc.
14) Dreyfus Connecticut Intermediate Municipal Bond Fund
15) Dreyfus Connecticut Municipal Money Market Fund, Inc.
16) The Dreyfus Convertible Securities Fund, Inc.
17) Dreyfus Edison Electric Index Fund, Inc.
18) Dreyfus Florida Intermediate Municipal Bond Fund
19) Dreyfus Florida Municipal Money Market Fund
20) Dreyfus Focus Funds, Inc.
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth, L.P. (A Strategic Fund)
24) Dreyfus Global Investing, Inc.
25) Dreyfus GNMA Fund, Inc.
26) Dreyfus Government Cash Management
27) Dreyfus Growth and Income Fund, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) Dreyfus Investors GNMA Fund
35) The Dreyfus Leverage Fund, Inc.
36) Dreyfus Life and Annuity Index Fund, Inc.
37) Dreyfus Liquid Assets, Inc.
38) Dreyfus Massachusetts Intermediate Municipal Bond Fund
39) Dreyfus Massachusetts Municipal Money Market Fund
40) Dreyfus Massachusetts Tax Exempt Bond Fund
41) Dreyfus Michigan Municipal Money Market Fund, Inc.
42) Dreyfus Money Market Instruments, Inc.
43) Dreyfus Municipal Bond Fund, Inc.
44) Dreyfus Municipal Cash Management Plus
45) Dreyfus Municipal Money Market Fund, Inc.
46) Dreyfus New Jersey Intermediate Municipal Bond Fund
47) Dreyfus New Jersey Municipal Bond Fund, Inc.
48) Dreyfus New Jersey Municipal Money Market Fund, Inc.
49) Dreyfus New Leaders Fund, Inc.
50) Dreyfus New York Insured Tax Exempt Bond Fund
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus Ohio Municipal Money Market Fund, Inc.
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) Dreyfus Treasury Cash Management
71) Dreyfus Treasury Prime Cash Management
72) Dreyfus Variable Investment Fund
73) Dreyfus-Wilshire Target Funds, Inc.
74) Dreyfus Worldwide Dollar Money Market Fund, Inc.
75) First Prairie Cash Management
76) First Prairie Diversified Asset Fund
77) First Prairie Money Market Fund
78) First Prairie Municipal Money Market Fund
79) First Prairie Tax Exempt Bond Fund, Inc.
80) First Prairie U.S. Government Income Fund
81) First Prairie U.S. Treasury Securities Cash Management
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Fund, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Fund, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
90) Pacific American Fund
91) Peoples Index Fund, Inc.
92) Peoples S&P MidCap Index Fund, Inc.
93) Premier Insured Municipal Bond Fund
94) Premier California Municipal Bond Fund
95) Premier GNMA Fund
96) Premier Growth Fund, Inc.
97) Premier Municipal Bond Fund
98) Premier New York Municipal Bond Fund
99) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly Director, President and Chief President and
Operating Officer Treasurer
Joseph F. Tower, III Senior Vice President and Chief Assistant
Financial Officer Treasurer
John E. Pelletier Senior Vice President and General Vice President
Counsel and Secretary
Frederick C. Dey Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman Vice President and Associate Vice President
General Counsel and Assistant
Secretary
John J. Pyburn Vice President Assistant
Treasurer
Jean M. O'Leary Assistant Secretary None
Ruth D. Leibert Assistant Vice President Assistant
Secretary
Paul D. Furcinito Assistant Vice President Assistant
Secretary
John W. Gomez Director None
William J. Nutt Director None
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
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 1st day of December, 1994.
DREYFUS CAPITAL VALUE FUND, INC.
BY: /s/Marie E. Connolly*
________________________________
Marie E. Connolly, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities and on the
date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Marie E. Connolly* President (Principal Executive 12/01/94
_____________________________ Officer) and Principal Financial
Accounting Officer and Treasurer
Marie e. Connolly
/s/David W. Burke* Director 12/01/94
_____________________________
David W. Burke
/s/Hodding Carter, III* Director 12/01/94
_____________________________
Hodding Carter, III
/s/Ehud Houminer* Director 12/01/94
_____________________________
Ehud Houminer
/s/Richard C. Leone* Director 12/01/94
_____________________________
Richard C. Leone
/s/Hans Mautner* Director 12/01/94
_____________________________
Hans Mautner
/s/John E. Zuccotti* Director 12/01/94
_____________________________
John E. Zuccotti
*BY: ________________________
Eric B. Fischman,
Attorney-in-Fact
INDEX OF EXHIBITS
(5) Investment Advisory Agreement
(6) Distribution Agreement
(8)(b) Form of Sub-Custodian Agreements
(9) Shareholder Services Plan
(11) Consent of Ernst & Young, Independent Auditors
(15) Distribution Plan
Power of Attorney
INVESTMENT ADVISORY AGREEMENT
DREYFUS CAPITAL VALUE FUND, INC.
(d/b/a Dreyfus Capital Value Fund (A Premier Fund))
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in accordance
with the limitations specified in its charter documents and in
its Prospectus and Statement of Additional Information as from
time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from
time to time may be approved by the Fund's Board. The Fund
desires to employ you to act as its investment adviser and also
intends to employ Comstock Partners, Inc. to act as its sub-
investment adviser (the "Sub-Investment Adviser").
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or persons
may be officers or employees who are employed by both you and the
Fund. The compensation of such person or persons shall be paid
by you and no obligation may be incurred on the Fund's behalf in
any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of the Fund's
portfolio in accordance with the Fund's investment objectives and
policies as stated in its Prospectus and Statement of Additional
Information as from time to time in effect. In connection
therewith, you will supervise the continuous program of
investment, evaluation and, if appropriate, sale and reinvestment
of the Fund's assets conducted by the Sub-Investment Adviser.
You will furnish to the Fund such statistical information, with
respect to the investments which the Fund may hold or contemplate
purchasing, as the Fund may reasonably request. The Fund wishes
to be informed of important developments materially affecting its
portfolio and shall expect you, on your own initiative, to
furnish to the Fund from time to time such information as you may
believe appropriate for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to the Fund's
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of the Fund's shares;
and generally assist in all aspects of the Fund's operations.
You shall have the right, at your expense, to engage other
entities to assist you in performing some or all of the
obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund agrees
as an inducement to your undertaking the same that you shall not
be liable hereunder for any error of judgment or mistake of law
or for any loss suffered by the Fund, provided that nothing
herein shall be deemed to protect or purport to protect you
against any liability to the Fund or to its security holders to
which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee, at an annual rate based on the value of the
Fund's average daily net assets during the preceding month, as
follows:
Annual Fee as a Percentage
Total Assets of Average Daily Net Assets
0 up to $25 million .60 of 1%
$25 million up to $75 million .50 of 1%
$75 million up to $200 million .45 of 1%
$200 million up to $300 million .40 of 1%
In excess of $300 million .375 of 1%
Net asset value shall be computed on such days and at
such time or times as described in the Fund's then-current
Prospectus and Statement of Additional Information. Upon any
termination of this Agreement before the end of any month, the fee
for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and
shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the
value of the Fund's net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of the Fund's net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund (other than
those borne by the Sub-Investment Adviser) will be borne by the
Fund, except to the extent specifically assumed by you. The
expenses to be borne by the Fund include, without limitation, the
following: organizational costs, taxes, interest, loan commitment
fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members who
are not your or the Sub-Investment Adviser's (or any affiliates
thereof) officers, directors or employees or holders of 5% or more
of your or the Sub-Investment Adviser's (or any affiliates thereof)
outstanding voting securities, Securities and Exchange Commission
fees and state Blue Sky qualification fees, advisory fees, charges
of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing services,
costs of maintaining the Fund's existence, costs attributable to
investor services (including, without limitation, telephone and
personnel expenses), costs of preparing and printing prospectuses
and statements of additional information for regulatory purposes
and for distribution to existing stockholders, costs of
stockholders' reports and meetings, and any extraordinary expenses.
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's Sub-
Investment Advisory Agreement, but excluding interest, taxes,
brokerage and, with the prior written consent of the necessary
state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund,
the Fund may deduct from the fees to be paid hereunder, or you will
bear, such excess expense to the extent required by state law. You
will pay or bear such excess expense equally with the Sub-
Investment Adviser to the extent of .15 of 1% of the Fund's average
daily net assets or $37,500, whichever is less, and all of the
remainder in excess of such amount. Your obligation pursuant
hereto will be limited to the amount of your fees hereunder. Such
deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly
basis.
The Fund understands that you now act, and that from time
to time hereafter you may act, as investment adviser to one or more
other investment companies and fiduciary or other managed accounts,
and the Fund has no objection to your so acting, provided that when
the purchase or sale of securities of the same issuer is suitable
for the investment objectives of two or more companies or accounts
managed by you which have available funds for investment, the
available securities will be allocated in a manner believed by you
to be equitable to each company or account. It is recognized that
in some cases this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtainable for or
disposed of by the Fund.
In addition, it is understood that the persons employed
by you to assist in the performance of your duties hereunder will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict your right or the right
of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for a loss
resulting from willful misfeasance, bad faith or gross negligence
on your part in the performance of your duties or from reckless
disregard by you of your obligations and duties under this
Agreement. Any person, even though also your officer, director,
partner, employee or agent, who may be or become an officer, Board
member, employee or agent of the Fund, shall be deemed, when
rendering services to the Fund or acting on any business of the
Fund, to be rendering such services to or acting solely for the
Fund and not as your officer, director, partner, employee or agent
or one under your control or direction even though paid by you.
This Agreement shall continue until November 15, 1994,
and thereafter shall continue automatically for successive annual
periods ending on November 15th of each year, provided such
continuance is specifically approved at least annually by (i) the
Fund's Board or (ii) vote of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not
"interested persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable
without penalty, on 60 days' notice, by the Fund's Board or by vote
of holders of a majority of the Fund's shares or, upon not less
than 90 days' notice, by you. This Agreement also will terminate
automatically in the event of its assignment (as defined in said
Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors, trustees,
partners, officers and employees of other corporations, business
trusts, partnerships or other entities (including other investment
companies) and that such other entities may include the name
"Dreyfus" as part of their name, and that your corporation or its
affiliates may enter into investment advisory or other agreements
with such other entities. If you cease to act as the Fund's
investment adviser, the Fund agrees that, at your request, the Fund
will take all necessary action to change the name of the Fund to a
name not including "Dreyfus" in any form or combination of words.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and returning
to us the enclosed copy hereof.
Very truly yours,
DREYFUS CAPITAL VALUE
FUND, INC.
By:
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
DISTRIBUTION AGREEMENT
DREYFUS CAPITAL VALUE FUND, INC.
(d/b/a Dreyfus Capital Value Fund (A Premier Fund))
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
DREYFUS CAPITAL VALUE FUND, INC.
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Reapproval Date Reapproval Day
November 15, 1995 November 15th
DREYFUS CAPITAL VALUE FUND, INC.
(d/b/a Dreyfus Capital Value Fund (A Premier Fund))
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan under which the Fund would pay the Fund's
distributor (the "Distributor") for providing services to (a)
shareholders of each series of the Fund or class of Fund shares
set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time, or (b) if no series or classes are set forth
on such Exhibit, shareholders of the Fund. The Distributor
would be permitted to pay certain financial institutions,
securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services.
The Plan is not to be adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act"), and the
fee under the Plan is intended to be a "service fee" as defined
in Article III, Section 26, of the NASD Rules of Fair Practice.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such information as it deemed necessary to an informed
determination as to whether a written plan should be implemented
and has considered such pertinent factors as it deemed necessary
to form the basis for a decision to use Fund assets for such
purposes.
In voting to approve the implementation of such a
plan, the Board has concluded, in the exercise of its reasonable
business judgment and in light of applicable fiduciary duties,
that there is a reasonable likelihood that the plan set forth
below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor a fee at
the annual rate set forth on Exhibit A in respect of the
provision of personal services to shareholders and/or the
maintenance of shareholder accounts. The Distributor shall
determine the amounts to be paid to Service Agents and the basis
on which such payments will be made. Payments to a Service
Agent are subject to compliance by the Service Agent with the
terms of any related Plan agreement between the Service Agent
and the Distributor.
2. For the purpose of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, as applicable, shall be computed in the
manner specified in the Fund's charter documents for the
computation of net asset value.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a
majority of the Board members who are not "interested persons"
(as defined in the Act) of the Fund and have no direct or
indirect financial interest in the operation of this Plan or in
any agreements entered into in connection with this Plan,
pursuant to a vote cast in person at a meeting called for the
purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the
Board, provided that any material amendments of the terms of
this Plan shall become effective only upon approval as provided
in paragraph 4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and
have no direct or indirect financial interest in the operation
of this Plan or in any agreements entered into in connection
with this Plan.
Dated: November 2, 1992
As Revised: August 24, 1994 EXHIBIT A
Name of Series or Class
Class A
Class B
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our report
dated November 8, 1994, in this Registration Statement (Form N-1A 2-88822)
of Dreyfus Capital Value Fund, Inc.
ERNST & YOUNG LLP
New York, New York
November 22, 1994
DREYFUS CAPITAL VALUE FUND, INC.
(d/b/a Dreyfus Capital Value Fund (A Premier Fund))
DISTRIBUTION PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Distribution
Plan (the "Plan") relating to its Class B shares in accordance
with Rule 12b-1, promulgated under the Investment Company Act of
1940, as amended (the "Act"). Under the Plan, the Fund would
pay the Fund's distributor (the "Distributor") for distributing
the Fund's Class B shares. If this proposal is to be
implemented, the Act and said Rule 12b-1 require that a written
plan describing all material aspects of the proposed financing be
adopted by the Fund.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use assets attributable to the Fund's
Class B shares for such purposes.
In voting to approve the implementation of such a plan,
the Board members have concluded, in the exercise of their
reasonable business judgment and in light of their respective
fiduciary duties, that there is a reasonable likelihood that the
plan set forth below will benefit the Fund and holders of its
Class B shares.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor for
distribution a fee at an annual rate of .75 of 1% of the value of
the average daily net assets attributable to Class B.
2. For the purposes of determining the fees payable
under this Plan, the value of the Fund's net assets attributable
to Class B shall be computed in the manner specified in the
Fund's charter documents as then in effect for the computation of
the value of the Fund's net assets attributable to such Class.
3. The Fund's Board shall be provided, at least
quarterly, with a written report of all amounts expended pursuant
to this Plan. The report shall state the purpose for which the
amounts were expended.
4. This Plan will become effective upon the later to
occur of (i) the consummation of the transactions contemplated by
the Amended and Restated Agreement and Plan of Merger dated as of
December 5, 1993 by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation or
(ii) approval by (a) holders of a majority of the Fund's
outstanding Class B shares, and (b) a majority of the Board
members, including a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this
Plan, pursuant to a vote cast in person at a meeting called for
the purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4(b)
hereof.
6. This Plan may be amended at any time by the Fund's
Board, provided that (a) any amendment to increase materially the
costs which the Fund may bear pursuant to this Plan shall be
effective only upon approval by a vote of the holders of a
majority of the Fund's outstanding Class B shares, and (b) any
material amendments of the terms of this Plan shall become
effective only upon approval as provided in paragraph 4(b)
hereof.
7. This Plan is terminable without penalty at any
time by (a) vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this
Plan, or (b) vote of the holders of a majority of the Fund's
outstanding Class B shares.
Dated: May 23, 1994
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "custodian") for the
investment company identified below (the "Fund") hereby appoints
on the following terms and conditions Bankers Trust Company as
subcustodian (the "Subcustodian") for it and the Subcustodian
hereby accepts such appointment on the following terms and con-
ditions as of the date set forth below.
1. QUALIFICATION. The Custodian and the Subcustodian
each represents to the other and to the Fund that it is
qualified to act as a custodian for a registered investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act").
2. SUBCUSTODY. The Subcustodian agrees to maintain a
separate account and to hold segregated at all times from
the Subcustodian's securities and from all other customers'
securities held by the Subcustodian, all the Fund's
securities and evidence of rights thereto ("Fund
Securities") deposited, from time to time by the Custodian
with the Subcustodian. The Subcustodian will accept, hold or
dispose of and take other actions with respect to Fund
Securities in accordance with the Instructions of the
Custodian given in the manner set forth in Section 4 and
will take certain other actions as specified in Section 3.
The Subcustodian hereby waives any claim against or lien on
any Fund Securities. The Subcustodian may take steps to
register and continue to hold Fund Securities in the name of
the Subcustodian's nominee and shall take such other steps
as the Subcustodian believes necessary or appropriate to
carry out efficiently the terms of this Agreement. To the
extent that ownership of Fund Securities may be recorded by
a book entry system maintained by any transfer agent or
registrar for such Fund Securities or by Depository Trust
Company, the Subcustodian may hold Fund Securities as a book
entry reflecting the ownership of such Fund Securities by
its nominee and need not possess certificates or any other
evidence of ownership of Fund Securities.
3. SUBCUSTODIAN'S ACTS WITHOUT INSTRUCTIONS. Except
as otherwise instructed pursuant to Section 4, the
Subcustodian will (i) present all Fund Securities requiring
presentation for any payment thereon, (ii) distribute to the
Custodian cash received thereon, (iii) collect and
distribute to the Custodian interest and any dividends and
distributions on Fund Securities, (iv) at the request of the
Custodian, or on its behalf, execute any necessary
declarations or certificates of ownership (provided by the
Custodian or on its behalf) under any tax law now or here-
after in effect, (v) forward to the Custodian, or notify it
by telephone of, confirmations, notices, proxies or proxy
soliciting materials relating to the Fund Securities
received by it as registered holder (and the Custodian
agrees to forward same to the Fund), and (vi) promptly
report to the Custodian any missed payment or other default
upon any Fund Securities known to it as Subcustodian
hereunder (the Subcustodian shall be deemed to have
knowledge of any payment default on any Fund Securities in
respect of which it acts as paying agent). All cash
distributions from the Subcustodian to the Custodian will be
in same day funds, on the same day that same day funds are
received by the Subcustodian unless such distribution
required instructions from the Custodian which were not
timely received. Promptly after the Subcustodian is
furnished with any report of its independent public
accountants on an examination of its internal accounting
controls and procedures for safeguarding securities held in
its custody as subcustodian under this Agreement or under
similar agreements, the Subcustodian will furnish a copy
thereof to the Custodian.
4. INSTRUCTIONS, OTHER COMMUNICATIONS. Any officer of
the Custodian designated from time to time by letter to the
Subcustodian, signed by the President or any Vice President
and any Assistant Vice President, Assistant Secretary or
Assistant Treasurer of the Custodian, as an officer of the
Custodian authorized to give instructions to the
Subcustodian with respect to Fund Securities (an "Authorized
Officer"), shall be authorized to instruct the Subcustodian
as to the acceptance, holding, presentation, disposition or
any other action with respect to Fund Securities from time
to time by telephone, or in writing signed by such
Authorized Officer and delivered by tested telex, tested
computer printout or such other reasonable method as the
Custodian and Subcustodian shall agree is designed to
prevent unauthorized officer's instructions; provided,
however, the Subcustodian is authorized to accept and act
upon orders from the Custodian, whether given orally, by
telephone or otherwise, which the Subcustodian reasonably
believes to be given by an authorized person. The
Subcustodian will promptly transmit to the Custodian all
receipts and transaction confirmations in respect of Fund
Securities as to which the Subcustodian has received any
instructions. The Authorized Officers shall be as set forth
on Exhibit A attached hereto and, as amended from time to
time, made a part hereof.
5. LIABILITIES. (i) The Subcustodian shall not be
liable for any action taken or omitted to be taken in
carrying out the terms and provision of this Agreement if
done without willful malfeasance, bad faith, gross
negligence or reckless disregard of its obligations and
duties under this Agreement. Except as otherwise set forth
herein, the Subcustodian shall have no responsibility for
ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes or similar matters
relating to the Fund Securities (except at the instructions
of the Custodian), nor for informing the Custodian with
respect thereto, whether or not the Subcustodian has, or is
deemed to have, knowledge of the aforesaid. The Subcustodian
is under no duty to supervise or to provide investment
counseling or advice to the Custodian or to the Fund
relative to the purchase, sale, retention or other
disposition of any Fund Securities held hereunder. The
Subcustodian shall for the benefit of the Custodian and the
Fund use the same care with respect to receiving,
safekeeping, handling and delivery of Fund Securities as it
uses in respect of its own securities.
(ii) The Subcustodian will indemnify, defend and save
harmless the Custodian and the Fund from and against all
loss, liability, claims and demands incurred by the
Custodian or the Fund arising out of or in connection with
the Subcustodian's willful malfeasance, bad faith, gross
negligence or reckless disregard of its obligations and
duties under this Agreement.
(iii) The Custodian agrees to be responsible for and
indemnify the Subcustodian and any nominee in whose name the
Fund Securities are registered, from and against all loss,
liability, claims and demands incurred by the Subcustodian
and the nominee in connection with the performance of any
activity pursuant to this Agreement, done in good faith and
without negligence, including any expenses, taxes or other
charges which the Subcustodian is required to pay in
connection therewith.
6. Each party may terminate this Agreement at any time
by not less than ten (10) business days' prior written
notice. In the event that such notice is given, the
Subcustodian shall make delivery of the Fund Securities held
in the Subcustodian account to the Custodian or to any third
party within the Borough of Manhattan, specified by the
Custodian in writing within ten (10) days of receipt of the
termination notice, at the Custodian's expense.
7. All communications required or permitted to be given
under this Agreement, unless otherwise agreed by the
parties, shall be addressed a follows:
(i) to the Subcustodian:
Bankers Trust Company
1 Bankers Trust Plaza
14th Floor
New York, NY 10015
Attention: Barara Walter
RMO Safekeeping Unit
(ii) to the Custodian:
The Bank of New York
110 Washington Street
New York, New York 10286
8. MISCELLANEOUS: this Agreement (i) shall be
governed by and construed in accordance with the laws of the
State of New York, (ii) may be executed in counterparts each
of which shall be deemed an original but all of which shall
constitute the same instrument, and (iii) may be amended by
the parties hereto in writing.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth below.
Dated: April 13, 1992
THE BANK OF NEW YORK
Custodian
By: ______________________________________
Title: ____________________________________
As Custodian For
DREYFUS CALIFORNIA INTERMEDIATE
MUNICIPAL BOND FUND
BANKERS TRUST COMPANY
As Subcustodian
By: ___________________________________
Title: ___________________________________
EXHIBIT A
TO SUBCUSTODIAN AGREEMENT
DATED: APRIL 13, 1992
The Authorized Officers pursuant to Section 4 of the
Agreement shall be:
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
Dated: April 13, 1992
THE BANK OF NEW YORK
As Custodian
By: ___________________________
Title: ________________________
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "Custodian") for the
investment company identified in Schedule A attached
(collectively, the "Funds") hereby appoints on the following
terms and conditions Chemical Bank as subcustodian (the
"Subcustodian") for it and the Subcustodian hereby accepts such
appointment on the following terms and conditions as of the date
set forth below.
1. QUALIFICATION. The Custodian and the Subcustodian
each represent to the other and to each Fund that it is
qualified to act as custodian for a registered investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act").
2. SUBCUSTODY. The Subcustodian agrees to hold in a
separate account, segregated at all times from all other
accounts maintained by the Subcustodian, all securities and
evidence of rights thereto of each of the Funds
(collectively, "Fund Securities") deposited, from time to
time by the Custodian with the Subcustodian. The
Subcustodian will accept, hold or dispose of and take such
other reasonable actions with respect to Fund Securities, in
addition to those specified in Section 3, in accordance with
the instructions of the Custodian relating to Fund
Securities given in the manner set forth in Section 4
("Instructions"). The Subcustodian hereby waives any claim
against, or lien on, any Fund Securities for any claim
hereunder. Registered Fund Securities may be held in the
name of the Subcustodian or nominee. To the extent that
ownership of Fund Securities may be recorded by a book entry
system maintained by any transfer agent or registrar for
such Fund Securities (including, but not limited to, any
such system operated by the Subcustodian) or by Depositary
Trust Company, the Subcustodian may hold Fund Securities as
a book entry reflecting the ownership of such Fund
Securities by it or its nominee and need not possess
certificates or any other evidence of ownership.
3. SUBCUSTODIAN'S ACTS WITHOUT INSTRUCTIONS. Except
as otherwise instructed pursuant to Section 4, the
Subcustodian will (i) present all Fund Securities requiring
presentation for any payment thereon, (ii) distribute to the
Custodian cash received thereupon, (iii) collect and
distribute to the Custodian interest and any dividends and
distributions on Fund Securities, (iv) forward to the
Custodian all confirmations, notices, proxies or proxy
soliciting materials relating to the Fund Securities
received by it (and the Custodian agrees to forward same to
the Fund), (v) report to the Custodian any missed payment or
other default upon any Fund Securities known to it as
Subcustodian hereunder, (the Subcustodian shall be deemed to
have knowledge of any payment default on any Fund Securities
in respect of which it acts as paying agent); all cash
distributions from the Subcustodian to the Custodian will be
on same day funds, or the same day that same day funds are
received by the Subcustodians unless such distribution
required instructions from the Custodian which were not
timely received, and (vi) at the request of the Custodian,
or on its behalf, execute any necessary declarations or
certificates of ownership (provided by the Custodian or on
its behalf) under any tax law nor or hereafter in effect.
The Subcustodian will furnish to the Custodian, upon the
Custodian's request, any report of the Subcustodian's
independent public accountants on an examination of its
internal accounting controls and procedures for safeguarding
securities held in its custody for the account of others.
4. INSTRUCTIONS, OTHER COMMUNICATIONS. Any officer of
the Custodian designated from time to time by letter to the
Subcustodian, signed by the President or any Vice President
and any Assistant Vice President, Assistant Secretary or
Assistant Treasurer of the Custodian, as an officer of the
Custodian authorized to give Instructions to the
Subcustodian with respect to Fund Securities (an "Authorized
Officer") shall be authorized to instruct the Subcustodian
as to the acceptance, holding, voting, presentation,
disposition or any other action with respect to Fund
Securities from time to time in writing signed by such
Authorized Officer and delivered by hand, mail, telecopier,
tested telex, tested computer printout or such other
reasonable method as the Custodian and Subcustodian shall
agree is designed to prevent unauthorized officer's
instructions. The Subcustodian is also authorized to accept
an act upon Instructions regardless of the manner in which
given (whether orally, by telephone or otherwise) if the
Subcustodian reasonably believes such Instructions are given
by an Authorized Officer. The Subcustodian will promptly
transmit to the Custodian all receipts, confirmations or
other transactional evidence received by it in respect of
Fund Securities as to which the Subcustodian has received
any Instructions. Instructions and other communications to
the Subcustodian shall be given to Chemical Bank, 55 Water
Street, Room 504, New York, New York, Attention: Debt
Securities Administration, Phone: (212)820-5616 Telex:
(212)269-8510 (or to such other address as the Custodian
or the Fund or Funds giving such notice, shall specify by
notice to the Subcustodian.
5. THE SUBCUSTODIAN. The Subcustodian shall not be
liable for any action taken or omitted to be taken in
carrying out the terms and provisions of this Agreement if
done without willful malfeasance, bad faith, negligence or
reckless disregard of its obligations and duties under this
Agreement.
The Subcustodian shall not have any responsibility for
ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes or similar matters
relating to the Fund Securities, except upon Instructions
from the Custodian, nor for informing the Custodian with
respect thereto, unless the Subcustodian has knowledge or is
deemed to have knowledge of the aforesaid. The Subcustodian
shall be deemed to have knowledge in circumstances where it
is acting as tender agent or paying agent for the Fund
Securities. The Subcustodian shall not be under a duty to
supervise or to provide advice (other than notice) to the
Custodian or any of the Funds relative to any purchase,
sale, retention or other disposition of any Fund Securities
held hereunder. The Subcustodian shall for the benefit of
the Custodian and the Funds be required to exercise the same
care with respect to the receiving, safekeeping, handling
and delivery of Fund Securities than it customarily
exercises in respect of its own securities.
The Subcustodian will indemnify, defend and save
harmless the Custodian and the Funds from any loss or
liability incurred by the Custodian arising out of or in
connection with the Subcustodian's willful malfeasance, bad
faith, negligence or reckless disregard of its obligations
and duties under this Agreement; PROVIDED, HOWEVER, that the
Subcustodian shall in no event be liable for any special,
indirect or consequential damages.
The Custodian agrees to be responsible for, and will
indemnify, defend and save harmless the Subcustodian (or any
nominee in whose name any Fund Securities are registered)
for, any loss or liability incurred by the Subcustodian (or
such nominee) arising out of or in connection with any
action taken by the Subcustodian (or such nominee) in
accordance with any Instructions or any other action taken
by the Subcustodian (or such nominee) in good faith and
without negligence pursuant to this Agreement, including any
expenses, taxes or other charges which the Subcustodian (or
such nominee) is required to incur or pay in connection
therewith.
6. RESIGNATION. The Subcustodian may resign as such
at any time upon not less than five business days' prior
written notice to the Custodian. In the event of such
resignation or any other termination of this Agreement, the
Subcustodian shall deliver all Fund Securities then held by
it to the Custodian, or as otherwise directed by the
Custodian pursuant to Instructions received by the
Subcustodian, at the Custodian's expense; PROVIDED, HOWEVER,
that the Subcustodian shall not be required to effect any
such delivery outside the Borough of Manhattan.
7. MISCELLANEOUS. This Agreement (i) shall be
governed by and construed in accordance with the laws of the
State of New York, (ii) may be executed in counterparts each
of which shall be deemed an original but all of which shall
constitute the same instrument, and (iii) may be amended
only by written agreement executed by the parties hereto.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth below.
Dated: ______________________________
By: ______________________________
[Address]
Telephone:
Telex:
As Custodian for the Funds Listed
in Schedule A attached
CHEMICAL BANK
By: ______________________________
POWER OF ATTORNEY
The undersigned, being members of the Board of the Dreyfus Capital
Value Fund (A Premier Fund), hereby constitutes and appoints Frederick C.
Dey, Eric B. Fischman, Ruth D. Leibert and John Pelletier as the attorney-
in-fact for the proper officers of the Fund, with full power of
substitution and resubstitution; to sign any and all amendments to the
Registration Statement (including Post-Effective Amendments and amendments
thereto); and that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved; and that such
attorneys-in-fact, and each of them, shall have full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in connection with such Registration Statement and any and all
amendments and supplements thereto, as fully to all intents and purposes as
the officer, for whom he is acting as attorney-in fact, might or could do
in person.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of
August 26, 1994.
/s/ David W. Burke /s/ Richard C. Leone
David W. Burke Richard C. Leone
/s/ Hodding Carter /s/ Hans C. Mautner
Hodding Carter, III Hans C. Mautner
/s/ Ehud Houminer /s/ John E. Zuccotti
Ehud Houminer John E. Zuccotti
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Frederick C. Dey,
Eric B. Fischman, Ruth D. Leibert and John Pelletier and each of them, with
full power to act without the other, her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution; for her and
in her name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to the Registration Statement for
each Fund listed in Exhibit A attached hereto (including Post-Effective
Amendments and amendments thereto); and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact, and each of
them, full power and authority to do and perform each and every act
ratifying and confirming all that said attorneys-in-fact and agents or any
of them, or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of
, 1994.
/s/
Marie E. Connolly
EXHIBIT A
Dreyfus Capital Value Fund (A Premier Fund)
Dreyfus New Leaders Fund, Inc.
Dreyfus Municipal Bond Fund, Inc.
Dreyfus Insured Municipal Bond Fund, Inc.
Dreyfus Municipal Money Market Fund, Inc.
Dreyfus California Tax Exempt Money Market Fund
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<NAME> DREYFUS CAPITAL VALUE FUND, INC.-CLASS A
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 463,056
<INVESTMENTS-AT-VALUE> 502,507
<RECEIVABLES> 110,103
<ASSETS-OTHER> 1,244
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 613,854
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 102,339
<TOTAL-LIABILITIES> 102,614
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 570,082
<SHARES-COMMON-STOCK> 9,248
<SHARES-COMMON-PRIOR> 2,683
<ACCUMULATED-NII-CURRENT> 9,772
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11,069)
<OVERDISTRIBUTION-GAINS> 0
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</TABLE>
