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. 18 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 18 [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)
----
X on August 21, 1995 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
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 6
5 Management of the Fund 20
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 38
7 Purchase of Securities Being Offered 22
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-33
13 Investment Objectives and Policies B-2
14 Management of the Fund B-14
15 Control Persons and Principal B-19
Holders of Securities
16 Investment Advisory and Other B-18
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-31
18 Capital Stock and Other Securities B-33
19 Purchase, Redemption and Pricing B-21; B-23;
of Securities Being Offered B-28
20 Tax Status *
21 Underwriters B-29
22 Calculations of Performance Data B-32
23 Financial Statements B-39
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-13
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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PROSPECTUS AUGUST 21, 1995
DREYFUS CAPITAL VALUE FUND (A PREMIER FUND)
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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.
BY THIS PROSPECTUS, THE FUND IS OFFERING FOUR CLASSES OF SHARES _
CLASS A, CLASS B, CLASS C AND CLASS R _ WHICH ARE DESCRIBED HEREIN. SEE
"ALTERNATE PURCHASE METHODS."
YOU CAN PURCHASE OR REDEEM ALL CLASSES OF SHARES BY TELEPHONE USING
DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION ("DREYFUS") SERVES AS THE FUND'S INVESTMENT
ADVISER.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED AUGUST 21, 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 144.
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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TABLE OF CONTENTS
Page
Fee Table................................. 3
Condensed Financial Information........... 4
Alternative Purchase Methods.............. 5
Description of the Fund................... 6
Management of the Fund.................... 20
How to Buy Fund Shares.................... 22
Shareholder Services...................... 27
How to Redeem Fund Shares................. 32
Distribution Plan and Shareholder Services Plan... 35
Dividends, Distributions and Taxes............. 36
Performance Information........................ 37
General Information............................ 38
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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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This Page Intentionally Left Blank
Page 2
<TABLE>
<CAPTION>
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS R
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................... 4.50% None None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)..... None* 4.00% 1.00% None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................... .75% .75% .75% .75%
12b-1 Fees............................................ None .75% .75% None
Other Expenses........................................ .85% .89% .85% .85%
Total Fund Operating Expenses......................... 1.60% 2.39% 2.35% 1.60%
EXAMPLE
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) except where noted, redemption at
the end of each time period:
CLASS A CLASS B CLASS C CLASS R
1 YEAR $ 61 $64/$24** $34/$24** $ 16
3 YEARS $ 93 $105/$75** $ 73 $ 50
5 YEARS $128 $148/$128** $126 $ 87
10 YEARS $226 $235*** $269 $190
-------------------
* A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
** Assuming no redemption of shares.
*** Ten-year figures assume conversion of Class B shares to Class A shares at
end of sixth year following the date of purchase.
</TABLE>
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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 costs and expenses borne by the Fund and investors, the payment of which
will reduce investors' annual return. Other Expenses for Class C are based on
amounts for Class A for the Fund's last fiscal year. Long-term investors in
Class B or Class C shares could pay more in 12b-1 fees than the economic
equivalent of paying a front-end sales charge. The information in the
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. Certain Service Agents (as defined below)
may charge their clients direct fees for effecting transactions in Fund
shares; such fees are not reflected in the foregoing table. See "Management
of the Fund," "How to Buy Fund Shares" and "Distribution Plan and Shareholder
Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited (except where
noted) by Ernst & Young LLP, the Fund's independent auditors, whose report
thereon appears in the Statement of Additional Information. Further financial
data and related notes for Class A and Class B are included in the Statement
of Additional Information, available upon request. No financial information
is available for Class C or Class R shares, which had not been offered as of
the date of this Prospectus.
page 3
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for Class A
and Class B shares of common stock outstanding, total investment return,
ratios to average net assets and other supplemental data for each period
indicated. This information has been derived from the Fund's financial
statements.
CLASS A SHARES CLASS B SHARES
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SIX MONTHS YEAR SIX MONTHS
ENDED ENDED ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31, 1995 SEPTEMBER 30, MARCH 31, 1995
--------------------------------------------------------------------- ------------- ------------- -------------
1986(1)(2) 1987(1) 1988(1) 1989(1) 1990(1) 1991 1992 1993 1994 (UNAUDITED) 1993(3) 1994 (UNAUDITED)
PER SHARE DATA: ----- ----- ----- ------ ----- ---- ---- ---- ---- --------- ----- ---- -------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period.. $7.25 $9.54 $12.84 $12.68 $14.42 $15.08 $12.97 $12.41 $11.42 $11.88 $10.58 $11.32 $11.69
----- ----- ----- ----- ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment
income-net(4) .03 .07 .58 .90 .89 .73 .40 .24 .24 .17 .03 .23 .15
Net realized and
unrealized gain
(loss) on
investments(4) 2.26 3.59 (.18) 1.60 .61 (.89) (.39) (.62) .46 (.48) .71 .38 (.50)
----- ----- ----- ----- ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM
INVESTMENT
OPERATIONS 2.29 3.66 .40 2.50 1.50 (.16) .01 (.38) .70 (.31) .74 .61 (.35)
----- ----- ----- ----- ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net(4) -- (.03) (.15) (.76) (.84) (.99) (.57) (.61) (.24) (.26) -- (.24) (.20)
Dividends from net realized
gain on
investments(4) -- (.33) (.41) -- -- (.96) -- -- -- -- -- -- --
----- ----- ----- ----- ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL
DISTRIBUTIONS -- (.36) (.56) (.76) (.84) (1.95) (.57) (.61) (.24) (.26) -- (.24) (.20)
----- ----- ----- ----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $9.54 $12.84 $12.68 $14.42 $15.08 $12.97 $12.41 $11.42 $11.88 $11.31 $11.32 $11.69 $11.14
===== ====== ====== ===== ====== ====== ====== ====== ====== ====== ===== ====== ======
TOTAL INVESTMENT
RETURN (5) 31.59%(6) 39.72% 3.29% 20.95% 10.53% (.70%) (.02%) (2.70%) 6.14% (2.55%)(6) 6.99%(6) 5.35% (2.91%)(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% 1.21% .61%(6) 1.49%(6) 1.99% .98%(6)
Ratio of dividends and interest on
securities sold short
to average
net assets -- .15% .13% .03% .26% .49% .39% .45% .39% .26%(6) .31%(6) .40% .27%(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% 2.06% 1.75%(6) .83%(6) 1.39% 1.37%(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% 45.57% 12.45%(6) 41.78% 45.57% 12.45%(6)
Net Assets, end of period
(000's Omitted) $9,444 $139,796 $502,442 $607,192 $741,267 $755,450 $537,392 $412,316 $402,708 $331,219 $30,378 $108,532 $98,618
--------------------
(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 load.
(6) Not annualized.
</TABLE>
Further information about the Fund's performance is contained in the
Fund's annual report which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
Page 4
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares. Orders
for purchases of Class R shares, however, may be placed only for certain
eligible investors as described below. If you are not eligible to purchase
Class R shares, you may choose from Class A, Class B and Class C the Class of
shares that best suits your needs, given the amount of your purchase, the
length of time you expect to hold your shares and any other relevant
circumstances. Each Fund share represents an identical pro rata interest in
the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a maximum
initial sales charge of 4.50% of the public offering price imposed at the
time of purchase. The initial sales charge may be reduced or waived for
certain purchases. See "How to Buy Fund Shares _ Class A Shares." These
shares are subject to an annual service fee at the rate of .25 of 1% of the
value of the average daily net assets of Class A. See "Distribution Plan and
Shareholder Services Plan _ Shareholder Services Plan."
Class B shares are sold at net asset value per share with no initial
sales charge at the time of purchase; as a result, the entire purchase price
is immediately invested in the Fund. Class B shares are subject to a maximum
4% contingent deferred sales charge ("CDSC"), which is assessed only if you
redeem Class B shares within six years of purchase. See "How to Buy Fund
Shares _ Class B Shares" and "How to Redeem Fund Shares_Contingent Deferred
Sales Charge _ Class B Shares." These shares also are subject to an annual
service fee at the rate of .25 of 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
such Class, and will no longer be subject to the distribution fee. Class B
shares that have been acquired through the reinvestment of dividends and
distributions will be converted on a pro rata basis together with other Class
B shares, in the proportion that a shareholder's Class B shares converting to
Class A shares bears to the total Class B shares not acquired through the
reinvestment of dividends and distributions.
Class C shares are 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 C shares are subject to a 1% CDSC,
which is assessed only if you redeem Class C shares within one year of
purchase. See "How to Buy Fund Shares _ Class C Shares" and "How to Redeem
Fund Shares _ Contingent Deferred Sales Charge _ Class C Shares." These
shares also are subject to an annual service fee at the rate of .25 of 1%,
and an annual distribution fee at the rate of .75 of 1%, of the value of the
average daily net assets of Class C. See "Distribution Plan and Shareholder
Services Plan." The distribution fee paid by Class C will cause such Class to
have a higher expense ratio and to pay lower dividends than Class A.
Class R shares may not be purchased directly by individuals, although
eligible institutions may purchase Class R shares for certain accounts
maintained by individuals. Class R shares are sold at net asset value per
share only to institutional investors acting for themselves or in a
fiduciary, advisory, agency, custodial or similar capacity for qualified or
non-qualified employee benefit plans, including pension, profit-sharing,
SEP-IRAs and other deferred compensation plans, whether established by corpora
tions, partnerships, non-profit entities or state and local governments, but
not including IRAs or IRA "Rollover Accounts." Class R shares are not subject
to an annual service fee or distribution fee.
Page 5
The decision as to which Class of shares is more beneficial to you
depends on the amount and the intended length of your investment. If you are
not eligible to purchase Class R shares, you should consider whether, during
the anticipated life of your investment in the Fund, the accumulated
distribution fee and CDSC, if any, on Class B or Class C shares would be less
than the initial sales charge on Class A shares purchased at the same time,
and to what extent, if any, such differential would be offset by the return
of Class A. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or Class C shares may exceed the
initial sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any conversion
rights of the Classes in the context of your own investment time frame. For
example, while Class C shares have a shorter CDSC period than Class B shares,
Class C shares do not have a conversion feature, and, therefore, are subject
to an ongoing distribution fee. Thus, Class B shares may be more attractive th
an Class C shares to investors with longer term investment outlooks.
Generally, Class A shares may be more appropriate for investors who invest
$100,000 or more in Fund shares, but will not be appropriate for investors
who invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's goal is to 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 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
Page 6
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.
("Moody's") or Standard & Poor's Corporation ("S&P") 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 or D by S&P).
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 S&P, 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 and BB
or lower by S&P. 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
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 up
to 331/3% of the value of its total assets. This borrowing, which is known as
leveraging, generally will be unsecured, except to the extent the Fund enters
into reverse repurchase agreements described below. Leveraging will
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.
Page 7
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.
SHORT-SELLING _ The Fund may make short sales, which are transactions in
which the Fund sells a security it does not own in anticipation of a decline
in the market value of that security. To complete such a transaction, the
Fund must borrow the security to make delivery to the buyer. The Fund then is
obligated to replace the security borrowed by purchasing it at the market
price at the time of replacement. The 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.
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.
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 Fund at no time will have
more than 15% of the value of its net assets in deposits on short sales
against the box.
CALL AND PUT OPTIONS ON SPECIFIC SECURITIES _ The Fund may invest up to 5%
of its assets, represented by the premium paid, in the purchase of call and
put options in respect of specific securities (or groups or "baskets" of
specific securities) in which the Fund may invest. The Fund may write covered
call and put option contracts to the extent of 20% of the value of its net
assets at the time such option contracts are written. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell,
the underlying security at the exercise price at any time during the option
period. Conversely, a put option gives the purchaser of the option the right
to sell, and obligates the writer to buy, the underlying security at the
exercise price at any time during the option period. A covered call option
sold by the Fund, which is a call option with respect to which the Fund owns
the underlying security, exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of
the underlying security or to possible continued holding of a security or
securities which might otherwise have been sold to protect against
depreciation in its market price. 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. 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. Similarly, the principal
reason for writing covered put options is to realize income in the form of
premiums. 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" by purchasing an option on the same
security with the same exercise price and expiration date as the option 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
Page 8
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 indices, 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 indices 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 or for hedging purposes, the Fund may engage in futures and
options on futures transactions, including those relating to indices, as
described below.
The Fund may trade futures contracts and options on futures contracts
in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or, to the
extent permitted under applicable law, on exchanges located outside the
United States, such as the London International Financial Futures Exchange
and the Sydney Futures Exchange Limited. Foreign markets may offer advantages
such as trading in commodities that are not currently traded in the United
States or arbitrage possibilities not available in the United States. Foreign
markets, however, may have greater risk potential than domestic markets. See
"Risk Factors _ Foreign Commodity Transactions" below.
The Fund's commodities transactions must constitute bona fide hedging
or other permissible transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission (the "CFTC"). In addition, the Fund may
not engage in such transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired commodity options, other than for
bona fide hedging transactions, would exceed 5% of the liquidation value of
the Fund's assets, after taking into account unrealized profits and
unrealized losses on such contracts it has entered into; provided, however,
that in the case of an option that is in-the-money at the time of purchase,
the in-the-money amount may be excluded in calculating the 5%. Pursuant to
regulations and/or published positions of the Securities and Exchange
Commission, the Fund may be required to segregate cash or high quality money
market instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity. The
segregation of such assets will have the effect of limiting the Fund's
Page 9
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.
To the extent the Fund is engaging in a futures transaction as a
hedging device, because of 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 if, for example, losses on the
portfolio securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities. For futures
contracts based on indices, 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 the market does not move 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.
Furthermore, if in such circumstances the Fund has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. The Fund
may have to sell such securities at a time when it may be disadvantageous to
do so.
Page 10
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 as a substitute for a comparable market position in
the underlying securities or for hedging purposes.
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 indices that are permitted investments, the Fund
intends to purchase and sell futures contracts on the stock index for which
it can obtain the best price with consideration also given to liquidity.
The price of stock index futures may not correlate perfectly with the
movement in the stock index because of certain market distortions. First, all
participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the index
and futures markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market also may cause temporary price distortions.
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 or 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
Page 11
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 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.
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
Page 12
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 331/3% of the value of the Fund's total assets. In
connection with such loans, the Fund will receive collateral consisting of
cash, U.S. Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Fund can increase its income
through the investment of such collateral. The Fund continues to be entitled
to payments in amounts equal to the interest, dividends 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 or statement of additional
information.
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
Page 13
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 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 por-
Page 14
tion 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 borrower 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 conver
tible 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.
Page 15
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. 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. 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 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 proceedings are commenced with respect to the
seller of the securities, realization on the securities by the Fund may be
delayed or limited.
Page 16
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, which currently limits borrowing to no more
than 331/3% of the value of the Fund's total assets; (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.
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 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
Page 17
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.
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
Page 18
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
or BB by S&P or as low as the lowest rating assigned by Moody's or S&P. 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 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 S&P 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 are regarded as having
extremely poor prospects of ever attaining any real investment standing.
Obligations rated D by S&P 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 and S&P
securities ratings. The ratings of Moody's and S&P 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 and BB or lower by S&P 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 avail-
Page 19
able 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 Securi
ties" above.
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 August 2, 1995,
Dreyfus managed or administered approximately $79 billion in assets for more
than 1.8 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 pro-
Page 20
vides a comprehensive range of financial products and services in domestic
and selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets. Mellon's
principal wholly-owned subsidiaries are Mellon Bank, N.A., Mellon Bank (DE)
National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO Credit
Corporation and a number of companies known as Mellon Financial Services
Corporations. Through its subsidiaries, including Dreyfus, Mellon managed more
than $203 billion in assets as of June 30, 1995, including approximately $73
billion in mutual fund assets. As of June 30, 1995, Mellon, through various
subsidiaries, provided non-investment services, such as custodial and
administration services, for more than $707 billion in assets, including
approximately $71 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 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 December 31,
1994, Comstock Partners managed approximately $979 million 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. 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.
Page 21
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 FDI Distribution Services,
Inc., a provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is
Boston Institutional Group, Inc.
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, 90 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
GENERAL
Class A shares, Class B shares and Class C shares may be purchased
only by clients of certain financial institutions (which may include banks),
securities dealers ("Selected Dealers") and other industry professionals
(collectively, "Service Agents"), except that full-time or part-time
employees of 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 may
purchase Class A shares directly through the Distributor. Subsequent
purchases may be sent directly to the Transfer Agent or your Service Agent.
Class R shares are offered only to institutional investors acting for
themselves or in a fiduciary, advisory, agency, custodial or similar
capacity, for qualified or non-qualified employee benefit plans, including
pension, profit-sharing, SEP-IRAs and other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). The term "Retirement Plans"
does not include IRAs or IRA "Rollover Accounts." Class R shares may be
purchased for a Retirement Plan only by a custodian, trustee, investment
manager or other entity autho-
Page 22
rized to act on behalf of such Plan. Institutions effecting transactions in
Class R shares for the accounts of their clients may charge their clients
direct fees in connection with such transactions.
When purchasing Fund shares, you must specify which Class is being
purchased. Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
Service Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees which
would be in addition to any amounts which might be received under the
Distribution Plan or Shareholder Services Plan. Each Service Agent has agreed
to transmit to its clients a schedule of such fees. You should consult your
Service Agent in this regard.
The minimum initial investment is $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. However, the minimum initial investment for Dreyfus-sponsored Keogh
Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750,
with no minimum for subsequent purchases. Individuals who open an IRA also
may open a non-working spousal IRA with a minimum initial investment of $250.
Subsequent investments in a spousal IRA must be at least $250. The initial
investment must be accompanied by the Fund's Account Application. 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.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amount that may be contributed to certain
Retirement Plans. These limitations apply with respect to participants at the
plan level and, therefore, do not directly affect the amount that may be
invested in the Fund by a Retirement Plan. Participants and plan sponsors
should consult their tax advisers for details.
You may purchase Fund shares by check or wire, or, 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 23
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, together with the applicable
Class' DDA# as shown below, for purchase of Fund shares in your name:
DDA # 8900119551 Dreyfus Capital Value Fund/Class A shares;
DDA # 8900115181 Dreyfus Capital Value Fund/Class B shares;
DDA # 8900251980 Dreyfus Capital Value Fund/Class C shares; or
DDA # 8900252332 Dreyfus Capital Value Fund/Class R shares.
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, 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.
Fund shares also may be purchased through Dreyfus-AUTOMATIC Asset
Builder, the Dreyfus Government Direct Deposit Privilege and Dreyfus Payroll
Savings Plan described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will
not protect an investor against loss in a declining market.
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 in proper form by the Transfer Agent or other
agent by the close of trading on the floor of the New York Stock Exchange
(currently 4:00 p.m., New York time) on 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
Page 24
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. For certain
institutions that have entered into agreements with the Distributor, payment
for the purchase of Fund shares may be transmitted, and must be received by
the Transfer Agent, within three business days after the order is placed. If
such payment is not received within three business days after the order is
placed, the order may be canceled and the institution could be held liable
for resulting fees and/or losses.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). Plan sponsors, administrators or trustees, as applicable, are
responsible for notifying the Distributor when the relevant requirement is
satisfied. All present holdings of shares of funds in the Dreyfus Family of
Funds by Eligible Benefit Plans will be aggregated to determine the fee
payable with respect to each purchase of Fund shares. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
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 or more..... -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of Class A
shares purchased without an initial sales charge as part of an investment of
at least $1,000,000 and redeemed within two years after purchase. The terms
contained in the section of the Fund's Prospectus entitled "How to Redeem
Fund Shares _ Contingent Deferred Sales Charge" (other than the amount of the
CDSC and time periods) are applicable to the Class A shares subject to a
CDSC. Letter of Intent and Right of Accumulation apply to such purchases of
Class A shares.
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.
Page 25
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 Eligible Benefit Plans. Class A shares
also may be purchased (including by exchange) at net asset value without a
sales load for Dreyfus-sponsored IRA "Rollover Accounts" with the
distribution proceeds from a qualified retirement plan or a Dreyfus-sponsored
403(b)(7) plan, provided that, at the time of such distribution, such
qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan (a) met the
requirements of an Eligible Benefit Plan and all or a portion of such plan's
assets were invested in funds in the Dreyfus Family of Funds or certain other
products made available by the Distributor to such plans, or (b) invested all
of its assets in certain funds in the Dreyfus Family of Funds or certain
other products made available by the Distributor to such plans.
Class A shares may be purchased at net asset value through certain
broker-dealers and other financial institutions which have entered into an
agreement with the Distributor, which includes a requirement that such shares
be sold for the benefit of clients participating in a "wrap account" or a
similar program under which such clients pay a fee to such broker-dealer or
other financial institution.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a broker-dealer or other financial
institution with the proceeds from the redemption of shares of a registered
open-end management investment company not managed by Dreyfus or its
affiliates. The purchase of Class A shares of the Fund must be made within 60
days of such redemption and the shareholder must have either (i) paid an
initial sales charge or a contingent deferred sales charge or (ii) been obliga
ted to pay at any time during the holding period, but did not actually pay on
redemption, a deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, by (i) qualified separate accounts maintained by
an insurance company pursuant to the laws of any State or territory of the
United States, (ii) a State, county or city or instrumentality thereof, (iii)
a charitable organization (as defined in Section 501(c)(3) of the Code)
investing $50,000 or more in Fund shares, and (iv) a charitable remainder
trust (as defined in Section 501(c)(3) of the Code).
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 Class A shares.
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. For the period from October 1, 1993 through
August 23, 1994, Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus and distributor of the Fund's shares until August 24, 1994, retained
$278,877 from sales loads on Class A shares.
Page 26
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 or Class C 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 from October 1, 1993 through August 23, 1994, Dreyfus Service
Corporation, as former distributor, retained $204,660 from the CDSC on Class
B shares.
CLASS C SHARES
The public offering price for Class C shares is the net asset value
per share of that Class. No initial sales charge is imposed at the time of
purchase. A CDSC is imposed, however, on redemptions of Class C shares made
within the first year of purchase. See "Class B Shares" above and "How to
Redeem Fund Shares."
CLASS R SHARES
The public offering price for Class R shares is the net asset value
per share of that Class.
RIGHT OF ACCUMULATION _ CLASS A SHARES
Reduced sales loads apply to any purchase of Class A shares, shares
of 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 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 shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Service Agent in this
regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of the
same Class of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of resi-
Page 27
dence. These funds have different investment objectives which may be of
interest to you. You also may exchange your Fund shares that are subject to a
CDSC for shares of Dreyfus Worldwide Dollar Money Market Fund, Inc. The
shares so purchased will be held in a special account created solely for this
purpose ("Exchange Account"). Exchanges of shares from an Exchange Account
only can be made into certain other funds managed or administered by Dreyfus.
No CDSC is charged when an investor exchanges into an Exchange Account;
however, the applicable CDSC will be imposed when shares are redeemed from an
Exchange Account or other applicable Fund account. Upon redemption, the
applicable CDSC will be calculated without regard to the time such shares were
held in an Exchange Account. See "How to Redeem Fund Shares." Redemption
proceeds for Exchange Account shares are paid by Federal wire or check only.
Exchange Account shares also are eligible for the Dreyfus Auto-Exchange
Privilege, Dreyfus Dividend Sweep and the Automatic Withdrawal Plan. 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. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY
BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND
SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To 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 applicable "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
or Class C shares at the time of an exchange; however, Class B or Class C
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 or Class C shares will be cal
culated from the date of the initial purchase of the Class B or Class C
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
Page 28
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.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result
in, a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same Class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO CLASS
R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth of the month according to the
schedule you have selected. Shares will be exchanged at the then-current net
asset value; however, a sales load may be charged with respect to exchanges
of Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or Class C shares at the time of an exchange; however, the Class B
or Class C 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 or Class C shares will
be calculated from the date of the initial purchase of the Class B or Class C
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 BUILDERRegistration Mark
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.
Page 29
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 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.
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 on the payment date dividends or dividends and
capital gain distributions, if any, from the Fund to a designated bank
account. Only an account maintained at a domestic financial institution which
is an Automated Clearing House member may be so designated. Banks may charge
a fee for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to 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 these privileges.
Page 30
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. Particular Retirement Plans,
including Dreyfus sponsored retirement plans, may permit certain participants
to establish an automatic withdrawal plan from such Retirement Plans.
Participants should consult their Retirement Plan sponsor and tax adviser for
details. Such a withdrawal plan is different than the Automatic Withdrawal
Plan. An application for the Automatic Withdrawal Plan can be obtained by
calling 1-800-645-6561. There is a service charge of 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 Automatic Withdrawal Plan.
Class B or Class C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently with
withdrawals of Class A shares generally are undesirable. 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.
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.
Page 31
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value as described below. If you hold Fund shares
of more than one Class, any request for redemption must specify the Class of
shares being redeemed. If you fail to specify the Class of shares to be
redeemed or if you own fewer shares of the Class than specified to be
redeemed, the redemption request may be delayed until the Transfer Agent
receives further instructions from you or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC) when
shares are redeemed. Service Agents may charge their clients a nominal fee
for effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request. The
value of the shares redeemed may be more or less than their original cost,
depending on the Fund's then-current net asset value.
Distributions from qualified Retirement Plans, IRAs (including IRA
"Rollover Accounts") and certain non-qualified deferred compensation plans,
except distributions representing returns of non-deductible contributions to
the Retirement Plan or IRA, generally are taxable income to the participant.
Distributions from such a Retirement Plan or IRA to a participant prior to
the time the participant reaches age 59-1/2 or becomes permanently disabled
may subject the participant to an additional 10% penalty tax imposed by the
IRS. Participants should consult their tax advisers concerning the timing and
consequences of distributions from a Retirement Plan or IRA. Participants in
qualified Retirement Plans will receive a disclosure statement describing the
consequences of a distribution from such a Plan from the administrator,
trustee or custodian of the Plan, before receiving the distribution. The Fund
will not report to the IRS redemptions of Fund shares by qualified Retirement
Plans, IRAs or certain non-qualified deferred compensation plans. The
administrator, trustee or custodian of such Retirement Plans and IRAs will be
responsible for reporting distributions from such Plans and IRAs to the IRS.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY 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
Page 32
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 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.
CLASS C SHARES _ A CDSC of 1% payable to the Distributor is imposed on any
redemption of Class C shares within one year of the date of purchase. The
basis for calculating the payment of any such CDSC will be the method used in
calculating the CDSC for Class B shares. See "Contingent Deferred Sales
Charge _ Class B Shares" above.
WAIVER OF CDSC _ The CDSC applicable to Class B and Class C shares may be
waived in connection with (a) redemptions made within one year after the
death or disability, as defined in Section 72(m)(7) of the Code, of the
shareholder, (b) redemptions by employees participating in Eligible Benefit
Plans, (c) redemptions as a result of a combination of any investment company
with the Fund by merger, acquisition of assets or otherwise and (d) a
distribution following retirement under a tax-
Page 33
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. If
the Fund's Board determines 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, the Dreyfus TELETRANSFER Privilege. If you have
given your Service Agent authority to instruct the or Transfer Agent to
redeem shares and to credit the proceeds of such redemptions to a designated
account at your Service Agent, you may redeem shares only in this manner and
in accordance with the regular redemption procedure described below. If you
wish to use the other redemption methods described below, you must arrange
with your Service Agent for delivery of the required application(s) to the
Transfer Agent. Other redemption procedures may be in effect for 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.
You may redeem 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 follow such
procedures, the Fund or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent instructions. Neither the Fund nor the Transfer
Agent will be liable for following telephone instructions reasonably believed
to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a 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
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 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
Page 34
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 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 account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be
exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
(CLASS A, CLASS B AND CLASS C ONLY)
Class B and Class C shares are subject to a Distribution Plan and
Class A, Class B and Class C shares only are subject to a Shareholder
Services Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor for
distributing the Fund's Class B and Class C shares at an annual rate of .75
of 1% of the value of the average daily net assets of Class B and Class C.
SHAREHOLDER SERVICES PLAN
Under the Shareholder Services Plan, the Fund pays the Distributor
for the provision of certain services to the holders of Class A, Class B and
Class C shares a fee at the annual rate of .25 of 1% of the value of the
average daily net assets of each such Class. 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 amounts to be paid to Service
Agents.
Page 35
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. Dividends
and distributions paid in cash to Retirement Plans, however, may be subject
to additional tax as described below. 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 a particular
Class will be borne exclusively by such Class. Class B and Class C shares
will receive lower per share dividends than Class A shares which will receive
lower per share dividends than Class R shares because of the higher expenses
borne by the relevant Class. See "Fee Table."
Dividends paid by the Fund to qualified Retirement Plans, IRAs
(including IRA "Rollover Accounts") or certain non-qualified deferred
compensation plans ordinarily will not be subject to taxation until the
proceeds are distributed from the Retirement Plan. The Fund will not report
dividends paid to such Plans and IRAs to the IRS. Generally, distributions
from such Retirement Plans, except those representing returns of
non-deductible contributions thereto, will be taxable as ordinary income and,
if made prior to the time the participant reaches age 59-1/2, generally will
be subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan (other than
certain governmental or church plans) or IRA for any taxable year following
the year in which the participant reaches age 70-1/2 is less than the
"minimum required distribution" for that taxable year, an excise tax equal to
50% of the deficiency may be imposed by the IRS. The administrator, trustee
or custodian of such a Retirement Plan or IRA will be responsible for
reporting distributions from such Plans and IRAs to the IRS. Participants in
qualified Retirement Plans will receive a disclosure statement describing the
consequences of a distribution from such a Plan from the administrator,
trustee or custodian of the Plan prior to receiving the distribution.
Moreover, certain contributions to a qualified Retirement Plan or IRA in
excess of the amounts permitted by law may be subject to an excise tax.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund will be taxable to U.S. shareholders
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, regardle
ss 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-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.
Page 36
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 may
be calculated on the basis of average annual total return and/or total
return. These total return figures reflect changes in the price of the shares
and assume that any income dividends and/or capital gains distributions made
by the Fund during the measuring period were reinvested in shares of the same
Class. These figures also take into account any applicable service and
distribution fees. As a result, at any given time, the performance of Class B
and Class C should be expected to be lower than that of Class A and the
performance of Class A, Class B and Class C should be expected to be lower
than that of Class R. Performance for each Class will be calculated
separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, or for shorter time periods depending
upon the length of time during which the Fund has operated.
Page 37
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value (or maximum offering price in the case of Class A) per share at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return. Total return also may be calculated by using the net asset value per
share at the beginning of the period instead of the maximum offering price
per share at the beginning of the period for Class A shares or without giving
effect to any applicable CDSC at the end of the period for Class B or Class C
shares. Calculations based on the net asset value per share do not reflect
the deduction of the applicable sales charge on Class A shares, which, if
reflected, would reduce the performance quoted.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., 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 400 million shares of Common Stock, par value
$.01 per share. The Fund's shares are classified into four classes _ Class
A, Class B, Class C and Class R. Each share has one vote and shareholders
will vote in the aggregate and not by class except as otherwise required by
law. However, only holders of Class B or Class C shares, as the case may be,
will be entitled to vote on matters submitted to shareholders pertaining to
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 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.
Page 38
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; outside the U.S.
and Canada, call 516-794-5452.
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 39
DREYFUS
Capital
Value
Fund
Prospectus
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
107p17082195
DREYFUS CAPITAL VALUE FUND (A PREMIER FUND)
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
AUGUST 21, 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 August 21,
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
Outside the U.S. and Canada -- Call 1-516-794-5452
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-14
Investment Advisory Agreements. . . . . . . . . . . . . . . B-18
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-20
Distribution Plan and Shareholder Services Plan . . . . . . B-21
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-23
Shareholder Services. . . . . . . . . . . . . . . . . . . . B-24
Determination of Net Asset Value. . . . . . . . . . . . . . B-27
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-28
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-30
Performance Information . . . . . . . . . . . . . . . . . . B-30
Information About the Fund. . . . . . . . . . . . . . . . . B-32
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . B-32
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . B-34
Financial Statements. . . . . . . . . . . . . . . . . . . . B-39
Report of Independent Auditors. . . . . . . . . . . . . . . B-52
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.
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. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not readily
marketable, the Fund will endeavor, to the extent practicable, to obtain the
right to registration at the expense of the issuer. Generally, there will
be a lapse of time between the Fund's decision to sell any such security and
the registration of the security permitting sale. During any such period,
the price of the securities will be subject to market fluctuations.
However, where a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the Securities Act of 1933, as amended,
for certain unregistered securities purchased by the Fund, the Fund intends
to treat such securities as liquid securities in accordance with procedures
approved by the Fund'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
information and other relevant information. To the extent that for a period
of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, the Fund's investing in such securities
may have the effect of increasing the level of illiquidity in the Fund's
portfolio during such period.
Investment Techniques
Leverage Through Borrowing. For borrowings for investment purposes;
the Investment Company Act of 1940, as amended (the "Act"), 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. 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. To the extent the Fund enters into a reverse repurchase agreement,
the Fund will maintain in a segregated custodial account cash or U.S.
Government securities or other high quality liquid debt securities at least
equal to the aggregate amount of its reverse repurchase obligations, plus
accrued interest, in certain cases, in accordance with releases promulgated
by the Securities and Exchange Commission. The Securities and Exchange
Commission views reverse repurchase transactions as collateralized
borrowings by the Fund.
Short-Selling. The Fund may engage in short-selling. 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.
Option Transactions. The Fund may engage in options transactions, such
as purchasing or writing covered call or put options. 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. 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 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 1/3% 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 any 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
objective. 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 indices, and options on
futures contract or indices, 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 (which
currently limits borrowing to no more than 33 1/3% of the value of the Fund's
total assets). For purposes of this investment restriction, the entry into
options futures contracts, including those relating to indices, and options
on futures contracts or indices 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 indices, and options on futures contracts or
indices, 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 1/3% of the value
of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of 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.
He is 58 years old and 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. He is 59 years old and his address is
MainStreet, 918 Sixteenth Street, N.W., Washington, D.C. 20006.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For more
than five years prior thereto, he was President, a director and, until
August 24, 1994, Chief Operating Officer of Dreyfus and Executive Vice
President and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus and, until August 24, 1994, the Fund's
distributor. From August 1994 to December 31, 1994, he was a director
of Mellon Bank Corporation. He is Chairman of the Board of Noel Group,
Inc., a venture capital company; a trustee of Bucknell University; and
a director of the Muscular Dystrophy Association, HealthPlan Services
Corporation, Belding Heminway, Inc., a manufacturer and marketer of
industrial threads, specialty yarns, home furnishings and fabrics,
Curtis Industries, Inc., a national distributor of chemicals and
automotive and other hardware, Simmons Outdoor Corporation and Staffing
Resources, Inc. He is 51 years old and his address is 200 Park Avenue,
New York, New York 10166.
EHUD HOUMINER, Director. Since July 1991, Professor and Executive-in-
Residence at the Columbia Business School, Columbia University. From
1992 to 1995 he was 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. He is
54 years old and 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. From April 1990 to March 1994, Chairman, and from
April 1988 to March 1994, 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. Mr. Leone
is also a director of Resource Mortgage Capital, Inc. He is 54 years
old and 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. He is 57 years
old and his address is 305 East 47th Street, New York, New York 10017.
ROBIN A. SMITH, Director. Since 1993, Vice President, and from March 1992
to October 1993, Executive Director, of One to One Partnership, Inc., a
national non-profit organization that seeks to promote mentoring and
economic empowerment for at-risk youths. From June 1986 to February
1992, she was an investment banker with Goldman, Sachs & Co. She is
also a Trustee of Westover School and a Board member of the Jacobs A.
Riis Settlement House and the High/Slop Education Research Foundation.
She is 31 years old and her address is 280 Park Avenue, New York, New
York 10010.
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. He is 57 years old and his
address is 237 Park Avenue, New York, New York 10017.
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 typically pays its Directors an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. The aggregate
amount paid to each Director by the Fund for the fiscal year ended September
30, 1994, and by other funds in the Dreyfus Family of Funds for which such
person is a Board member (the number of which is set forth in parenthesis
next to each Board member's total compensation) for the year ended December
31, 1994, is as follows:
<TABLE>
(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
-------------- ------------------ --------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
David W. Burke $ 468 none none $ 27,898 (52)
Hodding Carter, III $6,500 none none $ 33,625 (7)
Joseph S. DiMartino $4,085** none none $445,000***(93)
Ehud Houminer $3,996 none none $ 25,701 (11)
Richard C. Leone $6,500 none none $ 33,125 (7)
Hans C. Mautner $6,500 none none $ 33,625 (7)
Robin A. Smith $3,268** none none $ 30,000 ***(7)
John E. Zuccotti $6,500 none none $ 33,625 (7)
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $410 for all Directors as a group.
** Estimated amounts for the current fiscal year ending September 30,
1995.
*** Estimated amounts for the year ending December 31, 1995.
</TABLE>
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.,
the ultimate parent of which is Boston Institutional Group. Prior to
December 1991, she served as Vice President and Controller, and later as
Senior Vice President, of The Boston Company Advisors, Inc. She is 37
years old.
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. He is 30 years old.
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. He is 33 years old.
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. He is 30 years old.
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.
He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer 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. He is 59 years old.
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 Dreyfus Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of all officers of the Fund is 200 Park Avenue, New York, New
York 10166.
The following entity is known by the Fund to own, of record or
beneficially, 5% or more of the Fund's outstanding voting securities as of
August 7, 1995: Merrill Lynch Pierce Fenner & Smith Inc. was the owner of
27.1237% of the Fund's outstanding Class A shares and 34.7089% 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 August 7, 1995.
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 to the
Fund.
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; W. Keith Smith,
Vice Chairman of the Board; Robert E. Riley, President, Chief Operating
Officer and a director; Stephen E. Canter, Vice Chairman, Chief Investment
Officer and a director; Lawrence S. Kash, Vice Chairman--Distribution and a
director; Philip L. Toia, Vice Chairman--Operations and Administration;
Barbara E. Casey, Vice President--Retirement Services; Diane M. Coffey, Vice
President--Corporate Communications; Elie M. Genadry, Vice President--
Institutional Sales; William F. Glavin, Jr., Vice President--Corporate
Development; Henry D. Gottmann, Vice President--Sales and Service; Mark N.
Jacobs, Vice President--Legal and Secretary; Daniel C. Maclean, Vice
President and General Counsel; Jeffrey N. Nachman, Vice President--Mutual
Fund Accounting; Katherine C. Wickham, Vice President--Human Resources;
Maurice Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene,
Julian M. Smerling 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: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Directors who are not
officers, directors, employees, or holders of 5% or more of the outstanding
voting securities of Dreyfus or 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 preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, costs of shareholders' reports and
meetings and any extraordinary expenses. Class A, Class B and Class C
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 and Class C shares are subject
to an annual distribution fee for distributing the relevant Class of 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. In some states, certain financial
institutions effecting transactions in Fund shares may be required to
register as dealers pursuant to state law.
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 Price--Class A. Based upon the Fund's net asset value of Class
A shares at the close of business on September 30, 1994, the maximum
offering price of a Class A share would have been as follows:
<TABLE>
<S> <C> <C>
NET ASSET VALUE per share...............................................$11.88
Sales load for individual sales of shares aggregating less
than $50,000 - 4.5% of offering price
(approximately 4.7% of net asset value per
share)....................... .56
Offering price to
public......................................................... $12.44
</TABLE>
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distribution Plan and
Shareholder Services Plan."
Class B and Class C shares are subject to a Distribution Plan and Class
A, Class B and Class C shares are subject to a Shareholder Services Plan.
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 and Class C shares, pursuant to which the Fund pays the Distributor
for distributing the Fund's Class B and Class C shares. The Fund's Board of
Directors believes that there is a reasonable likelihood that the
Distribution Plan will benefit the Fund and the holders of Class B and Class
C shares.
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
the relevant Class of 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 April 3, 1994. As to the relevant Class of
shares, 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 such Class of 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. There
were no payments made under the Distribution Plan with respect to Class C
shares during the fiscal year ended September 30, 1994, as Class C shares
had not been offered.
Shareholder Services Plan. The Fund has adopted a Shareholder Services
Plan, pursuant to which the Fund pays the Distributor for the provision of
certain services to the holders of Class A, Class B and Class C shares.
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 April 3, 1994. As to each Class of shares,
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.
There were no payments made under the Shareholder Services Plan with respect
to Class C shares during the fiscal year ended September 30, 1994, as Class
C shares had not been offered.
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. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by Dreyfus. Shares of the same Class of such other funds
purchased by exchange will be purchased on the basis of relative net asset
value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load, and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds, and for
purposes of calculating CDSC rates and conversion periods, if any,
will be deemed to have been held since the date the shares being
exchanged were initially purchased.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of such fund shares and their
account number.
To request an exchange, an investor or the investor's Service Agent
acting on the investor's 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 applicable "No" box on the Account
Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor or a
representative of the investor's Service Agent, and reasonably believed by
the Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a Personal Retirement Plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for shares 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 funds in the Dreyfus Family of Funds. To exchange shares held
in personal retirement plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
an investor to purchase, in exchange for shares of the Fund, shares of the
same Class of another fund in the Dreyfus Family of Funds. This Privilege
is available only for existing accounts. With respect to Class R shares
held by a Retirement Plan, exchanges may be made only between the investor's
Retirement Plan account in one fund and such investor's Retirement Plan
account in another fund. Shares will be exchanged on the basis of relative
net asset value as described above under "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 the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or the
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Dreyfus 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 by a fund may be invested without
imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in the
shares of other funds that impose a CDSC and the applicable CDSC,
if any, will 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 or Class C 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 of the Fund, including
the advisory fees paid by the Fund and the distribution plan; and
shareholder services fees, as applicable, 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 for the fiscal year ended September 30, 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. 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.
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.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."
Class C and Class R shares had not been offered as of the date of the
financials and, therefore, no performance data is provided for Class C and
Class R.
The average annual total return for Class A for the 1 and 5 year periods
ended March 31, 1995 was -4.40% and 1.67%, respectively. The average annual
total return for Class A for the 8.975 year period from October 10, 1985
(commencement of operations) through March 31, 1995 was 10.32%. 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
March 31, 1995 was 6.11%. The average annual total return for Class B for
the period ended March 31, 1995 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 March 31, 1995 was -5.10%.
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 or Class C the maximum applicable CDSC has been paid
upon redemption at the end of the period.
Total return is calculated by subtracting the amount of The Fund's net
asset value (maximum offering price in the case of Class A) per share at the
beginning of a stated period from the net asset value (maximum offering
price in the case of Class A) per share at the end of the period (after
giving effect to the reinvestment of dividends and distributions during the
period and any applicable CDSC), and dividing the result by the net asset
value (maximum offering price in the case of Class A) per share at the
beginning of the period. Total return also may be calculated based on the
net asset value per share at the beginning of the period instead of the
maximum offering price per share at the beginning of the period for Class A
shares or without giving effect to any applicable CDSC at the end of the
period for Class B or Class C shares. In such cases, the calculation would
not reflect the deduction of the sales load with respect to Class A shares
or any applicable CDSC with respect to Class B or Class C shares, which, if
reflected, would reduce the performance quoted. The total return for Class
A for the period April 28, 1987 to March 31, 1995, based on maximum offering
price per share, was 52.71%. Based on net asset value per share, the total
return for Class A was 59.95% for this period. Total return for Class A for
the period October 10, 1985 and ending on March 31, 1995 based on maximum
offering price per share was 142.29%. Based on net asset value, the total
return for Class A was 153.66% for this period. The total return for Class
B for the period January 15, 1993 (commencement of offering Class B shares)
through March 31, 1995, after giving effect to the maximum CDSC per share,
was 6.44%. The total return for Class B, without giving effect to the
maximum CDSC, was 9.44% 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, 90 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>
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 4 of the Prospectus dated August 21, 1995.
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
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS MARCH 31, 1995 (UNAUDITED)
COMMON STOCKS-38.5% SHARES VALUE
-------------- --------------
<S> <C> <C> <C>
BASIC INDUSTRIES-35.2%
Agriculture-.9% IMC Global................................. 85,000 $ 4,154,375
--------------
Gold Mining-27.6% Amax Gold...............................(a) 225,500 1,324,813
Ashanti Goldfields......................(b) 450,000 11,418,750
Barrick Gold............................... 351,200 8,780,000
Battle Mountain Gold....................... 215,000 2,580,000
Cambior.................................... 150,000 1,702,109
Hecla Mining............................(a) 313,500 3,605,250
Homestake Mining........................... 844,800 15,628,800
Newmont Gold............................... 200,000 8,275,000
Newmont Mining............................. 731,000 31,250,250
Pegasus Gold............................(a) 150,000 1,837,500
Placer Dome................................ 766,400 18,681,000
Royal Oak Mines.........................(a) 400,000 1,325,000
Santa Fe Pacific Gold...................(a) 717,082 9,053,160
TVX Gold................................(a) 467,000 3,093,875
--------------
118,555,507
--------------
Metals-6.7% ASARCO..................................... 107,000 2,822,125
Echo Bay Mines............................. 50,000 518,750
Freeport-McMoRan Copper & Gold, Cl. A...... 860,000 18,812,500
Goldcorp Investments, Cl. A................ 237,860 1,721,467
Impala Platinum Holdings, A.D.R............ 15,000 339,480
Inco....................................... 165,000 4,599,375
--------------
28,813,697
--------------
TOTAL BASIC INDUSTRIES..................... 151,523,579
==============
RESTRUCTURING-3.3%
Energy-.7% Baker Hughes............................... 150,000 3,056,250
--------------
Foods and Beverages-.5% Dole Food.................................. 68,200 1,977,800
--------------
Holding Companies-1.5% Horsham.................................... 464,200 6,440,775
--------------
Retail-.6% K mart..................................... 187,000 2,571,250
--------------
TOTAL RESTRUCTURING........................ 14,046,075
==============
TOTAL COMMON STOCKS
(cost $137,081,103)...................... $165,569,654
==============
CONTRACTS
SUBJECT
PUT OPTIONS-2.0% TO PUT
--------------
Brokerage Basket;
November '95 @ $95....................(l) 224,323 $ 246,755
Standard & Poor's 500 Index Flex Options:
June '95 @ $450.......................... 46,500 58,125
September '95 @ $450..................... 119,000 416,500
December '95 @ $450..................... 122,000 732,000
Standard & Poor's 500 Index:
June '95 @ $450.......................... 172,500 258,750
September '95 @ $450..................... 88,000 330,000
September '95 @ $475..................... 40,100 275,687
September '95 @ $485..................... 48,500 415,281
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1995 (UNAUDITED)
CONTRACTS
SUBJECT
PUT OPTIONS (CONTINUED) TO PUT VALUE
-------------- --------------
Standard & Poor's 500 Index (continued):
December '95 @ $375...................... 45,500 $ 56,875
December '95 @ $400...................... 45,500 96,688
December '95 @ $450...................... 71,500 411,125
December '95 @ $475...................... 40,100 370,925
December '95 @ $485...................... 30,000 356,250
March '96 @ $453......................(l) 90,931 590,141
March '96 @ $500......................... 50,000 887,500
June '96 @ $450.......................... 23,500 217,375
June '96 @ $475.......................... 66,000 924,000
June '96 @ $500.......................... 35,000 717,500
PRINCIPAL
AMOUNT
SUBJECT
TO PUT
--------------
U.S. Treasury Bond;
6.25%, 8/15/2023;
April '95 @ $87.406.................(l) $ 52,500,000 1,050,000
--------------
TOTAL PUT OPTIONS
(cost $24,155,214)....................... $ 8,411,477
==============
PRINCIPAL
CONVERTIBLE BOND-1.2% AMOUNT
--------------
RETAIL; Pepgro, 6%
(cost $3,034,000).....................(c) $ 229,114 $ 5,155,071
==============
BONDS-30.6%
FOREIGN GOVERNMENTS: Argentinian Securities;
Republic of Argentina,
4.25%, 3/31/2023..................(d,e) $ 2,250,000 $ 902,813
Austrian Securities;
Republic of Austria,
4.50%, 2/12/2000....................(f) 28,319,365 28,186,264
Danish Securities;
Kingdom of Denmark,
4.25%, 9/30/1999....................(f) 13,233,348 13,085,135
German Securities;
Bundesrepublik Deutschland:
8.50%, 4/22/1996....................(g) 43,968,023 45,476,126
9%, 10/20/2000......................(g) 17,354,651 19,133,503
8.875%, 12/20/2000..................(g) 13,081,395 14,352,907
Netherlands Securities;
Netherlands Government,
7.25%, 7/15/1999....................(h) 4,217,493 4,339,800
Venezuelan Securities;
Republic of Venezuela,
6.75%, 3/31/2020................(d,e,i) 14,000,000 6,055,000
--------------
TOTAL BONDS
(cost $112,795,187)...................... $131,531,548
==============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1995 (UNAUDITED)
PRINCIPAL
SHORT-TERM INVESTMENTS-27.4% AMOUNT VALUE
-------------- --------------
<S> <C> <C> <C>
U.S. TREASURY BILLS: 5.41%, 4/6/95.............................. $ 6,189,000 $ 6,184,049
5.67%, 4/20/95..........................(j) 70,000,000 69,781,600
5.64%, 5/4/95.............................. 12,099,000 12,035,722
5.70%, 6/1/95...........................(k) 30,000,000 29,708,700
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $117,721,468)...................... $117,710,071
==============
TOTAL INVESTMENTS(cost $394,786,972)........................................... 99.7% $428,377,821
======== ==============
CASH AND RECEIVABLES (NET)..................................................... .3% $ 1,459,410
======== ==============
NET ASSETS..................................................................... 100.0% $429,837,231
======== ==============
</TABLE>
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 March 31,
1995, this security amounted to $11,418,750 or 2.7% of net assets.
(c) Denominated in South African Rand.
(d) Denominated in U.S. Dollars.
(e) Secured by U.S. Treasury securities.
(f) Denominated in Swiss Francs.
(g) Denominated in German Marks.
(h) Denominated in Dutch Guilder.
(i) Scheduled variable interest rate.
(j) Partially held by broker as collateral for open short positions.
(k) Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
(l) Securities restricted as to public resale. Investments in restricted
securities, with an aggregate market value of $1,886,896, represents
approximately .4% of net assets:
<TABLE>
<CAPTION>
ACQUISITION PURCHASE PERCENTAGE OF
PUT OPTIONS: DATE PRICE NET ASSETS VALUATION*
------------- ------------ ---------- --------------- ------------
<S> <C> <C> <C> <C>
Brokerage Basket**
November '95 @ $95....................... 11/11/94 $ 5.70 .06 fair value
Standard & Poor's 500 Index
March '96 @ $453......................... 12/14/94 21.99 .14 fair value
U.S. Treasury Bond;
6.25%, 8/15/2023 April '95@ $87.406...... 4/8/94 .06 .24 fair value
</TABLE>
* 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>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES MARCH 31, 1995 (UNAUDITED)
FINANCIAL FUTURES SOLD SHORT;
MARKET VALUE UNREALIZED
NUMBER OF COVERED APPRECIATION
ISSUER CONTRACTS BY CONTRACTS EXPIRATION AT 3/31/95
------ ------------ -------------- -------------- -------------
<S> <C> <C> <C> <C>
Hang Seng.................................... 35 $(1,936,271) April '95 $42,208
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF SECURITIES SOLD SHORT MARCH 31, 1995 (UNAUDITED)
COMMON STOCKS-21.1% SHARES VALUE
-------------- -------------
<S> <C> <C> <C>
AUTO RELATED-.8% Breed Technologies......................... 18,000 $ 393,750
Chrysler................................... 22,000 921,250
Ford Motor................................. 40,000 1,080,000
General Motors............................. 20,000 885,000
--------------
3,280,000
--------------
CONSUMERS- 5.5% Anheuser-Busch............................. 5,700 334,162
Avon Products.............................. 5,600 338,800
B.A.T. Industries, A.D.R. ................. 23,100 329,175
Colgate-Palmolive.......................... 15,600 1,029,600
General Mills.............................. 52,000 3,100,500
Heinz (H.J.)............................... 35,900 1,382,150
Hershey Foods.............................. 40,000 2,045,000
Kellogg.................................... 50,000 2,918,750
PepsiCo.................................... 38,100 1,485,900
Philip Morris.............................. 47,500 3,099,375
Reebok International....................... 53,900 1,920,188
Rubbermaid................................. 60,300 1,989,900
Sara Lee................................... 81,000 2,116,125
Tambrands.................................. 18,000 803,250
Wrigley, (Wm), Jr.......................... 20,000 887,500
--------------
23,780,375
--------------
DRUGS & MEDICAL- .6% Upjohn..................................... 70,000 2,502,500
--------------
FINANCE- 8.2% ADVANTA, Cl. A............................. 2,500 83,750
Bear Stearns............................... 116,750 2,159,875
Berkshire Hathaway......................... 45 1,019,250
Chase Manhattan............................ 78,000 2,778,750
Chemical Banking........................... 43,000 1,623,250
Citicorp................................... 23,000 977,500
Conseco.................................... 22,000 877,250
Dean Witter,Discover & Co.................. 93,000 3,789,750
First USA.................................. 53,000 2,226,000
Franklin Resources......................... 49,000 1,904,875
Kansas City Southern Industries............ 86,000 3,493,750
MBNA....................................... 55,000 1,595,000
Morgan Stanley Group....................... 31,000 2,088,625
Paine Webber Group......................... 88,000 1,419,000
Salomon.................................... 67,000 2,269,625
Suntrust Banks............................. 20,000 1,070,000
T. Rowe Price Associates................... 98,000 3,564,750
United Asset Management.................... 20,000 767,500
Wells Fargo & Co........................... 10,000 1,563,750
--------------
35,272,250
--------------
HEALTH CARE- 1.4% Bausch & Lomb.............................. 11,600 414,700
Healthsource............................... 23,000 1,089,625
Mid-Atlantic Medical Services.............. 33,500 741,188
United Healthcare.......................... 18,000 841,500
U.S. HealthCare............................ 68,500 3,031,125
--------------
6,118,138
--------------
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF SECURITIES SOLD SHORT (CONTINUED) MARCH 31, 1995 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
<S> <C> <C> <C>
HOTELS & MOTELS- .3% Hospitality Franchise Systems.............. 40,000 $ 1,280,000
--------------
MACHINERY-CONSTRUCTION
& MATERIAL-.4% Clark Equipment............................ 19,000 1,567,500
--------------
RAILROADS- .7% Burlington Northern........................ 52,000 3,087,500
--------------
RESTAURANTS- 1.0% Lone Star Steakhouse/Saloon................ 82,500 2,237,813
Outback Steakhouse......................... 74,500 1,890,437
--------------
4,128,250
--------------
RETAIL- 1.4% Home Depot................................. 64,233 2,842,310
Staples.................................... 50,000 1,318,750
Wal-Mart Stores............................ 81,000 2,065,500
--------------
6,226,560
--------------
TECHNOLOGY- .3% American Power Conversion.................. 47,000 769,625
Atmel...................................... 15,000 579,375
--------------
1,349,000
--------------
TELECOMMUNICATIONS- .5% Hong Kong Telecom, A.D.R................... 114,000 2,208,750
-------------
TOTAL SECURITIES SOLD SHORT
(proceeds $91,176,099)................... $90,800,823
==============
See independent accountants' reveiw report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1995 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $394,786,972)-see statement..................................... $428,377,821
Cash.................................................................... 1,429,420
Receivable from broker for proceeds on securities sold short............ 91,176,099
Dividends and interest receivable....................................... 5,783,263
Receivable for subscriptions to Common Stock............................ 634,686
Receivable for futures variation margin-Note 3(a)....................... 43,631
Prepaid expenses........................................................ 86,611
--------------
527,531,531
LIABILITIES:
Due to investment adviser............................................... $ 306,659
Due to sub-investment adviser........................................... 114,908
Securities sold short, at value
(proceeds $91,176,099)-see statement.................................. 90,800,823
Payable for Common Stock redeemed....................................... 4,827,931
Payable to broker for loss on securities sold short..................... 1,161,830
Accrued expenses........................................................ 482,149 97,694,300
------------- --------------
NET ASSETS ................................................................ $429,837,231
===============
REPRESENTED BY:
Paid-in capital......................................................... $514,777,277
Accumulated undistributed investment income-net......................... 7,085,119
Accumulated net realized (loss) on investments, securities
sold short, and foreign currency transactions......................... (126,579,647)
Accumulated net unrealized appreciation on investments,
securities sold short, and foreign currency transactions
(including $42,208 net unrealized appreciation on
financial futures)-Note 3(b).......................................... 34,554,482
--------------
NET ASSETS at value......................................................... $429,837,231
===============
Shares of Common Stock outstanding:
Class A Shares
(200 million shares of $.01 par value authorized)..................... 29,274,209
===============
Class B Shares
(200 million shares of $.01 par value authorized)..................... 8,851,619
===============
NET ASSET VALUE per share:
Class A Shares
($331,219,377 / 29,274,209 shares).................................... $11.31
=======
Class B Shares
($98,617,854 / 8,851,619 shares)...................................... $11.14
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
INVESTMENT INCOME:
INCOME:
<S> <C> <C>
Interest.............................................................. $11,050,911
Cash dividends (net of $38,887 foreign taxes withheld at source)...... 1,014,891
-------------
TOTAL INCOME...................................................... $ 12,065,802
EXPENSES:
Investment advisory fee-Note 2(a)..................................... 981,011
Sub-investment advisory fee-Note 2(a)................................. 744,161
Dividends on securities sold short.................................... 1,218,156
Shareholder servicing costs-Note 2(c)................................. 892,406
Distribution fees (Class B shares)-Note 2(b).......................... 384,891
Custodian fees........................................................ 51,194
Prospectus and shareholders' reports.................................. 38,886
Professional fees..................................................... 30,849
Registration fees..................................................... 29,757
Directors' fees and expenses-Note 2(d)................................ 20,341
Miscellaneous......................................................... 13,463
-------------
TOTAL EXPENSES.................................................... 4,405,115
--------------
INVESTMENT INCOME-NET............................................. 7,660,687
--------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3(a):
Long transactions (including options transactions and foreign
currency transactions)............................................ $ (6,783,141)
Short sale transactions............................................... (6,727,102)
-------------
NET REALIZED (LOSS)............................................... (13,510,243)
Net unrealized (depreciation) on investments, securities sold short
and foreign currency transactions [including $(1,441,892) net
unrealized (depreciation) on financial futures]....................... (9,900,659)
--------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (23,410,902)
--------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(15,750,215)
==============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1995
1994 (UNAUDITED)
-------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 9,823,170 $ 7,660,687
Net realized (loss) on investments..................................... (9,217,163) (13,510,243)
Net unrealized appreciation (depreciation) on investments for the period 26,168,303 (9,900,659)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.. 26,774,310 (15,750,215)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares....................................................... (8,633,848) (8,406,886)
Class B shares....................................................... (913,770) (1,940,644)
-------------- --------------
TOTAL DIVIDENDS.................................................. (9,547,618) (10,347,530)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 116,664,797 21,128,033
Class B shares....................................................... 85,400,651 12,897,989
Dividends reinvested:
Class A shares....................................................... 4,857,514 5,143,675
Class B shares....................................................... 489,988 990,255
Cost of shares redeemed:
Class A shares....................................................... (147,154,408) (77,298,474)
Class B shares....................................................... (8,939,968) (18,166,242)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS 51,318,574 (55,304,764)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................ 68,545,266 (81,402,509)
NET ASSETS:
Beginning of period.................................................... 442,694,474 511,239,740
-------------- --------------
End of period (including undistributed investment income-net:
$9,771,962 in 1994 and $7,085,119 in 1995)........................... $511,239,740 $429,837,231
============== ==============
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------- ------------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1995 SEPTEMBER 30, MARCH 31, 1995
1994 (UNAUDITED) 1994 (UNAUDITED)
-------------- ------------------- -------------- -------------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................... 9,919,385 1,885,731 7,342,835 1,151,068
Shares issued for dividends reinvested 411,308 466,335 41,951 91,016
Shares redeemed..................... (12,560,968) (6,968,159) (783,960) (1,674,217)
----------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING.......... (2,230,275) (4,616,093) 6,600,826 (432,133)
============== ============== ============== ==============
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Prospectus dated August 21, 1995.
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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. Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of Institutio
nal Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
Dreyfus is a direct subsidiary of Mellon Bank, N. A.
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.
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, resulting from changes in exchange rates.
(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.
(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>
<CAPTION>
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 six months ended March 31, 1995.
Dreyfus Service Corporation retained $11,624 during the six months ended
March 31, 1995 from commissions earned on sales of Fund shares.
(B) Under the Distribution Plan with respect to Class B shares (the
"Class B Distribution Plan") adopted pursuant to Rule 12b-1 under the Act,
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. During the six months ended March 31, 1995, $384,891 was charged to
the Fund pursuant to the 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 six months ended March 31, 1995,
$446,760 and $128,297 were charged to the Fund pursuant to the Class A and
Class B shares, respectively, pursuant to the Shareholder Service Plan.
(D) Each director who is not an "affiliated person" receives an annual
fee of $4,500 and an attendance fee of $500 per meeting. The Chairman of the
Board receives an additional 25% of such compensation and each director
emeritus receives 50% of such compensation.
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 and options transactions during the six months
ended March 31, 1995:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------- ---------------
<S> <C> <C>
Long transactions.................................................... $41,718,789 $ 9,826,696
Short sale transactions.............................................. 41,014,625 22,584,593
--------------- ---------------
TOTAL............................................................ $82,733,414 $32,411,289
=============== ===============
</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 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 March 31,
1995 and their related market values and proceeds are set forth in the
Statement of Securities Sold Short.
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. Typically, 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 March 31, 1995
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 market value
of such investments that are disclosed in the Statement of Investments.
(B) At March 31, 1995, accumulated net unrealized appeciation on
investments was $34,008,333, consisting of $57,513,637 gross unrealized
appreciation and $23,505,304 gross unrealized depreciation, excluding foreign
currency transactions.
At March 31, 1995, 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, 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 and for the six
months ended March 31, 1995 (unaudited).
Included in Part B of the Registration Statement:
Statement of Investments--September 30, 1994 and March
31, 1995 (unaudited)
Statement of Financial Futures--September 30, 1994 and
March 31, 1995 (unaudited)
Statement of Securities Sold Short--September 30, 1994
and March 31, 1995 (unaudited)
Statement of Assets and Liabilities--September 30, 1994
and March 31, 1995 (unaudited)
Statement of Operations--year ended September 30, 1994
and for the six months ended March 31, 1995 (unaudited)
Statement of Changes in Net Assets--for each of the
years ended September 30, 1993 and 1994 and for the six
months ended March 31, 1995 (unaudited)
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors,
dated November 8, 1994
All Schedules 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)(a) Registrant's Amended and Restated Charter and Articles
Supplementary.
(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.
(5)(a) Investment Advisory Agreement is incorporated by reference to
Exhibit (5)(a) of Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A, filed on December 1, 1994.
(b) Sub-Investment Advisory Agreement.
(6)(a) Distribution Agreement is incorporated by reference to Exhibit
(6)(a) of Post-Effective Amendment No. 16 to the Registration
Statement on Form N-1A, filed on December 1, 1994.
(b) Forms of Service Agreement.
(8)(a) Amended and Restated Custody Agreement.
(b) Sub-Custodian Agreements are incorporated by reference to Exhibit
(8)(a) of Post-Effective Amendment No. 16 to the Registration
Statement on Form N-1A, filed on December 1, 1994.
(9) Shareholder Services Plan.
(10) Opinion and Consent of Registrant's counsel.
(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.
(18) Rule 18f-3 Plan.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney.
(b) Certificate of Corporate Secretary.
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 August 7, 1995
______________ _____________________________
Common Stock
(Par value $.01)
Class A Shares - 16,385
Class B Shares - 4,279
Class C Shares -
Class R 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.
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.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
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;
DAVID B. TRUMAN Former Director:
(cont'd) 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 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 Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board 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
ROBERT E. RILEY Director:
President, Chief Dreyfus Service Corporation*;
Operating Officer, Former Executive Vice President:
and a Director Prudential Investment Corporation
751 Board Street
Newark, New Jersey 07102
STEPHEN E. CANTER Former Chairman and Chief Executive Officer:
Vice Chairman and Kleinwort Benson Investment Management
Chief Investment Officer, Americas Inc.*;
and a Director
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++'
Dreyfus Service Corporation*;
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company+++;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
The Dreyfus Security Savings Bank F.S.B.+;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization*;
The Truepenny Corporation*;
PHILIP L. TOIA Formerly, Senior Vice President:
(cont'd) The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales 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++;
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals*;
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*;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
DANIEL C. MACLEAN Secretary:
(cont'd) Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Senior Vice President:
Vice President-Corporate The Boston Company Advisors, Inc.
Development 53 State Street
Exchange Place
Boston, Massachusetts 02109
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
MARK N. JACOBS Vice President, Secretary and Director:
Vice President-Fund Lion Management, Inc.*;
Legal and Compliance, Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation
Services One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
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 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
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
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 Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus 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 GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth Opportunity Fund, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Equity Fund, Inc.
33) Dreyfus Investors GNMA Fund
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) The Dreyfus/Laurel Investment Series
38) The Dreyfus Leverage Fund, Inc.
39) Dreyfus Life and Annuity Index Fund, Inc.
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus Michigan Municipal Money Market Fund, Inc.
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus Ohio Municipal Money Market Fund, Inc.
60) Dreyfus 100% U.S. Treasury Intermediate Term Fund
61) Dreyfus 100% U.S. Treasury Long Term Fund
62) Dreyfus 100% U.S. Treasury Money Market Fund
63) Dreyfus 100% U.S. Treasury Short Term Fund
64) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
65) Dreyfus Pennsylvania Municipal Money Market Fund
66) Dreyfus Short-Intermediate Government Fund
67) Dreyfus Short-Intermediate Municipal Bond Fund
68) Dreyfus Short-Term Income Fund, Inc.
69) The Dreyfus Socially Responsible Growth Fund, Inc.
70) Dreyfus Strategic Growth, L.P.
71) Dreyfus Strategic Income
72) Dreyfus Strategic Investing
73) Dreyfus Tax Exempt Cash Management
74) The Dreyfus Third Century Fund, Inc.
75) Dreyfus Treasury Cash Management
76) Dreyfus Treasury Prime Cash Management
77) Dreyfus Variable Investment Fund
78) Dreyfus-Wilshire Target Funds, Inc.
79) Dreyfus Worldwide Dollar Money Market Fund, Inc.
80) General California Municipal Bond Fund, Inc.
81) General California Municipal Money Market Fund
82) General Government Securities Money Market Fund, Inc.
83) General Money Market Fund, Inc.
84) General Municipal Bond Fund, Inc.
85) General Municipal Money Market Fund, Inc.
86) General New York Municipal Bond Fund, Inc.
87) General New York Municipal Money Market Fund
88) Pacifica Funds Trust -
Pacific American Money Market Portfolio
Pacific American U.S. Treasury Portfolio
89) Peoples Index Fund, Inc.
90) Peoples S&P MidCap Index Fund, Inc.
91) Premier Insured Municipal Bond Fund
92) Premier California Municipal Bond Fund
93) Premier Global Investing, Inc.
94) Premier GNMA Fund
95) Premier Growth Fund, Inc.
96) Premier Municipal Bond Fund
97) Premier New York Municipal Bond Fund
98) 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, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk 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
Lynn H. Johnson+ Vice President None
Ruth D. Leibert++ Assistant Vice President Assistant
Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
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
90 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 certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and 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 21st day of August, 1995.
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 and Treasurer (Principal 8/21/95
_____________________________ Executive Officer and Principal
Marie E. Connolly Financial Officer)
/s/David W. Burke* Director 8/21/95
_____________________________
David W. Burke
/s/Hodding Carter, III* Director 8/21/95
_____________________________
Hodding Carter, III
/s/Joseph S. DiMartino* Chairman of the Board 8/21/95
_____________________________
Joseph S. DiMartino
/s/Ehud Houminer* Director 8/21/95
_____________________________
Ehud Houminer
/s/Richard C. Leone* Director 8/21/95
_____________________________
Richard C. Leone
/s/Hans Mautner* Director 8/21/95
_____________________________
Hans Mautner
Signatures Title Date
_____________________________ ______________________________ __________
/s/Robin A. Smith* Director 8/21/95
_____________________________
Robin A. Smith
/s/John E. Zuccotti* Director 8/21/95
_____________________________
John E. Zuccotti
*BY: /s/Eric B. Fischman
--------------------------
Eric B. Fischman,
Attorney-in-Fact
ARTICLES OF AMENDMENT
DREYFUS CAPITAL VALUE FUND, INC., a Maryland
corporation having its principal office in the State of Maryland
at 32 South Street, Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby
amended to provide that the designation of one hundred million
(100,000,000) generic shares of Common Stock of the Corporation
(marketed as Class A shares of Common Stock of the Corporation)
be changed to Class A shares of Common Stock of the Corporation.
SECOND: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
THIRD: These Articles of Amendment were approved by
at
least a majority of the entire Board of Directors of the
Corporation and are limited to changes expressly permitted by
Section 2-605 of subtitle 6 of Title 2 of the Maryland General
Corporation Law to be made without the affirmative vote of the
stockholders of the Corporation.
The Vice President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states
that to the best of his knowledge, information and belief the
matters and facts set forth in these Articles with respect to
the
authorization and approval of the amendment of the Corporation's
charter are true in all material respects, and that this
statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus Capital Value Fund, Inc.
has caused this instrument to be signed in its name and on its
behalf by its Vice President, Eric B. Fischman, and witnessed by
its Assistant Secretary, Ruth D. Leibert, on the 7th day of
July,
1995.
DREYFUS CAPITAL VALUE FUND, INC.
By:/s/Eric B. Fischman
Eric B. Fischman, Vice President
WITNESS:
/s/Ruth D. Leibert
Ruth D. Leibert,
Assistant Secretary
ARTICLES SUPPLEMENTARY
DREYFUS CAPITAL VALUE FUND, INC., a Maryland
corporation having its principal office in the State of Maryland
at 32 South Street, Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The aggregate number of shares of Common Stock
that the Corporation has authority to issue is increased by one
hundred million (100,000,000) shares, all of which one hundred
million (100,000,000) shares shall be classified as shares of
Class C Common Stock.
SECOND: The shares of Class C Common Stock classified
by the Corporation's Board of Directors hereby shall have the
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption as set forth in Article FIFTH
of the Corporation's Charter and shall be subject to all
provisions of the Corporation's Charter relating to stock of the
Corporation generally, subject to the following:
(1) As more fully set forth hereinafter, the
assets and liabilities and the income and expenses of
the Class C Common Stock shall be determined
separately
from those of any other class of the Corporation's
stock and, accordingly, the net asset value, the
dividends and distributions payable to holders, and
the
amounts distributable in the event of liquidation of
the Corporation to holders of shares of the
Corporation's stock may vary from class to class.
Except for these differences, and certain other
differences hereinafter set forth, the Class C Common
Stock and each other class of the Corporation's stock
shall have the same preferences, conversion and other
rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of
redemption.
(2) Assets of the Corporation attributable to
the
Class C Common Stock and each other class of the
Corporation's stock shall be invested in the same
investment portfolio of the Corporation.
(3) The dividends and distributions of
investment
income and capital gains with respect to the Class C
Common Stock shall be in such amounts as may be
declared from time to time by the Board of Directors,
and such dividends and distributions may vary between
the Class C Common Stock and any other class of the
Corporation's stock to reflect differing allocations
of
the expenses of the Corporation among the classes and
any resultant differences between the net asset values
per share of the classes, to such extent and for such
purposes as the Board of Directors may deem
appropriate. The allocation of investment income,
capital gains, expenses and liabilities of the
Corporation among the Class C Common Stock and any
other class of the Corporation's stock shall be
determined by the Board of Directors in a manner that
is consistent with applicable law.
(4) Except as may otherwise be required by law,
the holders of the Class C Common Stock shall have (i)
exclusive voting rights with respect to any matter
submitted to a vote of stockholders that affects only
holders of the Class C Common Stock, including,
without
limitation, the provisions of any distribution plan
adopted by the Corporation pursuant to Rule 12b-1
under
the Investment Company Act of 1940 (a "Plan")
applicable to Class C and (ii) no voting rights with
respect to the provisions of any Plan applicable to
any
other class of stock of the Corporation or with regard
to any other matter submitted to a vote of
stockholders
that does not affect holders of the Class C Common
Stock.
THIRD: Immediately before the increase in the
aggregate number of shares as set forth in Article FIRST hereof,
the Corporation was authorized to issue two hundred million
(200,000,000) shares of stock, one hundred million (100,000,000)
of which were shares of Class A Common Stock and one hundred
million (100,000,000) of which were shares of Class B Common
Stock, all having a par value of one cent ($.01) each, and an
aggregate par value of two million dollars ($2,000,000).
FOURTH: As hereby increased and classified, the total
number of shares of stock which the Corporation has authority to
issue is three hundred million (300,000,000) shares, all of
which
are shares of Common Stock, with a par value of one cent ($.01)
per share, having an aggregate par value of three million
dollars
($3,000,000), of which one hundred million (100,000,000) shares
are classified as shares of Class A Common Stock, one hundred
million (100,000,000) shares are classified as shares of Class B
Common Stock and one hundred million (100,000,000) shares are
classified as shares of Class C Common Stock.
FIFTH: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as
amended.
SIXTH: The Board of Directors of the Corporation
increased the total number of shares of capital stock that the
Corporation has authority to issue pursuant to Section 2-105(c)
of the Maryland General Corporation Law and classified the
increased shares pursuant to authority provided in the
Corporation's Charter.
The undersigned Vice President acknowledges these
Articles Supplementary to be the corporate act of the
Corporation
and states that to the best of his knowledge, information and
belief, the matters and facts with respect to authorization and
approval set forth in these Articles are true in all material
respects and that this statement is made under penalties of
perjury.
IN WITNESS WHEREOF, DREYFUS CAPITAL VALUE FUND, INC.
has caused these Articles Supplementary to be signed in its name
and on its behalf by its Vice President and witnessed by its
Assistant Secretary on July 7, 1995.
DREYFUS CAPITAL VALUE FUND, INC.
By:/s/Eric B. Fischman
Eric B. Fischman, Vice
President
Witness:
/s/Ruth D. Leibert
Ruth D. Leibert,
Assistant Secretary
ARTICLES SUPPLEMENTARY
DREYFUS CAPITAL VALUE FUND, INC., a Maryland
corporation having its principal office in the State of Maryland
at 32 South Street, Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The aggregate number of shares of Common Stock
that the Corporation has authority to issue is increased by one
hundred million (100,000,000) shares, all of which one hundred
million (100,000,000) shares shall be classified as shares of
Class R Common Stock.
SECOND: The shares of Class R Common Stock classified
by the Corporation's Board of Directors hereby shall have the
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption as set forth in Article FIFTH
of the Corporation's Charter and shall be subject to all
provisions of the Corporation's Charter relating to stock of the
Corporation generally, subject to the following:
(1) As more fully set forth hereinafter, the
assets and liabilities and the income and expenses of
the Class R Common Stock shall be determined
separately
from those of any other class of the Corporation's
stock and, accordingly, the net asset value, the
dividends and distributions payable to holders, and
the
amounts distributable in the event of liquidation of
the Corporation to holders of shares of the
Corporation's stock may vary from class to class.
Except for these differences, and certain other
differences hereinafter set forth, the Class R Common
Stock and each other class of the Corporation's stock
shall have the same preferences, conversion and other
rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of
redemption.
(2) Assets of the Corporation attributable to
the
Class R Common Stock and each other class of the
Corporation's stock shall be invested in the same
investment portfolio of the Corporation.
(3) The dividends and distributions of
investment
income and capital gains with respect to the Class R
Common Stock shall be in such amounts as may be
declared from time to time by the Board of Directors,
and such dividends and distributions may vary between
the Class R Common Stock and any other class of the
Corporation's stock to reflect differing allocations
of
the expenses of the Corporation among the classes and
any resultant differences between the net asset values
per share of the classes, to such extent and for such
purposes as the Board of Directors may deem
appropriate. The allocation of investment income,
capital gains, expenses and liabilities of the
Corporation among the Class R Common Stock and any
other class of the Corporation's stock shall be
determined by the Board of Directors in a manner that
is consistent with applicable law.
(4) Except as may otherwise be required by law,
the holders of the Class R Common Stock shall have (i)
exclusive voting rights with respect to any matter
submitted to a vote of stockholders that affects only
holders of the Class R Common Stock and (ii) no voting
rights with respect to any matter submitted to a vote
of stockholders that does not affect holders of the
Class R Common Stock.
THIRD: Immediately before the increase in the
aggregate number of shares as set forth in Article FIRST hereof,
the Corporation was authorized to issue three hundred million
(300,000,000) shares of stock, one hundred million (100,000,000)
of which were shares of Class A Common Stock, one hundred
million
(100,000,000) of which were shares of Class B Common Stock and
one hundred million (100,000,000) of which were shares of Class
C
Common Stock, all having a par value of one cent ($.01) each,
and
an aggregate par value of three million dollars ($3,000,000).
FOURTH: As hereby increased and classified, the total
number of shares of stock which the Corporation has authority to
issue is four hundred million (400,000,000) shares, all of which
are shares of Common Stock, with a par value of one cent ($.01)
per share, having an aggregate par value of four million dollars
($4,000,000), of which one hundred million (100,000,000) shares
are classified as shares of Class A Common Stock, one hundred
million (100,000,000) shares are classified as shares of Class B
Common Stock, one hundred million (100,000,000) shares are
classified as shares of Class C Common Stock and one hundred
million (100,000,000) shares are classified as shares of Class R
Common Stock.
FIFTH: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as
amended.
SIXTH: The Board of Directors of the Corporation
increased the total number of shares of capital stock that the
Corporation has authority to issue pursuant to Section 2-105(c)
of the Maryland General Corporation Law and classified the
increased shares pursuant to authority provided in the
Corporation's Charter.
The undersigned Vice President acknowledges these
Articles Supplementary to be the corporate act of the
Corporation
and states that to the best of his knowledge, information and
belief, the matters and facts with respect to authorization and
approval set forth in these Articles are true in all material
respects and that this statement is made under penalties of
perjury.
IN WITNESS WHEREOF, DREYFUS CAPITAL VALUE FUND, INC.
has caused these Articles Supplementary to be signed in its name
and on its behalf by its Vice President and witnessed by its
Assistant Secretary on August 16, 1995.
DREYFUS CAPITAL VALUE FUND, INC.
By:/s/Eric B. Fischman
Eric B. Fischman, Vice
President
Witness:
/s/Ruth D. Leibert
Ruth D. Leibert,
Assistant Secretary
SUB-INVESTMENT ADVISORY AGREEMENT
DREYFUS CAPITAL VALUE FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
April 28, 1987
As Revised, November 4, 1992
Comstock Partners, Inc.
45 Broadway
New York, New York 10006
Dear Sirs:
Dreyfus Capital Value Fund, Inc., a Maryland
corporation (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 Articles of Incorporation
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 of Directors.
The Fund desires to employ you to act as its sub-investment
adviser and also intends to employ The Dreyfus Corporation (the
"Adviser") to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or persons
may be officers and 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 Adviser
and the Fund's Board of Directors, 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 Fund's
investments and conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of the
Fund's assets. You will furnish to the Adviser or the Fund such
statistical information, with respect to the investments which
the Fund may hold or contemplate purchasing, as the Adviser or
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.
You shall exercise your best judgment in rendering the
services to be provided hereunder, and the Fund agrees as an
inducement to your undertaking the same that you shall not be
liable hereunder for any error of judgment or mistake of law or
for any loss suffered by the Fund, provided that nothing herein
shall be deemed to protect or purport to protect you against any
liability to the Fund or to its security holders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties
hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the annual rate based on the value of the
Fund's average daily net assets, as follows:
Annual Fee as a Percentage of
Total 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%
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. The fee for
the period from the date hereof to the end of the month hereof
shall be pro-rated according to the proportion which such period
bears to the full monthly period, and 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 Articles of Incorporation 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 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: taxes,
interest, brokerage fees and commissions, if any, fees of
Directors who are not officers, directors, employees or holders
of 5% or more of your outstanding voting securities and those of
the Adviser or any affiliates of you or the Adviser, 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 corporate
existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
preparing, printing and distributing prospectuses and statements
of additional information, costs of stockholders' reports and
corporate 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
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 Adviser to the extent of .15 of 1% of the Fund's average
daily net assets or $37,500, whichever is less. Your obligation
is 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 will continue
to act as investment adviser to various fiduciary or other
managed accounts, and the Fund has no objection to your so
acting. 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 services and nothing herein
contained 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, director, 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, partner, director,
employee, or agent or one under your control or direction even
though paid by you.
This Agreement 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 of Directors 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 the continuance also is approved by a majority of the
Fund's Directors 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 of Directors 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).
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:
COMSTOCK PARTNERS, INC.
By:____________________
APPENDIX B
TO BANK AFFILIATED BROKER-DEALER AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders
of, and administering shareholder accounts in, certain mutual fund(s)
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: assisting clients in changing dividend options,
account designations and addresses; performing sub-accounting;
establishing and maintaining shareholder accounts and records; processing
purchase and redemption transactions; providing periodic statements
and/or reports showing a client's account balance and integrating such
statements with those of other transactions and balances in the client's
other accounts serviced by us; arranging for bank wires; and providing
such other information and services as you reasonably may request, to the
extent we are permitted by applicable statute, rule or regulation. In this
regard, if we are a subsidiary or affiliate of a federally chartered and
supervised bank or other banking organization, you recognize that we may
be subject to the provisions of the Glass-Steagall Act and other laws,
rules, regulations or requirements governing, among other things, the
conduct of our activities. As such, we are restricted in the activities we
may undertake and for which we may be paid and, therefore, intend to
perform only those activities as are consistent with our statutory and
regulatory obligations. We represent and warrant to, and agree with you,
that the compensation payable to us hereunder, together with any other
compensation payable to us by clients in connection with the investment
of their assets in shares of the Funds, will be properly disclosed by us to
our clients, will be authorized by our clients and will not result in an
excessive or unauthorized fee to us.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to each Fund's shareholders, and to assist you in
servicing accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent. We agree that in the event an issue pertaining
to a Fund's Shareholder Services Plan is submitted for shareholder
approval, we will vote any Fund shares held for our own account in the
same proportion as the vote of those shares held for our clients' accounts.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. If we are a subsidiary or an affiliate of a federally supervised
bank or thrift institution, we agree that in providing services hereunder
we shall at all times act in compliance with the Interagency Statement on
Retail Sales of Nondeposit Investment Products issued by The Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, and the Office
of Thrift Supervision (February 15, 1994) or any successor interagency
requirements as in force at the time such services are provided. We shall
have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in 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, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein
by you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We
understand that any payments pursuant to this Agreement shall be paid
only so long as this Agreement and such Plan are in effect. We agree that
no Director, officer or shareholder of the Fund shall be liable individually
for the performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telecopier, telex, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
APPENDIX D
TO BANK AFFILIATED BROKER-DEALER AGREEMENT
EXPEDITED REDEMPTION INFORMATION FORM
The following information is provided by the Firm identified below which
desires to exercise expedited redemption privileges with respect to
shares of certain mutual funds managed, advised or administered by The
Dreyfus Corporation or its subsidiaries or affiliates, which shares are
registered in the name of, or beneficially owned by, the customers of such
Firm.
(PLEASE PRINT OR TYPE)
-----------------------------------------------------------------------------
NAME OF BANK
-----------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
In order to speed payment, redemption proceeds shall be sent only to the
commercial bank identified below, for credit to customer accounts of the
above-named Firm.
-----------------------------------------------------------------------------
NAME OF COMMERCIAL BANK TO RECEIVE ALL PAYMENTS - ABA NUMBER
-----------------------------------------------------------------------------
ACCOUNT NAME ACCOUNT NUMBER
-----------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
APPENDIX B
TO BROKER-DEALER AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders
of, and administering shareholder accounts in, certain mutual fund(s)
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: assisting clients in changing dividend options,
account designations and addresses; performing sub-accounting;
establishing and maintaining shareholder accounts and records; processing
purchase and redemption transactions; providing periodic statements
and/or reports showing a client's account balance and integrating such
statements with those of other transactions and balances in the client's
other accounts serviced by us; arranging for bank wires; and providing
such other information and services as you reasonably may request, to the
extent we are permitted by applicable statute, rule or regulation. We
represent and warrant to, and agree with you, that the compensation
payable to us hereunder, together with any other compensation payable to
us by clients in connection with the investment of their assets in shares
of the Funds, will be properly disclosed by us to our clients, will be
authorized by our clients and will not result in an excessive or
unauthorized fee to us. We will act solely as agent for, upon the order of,
and for the account of, our clients.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to each Fund's shareholders, and to assist you in
servicing accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent. We agree that in the event an issue pertaining
to a Fund's Shareholder Services Plan is submitted for shareholder
approval, we will vote any Fund shares held for our own account in the
same proportion as the vote of those shares held for our client's accounts.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. We shall have no authority to act as agent for the Funds or for
you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in 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, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein
by you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We
understand that any payments pursuant to this Agreement shall be paid
only so long as this Agreement and such Plan are in effect. We agree that
no Director, officer or shareholder of the Fund shall be liable individually
for the performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telex, telecopier, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109,
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
APPENDIX D
TO BROKER-DEALER AGREEMENT
EXPEDITED REDEMPTION INFORMATION FORM
The following information is provided by the Firm identified below which
desires to exercise expedited redemption privileges with respect to
shares of certain mutual funds managed, advised or administered by The
Dreyfus Corporation or its subsidiaries or affiliates, which shares are
registered in the name of, or beneficially owned by, the customers of such
Firm.
(PLEASE PRINT OR TYPE)
------------------------------------------------------------------------------
NAME OF FIRM
------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
In order to speed payment, redemption proceeds shall be sent only to the
commercial bank identified below, for credit to customer accounts of the
above-named Firm.
------------------------------------------------------------------------------
NAME OF COMMERCIAL BANK TO RECEIVE ALL PAYMENTS - ABA NUMBER
------------------------------------------------------------------------------
ACCOUNT NAME ACCOUNT NUMBER
------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
APPENDIX B
TO BANK AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders
of, and administering shareholder accounts in, certain mutual fund(s)
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: assisting clients in changing dividend options,
account designations and addresses; performing sub-accounting;
establishing and maintaining shareholder accounts and records; processing
purchase and redemption transactions; providing periodic statements
and/or reports showing a client's account balance and integrating such
statements with those of other transactions and balances in the client's
other accounts serviced by us; arranging for bank wires; and providing
such other information and services as you reasonably may request, to the
extent we are permitted by applicable statute, rule or regulation. In this
regard, if we are a federally chartered and supervised bank or other
banking organization, you recognize that we may be subject to the
provisions of the Glass-Steagall Act and other laws, rules, regulations, or
requirements governing, among other things, the conduct of our activities.
As such, we are restricted in the activities we may undertake and for
which we may be paid and, therefore, intend to perform only those
activities as are consistent with our statutory and regulatory obligations.
We represent and warrant to, and agree with you, that the compensation
payable to us hereunder, together with any other compensation payable to
us by clients in connection with the investment of their assets in shares
of the Funds, will be properly disclosed by us to our clients, will be
authorized by our clients and will not result in an excessive or
unauthorized fee to us.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to each Fund's shareholders, and to assist you in
servicing accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent. We agree that in the event an issue pertaining
to a Fund's Shareholder Services Plan is submitted for shareholder
approval, we will vote any Fund shares held for our own account in the
same proportion as the vote of those shares held for our clients' accounts.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. If we are a federally supervised bank or thrift institution, we
agree that, in providing services hereunder, we shall at all times act in
compliance with the Interagency Statement on Retail Sales of Nondeposit
Investment Products issued by The Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, and the Office of Thrift Supervision
(February 15, 1994) or any successor interagency requirements as in force
at the time such services are provided. We shall have no authority to act
as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in 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, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein
by you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We
understand that any payments pursuant to this Agreement shall be paid
only so long as this Agreement and such Plan are in effect. We agree that
no Director, officer or shareholder of the Fund shall be liable individually
for the performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telecopier, telex, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109,
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
APPENDIX D
TO BANK AGREEMENT
EXPEDITED REDEMPTION INFORMATION FORM
The following information is provided by the Bank identified below
which desires to exercise expedited redemption privileges with respect to
shares of certain mutual funds managed, advised or administered by The
Dreyfus Corporation or its affiliates, which shares are registered in the
name of, or beneficially owned by, the customers of such Bank.
(PLEASE PRINT OR TYPE)
------------------------------------------------------------------------------
NAME OF BANK
------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
In order to speed payment, redemption proceeds shall be sent only to the
commercial bank identified below, for credit to customer accounts of the
above-named Bank.
------------------------------------------------------------------------------
NAME OF COMMERCIAL BANK TO RECEIVE ALL PAYMENTS - ABA NUMBER
------------------------------------------------------------------------------
ACCOUNT NAME ACCOUNT NUMBER
------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
AMENDED AND RESTATED CUSTODY AGREEMENT
Amended and Restated Custody Agreement made as of
August 18, 1989 between DREYFUS CAPITAL VALUE FUND, INC., a
corporation organized and existing under the laws of the State
of Maryland, having its principal office and place of business
at 666 Old Country Road, Garden City, New York 11530
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New
York corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New
York, New York 10015 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have
the following meanings:
1. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or not
any such person is an Officer or employee of the Fund, duly
authorized by the Directors of the Fund to give Oral
Instructions and Written Instructions on behalf of the Fund and
listed in the Certificate annexed hereto as Appendix A or such
other Certificate as may be received by the Custodian from time
to time.
2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds
held in the Fund's custody account(s) at The Bank of New York,
or its successors, as of the close of such day or, if such day
is not a business day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party
such party's making a general assignment, arrangement or
composition with or for the benefit of its creditors, or
instituting or having instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or the entry of an order
for relief under the Federal bankruptcy law or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or if a petition is presented for
the winding up or liquidation of the party or a resolution is
passed for its winding up or liquidation, or it seeks, or
becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or
for all or substantially all of its assets or its taking any
action in furtherance of, or indicating its consent to approval
of, or acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and Federal
agency securities, its successor or successors and its nominee
or nominees.
5. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts and Futures Contract Options entitling the
holder, upon timely exercise and payment of the exercise price,
as specified therein, to purchase from the writer thereof the
specified underlying Securities.
6. "Certificate" shall mean any notice, instruction,
or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the Fund by
any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of O.C.C. and
a member of a national securities exchange qualified to act as a
custodian for an investment company, or any broker-dealer
reasonably believed by the Custodian to be such a clearing
member.
8. "Collateral Account" shall mean a segregated
account so denominated and pledged to the Custodian as security
for, and in consideration of, the Custodian's issuance of (a)
any Put Option guarantee letter or similar document described in
paragraph 8 of Article V herein, or (b) any receipt described in
Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S.
Consumer Price Index, all items and all urban consumers, U.S.
city average 1982-84 equals 100, as first published without
seasonal adjustment by the Bureau of Labor Statistics, the
Department of Labor, without regard to subsequent revisions or
corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange
traded option entitling the holder, upon timely exercise and
payment of the exercise price, as specified therein, to purchase
from the writer thereof the specified Securities (excluding
Futures Contracts) which are owned by the writer thereof and
subject to appropriate restrictions.
11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the
Securities and Exchange Commission, its successor or successors
and its nominee or nominees, provided the Custodian has received
a certified copy of a resolution of the Fund's Directors
specifically approving deposits in DTC. The term "Depository"
shall further mean and include any other person authorized to
act as a depository under the Investment Company Act of 1940,
its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of
the Fund's Directors specifically approving deposits therein by
the Custodian.
12. "Earnings Credit" shall mean for any given day
during a calendar year the product of (a) the Federal Funds Rate
for such date minus .25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately available
same day funds.
14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as
published in Federal Reserve Statistical Release H.15 (519) and
applicable to such day and each succeeding day which is not a
business day.
15. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities, including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at
an agreed upon price.
16. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option
with respect to a Futures Contract.
18. "Margin Account" shall mean a segregated account
in the name of a broker, dealer, futures commission merchant or
Clearing Member, or in the name of the Fund for the benefit of a
broker, dealer, futures commission merchant or Clearing Member,
or otherwise, in accordance with an agreement between the Fund,
the Custodian and a broker, dealer, futures commission merchant
or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund
may from time to time determine. Securities held in the
Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and
records.
19. "Merger" shall mean (a) with respect to the Fund,
the consolidation or amalgamation with, merger into, or transfer
of all or substantially all of its assets to, another entity,
where the Fund is not the surviving entity, and (b) with respect
to the Custodian, any consolidation or amalgamation with, merger
into, or transfer of all or substantially all of its assets to,
another entity, except for any such consolidation, amalgamation,
merger or transfer of assets between the Custodian and The Bank
of New York Company, Inc. or any subsidiary thereof, or the
Irving Bank Corporation or any subsidiary thereof, provided that
the surviving entity agrees to be bound by the terms of this
Agreement.
20. "Money Market Security" shall be deemed to
include, without limitation, debt obligations issued or
guaranteed as to principal and interest by the government of the
United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers'
acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase
and sale of such securities normally requires settlement in
Federal funds on the same date as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation,
a clearing agency registered under Section 17A of the Securities
Exchange Act of 1934, its successor or successors, and its
nominee or nominees.
22. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Treasurer or
any other person or persons duly authorized by the Directors of
the Fund to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other
Certificate as may be received by the Custodian from time to
time.
23. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal
instructions actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person.
25. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and tender of the specified
underlying Securities, to sell such Securities to the writer
thereof for the exercise price.
26. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities and agrees
to repurchase such Securities at a described or specified date
and price.
27. "Security" shall be deemed to include, without
limitation, honey Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics
similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public
authorities (including, without limitation, general obligation
bonds, revenue bonds and industrial bonds and industrial
development bonds), bonds, debentures, notes, mortgages or other
obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase, sell or
subscribe for the same, or evidencing or representing any other
rights or interest therein, or any property or assets.
28. "Segregated Security Account" shall mean an
account maintained under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the
custody account in which certain Securities and/or other assets
of the Fund shall be deposited and withdrawn from time to time
in accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time to
time determine.
29. "Shares" shall mean the shares of Common Stock of
the Fund, each of which, in the case of a Fund having Series, is
allocated to a particular Series.
30. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree to take
or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the value of a
particular stock index at the close of the last business day of
the contract and the price at which the futures contract is
originally struck.
31. "Stock Index Option" shall mean an exchange
traded option entitling the holder, upon timely exercise, to
receive an amount of cash determined by reference to the
difference between the exercise price and the value of the index
on the date of exercise.
32. "Written Instructions" shall mean written
communications actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any
time owned by the Fund during the period of this Agreement,
except that (a) if the Custodian fails to provide for the
custody of any of the Fund's Securities and moneys located or to
be located outside the United States in a manner satisfactory to
the Fund, the Fund shall be permitted to arrange for the custody
of such Securities and moneys located or to be located outside
the United States other than through the Custodian at rates to
be negotiated and borne by the Fund and (b) if the Custodian
fails to continue any existing sub-custodial or similar
arrangements on substantially the same terms as exist on the
date of this Agreement, the Fund shall be permitted to arrange
for such or similar services other than through the Custodian at
rates to be negotiated and borne by the Fund. The Custodian
shall not charge the Fund for any such terminated services after
the date of such termination.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, the Fund will deliver or cause
to be delivered to the Custodian all Securities and all moneys
owned by it, including cash received for the issuance of its
shares, at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and such
moneys until actually received by it. The Custodian will be
entitled to reverse any credits made on the Fund's behalf where
such credits have been previously made and moneys are not
finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and
on-going basis to deposit in the Book-Entry System all
Securities eligible for deposit therein and to utilize the
Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of
Securities collateral. Prior to a deposit of Securities of the
Fund in the Depository the Fund shall deliver to the Custodian a
certified resolution of the Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Depository
all Securities eligible for deposit therein and to utilize the
Depository to the extent possible in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of
Securities collateral. Securities and moneys of the Fund
deposited in either the Book-Entry System or the Depository will
be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts
in which the Custodian acts in a fiduciary or representative
capacity. Prior to the Custodian's accepting, utilizing and
acting with respect to Clearing Member confirmations for Options
and transactions in Options as provided in this Agreement, the
Custodian shall have received a certified resolution of the
Fund's Board of Directors approving, authorizing and instructing
the Custodian on a continuous and on-going basis, until
instructed to the contrary by a Certificate actually received by
the Custodian, to accept, utilize and act in accordance with
such confirmations as provided in this Agreement.
2. The Custodian shall credit to a separate account
in the name of the Fund all moneys received by it for the
account of the Fund, and shall disburse the same only:
(a) In payment for Securities purchased, as provided
in Article IV hereof;
(b) In payment of dividends or distributions, as
provided in Article XI hereof;
(c) In payment of original issue or other taxes, as
provided in Article XII hereof;
(d) In payment for Shares redeemed by it, as provided
in Article XII hereof;
(e) Pursuant to Certificates setting forth the name
and address of the person to whom the payment is to be made, and
the purpose for which payment is to be made; or
(f) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian, as provided in
Article XV hereof.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of the Fund
during said day. Where Securities are transferred to the
account of the Fund, the Custodian shall also by book-entry or
otherwise identify as belonging to the Fund a quantity of
Securities in a fungible bulk of Securities registered in the
name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the
Custodian shall furnish the Fund with a detailed statement of
the Securities and moneys held for the Fund under this
Agreement.
4. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, all Securities held for the
Fund, which are issued or issuable only in bearer form, except
such Securities as are held in the Book-Entry System, shall be
held by the Custodian in that form; all other Securities held
for the Fund may be registered in the name of the Fund, in the
name of any duly appointed registered nominee of the Custodian
as the Custodian may from time to time determine, or in the name
of the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository, any Securities which it
may hold for the account of the Fund and which may from time to
time be registered in the name of the Fund. The Custodian shall
hold all such Securities which are not held in the Book-Entry
System or in the Depository in a separate account in the name of
the Fund physically segregated at all times from those of any
other person or persons.
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate,
the Custodian by itself, or through the use of the Book-Entry
System or the Depository with respect to Securities therein
deposited, shall with respect to all Securities held for the
Fund in accordance with this Agreement:
(a) Collect all income due or payable and, in any
event, if the Custodian receives a written notice from the Fund
specifying that an amount of income should have been received by
the Custodian within the last 90 days, the Custodian will
provide a conditional payment of income within 60 days from the
date the Custodian received such notice, unless the Custodian
reasonably concludes that such income was not due or payable to
the Fund, provided that the Custodian may reverse any such
conditional payment upon its reasonably concluding that all or
any portion of such income was not due or payable, and provided
further that the Custodian shall not be liable for failing to
collect on a timely basis the full amount of income due or
payable in respect of a "floating rate instrument" or "variable
rate instrument" (as such terms are defined under Rule 2a-7
under the Investment Company Act of 1940, as amended) if it has
acted in good faith, without negligence or willful misconduct.
(b) Present for payment and collect the amount
payable upon such Securities which are called, but only if
either (i) the Custodian receives a written notice of such call,
or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian upon five business days'
prior notification to the Fund;
(c) Present for payment and collect the amount
payable upon all Securities which may mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as Custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or
hereafter in effect; and
(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein deposited,
for the account of the Fund all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder.
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the authority
of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in
exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund to any
protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery;
(d) Make such transfers or exchanges of the assets of
the Fund and take such other steps as shall be stated in said
order to be for the purpose of effectuating any duly authorized
plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) Present for payment and collect the amount
payable upon Securities not described in preceding paragraph
5(b) of this Article which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession
of any instrument or certificate representing any Futures
Contract, Option or Futures Contract Option until after it shall
have determined, or shall have received a Certificate from the
Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to
such availability, the Custodian shall comply with Section 17(f)
of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale, settlement, closing out or writing of
Futures Contracts, Options or Futures Contract Options by making
payments or deliveries specified in Certificates received by the
Custodian in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer
or futures commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or futures commission
merchants with respect to such Futures Contracts, Options or
Futures Contract Options, as the case may be, confirming that
such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise, in the
name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, provided, however, that payments to or
deliveries from the Margin Account shall be made in accordance
with the terms and conditions of the Margin Account Agreement.
Whenever any such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this Agreement
to the contrary, make payment for any Futures Contract, Option
or Futures Contract Option for which such instruments or such
certificates are available only against the delivery to the
Custodian of such instrument or such certificate, and deliver
any Futures Contract, Option or Futures Contract Option for
which such instruments or such certificates are available only
against receipt by the Custodian of payment therefor. Any such
instrument or certificate delivered to the Custodian shall be
held by the Custodian hereunder in accordance with, and subject
to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of any Option, Futures Contract,
Futures Contract Option or Reverse Repurchase Agreement, the
Fund shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such purchase:
(a) the name of the issuer and the title of the Securities; (b)
the number of shares or the principal amount purchased and
accrued interest, if any; (c) the date of purchase and
settlement; (d) the purchase price per unit; (e) the total
amount payable upon such purchase; (f) the name of the person
from whom or the broker through whom the purchase was made, and
the name of the clearing broker, if any; and (g) the name of the
broker to which payment is to be made. The.Custodian shall,
upon receipt of Securities purchased by or for the Fund, pay out
of the moneys held for the account of the Fund the total amount
payable to the person from whom, or the broker through whom, the
purchase was made, provided that the same conforms to the total
amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions.
2. Promptly after each sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures
Contract Option or Reverse Repurchase Agreement, the Fund shall
deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such sale: (a) the name of the
issuer and the title of the Security; (b) the number of shares
or principal amount sold, and accrued interest, if any; (c) the
date of sale; (d) the sale price per unit; (e) the total amount
payable to the Fund upon such sale; (f) the name of the broker
through whom or the person to whom the sale was made, and the
name of the clearing broker, if any; and (g) the name of the
broker to whom the Securities are to be delivered. The
Custodian shall deliver the Securities upon receipt of the total
amount payable to the Fund upon such sale, provided that the
same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions. Subject
to the foregoing, the Custodian may accept payment in such form
as shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing
among dealers in Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the type
of Option (put or call); (b) the name of the issuer and the
title and number of shares subject to such Option or, in the
case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options purchased;
(c) the expiration date; (d) the exercise price; (e) the dates
of purchase and settlement; (f) the total amount payable by the
Fund in connection with such purchase; (g) the name of the
Clearing Member through which such Option was purchased; and (h)
the name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing Member's
statement confirming the purchase of such Option held by such
Clearing Member for the account of the Custodian (or any duly
appointed and registered nominee of the Custodian) as custodian
for the Fund, out of moneys held for the account of the Fund,
the total amount payable upon such purchase to the Clearing
Member through whom the purchase was made, provided that the
same conforms to the total amount payable as set forth in such
Certificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph l hereof, the Fund shall deliver
to the Custodian a Certificate specifying with respect to each
such sale: (a) the type of Option (put or call); (b) the name
of the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index
to which such Option relates and the number of Stock Index
Options sold; (c) the date of sale; (d) the sale price; (e) the
date of settlement; (f) the total amount payable to the Fund
upon such sale; and (g) the name of the Clearing Member through
which the sale was made. The Custodian shall consent to the
delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding
paragraph l of this Article with respect to such Option against
payment to the Custodian of the total amount payable to the
Fund, provided that the same conforms to the total amount
payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any
Call Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Call Option: (a) the name of
the issuer and the title and number of shares subject to the
Call Option; (b) the expiration date; (c) the date of exercise
and settlement; (d) the exercise price per share; (e) the total
amount to be paid by the Fund upon such exercise; and (f) the
name of the Clearing Member through which such Call Option was
exercised. The Custodian shall, upon receipt of the Securities
underlying the Call Option which was exercised, pay out of the
moneys held for the account of the Fund the total amount payable
to the Clearing Member through whom the Call Option was
exercised, provided that the same conforms to the total amount
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the name of the issuer and
the title and number of shares subject to the Put Option; (b)
the expiration date; (c) the date of exercise and settlement;
(d) the exercise price per share; (e) the total amount to be
paid to the Fund upon such exercise; and (f) the name of the
Clearing Member through which such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the
exercise of the Put Option, deliver or direct the Depository to
deliver the Securities, provided the same conforms to the amount
payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any
Stock Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
type of Stock Index Option (put or call); (b) the number of
Options being exercised; (c) the stock index to which such
Option relates; (d) the expiration date; (e) the exercise price
(f) the total amount to be received by the Fund in connection
with such exercise; and (g) the Clearing Member from which such
payment is to be received.
6. Whenever the Fund writes a Covered Call Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same;
(b) the expiration date; (c) the exercise price; (d) the premium
to be received by the Fund; (e) the date such Covered Call
Option was written; and (f) the name of the Clearing Member
through which the premium is to be received. The Custodian
shall deliver or cause to be delivered, in exchange for receipt
of the premium specified in the Certificate with respect to such
Covered Call Option, such receipts as are required in accordance
with the customs prevailing among Clearing Members dealing in
Covered Call Options and shall impose, or direct the Depository
to impose, upon the underlying Securities specified in the
Certificate such restrictions as may be required by such
receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time
to refuse to issue any receipts for Securities in the possession
of the Custodian and not deposited with the Depository
underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such
Covered Call Option and specifying: (a) the name of the issuer
and the title and number of shares subject to the Covered Call
Option; (b) the Clearing Member to whom the underlying
Securities are to be delivered; and (c) the total amount payable
to the Fund upon such delivery. Upon the return and/or
cancellation of any receipts delivered pursuant to paragraph 6
of this Article, the Custodian shall deliver, or direct the
Depository to deliver, the underlying Securities as specified in
the Certificate for the amount to be received as set forth in
such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the name of the issuer and
the title and number of shares for which the Put Option is
written and which underlie the same; (b) the expiration date;
(c) the exercise price; (d) the premium to be received by the
Fund; (e) the date such Put Option is written; (f) the name of
the Clearing Member through which the premium is to be received
and to whom a Put Option guarantee letter is to be delivered;
(g) the amount of cash, and/or the amount and kind of
Securities, if any, to be deposited in the Segregated Security
Account; and (h) the amount of cash and/or the amount and kind
of Securities to be deposited into the Collateral Account. The
Custodian shall, after making the deposits into the Collateral
Account specified in the Certificate, issue a Put Option
guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the
Clearing Member specified in the Certificate against receipt of
the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue
any Put Option guarantee letter or similar document if it is
unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate
specifying: (a) the name of the issuer and title and number of
shares subject to the Put Option; (b) the Clearing Member from
which the underlying Securities are to be received; (c) the
total amount payable by the Fund upon such delivery; (d) the
amount of cash and/or the amount and kind of Securities to be
withdrawn from the Collateral Account; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Segregated Security Account. Upon the return
and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such
Put Option, the Custodian shall pay out of the moneys held for
the account of the Fund the total amount payable to the Clearing
Member specified in the Certificate as set forth in such
Certificate, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes a Stock Index Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) whether
such Stock Index Option is a put or a call; (b) the number of
Options written; (c) the stock index to which such Option
relates; (d) the expiration date; (e) the exercise price; (f)
the Clearing Member through which such Option was written; (g)
the premium to be received by the Fund; (h) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; (i) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in the Collateral Account; and (j) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in a Margin Account, and the name in which such
account is to be or has been established. The Custodian shall,
upon receipt of the premium specified in the Certificate, make
the deposits, if any, into the Segregated Security Account
specified in the Certificate, and either (1) deliver such
receipts, if any, which the Custodian has specifically agreed to
issue, which are in accordance with the customs prevailing among
Clearing Members in Stock Index Options and make the deposits
into the Collateral Account specified in the Certificate, or (2)
make the deposits into the Margin Account specified in the
Certificate.
11. Whenever a Stock index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) such information as may be necessary to identify the Stock
Index Option being exercised; (b) the Clearing Member through
which such Stock Index Option is being exercised; (c) the total
amount payable upon such exercise, and whether such amount is to
be paid by or to the Fund; (d) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Margin
Account; and (e) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account and the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account.
Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article,
the Custodian shall pay to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any Option identical
to a previously written Option described in paragraphs 6, 8 or
10 of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its
position as a writer of an Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect
to the Option being purchased: (a) that the transaction is a
Closing Purchase Transaction; (b) the name of the issuer and the
title and number of shares subject to the Option, or, in the
case of a Stock Index Option, the stock index to which such
Option relates and the number of Options held; (c) the exercise
price; (d) the premium to be paid by the Fund; (e) the
expiration date; (f) the type of Option (put or call); (g) the
date of such purchase; (h) the name of the Clearing Member to
which the premium is to be paid; and (i) the amount of cash
and/or the amount and kind of Securities, if any, to be
withdrawn from the Collateral Account, a specified Margin
Account or the Segregated Security Account. Upon the
Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8
or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the
previously imposed restrictions on the Securities underlying the
Call Option.
13. Upon the expiration or exercise of, or
consummation of a Closing Purchase Transaction with respect to,
any Option purchased or written by the Fund and described in
this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein, and upon the return and/or cancellation of
any receipts issued by the Custodian, shall make such
withdrawals from the Collateral Account, the Margin Account
and/or the Segregated Security Account as may be specified in a
Certificate received in connection with such expiration,
exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract (or with
respect to any number of identical Futures Contract(s)): (a)
the category of Futures Contract (the name of the underlying
stock index or financial instrument); (b) the number of
identical Futures Contracts entered into; (c) the delivery or
settlement date of the Futures Contract(s); (d) the date the
Futures Contract(s) was (were) entered into and the maturity
date; (e) whether the Fund is buying (going long) or selling
(going short) on such Futures Contract(s); (f) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; (g) the name of
the broker, dealer or futures commission merchant through which
the Futures Contract was entered into; and (h) the amount of fee
or commission, if any, to be paid and the name of the broker,
dealer or futures commission merchant to whom such amount is to
be paid. The Custodian shall make the deposits, if any, to the
Margin Account in accordance with the terms and conditions of
the Margin Account Agreement. The Custodian shall make payment
of the fee or commission, if any, specified in the Certificate
and deposit in the Segregated Security Account the amount of
cash and/or the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar
payment required to be made by the Fund to a broker, dealer or
futures commission merchant with respect to an outstanding
Futures Contract shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar
payment from a broker, dealer or futures commission merchant to
the Fund with respect to an outstanding Futures Contract shall
be received and dealt with by the custodian in accordance with
the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Futures Contract;
(b) with respect to a Stock Index Futures Contract, the total
cash settlement amount to be paid or received, and with respect
to a Financial Futures Contract, the Securities and/or amount of
cash to be delivered or received; (c) the broker, dealer or
futures commission merchant to or from which payment or delivery
is to be made or received; and (d) the amount of cash and/or
Securities to be withdrawn from the Segregated Security Account.
The Custodian shall make the payment or delivery specified in
the Certificate and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Certificate
specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b)
the Futures Contract being offset. The Custodian shall make
payment of the fee or commission, if any, specified in the
Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein, and make such withdrawals from the
Segregated Security Account as may be specified in such
Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Futures
Contract Option: (a) the type of Futures Contract Option (put
or call); (b) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option purchased; (c) the
expiration date; (d) the exercise price; (e) the dates of
purchase and settlement; (f) the amount of premium to be paid by
the Fund upon such purchase; (g) the name of the broker or
futures commission merchant through which such option was
purchased; and (h) the name of the broker or futures commission
merchant to whom payment is to be made. The Custodian shall pay
the total amount to be paid upon such purchase to the broker or
futures commission merchant through whom the purchase was made,
provided that the same conforms to the amount set forth in such
Certificate.
2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the type of
Futures Contract Option (put or call); (b) the type of Futures
Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract
Option; (c) the date of sale; (d) the sale price; (e) the date
of settlement; (f) the total amount payable to the Fund upon
such sale; and (g) the name of the broker or futures commission
merchant through which the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being
closed against payment to the Custodian of the total amount
payable to the Fund, provided the same conforms to the total
amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by
the Fund pursuant to paragraph 1 is exercised by the Fund, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the particular Futures Contract Option (put or
call) being exercised; (b) the type of Futures Contract
underlying the Futures Contract Option; (c) the date of
exercise; (d) the name of the broker or futures commission
merchant through which the Futures Contract Option is exercised;
(e) the net total amount, if any, payable by the Fund; (f) the
amount, if any, to be received by the Fund; and (g) the amount
of cash and/or the amount and kind of Securities to be deposited
in the Segregated Security Account. The Custodian shall make the
payments, if any, and the deposits, if any, into the Segregated
Security Account as specified in the Certificate. The deposits,
if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract
Option, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Futures Contract
Option: (a) the type of Futures Contract Option (put or call);
(b) the type of Futures Contract and such other information as
may be necessary to identify the Futures Contract underlying the
Futures Contract Option; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund; (f)
the name of the broker or futures commission merchant through
which the premium is to be received; and (g) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account. The Custodian
shall, upon receipt of the premium specified in the Certificate,
make the deposits into the Segregated Security Account, if any,
as specified in the Certificate. The deposits, if any, to be
made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
particular Futures Contract Option exercised; (b) the type of
Futures Contract underlying the Futures Contract Option; (c) the
name of the broker or futures commission merchant through which
such Futures Contract Option was exercised; (d) the net total
amount, if any, payable to the Fund upon such exercise; (e) the
net total amount, if any, payable by the Fund upon such
exercise; and (f) the amount of cash and/or the amount and kind
of Securities to be deposited in the Segregated Security
Account. The Custodian shall, upon its receipt of the net total
amount payable to the Fund, if any, specified in such
Certificate make the payments, if any, and the deposits, if any,
into the Segregated Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is
written by the Fund and which is a Put Option is exercised, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the particular Futures Contract Option
exercised; (b) the type of Futures Contract underlying such
Futures Contract Option; (c) the name of the broker or futures
commission merchant through which such Futures Contract Option
is exercised; (d) the net total amount, if any, payable to the
Fund upon such exercise; (e) the net total amount, if any,
payable by the Fund upon such exercise; and (f) the amount and
kind of Securities and/or cash to be withdrawn from or deposited
in the Segregated Security Account, if any. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in the Certificate make the payments, if
any, and the deposits, if any, into the Segregated Security
Account as specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as
a writer of such Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to the Futures Contract Option being purchased: (a)
that the transaction is a closing transaction; (b) the type of
Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract
Option; (c) the exercise price; (d) the premium to be paid by
the Fund; (e) the expiration date; (f) the name of the broker or
futures commission merchant to which the premium is to be paid;
and (g) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account. The Custodian shall effect the withdrawals from the
Segregated Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or consum-
mation of a closing transaction with respect to, any Futures
Contract Option written or purchased by the Fund and described
in this Article, the Custodian shall (a) delete such Futures
Contract Option from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein, and (b) make such
withdrawals from, and/or, in the case of an exercise, such
deposits into, the Segregated Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin
Account Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Article
shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the name
of the issuer and the title of the Security; (b) the number of
shares or principal amount sold, and accrued interest or
dividends, if any; (c) the dates of the sale and settlement; (d)
the sale price per unit; (e) the total amount credited to the
Fund upon such sales, if any; (f) the amount of cash and/or the
amount and kind of Securities, if any, which are to be deposited
in a Margin Account and the name in which such Margin Account
has been or is to be established; (g) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account; and (h) the name of the broker
through which such short sale was made. The Custodian shall
upon its receipt of a statement from such broker confirming such
sale and that the total amount credited to the Fund upon such
sale, if any, as specified in the Certificate is held by such
broker for the account of the Custodian (or any nominee of the
Custodian) as custodian of the Fund, issue a receipt or make the
deposits into the Margin Account and the Segregated Security
Account specified in the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing-out:
(a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued
interest or dividends, if any, required to effect such
closing-out to be delivered to the broker; (c) the dates of the
closing-out and settlement; (d) the purchase price per unit; (e)
the net total amount payable to the Fund upon such closing-out;
(f) the net total amount payable to the broker upon such
closing-out; (g) the amount of cash and the amount and kind of
Securities to be withdrawn, if any, from the Margin Account; (h)
the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Segregated Security Account; and
(i) the name of the broker through which the Fund is effecting
such closing-out. The Custodian shall, upon receipt of the net
total amount payable to the Fund upon such closing-out and the
return and/or cancellation of the receipts, if any, issued by
the custodian with respect to the short sale being closed-out,
pay out of the moneys held for the account of the Fund to the
broker the net total amount payable to the broker, and make the
withdrawals from the Margin Account and the Segregated Security
Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse
Repurchase Agreement with respect to Securities and money held
by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral
Instructions or Written Instructions specifying: (a) the total
amount payable to the Fund in connection with such Reverse
Repurchase Agreement; (b) the broker or dealer through or with
which the Reverse Repurchase Agreement is entered; (c) the
amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (d) the date of such Reverse Repurchase
Agreement; and (e) the amount of cash and/or the amount and kind
of Securities, if any, to be deposited in a Segregated Security
Account in connection with such Reverse Repurchase Agreement.
The Custodian shall, upon receipt of the total amount payable to
the Fund specified in the Certificate, Oral Instructions or
Written Instructions make the delivery to the broker or dealer,
and the deposits, if any, to the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written
Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in paragraph l of this Article, the Fund
shall promptly deliver a Certificate or, in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral instructions or Written Instructions to the
Custodian specifying: (a) the Reverse Repurchase Agreement
being terminated; (b) the total amount payable by the Fund in
connection with such termination; (c) the amount and kind of
Securities to be received by the Fund in connection with such
termination; (d) the date of termination; (e) the name of the
broker or dealer with or through which the Reverse Repurchase
Agreement is to be terminated; and (f) the amount of cash and/or
the amount and kind of Securities to be withdrawn from the
Segregated Security Account. The Custodian shall, upon receipt
of the amount and kind of Securities to be received by the Fund
specified in the Certificate, Oral Instructions or Written
Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Segregated Security Account
as specified in a Certificate received by the Custodian. Such
Certificate shall specify the amount of cash and/or the amount
and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that the Fund
fails to specify in a Certificate the name of the issuer, the
title and the number of shares or the principal amount of any
particular Securities to be deposited by the Custodian into, or
withdrawn from, a Segregated Securities Account, the Custodian
shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments
from a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account
Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law, the Custodian may enforce its
lien and realize on any such property whenever the Custodian has
made payment or delivery pursuant to any Put Option guarantee
letter or similar document or any receipt issued hereunder by
the Custodian. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's
obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed
the Custodian by the Fund within the scope of Article XIII
herein.
5. On each business day, the Custodian shall furnish
the Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer or futures commission merchant specified in the name of a
Margin Account a copy of the statement furnished the Fund with
respect to such Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account, the Custodian shall furnish the Fund with a
Statement with respect to such Collateral Account specifying the
amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written Instructions
specifying the then market value of the securities described in
such statement. In the event such then market value is indicated
to be less than the Custodian's obligation with respect to any
outstanding Put Option, guarantee letter or similar document,
the Fund shall promptly specify in a Certificate the additional
cash and/or Securities to be deposited in such Collateral
Account to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of
the resolution of the Directors, certified by the Secretary or
any Assistant Secretary, either (i) setting forth the date of
the declaration of a dividend or distribution, the date of
payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the
total amount payable to the Dividend Agent of the Fund on the
payment date, or (ii) authorizing the declaration of dividends
and distributions on a daily basis and authorizing the Custodian
to rely on Oral Instructions, Written Instructions or a
Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per share to the shareholders
of record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such
resolution, Oral Instructions, Written Instructions or
Certificate, as the case may be, the Custodian shall pay out of
the moneys held for the account of the Fund the total amount
payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF COMMON STOCK
1. Whenever the Fund shall sell any of its Shares, it
shall deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and price;
and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.
2. Upon receipt of such money from the Transfer
Agent, the Custodian shall credit such money to the account of
the Fund.
3. Upon issuance of any of the Fund's Shares in
accordance with the foregoing provisions of this Article, the
Custodian shall pay, out of the money held for the account of
the Fund, all original issue or other taxes required to be paid
by the Fund in connection with such issuance upon the receipt of
a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
shall hereafter redeem any of its Shares, it shall furnish to
the Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advice
setting forth the number of Shares received by the Transfer
Agent for redemption and that such Shares are valid and in good
form for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held for the account of the
Fund of the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the
redemption of any of the Fund's Shares, whenever its Shares are
redeemed pursuant to any check redemption privilege which may
from time to time be offered by the Fund, the Custodian, unless
otherwise instructed by a Certificate; shall, upon receipt of an
advice from the Fund or its agent setting forth that the
redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of
such check redemption privilege out of the money held in the
account of the Fund for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of the Fund which results in an
overdraft because the moneys held by the Custodian for the
account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a
Certificate or Oral Instructions issued pursuant to Article IV,
or which results in an overdraft for some other reason, or if
the Fund is for any other reason indebted to the Custodian
(except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this
Article XIII), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund payable on demand
and shall bear interest from the date incurred at a rate per
annum (based on a 360-day year for the actual number of days
involved) equal to the Federal Funds Rate plus 1/2%, such rate
to be adjusted on the effective date of any change in such
Federal Funds Rate but in no event to be less than 6% per annum,
except that any overdraft resulting from an error by the
Custodian shall bear no interest. Any such overdraft or
indebtedness shall be reduced by an amount equal to the total of
all amounts due the Fund which have not been collected by the
Custodian on behalf of the Fund when due because of the failure
of the Custodian to make timely demand or presentment for
payment. In addition, the Fund hereby agrees that the Custodian
shall have a continuing lien and security interest in and to any
property at any time held by it for the benefit of the Fund or
in which the Fund may have an interest which is then in the
Custodian's possession or control or in possession or control of
any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to
charge any such overdraft or indebtedness together with interest
due thereon against any balance of account standing to the
Fund's credit on the Custodian's books. For purposes of this
Section l of Article XIII, "overdraft" shall mean a negative
Available Balance.
2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is pursuant
to a separate agreement, the Custodian) from which it borrows
money for investment or for temporary or emergency purposes
using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to each such borrowing: (a) the name of the bank;
(b) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note,
duly endorsed by the Fund, or other loan agreement; (c) the time
and date, if known, on which the loan is to be entered into; (d)
the date on which the loan becomes due and payable; (e) the
total amount payable to the Fund on the borrowing date; (f) the
market value of Securities to be delivered as collateral for
such loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular
Securities; and (g) a statement specifying whether such loan is
for investment purposes or for temporary or emergency purposes
and that such loan is in conformance with the Investment Company
Act of 1940 and the Fund's prospectus. The Custodian shall
deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian
may, at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver
such Securities as additional collateral as may be specified in
a Certificate to collateralize further any transaction described
in this paragraph. The Fund shall cause all Securities released
from collateral status to be returned directly to the Custodian,
and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund
fails to specify in a Certificate the name of the issuer, the
title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its
Articles of Incorporation and as disclosed in its most recent
and currently effective prospectus to lend its portfolio
Securities, within 24 hours after each loan of portfolio
Securities the Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each such
loan: (a) the name of the issuer and the title of the
Securities; (b) the number of shares or the principal amount
loaned; (c) the date of loan and delivery; (d) the total amount
to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the
premium, if any, separately identified; and (e) the name of the
broker, dealer or financial institution to which the loan was
made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to
which the loan was made upon receipt of the total amount
designated as to be delivered against the loan of Securities.
The Custodian may accept payment in connection with a delivery
otherwise than through the Book-Entry System or Depository only
in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York
Clearing House funds and may deliver Securities in accordance
with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
name of the issuer and the title of the Securities to be
returned; (b) the number of shares or the principal amount to be
returned; (c) the date of termination; (d) the total amount to
be delivered by the Custodian (including the cash collateral for
such Securities minus any offsetting credits as described in
said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to which such
Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the
Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or
damage, including counsel fees, resulting from its action or
omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage
arising out of its own negligence or willful misconduct. The
Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund or of its
own counsel, at the expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian
shall be liable to the Fund for any loss or damage resulting
from the use of the Book-Entry System or any Depository arising
by reason of any negligence, misfeasance or willful misconduct
on the part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and
shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold or written by or for the Fund, the legality of
the purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;
(b) The legality of the issue or sale of any of the
Fund's Shares, or the sufficiency of the amount to be received
therefor;
(c) The legality of the redemption of any of the
Fund's Shares, or the propriety of the amount to be paid
therefor;
(d) The legality of the declaration or payment of any
dividend by the Fund;
(e) The legality of any borrowing by the Fund using
Securities as collateral;
(f) The legality of any loan of portfolio Securities
pursuant to Article XIV of this Agreement, nor shall the
Custodian be under any duty or obligation to see to it that any
cash collateral delivered to it by a broker, dealer or financial
institution or held by it at any time as a result of such loan
of portfolio Securities of the Fund is adequate collateral for
the Fund against any loss it might sustain as a result of such
loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check
or notify the Fund that the amount of such cash collateral held
by it for the Fund is sufficient collateral for the Fund, but
such duty or obligation shall be the sole responsibility of the
Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Fund are lent
pursuant to Article XIV of this Agreement makes payment to it of
any dividends or interest which are payable to or for the
account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian
shall promptly notify the Fund in the event that such dividends
or interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Segregated
Security Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer,
futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment
which the Fund may be entitled to receive from such broker,
dealer, futures commission merchant or Clearing Member, to see
that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the
amount the Fund is entitled to receive, or to notify the Fund of
the Custodian's receipt or non-receipt of any such payment;
provided however that the Custodian, upon the Fund's written
request, shall, as Custodian, demand from any broker, dealer,
futures commission merchant or Clearing Member identified by the
Fund the payment of any variation margin payment or similar
payment that the Fund asserts it is entitled to receive pursuant
to the terms of a Margin Account Agreement or otherwise from
such broker, dealer, futures commission merchant or Clearing
Member.
3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not
represented by any check, draft or other instrument for the
payment of money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money directly or
by the final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and
shall not be liable for ascertaining or acting upon any calls,
conversions, exchange, offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in
the Depository which may mature or be redeemed, retired, called
or otherwise become payable. However, upon receipt of a
Certificate from the Fund of an overdue amount on Securities
held in the Depository, the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian
shall not be under any obligation to appear in, prosecute or
defend any action, suit or proceeding in respect to any
Securities held by the Depository which in its opinion may
involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be
furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent
of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation,
unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction
of reimbursement of its costs and expenses in connection with
any such action.
7. The Custodian may appoint one or more banking
institutions as Depository or Depositories or as Sub-Custodian
or Sub-Custodians, including, but not limited to, banking
institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon terms and conditions
approved in a Certificate, which shall, if requested by the
Custodian, be accompanied by an approving resolution of the
Fund's Board of Directors adopted in accordance with Rule 17f-5
under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Fund are such
as properly may be held by the Fund under the provisions of its
Articles of Incorporation.
9. (a) The Custodian shall be entitled to receive
and the Fund agrees to pay to the Custodian all reasonable
out-of-pocket expenses and such compensation and fees as are
specified on Schedule A hereto. The Custodian shall not deem
amounts payable in respect of foreign custodial services to be
out-of-pocket expenses, it being the parties' intention that all
fees for such services shall be as set forth on Schedule B
hereto and shall be provided for the term of this Agreement
without any automatic or unilateral increase. The Custodian
shall have the right to unilaterally increase the figures on
Schedule A on or after March 1, 1991 and on or after each
succeeding March 1 thereafter by on amount equal to 50% of the
increase in the Consumer Price Index for the calendar year
ending on the December 31 immediately preceding the calendar
year in which such March 1 occurs, provided, however, that
during each such annual period commencing on a March 1, the
aggregate increase during such period shall not be in excess of
10%. Any increase by the Custodian shall be specified in a
written notice delivered to the Fund at least thirty days prior
to the effective date of the increase. The Custodian may charge
such compensation and any expenses incurred by the Custodian in
the performance of its duties pursuant to such agreement against
any money held by it for the account of the Fund. The Custodian
shall also be entitled to charge against any money held by it
for the account of the Fund the amount of any loss, damage,
liability or expense, including counsel fees, for which it shall
be entitled to reimbursement under the provisions of this
Agreement. The expenses which the Custodian may charge against
the account of the Fund include, but are not limited to, the
expenses of Sub-Custodians and foreign branches of the Custodian
incurred in settling outside of New York City transactions
involving the purchase and sale of Securities of the Fund.
(b) The Fund shall receive a credit for each
calendar month against such compensation and fees of the
Custodian as may be payable by the Fund with respect to such
calendar month in an amount equal to the aggregate of its
Earnings Credit for such calendar month. In no event may any
Earnings Credits be carried forward to any fiscal year other
than the fiscal year in which it was earned, or, unless
permitted by applicable law, transferred to, or utilized by, any
other person or entity, provided that any such transferred
Earnings Credit can be used only to offset compensation and fees
of the Custodian for services rendered to such transferee and
cannot be used to pay the Custodian's out-of-pocket expenses.
For purposes of this subsection (b), the Fund is permitted to
transfer Earnings Credits only to The Dreyfus Corporation, its
affiliates and/or any investment company now or in the future
sponsored by The Dreyfus Corporation or any of its affiliates or
for which The Dreyfus Corporation or any of its affiliates acts
as the sole investment adviser or as the principal distributor,
and Daiwa Money Fund Inc. For purposes of this sub-section (b),
a fiscal year shall mean the twelve-month period commencing on
the effective date of this Agreement and on each anniversary
thereof.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or XI hereof. The Fund
agrees to forward to the Custodian a Certificate or facsimile
thereof, confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business of the
same day that such Oral Instructions or Written Instructions are
given to the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall
in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions, provided
such instructions reasonably appear to have been received from
an Authorized Person.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance
with the terms and conditions of any Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained
in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund
which are in the possession of the Custodian shall be the
property of the Fund. Such books and records shall be prepared
and maintained as required by the investment Company Act of
1940, as amended, and other applicable securities laws and rules
and regulations. The Fund, or the Fund's authorized
representatives, shall have access to such books and records
during the Custodian's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by the Custodian to the Fund or the
Fund's authorized representative at the Fund's expense.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Depository,
or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time
to time.
14. The Fund agrees to indemnify the Custodian
against and save the Custodian harmless from all liability,
claims, losses and demands whatsoever, including attorney's
fees, howsoever arising or incurred because of or in connection
with the Custodian's payment or non-payment of checks pursuant
to paragraph 6 of Article XII as part of any check redemption
privilege program of the Fund, except for any such liability,
claim, loss and demand arising out of the Custodian's own
negligence or willful misconduct.
15. Subject to the foregoing provisions of this
Agreement, the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or
dealers in such Securities.
16. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
(a) Except as provided in subparagraphs (b), (c)
and (d) herein, neither party may terminate this Agreement until
the earlier of the following: (i) August 31, 1993, and (ii) the
third anniversary of the earliest date on which none of the
companies listed on Schedule C hereto is a transfer agency
customer of the Custodian. Any such termination may be effected
only by the terminating party giving to the other party a notice
in writing specifying the date of such termination, which shall
be not less than two hundred seventy (270) days after the date
of giving of such notice.
(b) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under this Agreement and such breach has remained
uncured for a period of thirty days after the Custodian's
receipt from the Fund of written notice specifying such breach.
(c) Either party, immediately upon written
notice to the other party, may terminate this Agreement upon the
Merger or Bankruptcy of the other party.
(d) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under the "Amendment to Transfer Agency Agreements"
dated August 18, 1989 and has not cured such breach as promptly
as practicable and in any event within seven days of its receipt
of written notice of such breach, provided that the Custodian
shall not be permitted to cure any such material breach arising
from the willful misconduct of the Custodian.
In the event notice of termination is given by the
Fund, it shall be accompanied by a copy of a resolution of the
Directors of the Fund, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which
shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. In the event
notice of termination is given by the Custodian, the Fund shall,
on or before the termination date, deliver to the Custodian a
copy of a resolution of its Directors, certified by the
Secretary or any Assistant Secretary, designating a successor
custodian or custodians. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits.
Upon the date set forth in such notice, this Agreement shall
terminate and the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on that date deliver
directly to the successor custodian all Securities and moneys
then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment
or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall, upon the date specified in the notice
of termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot
be delivered to the Fund, to hold such Securities hereunder in
accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Fund under its
seal, setting forth the names and the signatures of the present
Authorized Persons. The Fund agrees to furnish to the Custodian
a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or
in the event that other or additional Authorized Persons are
elected or appointed. Until such new Certificate shall be
received, the Custodian shall be fully protected in acting under
the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the
last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Fund under its
seal, setting forth the names and the signatures of the present
Officers of the Fund. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event any
such present Officer ceases to be an Officer of the Fund, or in
the event that other or additional Officers are elected or
appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers
as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such other
place as the Custodian may from time to time designate in
writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Fund, shall be sufficiently given if addressed to the Fund and
mailed or delivered to it at its office at 666 Old Country Road,
Garden City, New York 11530, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both
parties with the same formality as this Agreement and approved
by a resolution of the Directors of the Fund.
6. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors
and assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of its
Directors.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
9. This Agreement shall not be effective on the date
hereof and instead shall become effective on January 1, 1990.
When effective, this Agreement shall supersede the then-existing
Custody Agreement between the parties hereto. IN WITNESS WHEREOF,
the parties hereto have caused
this Agreement to be executed by their respective Officers,
thereunto duly authorized, and their respective corporate seals
to be hereunto affixed, as of the day and year first above
written.
DREYFUS CAPITAL VALUE FUND, INC.
By:_____________________________
Attest:
________________________
THE BANK OF NEW YORK
By:______________________________
Attest:
________________________
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.
8. The obligations hereunder and under any related
Plan agreement shall only be binding upon the assets and
property
of the Fund or the affected series or class, as the case may be,
and shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
Dated: November 2, 1992
As Revised: August 7, 1995 EXHIBIT A
Fee as a Percentage of
Name of Class Average Daily Net Assets
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
[STROOCK & STROOCK & LAVAN LETTERHEAD]
August 27, 1985
Dreyfus Capital Value Fund, Inc.
666 Old Country Road
Garden City, New York 11530
Gentlemen:
We have acted as counsel to Dreyfus Capital Value Fund, Inc.
(the "Fund") in connection with the preparation of a
Registration Statement on Form N-1A, Registration No. 2-88822
(the "Registration Statement"), covering shares of Common Stock,
par value $.01 per share, of the Fund.
We have examined copies of the Articles of Incorporation and By-
Laws of the Fund, the Registration Statement, and such other
corporate records and documents as we have deemed necessary for
the purpose of this opinion. We also have examined such other
documents, papers, statutes and authorities as we deemed
necessary to form a basis for the opinion hereinafter expressed.
In our examination of such material, we have assumed the
genuineness of all signatures and the conformity to original
documents of all copies submitted to us. As to various
questions of fact material to such opinion, we have relied upon
statements and certificates of officers and representatives of
the Fund and others.
Attorneys involved in the preparation of this opinion are
admitted only to the bar of the State of New York. As to
various questions arising under the laws of the State of
Maryland, we have relied on the opinion of Messrs. Venable,
Baetjer and Howard, a copy of which is attached hereto.
Based upon the foregoing, we are of the opinion that the shares
of Common Stock, par value $.01 per share, of the Fund to be
issued in accordance with the terms of the offering as set forth
in the Prospectus included as part of the Registration
Statement, when so issued and paid for, will constitute validly
authorized and issued shares of Common Stock, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the
Prospectus included in the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by
or on behalf of the Fund or any Distributor or dealer in
connection with the registration and qualification of the Fund
or its Common Stock under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
[VENABLE, BAETJER AND HOWARD LETTERHEAD]
August 27, 1985
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Re: Dreyfus Capital Value Fund, Inc.
Gentlemen:
We have acted as Maryland counsel for the Dreyfus Capital Value
Fund, Inc., a Maryland corporation (the "Company"), in
connection with the organization of the Company and the issuance
of shares of its Common Stock.
We have examined the Company's Articles of Incorporation, its
Bylaws, the Prospectus included in its Registration Statement on
Form N-1A, substantially in the form in which it has or is to
become effective (the "Prospectus"), and have examined and
relied upon such corporate records of the Company and other
documents and certificates as to factual matters as we have
deemed to be necessary to render the opinion expressed herein.
We have assumed, without independent verification, the
genuineness of the signatures on and the authenticity of all
documents furnished to us.
Based on such examination, we are of the opinion that:
1. The Company is duly organized an validly existing as a
corporation in good standing under the laws of the State of
Maryland.
2. The 9,311 shares of Common Stock presently issued and
outstanding have been validly and legally issued and are fully
paid and non-assessable shares under the laws of the State of
Maryland.
3. The balance of the shares of Common Stock of the
Company to be offered for sale pursuant to the Prospectus are
authorized and unissued shares and, when such shares have been
duly sold, issued and paid for as contemplated in the
Prospectus, such shares will have been validly and legally
issued and will be fully paid and non-assessable shares of
Common Stock of the Company under the laws of the State of
Maryland.
This letter expresses our opinion as to the Maryland General
Corporation Law governing matters such as due incorporation and
the authorization and issuance of stock, but does not extend to
the securities or "Blue Sky" laws of Maryland or federal
securities or other laws.
You may rely upon our foregoing opinion in rendering your
opinion to the Company, which is to be filed as an exhibit to
the Registration Statement. We do not thereby admit that we are
"experts" as that term is used in the Securities Act of 1933 or
the rules and regulations of the Securities and Exchange
Commission.
Very truly yours,
VENABLE, BAETJER AND HOWARD
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
August 18, 1995
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") in accordance with Rule 12b-1, promulgated
under the Investment Company Act of 1940, as amended (the
"Act"). The Plan would pertain to each class set forth on
Exhibit A hereto, as such Exhibit may be revised from time to
time (each, a "Class"). Under the Plan, the Fund would pay the
Fund's distributor (the "Distributor") for distributing shares
of each Class. 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
each Class 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 shareholders of
each Class.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor for
distribution a fee in respect of each Class at the annual rate
set forth on Exhibit A.
2. For the purposes of determining the fees payable
under this Plan, the value of the Fund's net assets attributable
to each Class 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. As to each Class, this Plan will become effective
upon approval by (a) holders of a majority of the outstanding
shares of such Class, 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. As to each Class, this Plan may be amended at any
time by the Fund's Board, provided that (a) any amendment to
increase materially the costs which such Class may bear pursuant
to this Plan shall be effective only upon approval by a vote of
the holders of a majority of the outstanding shares of such
Class, 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. As to each Class, 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 outstanding shares of such Class.
Dated: May 23, 1994
Revised: August 7, 1995 EXHIBIT A
Fee as a Percentage of
Name of Class Average Daily Net Assets
Class B .75 of 1%
s C .75 of 1%
THE DREYFUS FAMILY OF FUNDS
(Premier Family of Equity Funds)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), requires that the Board of an
investment company desiring to offer multiple classes pursuant
to said Rule adopt a plan setting forth the separate arrangement
and expense allocation of each class, and any related conversion
features or exchange privileges.
The Board, including a majority of the non-interested
Board members, of each of the investment companies, or series
thereof, listed on Schedule A attached hereto (each, a "Fund")
which desires to offer multiple classes has determined that the
following plan is in the best interests of each class
individually and each Fund as a whole:
1. Class Designation: Fund shares shall be divided
into Class A, Class B, Class C and Class R.
2. Differences in Services: The services offered to
shareholders of each Class shall be substantially the same,
except that Right of Accumulation, Letter of Intent and
Reinvestment Privilege shall be available only to holders of
Class A shares.
3. Differences in Distribution Arrangements: Class
A shares shall be offered with a front-end sales charge, as such
term is defined in Article III, Section 26(b), of the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., and a deferred sales charge (a "CDSC"), as such term is
defined in said Section 26(b), may be assessed on certain
redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more. The
amount of the sales charge and the amount of and provisions
relating to the CDSC pertaining to the Class A shares are set
forth on Schedule B hereto.
Class B shares shall not be subject to a front-end
sales charge, but shall be subject to a CDSC and shall be
charged an annual distribution fee under a Distribution Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the
fees under the Distribution Plan pertaining to the Class B
shares, are set forth on Schedule C hereto.
Class C shares shall not be subject to a front-end
sales charge, but shall be subject to a CDSC and shall be
charged an annual distribution fee under a Distribution Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the
fees under the Distribution Plan pertaining to the Class C
shares, are set forth on Schedule D hereto.
Class R shares shall be offered at net asset value
only to institutional investors acting for themselves or in a
fiduciary, advisory, agency, custodial or similar capacity for
qualified or non-qualified employee benefit plans, including
pension, profit-sharing, SEP-IRAs and other deferred
compensation plans, whether established by corporations,
partnerships, non-profit entities or state and local
governments, but not including IRAs or IRA "Rollover Accounts."
Class A, Class B and Class C shares shall be subject
to an annual service fee at the rate of .25% of the value of the
average daily net assets of such Class pursuant to a Shareholder
Services Plan.
4. Expense Allocation. The following expenses
shall be allocated, to the extent practicable, on a Class-by-
Class basis: (a) fees under the Distribution Plan and
Shareholder Services Plan; (b) printing and postage expenses
related to preparing and distributing materials, such as
shareholder reports, prospectuses and proxies, to current
shareholders of a specific Class; (c) Securities and Exchange
Commission and Blue Sky registration fees incurred by a specific
Class; (d) the expense of administrative personnel and services
as required to support the shareholders of a specific Class; (e)
litigation or other legal expenses relating solely to a specific
Class; (f) transfer agent fees identified by the Fund's transfer
agent as being attributable to a specific Class; and (g) Board
members' fees incurred as a result of issues relating to a
specific Class.
5. Conversion Features. Class B shares shall
automatically convert to Class A shares after a specified period
of time after the date of purchase, based on the relative net
asset value of each such Class without the imposition of any
sales charge, fee or other charge, as set forth on Schedule E
hereto. No other Class shall be subject to any automatic
conversion feature.
6. Exchange Privileges. Shares of a Class shall be
exchangeable only for (a) shares of the same Class of other
investment companies managed or administered by The Dreyfus
Corporation and (b) shares of certain other investment companies
specified from time to time.
SCHEDULE A
Name of Fund Date Plan Adopted
Premier Growth Fund, Inc. April 12, 1995
Premier Global Investing, Inc. April 24, 1995
(Revised July 17, 1995)
Premier Strategic Investing July 19, 1995
Dreyfus Capital Value Fund August 7, 1995
(A Premier Fund) SCHEDULE B
Front-End Sales Charge--Class A Shares--The public offering
price for Class A shares shall be the net asset value per share
of that Class plus a sales load as shown below:
Total Sales Load Amount of Transaction As a % of
offering
price per
share As a % of
net asset
value per
share Less than $50,000. . . . . . 4.50 4.70 $50,000 to less than $100,000
4.00 4.20 $100,000 to less than $250,000 3.00 3.10 $250,000 to less than
$500,000 2.50 2.60 $500,000 to less than $1,000,000 2.00 2.00 $1,000,000
or more -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of 1%
shall be assessed at the time of redemption of Class A shares
purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within two years
after purchase. The terms contained in Schedule C pertaining to
the CDSC assessed on redemptions of Class B shares (other than
the amount of the CDSC and its time periods), including the
provisions for waiving the CDSC, shall be applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of
Accumulation shall apply to such purchases of Class A shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable
to the Fund's Distributor shall be imposed on any redemption of
Class B shares which reduces the current net asset value of such
Class B shares to an amount which is lower than the dollar
amount of all payments by the redeeming shareholder for the
purchase of Class B shares of the Fund held by such shareholder
at the time of redemption. No CDSC shall 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 the shareholder's Class B shares above the dollar amount of
all payments for the purchase of Class B shares of the Fund held
by such shareholder 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 shall depend on the number of years from the time
the shareholder 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 shall 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 Payment
Was Made CDSC as a % of
Amount 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 shall be made in a manner that
results in the lowest possible rate. Therefore, it shall be
assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the
increase in net asset value of Class B shares above the total
amount of payments for the purchase of Class B shares made
during the preceding six years; then of amounts representing the
cost of shares purchased six years prior to the redemption; and
finally, of amounts representing the cost of shares held for the
longest period of time within the applicable six-year period.
Waiver of CDSC--The CDSC shall 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 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 Fund's Distributor
exceeds one million dollars, (c) redemptions as a result of a
combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, and (d) a distribution
following retirement under a tax-deferred retirement plan or
upon attaining age 70-1/2 in the case of an IRA or Keogh plan or
custodial account pursuant to Section 403(b) of the Code. Any
Fund shares subject to a CDSC which were purchased prior to the
termination of such waiver shall have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of
such shares.
Amount of Distribution Plan Fees--Class B Shares--.75 of 1% of
the value of the average daily net assets of Class B.
SCHEDULE D
Contingent Deferred Sales Charge--Class C Shares--A CDSC of
1.00% payable to the Fund's Distributor shall be imposed on any
redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such
CDSC shall be the method used in calculating the CDSC for Class
B shares. In addition, the provisions for waiving the CDSC
shall be those set forth for Class B shares.
Amount of Distribution Plan Fees--Class C Shares--.75 of 1% of
the value of the average daily net assets of Class C.
SCHEDULE E
Conversion of Class B Shares--Approximately six years after the
date of purchase, Class B shares automatically shall convert to
Class A shares, based on the relative net asset values for
shares of each such Class, and shall no longer be subject to the
distribution fee. At that time, Class B shares that have been
acquired through the reinvestment of dividends and distributions
("Dividend Shares") shall be converted in the proportion that a
shareholder's Class B shares (other than Dividend Shares)
converting to Class A shares bears to the total Class B shares
then held by the shareholder which were not acquired through the
reinvestment of dividends and distributions.
OTHER EXHIBIT
DREYFUS CAPITAL VALUE FUND, INC.
POWER OF ATTORNEY
The undersigned, being members of the Board of Dreyfus Capital Value
Fund, Inc., (the "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
andresubstitution; to sign any and all amendments to the Registration
Statement (including Post-Effective Amendments and amendments thereto);
andthat the appointment of each of such persons as such attorney-in-fact
hereby is authorized and approved; and that such attorneys-in-fact, and
eachofthem, 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
suchRegistration Statement and any and all amendments and supplements
thereto,as fully to all intents and purposes as the officer, for whom he
orsheis acting as attorney-in-fact, might or could do in person.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of
June 9, 1995.
/s/ Joseph S. DiMartino /s/ Robin A. Smith
Joseph S. Dimartino Robin A. Smith
DREYFUS CAPITAL VALUE FUND, INC.
POWER OF ATTORNEY
The undersigned, being members of the Board of the Dreyfus
CapitalValue Fund, Inc. 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 asof
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
DREYFUS CAPITAL VALUE FUND, INC.
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
Dreyfus Capital Value Fund, Inc. (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,
fullpower and authority to do and perform each and every act ratifying
andconfirming 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
December 7, 1994.
/s/ Marie E. Connolly
Marie E. Connolly
OTHER EXHIBIT
DREYFUS CAPITAL VALUE FUND, INC.
Certificate of Assistant Secretary
The undersigned, Ruth D. Leibert, Assistant Secretary of Dreyfus
Capital Value Fund, Inc. ("Fund"), hereby certifies that set forth below is
a copy of the resolution adopted by the Fund's Board of Directors
authorizing the signing by Frederick C. Dey, Eric B. Fischman, Ruth D.
Leibert and John Pelletier on behalf of the proper officers of the Fund
pursuant to a power of attorney.
RESOLVED, that the Registration Statement and any and all
amendments and supplements thereto, may be signed by any one of
FrederickC.Dey, Eric B. Fischman, Ruth D. Leibert and John Pelletier as
theattorney-in-fact for the proper officers of the Fund, with full power
ofsubstitution and resubstitution; and that the appointment of each of
suchpersons as such attorney-in-fact hereby is authorized and approved;
andthat such attorneys-in-fact, and each of them, shall have full power
andauthority 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 or she is acting as attorney-in-fact,
might or could do in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
Seal of the Fund on March 1, 1995.
___________________
Ruth D. Leibert
Assistant Secretary
(SEAL)
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