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. 19 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]
Amendment No. 19 [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 February 1, 1996 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, 1995 was filed on November 29, 1995.
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 3
4 General Description of Registrant 7
5 Management of the Fund 10
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 27
7 Purchase of Securities Being Offered 12
8 Redemption or Repurchase 21
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-1,
B-32
13 Investment Objectives and Policies B-2
14 Management of the Fund B-13
15 Control Persons and Principal B-13
Holders of Securities
16 Investment Advisory and Other B-17
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-29
18 Capital Stock and Other Securities B-32
19 Purchase, Redemption and Pricing B-19;
of Securities Being Offered B-22; B-26
20 Tax Status *
21 Underwriters B-19
22 Calculations of Performance Data B-30
23 Financial Statements B-38
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-12
30 Location of Accounts and Records C-15
31 Management Services C-15
32 Undertakings C-15
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
- ---------------------------------------------------------------------------
PROSPECTUS FEBRUARY 1, 1996
DREYFUS CAPITAL VALUE FUND (A PREMIER FUND)
- ---------------------------------------------------------------------------
DREYFUS CAPITAL VALUE FUND(A PREMIER FUND) (THE "FUND") IS AN
OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND.
THE FUND'S INVESTMENT OBJECTIVE 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
"ALTERNATIVE 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 FEBRUARY 1, 1996,
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..................... 3
Alternative Purchase Methods........................ 6
Description of the Fund............................. 7
Management of the Fund.............................. 10
How to Buy Shares................................... 12
Shareholder Services................................ 17
How to Redeem Shares................................ 21
Distribution Plan and Shareholder Services Plan...... 24
Dividends, Distributions and Taxes.................... 25
Performance Information............................... 26
General Information.................................. 27
Appendix............................................ 29
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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.
- ---------------------------------------------------------------------------
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........................................ .94% .94% .94% .69%
Total Fund Operating Expenses......................... 1.69% 2.44% 2.44% 1.44%
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 $65/$25** $34/$25** $ 15
3 YEARS $ 96 $106/$76** $ 76 $ 46
5 YEARS $133 $150/$130** $130 $ 79
10 YEARS $236 $242*** $278 $172
- ------------------
*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 figure assumes conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
</TABLE>
- ---------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
- ---------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the Fund and investors, the payment of which
will reduce investors' annual return. Other Expenses for Class C and Class R
are based on applicable 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 Shares" and "Distribution
Plan and Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
Page 3
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of common stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------------------------------------------------------------- -----------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
-------------------------------------------------------------------------- -----------------------
PER SHARE DATA: 1986(1)(2) 1987(1) 1988(1) 1989(1) 1990(1) 1991 1992 1993 1994 1995 1993(3) 1994 1995
--------- ------- ------ ------- ------- ------ ------ ----- ----- ----- ------- ---- ------
<S> <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 .36 .03 .23 .31
Net realized and
unrealized gain (loss)
on investments(4) 2.26 3.59 (.18) 1.60 .61 (.89) (.39) (.62) .46 (1.37) .71 .38 (1.38)
TOTAL FROM
------ ----- ------ ------ ------ ------ ----- ----- ----- ------ ------ ------ ------
INVESTMENT OPERATIONS 2.29 3.66 .40 2.50 1.50 (.16) .01 (.38) .70 (1.01) .74 .61 (1.07)
------ ----- ------ ------ ------ ------ ----- ----- ----- ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income--net(4) -_ (.03) (.15) (.76) (.84) (.99) (.57) (.61) (.24) (.26) -_ (.24) (.21)
Dividends from net realized
gain on investments(4) -_ (.33) (.41) -_ -_ (.96) -_ -_ -_ -_ -_ -_ --
------ ----- ------ ------ ------ ------ ----- ----- ----- ------ ------ ------ ------
TOTAL DISTRIBUTIONS -_ (.36) (.56) (.76) (.84) (1.95) (.57) (.61) (.24) (.26) -_ (.24) (.21)
------ ----- ------ ------ ------ ------ ----- ----- ----- ------ ------ ------ ------
Net asset value,
end of period $9.54 $12.84 $12.68 $14.42 $15.08 $12.97 $12.41$11.42 $11.88 $10.61 $11.32 $11.69 $10.41
===== ====== ====== ====== ====== ====== ====== ===== ===== ====== ===== ====== =====
TOTAL INVESTMENT
RETURN (5) 31.59%(6) 39.72% 3.29% 20.95% 10.53% (.70%) (.02%) (2.70%) 6.14% (8.58%) 6.99%(6) 5.35%(9.27%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses
to average net asset 1.47%(6) 1.50% 1.24% 1.22% 1.20% 1.19% 1.19% 1.23% 1.21% 1.24% 1.49%(6) 1.99% 1.99%
Ratio of dividends and interest on
securities sold short
to average net assets -_ .15% .13% .03% .26% .49% .39% .45% .39% .45 .31%(6) .40% .45%
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% 3.61% .83%(6) 1.39% 2.86%
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% 54.70% 41.78% 45.57% 54.70%
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 $271,052 $30,378 $108,532 $87,847
- -------------------------------
(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>
<TABLE>
<CAPTION>
CLASS C CLASS R
----------------- -----------------
Period Ended Period Ended
PER SHARE DATA: September 30, September 30,
--------------- -------------------
1995(1) 1995(1)
------- --------
<S> <C> <C>
Net asset value, beginning of period................................ $10.64 $10.84
------- -------
INVESTMENT OPERATIONS:
Investment income-net .............................................. .02 .04
Net realized and unrealized (loss) on investments................... (.25) (.26)
------- ------
TOTAL FROM INVESTMENT OPERATIONS.................................... (.23) (.22)
------- -------
DISTRIBUTIONS:
Dividends from investment income-net................................ -- --
Dividends from net realized gain on investments..................... -- --
------- -------
TOTAL DISTRIBUTIONS................................................. -- --
------- -------
Net asset value, end of period...................................... $10.41 $10.62
====== ======
TOTAL INVESTMENT RETURN(2)............................................ (2.26%)(3) (2.03%)(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets................... .26%(3) .14%(3)
Ratio of dividends and interest on securities sold short to average net assets .06%(3) .04%(3)
Ratio of net investment income to average net assets................ .23%(3) .38%(3)
Decrease reflected in above expense ratios due to
expense reimbursements.............................................. -- --
Portfolio Turnover Rate............................................. 54.70% 54.70%
Net Assets, end of period (000's omitted)........................... $1 $1
- ------------------
(1) From August 22, 1995 (commencement of initial offering) to September 30, 1995.
(2) Exclusive of sales load.
(3) 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.
<TABLE>
<CAPTION>
DEBT OUTSTANDING
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------------------
1986(1) 1987 1988 1989 1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount of debt outstanding
at end of period
(in thousands)....... -- -_ -_ -_ -_ -_ -_ -_ -- $10,000
Average amount of debt
outstanding throughout period
(in thousands)(2)..... -- -_ -_ _- -- -- -_ -_ -_ $859
Average number of shares
outstanding throughout
period (in thousands)(3) -- -_ -_ -- -- -_ -- -_ -_ 38,750
Average amount of debt per share
throughout period -- -_ -_ _- -- -- -- -- -_ $ .02
(1)From October 10, 1985 (commencement of operations) to September 30, 1986.
(2)Based upon daily outstanding borrowings.
(3)Based upon month-end balances.
</TABLE>
Page 5
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 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 Shares _
Class B Shares" and "How to Redeem 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 Shares _ Class C Shares" and "How to Redeem 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.
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
Page 6
purchased at the same time, and to what extent, if any, such differential
would be offset by the return of Class A. Additionally, investors qualifying
for reduced initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A shares because
the accumulated continuing distribution fees on Class B or Class C shares may
exceed the initial sales charge on Class A shares during the life of the
investment. Finally, you should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of your own investment time
frame. For example, while Class C shares have a shorter CDSC period than
Class B shares, Class C shares do not have a conversion feature, and,
therefore, are subject to an ongoing distribution fee. Thus, Class B shares
may be more attractive than Class C shares to investors with longer term
investment outlooks. Generally, Class A shares may be more appropriate for
investors who invest $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 investment objective is to maximize total return,
consisting of capital appreciation and current income. It cannot be changed
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")) 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 may invest in the
securities of companies whose principal activities are in, or governments of,
emerging markets. The Fund will not invest more than 65% of its assets in
securities of foreign issuers. See "Investment Considerations and Risks _
Foreign Securities" below.
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.
The Fund generally seeks to invest in equity securities determined by
the Advisers to offer above average potential for total return. In making
this determination, factors including price-earnings ratios, cash flow and
the relationship of asset value to market value of the securities will be
taken into account. The Fund will be alert to companies engaged in
restructuring efforts, such as mergers, acquisitions and divestitures of less
profitable units.
The Fund typically purchases a debt security if the Advisers believe
that the yield and potential for capital appreciation of the security are
sufficiently attractive in light of the risks of ownership of the security.
In determining whether the Fund should invest in particular debt securities,
the Advisers consider factors such as: the price, coupon and yield to
maturity; their assessment of the credit quality of the issuer; the issuer's
available cash flow and the related coverage ratios; the property, if any,
securing the obligation; and the terms of the debt securities, including the
subordination, default, sinking fund and
Page 7
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 Rating Group, a division of The McGraw Hill Companies, Inc.
("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 "Investment Considerations and Risks_Lower Rated
Securities" below for a discussion of certain risks and "Appendix" in the
Statement of Additional Information.
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 the bank obligations, including time deposits, exceed 25% of
its assets. See "Appendix _Certain Portfolio Securities."
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 1940 Act.
The Fund's annual portfolio turnover rate is not expected to exceed
100%. Higher portfolio turnover rates usually generate additional brokerage
commissions and expenses and the short-term gains realized from these
transactions are taxable to shareholders as ordinary income. In addition, the
Fund may engage in various investment techniques, such as foreign currency
transactions, options and futures transactions, leveraging, short-selling and
lending portfolio securities. See also "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objective and
Management Policies _ Management Policies" in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an overall
investment program and should invest only if they are willing to undertake
the risks involved. See "Investment Objective and Management
Policies_Management Policies" in the Statement of Additional Information for
a further discussion of certain risks.
EQUITY SECURITIES -- Equity securities fluctuate in value, often based on
factors unrelated to the value of the issuer of the securities, and such
fluctuations can be pronounced. Changes in the value of the Fund's
investments will result in changes in the value of its shares and thus the
Fund's total return to investors.
The securities of the smaller companies in which the Fund may invest
may be subject to more abrupt or erratic market movements than larger, more
established companies, because these securities typically are traded in lower
volume and the issuers typically are subject to a greater degree to changes
in earnings and prospects.
Page 8
FIXED-INCOME SECURITIES -- Even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities generally 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 issuer. Certain securities that may be
purchased by the Fund, such as those rated Baa or lower by Moody's and BBB or
lower by S&P may be subject to such risk with respect to the issuing entity
and to greater market fluctuations than certain lower yielding, higher rated
fixed-income 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. See "Lower Rated
Securities" and "Appendix_Certain Portfolio Securities_Ratings" below, and
"Appendix" in the Statement of Additional Information.
LOWER RATED SECURITIES -- The Fund may invest up to 35% of its net assets in
higher yielding (and, therefore, higher risk) debt securities. 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 (commonly known as junk bonds). 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. The retail secondary market for these securities may be less
liquid than that of higher rated securities; adverse 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. See
"Appendix _Certain Portfolio Securities_Ratings."
FOREIGN SECURITIES -- Foreign securities markets generally are not as
developed or efficient as those in the United States. Securities of some
foreign issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States.
Because 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.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more
volatile than the markets of more mature economies; however, such markets may
provide higher rates of return to investors. Many developing 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.
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.
FOREIGN CURRENCY TRANSACTIONS -- Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by
the forces of supply and demand in the foreign exchange markets and the
relative merits of investments in different countries, actual or perceived
changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or central
banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad. See "Appendix _ Investment
Techniques _ Foreign Currency Transactions."
Page 9
USE OF DERIVATIVES -- The Fund may invest in derivatives ("Derivatives").
These are financial instruments which derive their performance, at least in
part, from the performance of an underlying asset, index, currency or
interest rate. The Derivatives the Fund may use include options and futures.
While Derivatives can be used effectively in furtherance of the Fund's
investment objective, under certain market conditions, they can increase the
volatility of the Fund's net asset value, can decrease the liquidity of the
Fund's investments and make more difficult the accurate pricing of the Fund's
portfolio. See "Appendix _ Investment Techniques _ Use of Derivatives" below
and "Investment Objective and Management Policies _ Management Policies _
Derivatives" in the Statement of Additional Information.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are made
independently from those of the other investment companies or accounts
advised by Dreyfus or Comstock Partners. If, however, such other investment
companies or accounts desire to invest in, or dispose of, the same securities
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 December 31, 1995,
Dreyfus managed or administered approximately $81 billion in assets for
approximately 1.7 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 in accordance with Maryland law.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCOCredit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including Dreyfus, Mellon managed more than $209 billion in
assets as of September 30, 1995, including approximately $80 billion in
mutual fund assets. As of September 30, 1995, Mellon, through various
subsidiaries, provided non-investment services, such as custodial and
administration services, for more than $717 billion in assets, including
approximately $55 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:
<TABLE>
<CAPTION>
ANNUAL FEE AS A PERCENTAGE OF
AVERAGE NET ASSETS AVERAGE DAILY NET ASSETS
-------------------------------- --------------------------------------------------
<S> <C> <C>
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%
</TABLE>
For the fiscal year ended September 30, 1995, the Fund paid Dreyfus a
monthly investment advisory fee at the effective annual rate of .43 of 1% of
the value of the Fund's average daily net assets.
Page 10
In allocating brokerage transactions for the Fund, the Advisers seek
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, the Advisers may consider, among other things,
the receipt of research services and/or the sale of shares of the Fund or
other funds in the Dreyfus Family of Funds as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the Statement of Additional Information.
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,
1995, Comstock Partners managed approximately $696 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.
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:
<TABLE>
<CAPTION>
ANNUAL FEE AS A PERCENTAGE OF
AVERAGE NET ASSETS AVERAGE DAILY NET ASSETS
----------------------------- ------------------------------------------------
<S> <C> <C>
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%
</TABLE>
For the fiscal year ended September 30, 1995, the Fund paid Comstock
Partners a monthly sub-investment advisory fee at the effective annual rate of
.32 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. The Fund will
not pay Dreyfus or Comstock Partners at a
Page 11
later time for any amounts which may be waived, nor will the Fund reimburse
Dreyfus 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's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, 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 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 authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
When purchasing Fund shares, you must specify which Class is being
purchased. Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
Service Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees which
would be in addition to any amounts which might be received under the
Distribution Plan or Shareholder Services Plan. You should consult your Servi
ce 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 affi-
Page 12
liates 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 invest
ment 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."
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
Page 13
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 Fund's Board. For further information regarding the
methods employed in valuing Fund investments, see "Determination of Net Asset
Value" in the Statement of Additional Information.
If an order is received in proper form by the Transfer Agent or other
agent by the close of trading on the floor of the New York Stock Exchange
(currently 4:00 p.m., New York time) on any business day, Fund shares will be
purchased at the public offering price determined as of such close of trading
on the floor of the New York Stock Exchange on that day. Otherwise, Fund
shares will be purchased at the public offering price determined as of the
close of trading on the floor of the New York Stock Exchange on the next
business day, except where shares are purchased through a dealer as provided
below.
Orders for the purchase of Fund shares received by dealers by the
close of trading on the floor of the New York Stock Exchange on any business
day and transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on the public
offering price per share determined as of the close of trading on the floor
of the New York Stock Exchange on that day. Otherwise, the orders will be
based on the next determined public offering price. It is the dealers'
responsibility to transmit orders so that they will be received by the
Distributor or its designee before the close of its business day. 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 $1,000,000 ("Eligible Benefit Plans"). Plan
sponsors, administrators or trustees, as applicable, are responsible for
notifying the Distributor when the relevant requirement is satisfied. Shares
of funds in the Dreyfus Family of Funds then held by Eligible Benefit Plans
will be aggregated to determine the fee payable. 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.
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
Page 14
concerning this requirement. Failure to furnish a certified TIN to the Fund
could subject you to a $50 penalty imposed by the Internal Revenue Service
(the "IRS").
CLASS A SHARES
The public offering price 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.
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.
Page 15
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.
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 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.
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 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.
Page 16
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
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
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 residence. 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 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 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452. See "How to Redeem
Fund Shares_Procedures." Upon an exchange into a new account, the following
shareholder services and privi-
Page 17
leges, 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 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. See
"Dividends, Distributions and Taxes."
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. See "Dividends, Distributions and Taxes." 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
Page 18
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.
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 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.
Page 19
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 Dreyfus Dividend Sweep.
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, which can be obtained by calling
1-800-645-6561, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a 13-month period
pursuant to the terms and 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
Page 20
redeem an appropriate number of Class A shares of the Fund
held in escrow to realize the difference. Signing a Letter of Intent does not
bind you to purchase, or the Fund to sell, the full amount indicated at the
sales load in effect at the time of signing, but you must complete the
intended purchase to obtain the reduced sales load. At the time you purchase
Class A shares, you must indicate your intention to do so under a Letter of
Intent.
HOW TO REDEEM 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 591\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
Page 21
YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP.
Fund shares will not be redeemed until the Transfer Agent has received your
Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE
CLASS B SHARES -- A CDSC payable to the Distributor is imposed on any
redemption of Class B shares which reduces the current net asset value of
your Class B shares to an amount which is lower than the dollar amount of all
payments by you for the purchase of Class B shares of the Fund held by you at
the time of redemption. No CDSC will be imposed to the extent that the net
asset value of the Class B shares redeemed does not exceed (i) the current
net asset value of Class B shares acquired through reinvestment of dividends
or capital gain distributions, plus (ii) increases in the net asset value of
your Class B shares above the dollar amount of all your payments for the
purchase of Class B shares of the Fund held by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined
below their original cost as a result of the Fund's performance, a CDSC may
be applied to the then-current net asset value rather than the purchase
price.
In circumstances where the CDSC is imposed, the amount of the charge
will depend on the number of years from the time you purchased the Class B
shares until the time of redemption of such shares. Solely for purposes of
determining the number of years from the time of any payment for the purchase
of Class B shares, all payments during a month will be aggregated and deemed
to have been made on the first day of the month. The following table sets
forth the rates of the CDSC:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE CDSC AS A % OF AMOUNT
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
--------------------------------- -------------------------------
<S> <C> <C>
First....................................... 4.00
Second...................................... 4.00
Third....................................... 3.00
Fourth...................................... 3.00
Fifth....................................... 2.00
Sixth....................................... 1.00
</TABLE>
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
Page 22
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-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 or the Dreyfus TELETRANSFER Privilege. If you have
given your Service Agent authority to instruct the Transfer Agent to redeem
shares and to credit the proceeds of such redemptions to a designated account
at your Service Agent, you may redeem shares only in this manner and in accord
ance 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.
Page 23
For the location of the nearest Dreyfus Financial Center, please call one of
the telephone numbers listed under "General Information." Redemption requests
must be signed by each shareholder, including each owner of a joint account,
and each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature guarantees in proper
form generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges Medallion
Program. If you have any questions with respect to signature-guarantees,
please call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written signature-
guaranteed request.
DREYFUS TELETRANSFER PRIVILEGE -- You may redeem 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
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
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 are subject to a Shareholder Services
Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1 under the
1940 Act, 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
Page 24
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.
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 1940 Act. 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, regardless
of how long shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in additional Fund shares.
The Code provides that the net capital gain of an individual generally will
not be subject to Federal income tax at a rate in excess of 28%. Dividends,
together with distributions may be subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by
the Fund to a
Page 25
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.
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.
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, in 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.
With respect to individual investors and certain non-qualified
Retirement Plans, 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 share
holder 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, 1995 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. 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
Page 26
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.
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 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of 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
Page 27
addition, the Fund's Board will call a meeting of shareholders for the
purpose of electing Directors if, at any time, less than a majority of the
Directors then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561. In New York City, call 1-718-895-1206; outside the U.S. and
Canada, call 516-794-5452.
Page 28
APPENDIX
INVESTMENT TECHNIQUES
FOREIGN CURRENCY TRANSACTIONS -- Foreign currency transactions may be entered
into for a variety of purposes, including: to fix in U.S. dollars, between
trade and settlement date, the value of a security the Fund has agreed to buy
or sell; or to hedge the U.S. dollar value of securities the Fund already
owns, particularly in which the foreign security is denominated; or to gain
exposure to the foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Fund's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Fund agreeing to
exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to receive in the
exchange. The Fund's success in these transactions will depend principally on
the Advisers' ability to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar.
SHORT-SELLING -- In these transactions, the Fund sells a security it does not
own in anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make delivery
to the buyer. The Fund is obligated to replace the security borrowed by
purchasing it subsequently at the market price at the time of replacement.
The price at such time may be more or less than the price at which the
security was sold by the Fund, which would result in a loss or a gain,
respectively.
Securities will not 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 make a short sale which results in the Fund having sold short in the
aggregate more than 5% of the outstanding securities of any class of an
issuer.
The Fund also may make short sales "against the box," in which the
Fund enters into a short sale of a security it owns in order to hedge an
unrealized gain on the security. At no time will more than 15% of the value
of the Fund's net assets be in deposits on short sales against the box.
LEVERAGE -- 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 limited to 33-1/3% of the value of the Fund's
total assets. These borrowings will be subject to interest costs which may or
may not be recovered by appreciation of the securities purchased; in certain
cases, interest costs may exceed the return received on the securities
purchased.
The Fund may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves 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. Except for these transactions, the Fund's borrowings generally will
be unsecured.
USE OF DERIVATIVES -- The Fund may invest in the types of Derivatives
enumerated under "Description of the Fund -- Investment Considerations and
Risks -- Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objective and Management
Policies -- Management Policies -- Derivatives" in the Statement of
Additional Information.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses
Page 29
if its Derivatives were poorly correlated with its other investments, or if
the Fund were unable to liquidate its position because of an illiquid
secondary market. The market for many Derivatives is, or suddenly can become,
illiquid. Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices for Derivatives.
Although the Fund will not be a commodity pool, Derivatives subject
the Fund to the rules of the Commodity Futures Trading Commission which limit
the extent to which the Fund can invest in certain Derivatives. The Fund may
invest in futures contracts and options with respect thereto for hedging
purposes without limit. However, the Fund may not invest in such contracts
and options for other purposes if the sum of the amount of initial margin
deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceed 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such contracts and options; 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%
limitation.
The Fund may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. The Fund may write
(i.e., sell) 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.
When required by the Securities and Exchange Commission, the Fund will set
aside permissible liquid assets in a segregated account to cover its
obligations relating to its transactions in Derivatives. To maintain this
required cover, the Fund may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate a
Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES _ The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. In connection with such
loans, the Fund continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned securities.
Loans of portfolio securities afford the Fund an opportunity to earn interest
on the amount of the loan and at the same time to earn income on the loaned
securities' collateral. Loans of portfolio securities may not exceed 33-1/3%
of the value of the Fund's total assets. In connection with such loans, the
Fund will receive collateral consisting of cash, U.S. Government securities
or irrevocable letters of credit which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. Such loans are terminable by the Fund at any time upon specified
notice. The Fund might experience risk of loss if the institution with which
it has engaged in a portfolio loan transaction breaches its agreement with
the Fund.
FORWARD COMMITMENTS _ The Fund may purchase securities on a forward
commitment or when-issued 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 forward
commitment or when-issued security are fixed when the Fund enters into the
commitment, but the Fund does not make a payment until it receives delivery
from the counterparty. The Fund will commit 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. A
segregated account of the Fund consisting of cash, cash equivalents or U.S.
Government securities or other high quality debt securities at least equal at
all times to the amount of the commitments will be established and maintained
at the Fund's custodian bank.
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 United States. Issuers whose
principal activi-
Page 30
ties 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 1940 Act. As a result, the Fund's
investment in these Structured Securities may be limited by the restrictions
contained in the 1940 Act.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in fixed and
floating rate loans ("Loans") arranged through private negotiations between
an issuer of Sovereign Debt Obligations and one or more financial
institutions ("Lenders"). The Fund's investments in Loans are expected in
most instances to be in the form of participations in Loans ("Participations")
and assignments of all or a portion of Loans ("Assignments") from third
parties. The government that is the borrower on the Loan will be considered
by the Fund to be the issuer of a Participation or Assignment. The Fund's
investment in Participations typically will result in the Fund having a
contractual relationship only with the Lender and not with the borrower.
The Fund will have the right to receive payments of principal, interest and
any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund
generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the Loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any
collateral supporting the Loan in which it has purchased the Participation.
As a result, the Fund may be subject to the credit risk of both the 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
Page 31
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 -- Convertible securities may be converted at either a
stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed-income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in right of
payment to all equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the subordination feature,
however, convertible securities typically have lower ratings than similar
non-convertible securities.
WARRANTS _ A warrant is an instrument issued by a corporation which gives the
holder the right to subscribe to a specified amount of the corporation's
capital stock at a set price for a specified period of time. The Fund may
invest up to 2% of its net assets in warrants, except that this limitation
does not apply to warrants purchased by the Fund that are sold in units with,
or attached to, other securities.
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 1940 Act, 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.
MONEY MARKET INSTRUMENTS -- The Fund may invest in the following types of
money market instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. 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.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
BANK OBLIGATIONS. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Fund
Page 32
may be subject to additional investment risks that are different in some
respects from those incurred by a fund which invests only in debt obligations
of U.S. domestic issuers.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and 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. The commercial
paper purchased by the Fund will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's
or A-1 by S&P, (b) issued by companies having an outstanding unsecured debt
issue currently rated at least A3 by Moody's or A- by S&P, or (c) if unrated,
determined by the Advisers to be of comparable quality to those rated obligati
ons which may be purchased by the Fund.
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 privately
negotiated, non-exchange traded options and securities used to cover such
options. As to these securities, the Fund is subject to a risk that should
the Fund desire to sell them when a ready buyer is not available at a price
the Fund deems representative of their value, the value of the Fund's net
assets could be adversely affected.
RATINGS -- Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Securities rated BB by S&P 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 payments. Securities rated C by Moody's are regarded as having
extremely poor prospects of ever attaining any real investment standing.
Securities rated D by S&P are in default and the payment of interest and/or
repayment of principal is in arrears. Such securities, though high yielding,
are characterized by great risk. See "Appendix" in the Statement of
Additional Information for a general description of securities ratings.
The ratings of Moody's and S&P represent their opinions as to the
quality of the obligations which they undertake to rate. 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 such obligations. 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.
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 33
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Page 35
CAPITAL
VALUE
FUND
(A PREMIER FUND)
PROSPECTUS (Lion Logo)
Copy Rights 1996 Dreyfus Service Corporation
107p18020196
Registration Mark
__________________________________________________________________________
DREYFUS CAPITAL VALUE FUND (A PREMIER FUND)
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FEBRUARY 1, 1996
__________________________________________________________________________
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
February 1, 1996, 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 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-13
Investment Advisory Agreements. . . . . . . . . . . . . . . B-19
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . B-20
Distribution Plan and Shareholder Services Plan . . . . . . B-21
Redemption of Shares. . . . . . . . . . . . . . . . . . . . B-22
Shareholder Services. . . . . . . . . . . . . . . . . . . . B-23
Determination of Net Asset Value. . . . . . . . . . . . . . B-26
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-27
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-29
Performance Information . . . . . . . . . . . . . . . . . . B-30
Information About the Fund. . . . . . . . . . . . . . . . . B-32
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . . . B-32
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . B-33
Financial Statements. . . . . . . . . . . . . . . . . . . . B-38
Report of Independent Auditors. . . . . . . . . . . . . . . B-57
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
Depositary Receipts. The Fund may invest in the securities of
foreign issuers in the form of American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs") and other forms of depositary
receipts. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are
receipts typically issued by a United States bank or trust company which
evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), are receipts issued in Europe typically by
non-United States banks and trust companies that evidence ownership of
either foreign or domestic securities. Generally, ADRs in registered form
are designed for use in the United States securities markets and EDRs and
CDRs in bearer form are designed for use in Europe. These securities may
be purchased through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the underlying security
and a depositary, whereas a depositary may establish an unsponsored
facility without participation by the issuer of the deposited security.
Holders of unsponsored depositary receipts generally bear all the costs of
such facilities and the depositary of an unsponsored facility frequently
is under no obligation to distribute shareholder communications received
from the issuer of the deposited security or to pass through voting rights
to the holders of such receipts in respect of the deposited securities.
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 $1
billion, 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.
Commercial Paper and Other Short-Term Corporate Obligations. These
instruments include variable amount master demand notes, which are
obligations that permit the Fund to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements
between the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest, at any time.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating
agencies, and the Fund may invest in them only if at the time of an
investment the borrower meets the criteria set forth in the Prospectus for
other commercial paper issuers.
Convertible 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.
A unique feature of convertible securities is that as the market price of
the underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the
market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without
risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable
stream of income with generally higher yields than common stocks. There
can be no assurance of current income because the issuers of the
convertible securities may default on their obligations. 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, however,
generally offer lower interest or dividend yields than non-convertible
securities of similar quality because of the potential for capital
appreciation.
Foreign Government Obligations; Securities of Supranational Entities.
The Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Manager to be of comparable
quality to the other obligations in which the Fund may invest. Such
securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the
Asian Development Bank and the InterAmerican Development Bank.
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 has developed for certain unregistered securities
purchased by the Fund pursuant to Rule 144A under the Securities Act of
1933, as amended, the Fund intends to treat such securities as liquid
securities in accordance with procedures approved by the Fund's Board.
Because it is not possible to predict with assurance how the market for
specific restricted securities sold pursuant to Rule 144A will develop,
the Fund's Board has directed the Advisers to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level
of illiquidity in its investment portfolio during such period.
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.
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 corporations and 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. The Fund currently intends to invest less than 5%
of its assets in zero coupon securities.
Management Policies
Leverage. For borrowings for investment purposes, the Investment
Company Act of 1940, as amended (the "1940 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 required coverage should decline as a result of
market fluctuations or other reasons, the Fund may be required to sell
some of its portfolio securities within three days to reduce the amount of
its borrowings 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 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. Until the Fund closes its short position or
replaces the borrowed security, it will: (a) maintain a segregated
account, containing cash or U.S. Government securities, at such a level
that 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; or (b) otherwise cover its short position.
Lending Portfolio Securities. In connection with its securities
lending transactions, the Fund may return to the borrower or a third party
which is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of collateral
received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; (5) the Fund may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the loaned
securities may pass to the borrower, the Fund's Board must terminate the
loan and regain the right to vote the securities if a material event
adversely affecting the investment occurs.
Derivatives. The Fund may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide
a cheaper, quicker or more specifically focused way for the Fund to invest
than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
margin requirements) operated by the clearing agency in order to reduce
overall credit risk. As a result, unless the clearing agency defaults,
there is relatively little counterparty credit risk associated with
Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an
over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, the Advisers will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as they
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. The Fund may enter into 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
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
opportunities or arbitrage possibilities not available in the United
States. Foreign markets, however, may have greater risk potential than
domestic markets. For example, some foreign exchanges are principal
markets so that no common clearing facility exists and an investor may
look only to the broker for performance of the contract. In addition, 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. Unlike trading on domestic commodity exchanges, trading on
foreign commodity exchanges is not regulated by the Commodity Futures
Trading Commission.
Engaging in these transactions involves risk of loss to the Fund
which could adversely affect the value of the Fund's net assets. 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.
Successful use of futures by the Fund also is subject to the ability
of the Advisers to predict correctly movements in the direction of the
relevant market and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract.
For example, if the Fund uses futures to hedge against the possibility of
a decline in the market value of securities held in its portfolio and the
prices of such securities instead increase, 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.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Fund may be required to segregate cash or
high quality money market instruments in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of
limiting the Fund's ability otherwise to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell stock index
futures contracts. A stock index future obligates the Fund to pay or
receive an amount of cash equal to a fixed dollar amount specified in the
futures contract multiplied by the difference between the settlement price
of the contract on the contract's last trading day and the value of the
index based on the stock prices of the securities that comprise it at the
opening of trading in such securities on the next business day.
The Fund may purchase and sell interest rate futures contracts. An
interest rate future obligates the Fund to purchase or sell an amount of a
specific debt security at a future date at a specific price.
The Fund may purchase and sell currency futures. A foreign currency
future obligates the Fund to purchase or sell an amount of a specific
currency at a future date at a specific price.
Options--In General. The Fund may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to
sell, the underlying security or securities at the exercise price at any
time during the option period, or at a specific date. Conversely, a put
option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying security or securities at the exercise
price at any time during the option period.
A covered call option written by the Fund is a call option with
respect to which the Fund owns the underlying security or otherwise covers
the transaction by segregating cash or other securities. A put option
written by the Fund is covered when, among other things, cash or liquid
securities having a value equal to or greater than the exercise price of
the option are placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken. The principal reason for writing
covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. The Fund receives a premium from writing covered call
or put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading
halts or suspensions in one or more options. There can be no assurance
that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it
might not be possible to effect closing transactions in particular
options. 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.
Specific Options Transactions. The Fund may purchase and sell call and
put options in respect of specific securities (or groups or "baskets" of
specific securities) or stock indices listed on national securities
exchanges or traded in the over-the-counter market. An option on a stock
index is similar to an option in respect of specific securities, except
that settlement does not occur by delivery of the securities comprising
the index. Instead, the option holder receives an amount of cash if the
closing level of the stock index upon which the option is based is greater
than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. Thus, the effectiveness of purchasing or
writing stock index options will depend upon price movements in the level
of the index rather than the price of a particular stock.
The Fund may purchase and sell call and put options on foreign
currency. These options convey the right to buy or sell the underlying
currency at a price which is expected to be lower or higher than the spot
price of the currency at the time the option is exercised or expires.
The Fund may purchase cash-settlement options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps
in pursuit of its investment objective. Interest rate swaps involve the
exchange by the Fund with another party of their respective commitments to
pay or receive interest (for example, an exchange of floating-rate
payments for fixed-rate payments) denominated in U.S. dollars or foreign
currency. Equity index swaps involve the exchange by the Fund with
another party of cash flows based upon the performance of an index or a
portion of an index of securities which usually includes dividends. A
cash-settled option on a swap gives the purchaser the right, but not the
obligation, in return for the premium paid, to receive an amount of cash
equal to the value of the underlying swap as of the exercise date. These
options typically are purchased in privately negotiated transactions from
financial institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability
of the Advisers to predict correctly movements in the prices of individual
stocks or the stock market generally. To the extent such predictions are
incorrect, the Fund may incur losses.
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 Derivatives 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. Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (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 forward commitment
or when-issued basis may expose the Fund to risks because they may
experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued 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. Purchasing
securities on a forward commitment or when-issued basis when the Fund is
fully or almost fully invested may result in greater potential fluctuation
in the value of the Fund's net assets and its net asset value per share.
Investment Considerations and Risks
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 Ratings Group, a division of The McGraw
Hill Companies, Inc. ("S&P" and with Moody's, the "Rating Agencies").
Such securities, though higher yielding, are characterized by risk. See
in the Fund's Prospectus "Description of the Fund--Investment
Considerations and Risks--Lower Rated Securities" for a discussion of
certain risks and the "Appendix" for a general description of the Rating
Agencies' ratings. Although ratings may be useful in evaluating the
safety of interest and principal payments, they do not evaluate the market
value risk of these securities. The Fund will rely on the Advisers'
judgment, analysis and experience in evaluating the creditworthiness of an
issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are
higher rated securities. These securities generally are considered by the
Rating Agencies to be, on balance, predominantly speculative with respect
to capacity to pay interest and repay principal in accordance with the
terms of the obligation and generally will involve more credit risk than
securities in the higher rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities
of such issuers generally is greater than is the case with the higher
rated securities. For example, during an economic downturn or a sustained
period of rising interest rates, highly leveraged issuers of these
securities may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations also
may be affected adversely by specific corporate developments, forecasts,
or the unavailability of additional financing. The risk of loss because
of default by the issuer is significantly greater for the holders of these
securities because such securities generally are unsecured and often are
subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's 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 an economic recession could disrupt severely
the market for such securities and may have an adverse impact on the value
of such securities. In addition, it is likely that any such economic
downturn could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon and increase the
incidence of default for such securities.
The Fund may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues.
The Fund has no arrangement with 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. The credit risk factors pertaining to lower rated
securities also apply to lower rated zero coupon securities and
pay-in-kind bonds. 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.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 16 as
fundamental policies, which cannot be changed without approval by the
holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. Investment restriction number 17 is not a
fundamental policy and may be changed by a vote by a majority of the
Fund's Board members 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 contracts 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 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this investment restriction,
the entry into options 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.
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
Board members and officers of the Fund, together with information as
to their principal business occupations during at least the last five
years, are shown below. Each Board member who is deemed to be an
"interested person" of the Fund, as defined in the 1940 Act, is indicated
by an asterisk.
Board Members of the Fund
*DAVID W. BURKE, Board Member. Chairman of the Broadcasting Board of
Governors, an independent board within the United States Information
Agency, since August 1995. From August 1994 to February 1995, Mr.
Burke was consultant to Dreyfus, and from October 1990 to August
1994, he was 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 59 years old and his address is Box 654, Eastham, Massachusetts
02642.
HODDING CARTER, III, Board Member. 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 60
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, and Staffing Resources, Inc. He is 52 years old and his
address is 200 Park Avenue, New York, New York 10166.
EHUD HOUMINER, Board Member. Since July 1991, Professor and Executive-in-
Residence at the Columbia Business School, Columbia University. 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 55 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, Board Member. President of The Twentieth Century Fund,
a tax exempt research foundation engaged in the studies of economic,
foreign policy and domestic issues. 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 55 years old and his address is 41 East 70th
Street, New York, New York 10021.
HANS C. MAUTNER, Board Member. 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 58 years old and his address is 305 East 47th
Street, New York, New York 10017.
ROBIN A. SMITH, Board Member. 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/Scope
Educational Research Foundation. She is 31 years old and her address
is 280 Park Avenue, New York, New York 10010.
JOHN E. ZUCCOTTI, Board Member. 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 58
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
Board members of the Fund who are not "interested persons" of the Fund, as
defined in the 1940 Act, will be selected and nominated by the Board
members who are not "interested persons" of the Fund.
The Fund typically pays its Board members an annual retainer and a
per meeting fee and reimburses them for their expenses. The Chairman of
the Board receives an additional 25% of such compensation. Emeritus
Board members are entitled to receive an annual retainer and a per meeting
fee of one-half the amount paid to them as Board Members. The aggregate
amount of compensation paid to each Board member by the Fund for the
fiscal year ended September 30, 1995, 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>
<CAPTION>
(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 $6,000 none none $ 27,898 (52)
Hodding Carter, III $6,500 none none $ 33,625 (7)
Joseph S. DiMartino $5,635 none none $445,000 **(94)
Ehud Houminer $6,500 none none $ 25,701 (11)
Richard C. Leone $6,500 none none $ 33,125 (7)
Hans C. Mautner $6,000 none none $ 33,625 (7)
Robin A. Smith $4,508 none none $ 32,000 **(7)
John E. Zuccotti $6,500 none none $ 33,625 (7)
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $355 for all Board members as a group.
** Estimated amounts for December 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Executive
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 38 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 31 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 34 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 31 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. She is 26 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 33 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.
MARGARET PARDO, Assistant Secretary. Legal Assistant with the Distributor
and an officer of other investment companies advised or administered by
Dreyfus. From June 1992 to April 1995, she was a Medical Coordinator
Officer at ORBIS International. Prior to June 1992, she worked as
Program Coordinator at Physicians World Communications Group. She is
27 years old.
The address of all officers of the Fund is 200 Park Avenue, New York,
New York 10166.
The following entities are known by the Fund to own, of record or
beneficially, 5% or more of the Fund's outstanding voting securities as of
January 17, 1996: Merrill Lynch Pierce Fenner & Smith Inc. was the record
owner of 25.5692% of the Fund's outstanding Class A shares and 30.8266% of
the Fund's outstanding Class B, shares; Bell Childrens Trust was the
record owner of 62.1406% and Everen Clearing Corporation was the record
owner of 28.3089% of the Fund's outstanding Class C shares; and Premier
Mutual Fund Services, Inc. was the beneficial owner of 100% of the Fund's
outstanding Class R shares. Each named entity is deemed to be a "control
person" as defined in the 1940 Act.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's voting securities outstanding on January 17, 1996.
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 or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance also is
approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund or Dreyfus, by vote cast
in person at a meeting called for the purpose of voting such approval.
Shareholders last approved the Agreement on August 4, 1994. The Fund's
Board, including a majority of the Board members who are not "interested
persons" of any party to the Agreement, last approved the Agreement at a
meeting held on October 30, 1995. The Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board or by vote of the holders
of a majority of the Fund's 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 1940 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, 1993, 1994 and 1995 amounted to $1,922,869,
$2,118,758 and $1,840,790, 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; Christopher M. Condron, 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; William T. Sandalls, Jr., Senior Vice President and Chief
Financial Officer; 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; Mark N. Jacobs, Vice President--Legal
and Secretary; Daniel C. Maclean, Vice President and General Counsel;
Jeffrey N. Nachman, Vice President--Mutual Fund Accounting; Maurice
Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and Mandell L.
Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene and Julian
M. Smerling, 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 or (ii)
vote of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting securities, provided that in either event the continuance also is
approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 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 Fund's Board, including a majority
of the Board members 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 30, 1995. The
Sub-Investment Advisory Agreement is terminable without penalty, on not
more than 60 days' notice, by the Fund's Board or by vote of the holders
of a majority of the Fund's outstanding voting shares, or, upon not less
than 90 days' notice, by Comstock Partners. The Sub-Investment Advisory
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 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, 1993, 1994 and 1995
amounted to $1,447,869, $1,643,758 and $1,365,789, respectively.
The following persons are the principals of Comstock Partners:
Stanley D. Salvigsen, Chairman of the Board and Chief Executive Officer; and
Charles L. Minter, Vice Chairman of the Board and Chief Operating
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. 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, W. Troy Hottenstein, Charles L. Minter, Elaine Rees, Stanley D.
Salvigsen and Richard C. Shields. 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
Board's review at the meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the 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
Board members 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. In
addition, Class B and Class C shares are subject to an annual distribution
fee and Class A, Class B and Class C shares are subject to an annual
service fee. 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, 1995, no expense
reimbursement was required pursuant to such limitation.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis 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.
For the period from August 24, 1994 through September 30, 1994 and
for the fiscal year ended September 30, 1995, the Distributor retained
$8,483 and $60,046, respectively, from sales loads on Fund shares. For
the fiscal year ended September 30, 1993 and for the period from October
1, 1993 through August 23, 1994, Dreyfus Service Corporation, as the
Fund's distributor during such period, retained $278,877 and $394,268,
respectively, from sales loads on Fund shares.
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 Internal Revenue Code of 1986, as amended (the "Code") although more
than one beneficiary is involved; or a group of accounts established by or
on behalf of the employees of an employer or affiliated employers pursuant
to an employee benefit plan or other program (including accounts
established pursuant to Sections 403(b), 408(k), and 457 of the Code); or
an organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the
purchases are made through a central administration or a single dealer, or
by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of
Class A shares of the Fund aggregating less than $50,000 subject to the
schedule of sales charges set forth in the Fund's Prospectus at a price
based upon the net asset value of the Fund's Class A shares on September
30, 1995:
Net Asset Value per Share $10.61
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $ .50
------
Per Share Offering Price to
the Public $11.11
======
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 p.m., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York
Stock Exchange are open for business will be credited to the shareholder's
Fund account on the next bank business day following such purchase order.
Purchase orders made after 4:00 p.m., New York time, on any business day
the Transfer Agent and the New York Stock Exchange are open for business,
or orders made on Saturday, Sunday or any Fund holiday (e.g., when the New
York Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the
Account Application or Shareholder Services Form on file. If the proceeds
of a particular redemption are to be wired to an account at any other
bank, the request must be in writing and signature-guaranteed. See
"Redemption of Shares--Dreyfus TeleTransfer Privilege."
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 1940 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 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 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 Board 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, and by the Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the 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 Board members cast in person at a meeting called for the
purpose of voting on the Distribution Plan. The Distribution Plan was
last so approved on October 30, 1995. As to the relevant Class of shares,
the Distribution Plan may be terminated at any time by vote of a majority
of the Board members who are not "interested persons" and have no direct
or indirect financial interest in the operation of the 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, 1995, the Fund was charged
$738,584 with respect to Class B shares and $1 with respect to Class C
shares under the Distribution Plan.
Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund pays the Distributor for the
provision of certain services to the holders of Class A, 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 Board for its review. In addition, the Shareholder
Services Plan provides that material amendments must be approved by the
Fund's Board, and by the Board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Shareholder Services Plan is subject to
annual approval by such vote of the Board members cast in person at a
meeting called for the purpose of voting on the Shareholder Services Plan.
The Shareholder Services Plan was last so approved on October 30, 1995.
As to each Class of shares, the Shareholder Services Plan is terminable at
any time by vote of a majority of the Board members 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, 1995, the Fund was charged
$822,664 with respect to Class A shares, $246,195 with respect to Class B
shares, and $0 with respect to Class C shares under the Shareholder
Services Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem 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
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 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.
Each 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
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. 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 of the Fund believes that the Fund has qualified for the
fiscal year ended September 30, 1995 as a "regulated investment company"
under the Code 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 securities gains to the extent that
such income and gains are distributed to shareholders in accordance with
applicable provisions of the Code. 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) to
its shareholders, derive less than 30% of its annual gross income from
gain on the sale of securities held for less than three months, and meet
certain asset diversification and other requirements. The term "regulated
investment company" does not imply the supervision of management or
investment practices or policies by any government agency.
Any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of the shares
below the cost of the investment. Such a dividend or distribution would
be a return of investment in an economic sense, although taxable as stated
above. In addition, the Code provides that if a shareholder holds shares
of the Fund for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on the sale of
such shares will be treated as long-term capital loss to the extent of the
capital gain distribution received.
Depending upon the composition of the Fund's income, the entire
amount or a portion of the dividends paid by the Fund from net investment
income may qualify for the dividends received deduction allowable to
qualifying U.S. corporate shareholders ("dividends received deduction").
In general, dividend income of the Fund distributed to qualifying
corporate shareholders will be eligible for the dividends received
deduction only to the extent that the Fund's income consists of dividends
paid by U.S. corporations. However, Section 246(c) of the Code provides
that if a qualifying corporate shareholder has disposed of Fund shares not
held for 46 days or more and has received a dividend from net investment
income with respect to such shares, the portion designated by the Fund as
qualifying for the dividends received deduction will not be eligible for
such shareholder's dividends received deduction. In addition, the Code
provides other limitations with respect to the ability of a qualifying
corporate shareholder to claim the dividends received deduction in
connection with holding Fund shares.
The Fund may qualify for and may make an election permitted under
Section 853 of the Code so that shareholders may be eligible to claim a
credit or deduction on their Federal income tax returns for, and will be
required to treat as part of the amounts distributed to them, their pro
rata portion of qualified taxes paid or incurred by the Fund to foreign
countries (which taxes relate primarily to investment income). The Fund
may make an election under Section 853, provided that more than 50% of the
value of the Fund's total assets at the close of the taxable year consists
of securities in foreign corporations, and the Fund satisfies the
applicable distribution provisions of the Code. The foreign tax credit
available to shareholders is subject to certain limitations imposed by the
Code.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gains and losses. However, a portion of the
gain or loss realized from the disposition of foreign currencies
(including foreign currency denominated bank deposits) and non-U.S. dollar
denominated securities (including debt instruments and certain forward
contracts and options) may be treated as ordinary income or loss under
Section 988 of the Code. In addition, all or a portion of any gains
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276. Finally, all
or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258.
"Conversion transactions" are defined to include certain forward, futures,
option and straddle transactions, transactions marketed or sold to produce
capital gains, or transactions described in Treasury regulations to be
issued in the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund
from certain forward contracts and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or
loss. Gain or loss will arise upon exercise or lapse of such contracts
and options as well as from closing transactions. In addition, any such
contracts or options remaining unexercised at the end of the Fund's
taxable year will be treated as sold for their then fair market value,
resulting in additional gain or loss to the Fund characterized in the
manner described above.
Offsetting positions held by the Fund involving certain foreign
currency forward contracts or options may constitute "straddles."
"Straddles" are defined to include "offsetting positions" in actively
traded personal property. The tax treatment of "straddles" is governed by
Sections 1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Sections 1256 and 988 of the Code.
As such, all or a portion of any short or long-term capital gain from
certain "straddle" transactions may be recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of
its engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles"
were governed by Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to the Fund may differ. If no election is
made, to the extent the "straddle" and conversion transaction rules apply
to positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" and conversion transaction rules,
short-term capital loss on "straddle" positions may be recharacterized as
long-term capital loss, and long-term capital gains may be treated as
short-term capital gains or ordinary income.
If the Fund invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain Federal income taxes on the Fund. In
addition, gain realized from the sale or other disposition of PFIC
securities may be treated as ordinary income under Section 1291 of the
Code.
PORTFOLIO TRANSACTIONS
Dreyfus 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.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block
trades may, in certain cases, result from two or more funds 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.
When transactions are executed in the over-the-counter market, the Fund
will deal with the primary market makers unless a more favorable price or
execution otherwise is obtainable. Foreign exchange transactions are made
with banks or institutions in the interbank market at prices reflecting a
mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year, as well as within a
year. It is anticipated that in any fiscal year, the turnover rate
generally should not exceed 100%. 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 which would result in greater brokerage expenses.
The overall reasonableness of brokerage commissions paid is evaluated by
the Advisers based upon their knowledge of available information as to the
general level of commissions paid by other institutional investors for
comparable services.
In connection with its portfolio securities transactions for the
fiscal years ended 1993, 1994 and 1995, the Fund paid brokerage
commissions of $940,251, $448,986 and $358,711, 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 $207,750, $488,390
and $43,200 for the fiscal years ended 1993, 1994 and 1995, respectively,
none of which was paid to the Distributor.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The average annual total return for Class A for the 1 and 5 year
periods ended September 30, 1995 was -12.70% and -2.19%, respectively.
The average annual total return for Class A for the 9.975 year period from
October 10, 1985 (commencement of operations) through September 30, 1995
was 8.58%. The average annual total return for Class A for the 8.427 year
period from the date of the effectiveness of the Fund's current investment
objective, fundamental investment policies and investment restrictions
(April 28, 1987) through September 30, 1995 was 4.36%. The average annual
total return for Class B for the year ended September 30, 1995 was -
12.83%. The average annual total return for Class B for the 2.710 year
period from January 15, 1993 (commencement of initial offering of Class B
shares) through September 30, 1995 was -0.26%. 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 (commencement of
operations) to September 30, 1995, based on maximum offering price per
share, was 43.26%. Based on net asset value per share, the total return
for Class A was 50.05% for this period. Total return for Class A for the
period October 10, 1985 and ending on September 30, 1995, based on maximum
offering price per share, was 127.30%. Based on net asset value, the
total return for Class A was 137.96% for this period. The total return
for Class B for the period January 15, 1993 (commencement of offering
Class B shares) through September 30, 1995, after giving effect to the
maximum CDSC per share, was -0.69%. The total return for Class B, without
giving effect to the maximum CDSC, was 2.27% for this period. The total
return for Class C for the period August 22, 1995 (commencement of
offering of Class C shares) through September 30, 1995, after giving
effect to the maximum CDSC per share, was -3.23%. The total return for
Class C, without giving effect to the maximum CDSC, was -2.26% for this
period. The total return for Class R for the period August 22, 1995
(commencement of offering of Class R shares) through September 30, 1995
was -2.03%.
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.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, is
located at P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's transfer and dividend disbursing agent. Under a transfer agency
agreement with the Fund, the Transfer Agent arranges for the maintenance
of shareholder account records for the Fund, the handling of certain
communications between shareholders and the Fund and the payment of
dividends and distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee computed on the basis of the number
of shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses. The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's custodian.
Neither the Transfer Agent nor The Bank of New York has any part in
determining the investment policies of each Fund or which securities are
to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares 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 S&P and 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>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
COMMON STOCKS-40.1% SHARES VALUE
-------- -------
<S> <C> <C>
BASIC INDUSTRIES-29.4%
Gold Mining-26.4% Amax Gold............................. (a) 225,500 $1,381,188
Ashanti Goldfields, G.D.R. .......... (b) 425,000 8,526,563
Barrick Gold........................... 261,200 6,758,550
Battle Mountain Gold................... 215,000 2,123,125
Cambior................................ 150,000 1,593,128
Driefontein Consolidated, A.D.R. ...... 127,000 1,730,375
East Rand Gold & Uranium, A.D.R. ...... 100,000 290,000
Echo Bay Mines......................... 250,000 2,718,750
Elandsrand Gold Mining, A.D.R. ........ 251,100 1,462,657
Free State Consolidated Gold Mines, A.D.R. 135,000 1,535,625
Goldcorp, Cl. A........................ 237,860 2,348,994
Golden Shamrock Mines................ (a) 440,000 272,945
Hartebeesfontein Gold Mining, A.D.R. .. 433,000 1,309,825
Hecla Mining......................... (a) 313,500 3,801,188
Homestake Mining....................... 424,800 7,221,600
Kinross Mines, A.D.R. ................. 144,000 1,584,000
Newmont Gold........................... 200,000 8,100,000
Newmont Mining......................... 118,000 5,015,000
Pegasus Gold......................... (a) 363,300 4,949,962
Placer Dome............................ 501,400 13,161,750
Royal Oak Mines...................... (a) 400,000 1,725,000
Santa Fe Pacific Gold................ (a) 677,082 8,548,160
TVX Gold............................. (a) 467,000 3,269,000
Vaal Reefs Exploration & Mining, A.D.R. 347,500 2,280,469
Western Area Gold Mining, A.D.R. ...... 18,100 313,356
Western Deep Levels, A.D.R. ........... 38,000 1,313,375
Winkelhaak Mines, A.D.R. .............. 175,600 1,569,425
-----------
94,904,010
-----------
Metals-3.0% Freeport-McMoRan Copper & Gold, Cl. A... 400,000 10,250,000
Impala Platinum Holdings, A.D.R. ...... 15,000 371,816
-----------
10,621,816
-----------
TOTAL BASIC INDUSTRIES................. 105,525,826
============
RESTRUCTURING-10.7%
Broadcasting-.5% Tele-Communications Liberty Media, Cl. A. 17,500 468,125
Tele-Communications-TCI, Cl. A....... (a) 70,000 1,225,000
-----------
1,693,125
-----------
Chemicals-.6% P.T. Tri Polyta Indonesia, A.D.R. ...... 102,000 2,193,000
-----------
Conglomerates-.6% Teledyne................................ 75,000 2,034,375
-----------
Electrical Equipment-.3% Hitachi, A.D.R. ........................ 10,000 1,101,250
-----------
Energy-.8% Baker Hughes............................ 150,000 3,056,250
-----------
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
RESTRUCTURING (CONTINUED)
Foods and Beverages-.6% Dole Food............................... 68,200 $ 2,361,425
-----------
Holding Companies-1.7% Horsham................................. 464,200 6,092,625
-----------
Industrial-1.5% Pepgro ................................. 848,700 2,760,425
Pepgro ((N) Shares).................... 848,700 2,557,025
-----------
5,317,450
-----------
Miscellaneous-.7% Fleming Russia Securities Fund.......... 220,765 1,545,355
Lazard Vietnam Fund.................... 87,000 913,500
-----------
2,458,855
-----------
Oil-.9% Amerada Hess............................ 31,000 1,507,375
Total S.A., A.D.R. .................... 54,000 1,626,750
-----------
3,134,125
-----------
Oil and Gas Exploration-.3% Petro-Canada........................... 113,500 1,223,756
___________
Retail- 1.6% Duty Free International................. 111,200 1,417,800
Hartmarx............................. (a) 260,000 1,560,000
K mart............................ 187,000 2,711,500
___________
5,689,300
___________
Semiconductors-.6% Fujitsu ................................ 27,000 338,176
NEC, A.D.R. ........................... 18,400 1,285,700
OKI Electric Industry................ (a) 32,000 294,349
Toshiba................................ 37,000 268,788
___________
2,187,013
___________
TOTAL RESTRUCTURING.................... 38,542,549
============
TOTAL COMMON STOCKS
(cost $124,782,969).................. $144,068,375
============
PREFERRED STOCKS-.1%
Conglomerates; Teledyne, Series E
(cost $11,063)....................... 750 $ 10,406
============
CONTRACTS
SUBJECT
PUT OPTIONS-2.6% TO PUT
_______
AMEX Security Broker/Dealer Index:
January `96 @ $355................... 33,400 $ 81,413
Brokerage Basket;
November `95 @ $95................. (n) 224,323 0
Nasdaq 100 Index:
March `96 @ $550..................... 4,000 76,000
June `96 @ $550...................... 3,500 84,438
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
CONTRACTS
SUBJECT
PUT OPTIONS (CONTINUED) TO PUT VALUE
_______ _______
Philadelphia Semi-Conductor Index;
June `96 @ $280...................... 4,200 $152,250
Standard & Poor's 500 Index Flex
Options:
December `95 @ $450.................. 122,000 26,688
December `96 @ $525.................. 32,500 365,625
Standard & Poor's 500 Index:
December `95 @ $375.................. 45,500 5,687
December `95 @ $400.................. 45,500 2,844
December `95 @ $450.................. 71,500 20,109
December `95 @ $475.................. 40,100 15,037
December `95 @ $485.................. 30,000 15,000
December `95 @ $550.................. 41,500 140,063
March `96 @ $453................... (n) 90,930 3,637
March `96 @ $500..................... 113,000 268,375
March `96 @ $525..................... 84,000 351,750
June `96 @ $450...................... 23,500 36,719
June `96 @ $475...................... 113,000 268,375
June `96 @ $500...................... 73,000 310,250
June `96 @ $550...................... 52,000 546,000
September `96 @ $550................. 101,000 1,350,875
December `96 @ $525.................. 32,500 357,500
PRINCIPAL
AMOUNT
SUBJECT
TO PUT
-------
Japanese Government Bond:
4.60%, 9/20/2004:
May `96 @ $1.288............... (c,d,n) $ 27,955,912 2,591,910
June `96 @ $1.343................(c,d,n) 13,271,002 2,248,909
U.S. Treasury Bond;
7.625%, 2/15/2025;
April `96 @ $103.078................(n) 30,000,000 120,000
___________
TOTAL PUT OPTIONS
(cost $25,556,433)................... $9,439,454
=============
PRINCIPAL
BONDS AND NOTES-37.4% AMOUNT
--------
BONDS-36.6%.......... Argentinian Securities;
Republic of Argentina,
5%, 3/31/2023................(e,f,g) $ 2,250,000 $1,092,656
Austrian Securities;
Republic of Austria,
4.50%, 2/12/2000................(h) 27,744,166 28,881,677
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------- -------
BONDS (CONTINUED)...... Danish Securities;
Kingdom of Denmark,
4.25%, 9/30/1999................(h) $ 12,964,564 $ 13,411,841
Dutch Securities;
Netherlands Government,
7.25%, 7/15/1999................(j) 4,062,754 4,308,550
German Securities;
Bundesrepublik Deutschland:
8.50%, 4/22/1996................(i) 42,337,299 43,323,758
9%, 10/20/2000................(i) 16,710,987 18,893,442
8.875%, 12/20/2000............(i) 12,596,221 14,193,422
Venezuelan Securities;
Republic of Venezuela,
6.75%, 3/31/2020.............(e,f) 14,000,000
7,175,000
___________
131,280,346
___________
NOTES-.8% Federal National Mortgage Association,
Non-Callable Strips, (collateralized by
FNMA Strip, 10/1/2024) Cl. 267-2,
8.50%, 10/25/2024 (Interest Only Obligation) 11,748,490 (k) 2,915,094
___________
TOTAL BONDS AND NOTES
(cost $115,829,424).................. $134,195,440
=============
LOAN PARTICIPATIONS-2.3%
FOREIGN LOAN PARTICIPATIONS:Vnesheconombank (Bank for Foreign
Economic Affairs of the USSR)
5/3/2025................... (h,n) $19,446,845 $ 6,077,139
5/3/2025.................. (i,n) 6,298,111 2,212,211
___________
TOTAL LOAN PARTICIPATIONS
(cost $6,703,509).................... $ 8,289,350
=============
SHORT-TERM INVESTMENTS-21.5%
U.S. TREASURY BILLS:. 5.35%, 10/5/95 (l,m) $ 44,201,000 $ 44,169,617
5.35%, 10/12/95.............. (l,m) 3,453,000 3,447,026
5.36%, 11/9/95......................... 409,000 406,595
5.38%, 11/16/95........................ 16,567,000 16,452,191
5.37%, 11/24/95................ (l,m) 9,429,000 9,352,625
5.24%, 12/7/95......................... 3,377,000 3,343,028
___________
TOTAL SHORT-TERM INVESTMENTS
(cost $77,178,940)................... $ 77,171,082
=============
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
VALUE
_______
TOTAL INVESTMENTS (cost $350,062,338) ................................ 104.0% $373,174,107
====== =============
LIABILITIES, LESS CASH AND RECEIVABLES ..................................... (4.0%) $ (14,273,638)
====== =============
NET ASSETS.................................................................. 100.0% $ 358,900,469
====== =============
</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 September
30, 1995, this security amounted to $8,526,563 or 2.4% of net assets.
(c) Strike price converted to U.S. Dollars at the prevailing rate of
exchange.
(d) Denominated in Japanese Yen.
(e) Denominated in U.S. Dollars.
(f) Secured by U.S. Treasury securities.
(g) Scheduled variable interest rate.
(h) Denominated in Swiss Francs.
(i) Denominated in German Marks.
(j) Denominated in Dutch Guilder.
(k) Notional face amount.
(l) Partially held by broker as collateral for open short positions.
(m) Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
(n) Securities restricted as to public resale. Investments in restricted
securities, with an aggregate market value of $13,253,806, represents
approximately 3.7% 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 0.00 fair value
Japanese Government Bond:
4.60%, 9/20/2004, May `96 @ $1.288....... 5/16/95 $ .07 0.72 fair value
4.60%, 9/20/2004, June `96 @ $1.343...... 6/21/95 $ .08 0.63 fair value
Standard & Poor's 500 Index
March `96 @ $453......................... 12/14/94 $21.99 0.00 fair value
U.S. Treasury Bond;
7.625%, 2/15/2025, April `96 @ $103.078.. 4/12/95 $4.72 0.03 fair value
LOAN PARTICIPATIONS;
_____________________
Vnesheconombank (Bank for Foreign Economic Affairs
of the USSR)
5/3/2025............................... 5/2/95 $ .24 2.30 fair value
6/29/95
* 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>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1995
UNREALIZED
MARKET VALUE APPRECIATION
NUMBER OF COVERED (DEPRECIATION)
FINANCIAL FUTURES PURCHASED; CONTRACTS BY CONTRACTS EXPIRATION AT 9/30/95
------------ ------------- --------- -------------
<S> <C> <C> <C> <C>
Nikkei 225................................... 22 $ 1,980,550 December `95 $(23,400)
FINANCIAL FUTURES SOLD SHORT:
Hang Seng.................................... 70 (4,371,553) October `95 (3,625)
Japanese Yen................................. 22 (2,823,975) March `96 84,000
-------
$ 56,975
=========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF SECURITIES SOLD SHORT SEPTEMBER 30, 1995
COMMON STOCKS-18.9% SHARES VALUE
___________ _____________
<S> <C> <C>
AUTO RELATED-.3%...... Ford Motor 40,000 $1,245,000
-------------
COMPUTERS-.4%..... Compaq Computer 32,000 1,548,000
-------------
CONSUMERS-6.1%.. Anheuser-Busch 5,700 355,537
B.A.T. Industries, A.D.R. ............. 23,100 392,700
Clorox................................. 22,000 1,570,250
Coca-Cola.............................. 41,000 2,829,000
Disney (Walt) ......................... 10,000 573,750
General Mills.......................... 52,000 2,899,000
Gillette............................... 23,000 1,095,375
Heinz (H.J.)........................... 35,900 1,642,425
Kellogg................................ 50,000 3,618,750
Reebok International................... 53,900 1,852,813
Rubbermaid............................. 60,300 1,665,787
Sara Lee............................... 81,000 2,409,750
Wrigley, (Wm), Jr...................... 20,000 1,010,000
_____________
21,915,137
_____________
.......FINANCE-4.2%.......... ADVANTA, Cl. A 2,500 112,500
Alex Brown............................. 19,900 1,161,663
Bear Stearns........................... 122,587 2,635,620
CMAC Investment........................ 15,000 789,375
Conseco................................ 22,000 1,152,250
MGIC Investment........................ 22,000 1,259,500
Merrill Lynch.......................... 42,000 2,625,000
PMI Group.............................. 10,000 473,750
Paine Webber Group..................... 88,000 1,738,000
Schwab (Charles)....................... 80,000 2,240,000
United Asset Management................ 20,000 802,500
_____________
14,990,158
_____________
HEALTH CARE-.3%... Healthsource 23,000 1,106,875
_____________
MACHINERY-CONSTRUCTION &
MATERIAL-.7%....... Deere & Co ............... 18,200 1,481,025
Ingersoll-Rand......................... 26,500 993,750
_____________
2,474,775
_____________
RESTAURANTS-.6%. Outback Steakhouse 74,500 2,290,875
_____________
RETAIL-1.5%........ Home Depot 64,233 2,561,291
Sysco.................................. 25,000 681,250
Wal-Mart Stores........................ 81,000 2,014,875
_____________
5,257,416
_____________
TECHNOLOGY-4.2%.... American Power Conversion 47,000 575,750
Applied Materials...................... 16,700 1,707,575
Integrated Device Technology........... 36,000 900,000
Intel ................................. 30,600 1,839,825
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF SECURITIES SOLD SHORT (CONTINUED) SEPTEMBER 30, 1995
COMMON STOCKS (CONTINUED) SHARES VALUE
__________ _________
TECHNOLOGY (CONTINUED)....... KLA Instruments 19,500 $ 1,564,875
Kulicke & Soffa Industries............. 38,000 1,387,000
Maxim Integrated Products.............. 15,000 1,110,000
Micron Technology...................... 10,000 795,000
Microsoft.............................. 11,000 995,500
Motorola............................... 21,000 1,603,875
Novellus Systems....................... 14,000 980,000
Texas Instruments...................... 20,000 1,597,500
_____________
15,056,900
_____________
TELECOMMUNICATIONS-.6% Hong Kong Telecom, A.D.R. 114,000 2,080,500
_____________
TOTAL SECURITIES SOLD SHORT
(proceeds $65,428,414)............... $67,965,636
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $350,062,338)-see statement..................................... $373,174,107
Cash.................................................................... 620,787
Receivable from broker for proceeds on securities sold short............ 65,428,414
Dividends and interest receivable....................................... 5,945,967
Receivable for investment securities sold............................... 1,234,459
Receivable for subscriptions to Common Stock............................ 236,972
Prepaid expenses........................................................ 76,703
_____________
446,717,409
LIABILITIES:
Due to investment adviser............................................... $132,304
Due to sub-investment adviser........................................... 93,263
Due to Distributor...................................................... 130,083
Securities sold short, at value
(proceeds $65,428,414)-see statement.................................. 67,965,636
Bank loans payable-Note 2............................................... 10,000,000
Net unrealized depreciation on forward currency
exchange contracts-Note 4(a).......................................... 5,203,133
Payable for investment securities purchased............................. 2,539,142
Payable for Common Stock redeemed....................................... 1,335,306
Interest payable........................................................ 56,623
Payable for futures variation margin-Note 4(a).......................... 6,806
Accrued expenses........................................................ 354,644 87,816,940
------- ____________
NET ASSETS.................................................................. $358,900,469
=============
REPRESENTED BY:
Paid-in capital......................................................... $469,863,103
Accumulated undistributed investment income-net......................... 14,105,924
Accumulated net realized (loss) on investments, securities sold short,
foreign currency transactions and financial futures................... (140,552,041)
Accumulated net unrealized appreciation on investments, securities
sold short, and foreign currency transactions
(including $56,975 net unrealized appreciation
on financial futures)-Note 4(b)....................................... 15,483,483
_____________
NET ASSETS at value......................................................... $358,900,469
=============
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) SEPTEMBER 30, 1995
Shares of Common Stock outstanding:
Class A Shares
(100 million shares of $.01 par value authorized)..................... 25,543,483
=============
Class B Shares
(100 million shares of $.01 par value authorized)..................... 8,438,630
=============
Class C Shares
(100 million shares of $.01 par value authorized)..................... 94
=============
Class R Shares
(100 million shares of $.01 par value authorized)..................... 92
=============
NET ASSET VALUE per share:
Class A Shares
($271,051,783 / 25,543,483 shares).................................... $10.61
=========
Class B Shares
($87,846,730 / 8,438,630 shares)...................................... $10.41
=========
Class C Shares
($979 / 94 shares).................................................... $10.41
=========
Class R Shares
($977 / 92 shares).................................................... $10.62
=========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 20,726,708
Cash dividends (net of $75,753 foreign taxes withheld at source)...... 1,924,318
___________
TOTAL INCOME...................................................... $ 22,651,026
EXPENSES:
Investment advisory fee-Note 3(a)..................................... 1,840,790
Sub-investment advisory fee-Note 3(a)................................. 1,365,789
Dividends on securities sold short.................................... 1,861,794
Shareholder servicing costs-Note 3(c)................................. 1,659,621
Distribution fees-Note 3(b)........................................... 738,585
Prospectus and shareholders' reports.................................. 120,170
Custodian fees........................................................ 106,205
Professional fees..................................................... 73,048
Registration fees..................................................... 72,468
Interest expense-Note 2............................................... 59,145
Directors' fees and expenses-Note 3(d)................................ 49,789
Miscellaneous......................................................... 22,130
___________
TOTAL EXPENSES.................................................... 7,969,534
___________
INVESTMENT INCOME-NET............................................. 14,681,492
___________
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments-Note 4(a):
Long transactions (including options transactions and foreign
currency transactions)............................................ $2,696,163
Short sale transactions............................................... (22,403,778)
Net realized gain on forward currency exchange contracts-Note 4(a);
Long transactions..................................................... 118,547
Net realized (loss) on financial futures-Note 4(a);
Short transactions.................................................... (7,893,569)
___________
NET REALIZED (LOSS)................................................... (27,482,637)
Net unrealized (depreciation) on investments, securities sold short
and foreign currency transactions [including ($1,427,125) net
unrealized (depreciation) on financial futures]....................... (28,971,658)
___________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (56,454,295)
___________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(41,772,803)
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
-------------------------------
1994 1995
-------- --------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $9,823,170 $14,681,492
Net realized (loss) on investments, securities sold short,
foreign currency transactions and financial futures................... (9,217,163) (27,482,637)
Net unrealized appreciation (depreciation) on investments, securities
sold short,
foreign currency transactions and financial futures for the year...... 26,168,303 (28,971,658)
------------- ______________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... 26,774,310 (41,772,803)
------------- ______________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (8,633,848) (8,406,886)
Class B shares........................................................ (913,770) (1,940,644)
Class C shares........................................................ -- --
Class R shares........................................................ -- --
------------- --------------
TOTAL DIVIDENDS................................................... (9,547,618) (10,347,530)
------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 116,664,797 39,533,363
Class B shares.................................................... 85,400,651 26,973,391
Class C shares........................................................ -- 1,000
Class R shares........................................................ -- 1,000
Dividends reinvested:
Class A shares........................................................ 4,857,514 5,143,774
Class B shares........................................................ 489,988 990,338
Class C shares........................................................ -- --
Class R shares........................................................ -- --
Cost of shares redeemed:
Class A shares........................................................ (147,154,408) (136,312,596)
Class B shares........................................................ (8,939,968) (36,549,208)
Class C shares........................................................ -- --
Class R shares........................................................ -- --
------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS. 51,318,574 (100,218,938)
------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 68,545,266 (152,339,271)
NET ASSETS:
Beginning of year....................................................... 442,694,474 511,239,740
------------- --------------
End of year (including undistributed investment income-net:
$9,771,962 in 1994 and $14,105,924 in 1995)........................... $ 511,239,740 $ 358,900,469
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED
SHARES
CLASS C CLASS R
---------- --------
CLASS A CLASS B PERIOD ENDED PERIOD ENDED
------------------ ------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
------------------------ ---------------------
1994 1995 1994 1995 1995* 1995*
--------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold....... 9,919,385 3,569,389 7,342,835 2,464,126 94 92
Shares issued for
dividends reinvested. 411,308 466,343 41,951 91,024 __ __
Shares redeemed........ (12,560,968) (12,382,551) (783,960) (3,400,272) __ __
-------- -------- --------- ---------- --------- --------
(DECREASE) IN
SHARES OUTSTANDING (2,230,275) (8,346,819) 6,600,826 (845,122) 94 92
=========== =========== =========== =========== =========== ===========
* From August 22, 1995 (commencement of initial offering) to September 30, 1995.
See notes to financial statements.
</TABLE>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated
February 1, 1996.
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. 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 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. Dreyfus is a
direct subsidiary of Mellon Bank, N.A.
The Fund offers Class A, Class B, Class C and Class R shares. Class A
shares are subject to a sales charge imposed at the time of purchase, Class B
shares are subject to a contingent deferred sales charge imposed at the time
of redemption on redemptions made within six years of purchase, Class C
shares are subject to a contingent deferred sales charge imposed at the time
of redemption on redemptions made within one year of purchase and Class R
shares are sold at net asset value per share only to institutional investors.
Other differences between the four 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.
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. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(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
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
$122,600,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to September 30,
1995. The carryover does not include net realized securities losses from
November 1, 1994 through September 30, 1995 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, $56,700,000 expires in fiscal 2002, and
$9,200,000 expires in fiscal 2003.
NOTE 2-BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up to
$10 million under a short-term unsecured line of credit. Interest on
borrowings is charged at rates which are related to Federal Funds rates in
effect from time to time. Outstanding borrowings on September 30, 1995 under
the line of credit, amounted to $10 million, at an annualized rate of 7.05%.
The average daily amount of short-term debt outstanding during the year
ended September 30, 1995 was approximately $859,000, with a related weighted
average annualized interest rate of 6.89%. The maximum amount borrowed at any
time during the year ended September 30, 1995 was $10 million.
NOTE 3-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS 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:
AVERAGE NET ASSETS DREYFUS COMSTOCK PARTNERS
-------------------- ------- --------------
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%
The Agreements further provide that the Fund may deduct from the fees 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 expense
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 21\2%
of the first $30
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
million, 2% of the next $70 million and 11\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, 1995.
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus,
retained $13,897 during the year ended September 30, 1995 from commissions
earned on sales of Fund shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, 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. During the year ended September 30,
1995, $738,584 was charged to the Fund for the Class B shares and $1 was
charged to the Fund for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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, 1995,
$822,664, $246,195 were charged to Class A and B shares, respectively, and no
amounts were charged to the Class C shares, by the Distributor pursuant to
the Shareholder Services Plan.
(D) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund 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 4-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
options transactions during the year ended September 30, 1995:
PURCHASES SALES
_______________ _______________
Long transactions.............. $ 87,407,314 $ 77,568,367
Short sale transactions........ 136,098,892 76,244,500
_______________ _______________
TOTAL........................ $223,506,206 $153,812,867
============== ==============
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 September 30, 1995 and their related
market values and proceeds are set forth in the Statement of Securities Sold
Short.
<TABLE>
<CAPTION>
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following summarizes open forward currency contracts at
September 30, 1995:
U.S. DOLLAR UNREALIZED
FORWARD CURRENCY CONTRACTS: PROCEEDS VALUE (DEPRECIATION)
------- ------- --------------
<S> <C> <C> <C>
SALES:
Dutch Guilders, expiring 11/20/95...................... $4,072,948 $4,203,262 $ (130,314)
German Deutschemarks, expiring 11/17/95................ 73,520,652 75,890,661 (2,370,009)
Swiss Francs, expiring 11/17/95........................ 42,549,364 45,252,174 (2,702,810)
COST
-------
PURCHASES;
Hong Kong Dollars, expiring 10/3/95.................... $181,174 181,174 --
-------------
TOTAl.............................................. $ (5,203,133)
=============
</TABLE>
The Fund enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency
exchange rates on its foreign portfolio holdings. When executing forward
currency exchange contracts, the Fund is obligated to buy or sell a foreign
currency at a specified rate on a certain date in the future. With respect to
sales of forward currency exchange contracts, the Fund would incur a loss if
the value of the contract increases between the date the forward contract is
opened and the date the forward contract is closed. The Fund realizes a gain
if the value of the contract decreases between those dates. With respect to
purchases of forward currency exchange contracts, the Fund would incur a loss
if the value of the contract decreases between the date the forward contract
is opened and the date the forward contract is closed. The Fund realizes a
gain if the value of the contract increases between those dates. The Fund is
also exposed to credit risk associated with counter party nonperformance on
these forward currency exchange contracts which is typically limited to the
unrealized gains on such contracts that are recognized in the statement of
assets and liabilities.
The Fund may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Fund is exposed to
market risk as a result of changes in the value of the underlying financial
instruments (see the Statement of Financial Futures). Investments in
financial futures require the Fund to "mark to market" on a daily basis,
which reflects the change in the market value of the 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 September
30, 1995 and their related unrealized market appreciation (depreciation) are
set forth in the Statement of Financial Futures.
The Fund may purchase put and call options, including restricted options,
which are not exchange traded in order to gain exposure to or protect against
changes in the market. 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.
The Fund may invest in fixed and floating rate loans arranged through
private negotiations between an issuer of Sovereign Debt Obligations and one
or more financial institutions. The Fund's investments in loans are expected
in most instances to be in the form of participations in loans and
assignments of all or a portion of loans from third parties. As a result the
Fund may be subject to credit risk from the issuer of
DREYFUS CAPITAL VALUE FUND (A Premier Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Sovereign Debt Obligations and the third party. In addition such loans may be
less liquid and may be subject to greater price volatility.
(B) At September 30, 1995, accumulated net unrealized appreciation on
investments was $20,631,522, consisting of $46,860,961 gross unrealized
appreciation and $26,229,439 gross unrealized depreciation, excluding foreign
currency transactions.
At September 30, 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).
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, 1995, 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, 1995 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,
1995, 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 & Young LLP signature logo]
New York, New York
November 13, 1995
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, 1994 and 1995.
Included in Part B of the Registration Statement:
Statement of Investments--September 30, 1995
Statement of Financial Futures--September 30, 1995
Statement of Securities Sold Short--September 30, 1995
Statement of Assets and Liabilities--September 30, 1995
Statement of Operations--year ended September 30, 1995
Statement of Changes in Net Assets--for each of the
years ended September 30, 1994 and 1995
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors,
dated November 13, 1995
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 are incorporated by reference to Exhibit (1)(a) of
Post-Effective Amendment No. 18 to the Registration Statement on
Form N-1A, filed on August 21, 1995.
(2) Registrant's By-Laws.
(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 is incorporated by reference to
Exhibit (5)(b) of Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A, filed on August 21, 1995.
(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 Agreements are incorporated by reference to
Exhibit (6)(b) of Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A, filed on August 21, 1995.
(8)(a) Amended and Restated Custody Agreement is incorporated by
reference to Exhibit (8)(a) of Post-Effective Amendment No. 18 to
the Registration Statement on Form N-1A, filed on August 21,
1995.
(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 is incorporated by reference to Exhibit
(9) of Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A, filed on August 21, 1995.
(10) Opinion and Consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No. 18
to the Registration Statement on Form N-1A, filed on August 21,
1995.
(11) Consent of Independent Auditors.
(15) Distribution Plan is incorporated by reference to Exhibit (15) of
Post-Effective Amendment No. 18 to the Registration Statement on
Form N-1A, filed on August 21, 1995.
(16) Schedules of Computation of Performance Data are incorporated by
reference to Exhibit 16 of Post-Effective Amendment No. 15 to the
Post-Effective Amendment No. 15 filed on January 28, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(18) Rule 18f-3 Plan is incorporated by reference to Exhibit (18) of
Post-Effective Amendment No. 18 to the Registration Statement on
Form N-1A, filed on August 21, 1995.
Other Exhibits
______________
(a) Powers of Attorney are incorporated by reference to
Other Exhibits (a) of Post-Effective Amendment No. 18
to the Registration Statement on Form N-1A, filed on
August 21, 1995.
(b) Certificate of Corporate Secretary is incorporated by
reference to Other Exhibits (b) of Post-Effective
Amendment No. 18 to the Registration Statement on Form
N-1A, filed on August 21, 1995.
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 January 17, 1996
______________ _____________________________
Common Stock
(Par value $.01)
Class A Shares - 14,410
Class B Shares - 3,992
Class C Shares - 12
Class R Shares - 1
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****
Mellon Bank, N.A.****
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
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*****
Vice Chairman of the Board:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****
Operating Officer The Boston Company*****
and Director Deputy Director:
Mellon Trust****
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****
President:
Boston Safe Deposit and Trust Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
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*****
Laurel Capital Advisors****
Boston Group Holdings, Inc.
Executive Vice President:
Mellon Bank, N.A.****
Boston Safe Deposit & Trust*****
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Director:
Dreyfus Precious Metals, Inc.*;
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, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
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++
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 Acquisition Corporation*;
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director, Vice President and Treasurer:
Lion Management, Inc.*;
Director:
The Dreyfus Trust Company++;
Secretary:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
Legal and Secretary 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
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
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 131 Second Street, Lewes,
Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 28(b). Business and Other Connections of Sub-Investment Advisers
(i) Registrant is fulfilling the requirement of this Item
28(b) to provide a list of the officers and directors of Comstock
partners, Inc. ("Comstock"), the sub-investment adviser to the Registrant,
together with information as to any other business, profession, vocation
or employment of a substantial nature engaged in by Comstock or those of
its officers and directors during the past two years, by incorporating by
reference the information contained in the Form ADV filed with the SEC
pursuant to the Investment Advisers Act of 1940 by Comstock (SEC File No.
801-28570).
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 GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Capital Value Fund, Inc.
14) Dreyfus Cash Management
15) Dreyfus Cash Management Plus, Inc.
16) Dreyfus Connecticut Intermediate Municipal Bond Fund
17) Dreyfus Connecticut Municipal Money Market Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth Fund
24) Dreyfus GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth and Value Funds, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) 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) Dreyfus Life and Annuity Index Fund, Inc.
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus Michigan Municipal Money Market Fund, Inc.
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus Ohio Municipal Money Market Fund, Inc.
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Short-Intermediate Government Fund
66) Dreyfus Short-Intermediate Municipal Bond Fund
67) Dreyfus Short-Term Income Fund, Inc.
68) The Dreyfus Socially Responsible Growth Fund, Inc.
69) Dreyfus Strategic Income
70) Dreyfus Strategic Investing
71) Dreyfus Tax Exempt Cash Management
72) The Dreyfus Third Century Fund, Inc.
73) Dreyfus Treasury Cash Management
74) Dreyfus Treasury Prime Cash Management
75) Dreyfus Variable Investment Fund
76) Dreyfus-Wilshire Target Funds, Inc.
77) Dreyfus Worldwide Dollar Money Market Fund, Inc.
78) General California Municipal Bond Fund, Inc.
79) General California Municipal Money Market Fund
80) General Government Securities Money Market Fund, Inc.
81) General Money Market Fund, Inc.
82) General Municipal Bond Fund, Inc.
83) General Municipal Money Market Fund, Inc.
84) General New York Municipal Bond Fund, Inc.
85) General New York Municipal Money Market Fund
86) Pacifica Funds Trust -
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
87) Peoples Index Fund, Inc.
88) Peoples S&P MidCap Index Fund, Inc.
89) Premier Insured Municipal Bond Fund
90) Premier California Municipal Bond Fund
91) Premier Capital Growth Fund, Inc.
92) Premier Global Investing, Inc.
93) Premier GNMA Fund
94) Premier Growth Fund, Inc.
95) Premier Municipal Bond Fund
96) Premier New York Municipal Bond Fund
97) Premier State Municipal Bond Fund
98) Premier Strategic Growth Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ 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
Paul Prescott+ Vice President None
Elizabeth Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
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. First Data Investor 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. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02903-9671
4. 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 29th day of January, 1996.
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 1/29/96
_____________________________ (Principal Executive Officer)
Marie E. Connolly
/s/Joseph F. Tower, III* Assistant Treasurer (Principal 1/29/96
- ----------------------------- Accounting and Financial Officer)
Joseph F. Tower, III
/s/David W. Burke* Board member 1/29/96
_____________________________
David W. Burke
/s/Hodding Carter, III* Board member 1/29/96
_____________________________
Hodding Carter, III
/s/Joseph S. DiMartino* Chairman of the Board 1/29/96
_____________________________
Joseph S. DiMartino
/s/Ehud Houminer* Board member 1/29/96
_____________________________
Ehud Houminer
/s/Richard C. Leone* Board member 1/29/96
_____________________________
Richard C. Leone
/s/Hans Mautner* Board member 1/29/96
_____________________________
Hans Mautner
/s/Robin A. Smith* Board member 1/29/96
_____________________________
Robin A. Smith
/s/John E. Zuccotti* Board member 1/29/96
_____________________________
John E. Zuccotti
*BY: /s/Eric B. Fischman
________________________
Eric B. Fischman,
Attorney-in-Fact
INDEX OF EXHIBITS
(2) Registrant's By-Laws
(11) Consent of Independent Auditors
BY-LAWS
OF
DREYFUS CAPITAL VALUE FUND, INC.
(A Maryland Corporation)
___________
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates
representing shares of stock shall set forth thereon the
statements prescribed by Section 2-211 of the Maryland General
Corporation Law ("General Corporation Law") and by any other
applicable provision of law and shall be signed by the Chairman
of the Board or the President or a Vice President and
countersigned by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer and may be sealed with the
corporate seal. The signatures of any such officers may be
either manual or facsimile signatures and the corporate seal may
be either facsimile or any other form of seal. In case any such
officer who has signed manually or by facsimile any such
certificate ceases to be such officer before the certificate is
issued, it nevertheless may be issued by the corporation with
the same effect as if the officer had not ceased to be such
officer as of the date of its issue.
No certificate representing shares of stock shall be
issued for any share of stock until such share is fully paid,
except as otherwise authorized in Section 2-206 of the General
Corporation Law.
The corporation may issue a new certificate of stock
in place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, and the Board of Directors
may require, in its discretion, the owner of any such
certificate or his legal representative to give bond, with
sufficient surety, to the corporation to indemnify it against
any loss or claim that may arise by reason of the issuance of a
new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions
restricting the transferability of shares of stock, if any,
transfers of shares of stock of the corporation shall be made
only on the stock transfer books of the corporation by the
record holder thereof or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of
the corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes
due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of
Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to
vote at, any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any
rights or in order to make a determination of stockholders for
any other proper purpose. Such date, in any case, shall be not
more than 90 days, and in case of a meeting of stockholders not
less than 10 days, prior to the date on which the meeting or
particular action requiring such determination of stockholders
is to be held or taken. In lieu of fixing a record date, the
Board of Directors may provide that the stock transfer books
shall be closed for a stated period but not to exceed 20 days.
If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of, or to vote at, a
meeting of stockholders, such books shall be closed for at least
10 days immediately preceding such meeting. If no record date
is fixed and the stock transfer books are not closed for the
determination of stock-holders: (1) The record date for the
determination of stock-holders entitled to notice of, or to vote
at, a meeting of stockholders shall be at the close of business
on the day on which the notice of meeting is mailed or the day
30 days before the meeting, whichever is the closer date to the
meeting; and (2) The record date for the determination of
stockholders entitled to receive payment of a dividend or an
allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors declaring
the dividend or allotment of rights is adopted, provided that
the payment or allotment date shall not be more than 60 days
after the date on which the resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in
respect of the right to notice of a meeting of stockholders or a
waiver thereof or to participate or vote thereat or to consent
or dissent in writing in lieu of a meeting, as the case may be,
the term "share of stock" or "shares of stock" or "stockholder"
or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares
of stock when the corporation is authorized to issue only one
class of shares of stock and said reference also is intended to
include any outstanding share or shares of stock and any holder
or holders of record of outstanding shares of stock of any class
or series upon which or upon whom the Charter confers such
rights where there are two or more classes or series of shares
or upon which or upon whom the General Corporation Law confers
such rights notwithstanding that the Charter may provide for
more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder.
5. STOCKHOLDER MEETINGS.
- ANNUAL MEETINGS. If a meeting of the stockholders
of the corporation is required by the Investment Company Act of
1940, as amended, to elect the directors, then there shall be
submitted to the stockholders at such meeting the question of
the election of directors, and a meeting called for that purpose
shall be designated the annual meeting of stockholders for that
year. In other years in which no action by stockholders is
required for the aforesaid election of directors, no annual
meeting need be held.
- SPECIAL MEETINGS. Special stockholder meetings for
any purpose may be called by the Board of Directors or the
President and shall be called by the Secretary for the purpose
of removing a Director and for all other purposes whenever the
holders of shares entitled to at least ten percent of all the
votes entitled to be cast at such meeting shall make a duly
authorized request that such meeting be called. Such request
shall state the purpose of such meeting and the matters proposed
to be acted on thereat, and no other business shall be
transacted at any such special meeting. Notwithstanding the
foregoing, unless requested by stockholders entitled to cast a
majority of the votes entitled to be cast at the meeting, a
special meeting of the stockholders need not be called at the
request of stockholders to consider any matter that is
substantially the same as a matter voted on at any special
meeting of the stockholders held during the preceding twelve
(12) months.
- PLACE AND TIME. Stockholder meetings shall be held
at such place, either within the State of Maryland or at such
other place within the United States, and at such date or dates
as the directors from time to time may fix.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE.
Written or printed notice of all meetings shall be given by the
Secretary and shall state the time and place of the meeting.
The notice of a special meeting shall state in all instances the
purpose or purposes for which the meeting is called. Written or
printed notice of any meeting shall be given to each stockholder
either by mail or by presenting it to him personally or by
leaving it at his residence or usual place of business not less
than ten days and not more than ninety days before the date of
the meeting, unless any provisions of the General Corporation
Law shall prescribe a different elapsed period of time, to each
stockholder at his address appearing on the books of the
corporation or the address supplied by him for the purpose of
notice. If mailed, notice shall be deemed to be given when
deposited in the United States mail addressed to the stockholder
at his post office address as it appears on the records of the
corporation with postage thereon prepaid. Whenever any notice
of the time, place or purpose of any meeting of stockholders is
required to be given under the provisions of these by-laws or of
the General Corpora-tion Law, a waiver thereof in writing,
signed by the stockholder and filed with the records of the
meeting, whether before or after the holding thereof, or actual
attendance or representation at the meeting shall be deemed
equivalent to the giving of such notice to such stockholder.
The foregoing requirements of notice also shall apply, whenever
the corporation shall have any class of stock which is not
entitled to vote, to holders of stock who are not entitled to
vote at the meeting, but who are entitled to notice thereof and
to dissent from any action taken thereat.
- STATEMENT OF AFFAIRS. The President of the
corporation or, if the Board of Directors shall determine
otherwise, some other executive officer thereof, shall prepare
or cause to be prepared annually a full and correct statement of
the affairs of the corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be filed at the principal office of the corporation
in the State of Maryland.
- QUORUM. At any meeting of stockholders, the
presence in person or by proxy of stockholders entitled to cast
one-third of the votes thereat shall constitute a quorum. In
the absence of a quorum, the stockholders present in person or
by proxy, by majority vote and without notice other than by
announcement, may adjourn the meeting from time to time, but not
for a period exceeding 120 days after the original record date
until a quorum shall attend.
- ADJOURNED MEETINGS. A meeting of stockholders
convened on the date for which it was called (including one
adjourned to achieve a quorum as provided in the paragraph
above) may be adjourned from time to time without further notice
to a date not more than 120 days after the original record date,
and any business may be transacted at any adjourned meeting
which could have been transacted at the meeting as originally
called.
- CONDUCT OF MEETING. Meetings of the stockholders
shall be presided over by one of the following officers in the
order of seniority and if present and acting: the President,
the Chairman of the Board, a Vice President or, if none of the
foregoing is in office and present and acting, by a chairman to
be chosen by the stockholders. The Secretary of the corporation
or, in his absence, an Assistant Secretary, shall act as
secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the chairman of the meeting shall
appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may
authorize another person or persons to act for him by proxy in
all matters in which a stockholder is entitled to participate,
whether for the purposes of determining his presence at a
meeting, or whether by waiving notice of any meeting, voting or
participating at a meeting, expressing consent or dissent
without a meeting or otherwise. Every proxy shall be executed
in writing by the stockholder or by his duly authorized
attorney-in-fact or be in such other form as may be permitted by
the Maryland General Corporation Law, including documents
conveyed by electronic transmission and filed with the Secretary
of the corporation. A copy, facsimile transmission or other
reproduction of the writing or transmission may be substituted
for the original writing or transmission for any purpose for
which the original transmission could be used. No unrevoked
proxy shall be valid after eleven months from the date of its
execution, unless a longer time is expressly provided therein.
The placing of a stockholder's name on a proxy pursuant
to telephonic or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to verify
that such instructions have been authorized by such stockholder
shall constitute execution of such proxy by or on behalf of such
stockholder.
- INSPECTORS OF ELECTION. The directors, in advance
of any meeting, may, but need not, appoint one or more
inspectors to act at the meeting or any adjournment thereof. If
an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an
inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or
at the meeting by the person presiding thereat. Each inspector,
if any, before entering upon the discharge of his duties, shall
take and sign an oath to execute faithfully the duties of
inspector at such meeting with strict impartiality and according
to the best of his ability. The inspectors, if any, shall
determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of
a quorum and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with
the right to vote, count and tabulate all votes, ballots or
consents, determine the result and do such acts as are proper to
conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting or any stock-
holder, the inspector or inspectors, if any, shall make a report
in writing of any challenge, question or matter determined by
him or them and execute a certificate of any fact found by him
or them.
- VOTING. Each share of stock shall entitle the
holder thereof to one vote, except in the election of directors,
at which each said vote may be cast for as many persons as there
are directors to be elected. Except for election of directors,
a majority of the votes cast at a meeting of stockholders, duly
called and at which a quorum is present, shall be sufficient to
take or authorize action upon any matter which may come before a
meeting, unless more than a majority of votes cast is required
by the corporation's Articles of Incorporation. A plurality of
all the votes cast at a meeting at which a quorum is present
shall be sufficient to elect a director.
6. INFORMAL ACTION. Any action required or permitted
to be taken at a meeting of stockholders may be taken without a
meeting if a consent in writing, setting forth such action, is
signed by all the stockholders entitled to vote on the subject
matter thereof and any other stockholders entitled to notice of
a meeting of stockholders (but not to vote thereat) have waived
in writing any rights which they may have to dissent from such
action and such consent and waiver are filed with the records of
the corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and
affairs of the corporation shall be managed under the direction
of a Board of Directors. The use of the phrase "entire board"
herein refers to the total number of directors which the
corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be
a natural person of full age. A director need not be a
stockholder, a citizen of the United States or a resident of the
State of Maryland. The initial Board of Directors shall consist
of one person. Thereafter, the number of directors constituting
the entire board shall never be less than three or the number of
stockholders, whichever is less. At any regular meeting or at
any special meeting called for that purpose, a majority of the
entire Board of Directors may increase or decrease the number of
direc-tors, provided that the number thereof shall never be less
than three or the number of stockholders, whichever is less, nor
more than twelve and further provided that the tenure of office
of a director shall not be affected by any decrease in the
number of directors.
3. ELECTION AND TERM. The first Board of Directors
shall consist of the director named in the Articles of
Incorporation and shall hold office until the first meeting of
stockholders or until his successor has been elected and
qualified. Thereafter, directors who are elected at a meeting
of stockholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold
office until their successors have been elected and qualified.
Newly created directorships and any vacancies in the Board of
Directors, other than vacancies resulting from the removal of
directors by the stockholders, may be filled by the Board of
Directors, subject to the provisions of the Investment Company
Act of 1940. Newly created directorships filled by the Board of
Directors shall be by action of a majority of the entire Board
of Directors then in office. All vacancies to be filled by the
Board of Directors may be filled by a majority of the remaining
members of the Board of Directors, although such majority is
less than a quorum thereof.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the
Board shall fix, except that the first meeting of a newly
elected Board shall be held as soon after its election as the
directors conveniently may assemble.
- PLACE. Meetings shall be held at such place within
or without the State of Maryland as shall be fixed by the Board.
- CALL. No call shall be required for regular
meetings for which the time and place have been fixed. Special
meetings may be called by or at the direction of the President
or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Whenever
any notice of the time, place or purpose of any meeting of
directors or any committee thereof is required to be given under
the provisions of the General Corporation Law or of these by-
laws, a waiver thereof in writing, signed by the director or
committee member entitled to such notice and filed with the
records of the meeting, whether before or after the holding
thereof, or actual attendance at the meeting shall be deemed
equivalent to the giving of such notice to such director or such
committee member.
- QUORUM AND ACTION. A majority of the entire Board
of Directors shall constitute a quorum except when a vacancy or
vacancies prevents such majority, whereupon a majority of the
directors in office shall constitute a quorum, provided such
majority shall constitute at least one-third of the entire Board
and, in no event, less than two directors. A majority of the
directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as
otherwise specifically provided by the Articles of
Incorporation, the General Corporation Law or these by-laws, the
action of a majority of the directors present at a meeting at
which a quorum is present shall be the action of the Board of
Directors.
- CHAIRMAN OF THE MEETING. The Chairman of the
Board, if any and if present and acting, or the President or any
other director chosen by the Board, shall preside at all
meetings.
5. REMOVAL OF DIRECTORS. Any or all of the directors
may be removed for cause or without cause by the stockholders,
who may elect a successor or successors to fill any resulting
vacancy or vacancies for the unexpired term of the removed
director or directors.
6. COMMITTEES. The Board of Directors may appoint
from among its members an Executive Committee and other
committees composed of two or more directors and may delegate to
such committee or committees, in the intervals between meetings
of the Board of Directors, any or all of the powers of the Board
of Directors in the management of the business and affairs of
the corporation, except the power to amend the by-laws, to
approve any consolidation, merger, share exchange or transfer of
assets, to declare dividends, to issue stock (except to the
extent permitted by law) or to recommend to stockholders any
action requiring the stockholders' approval. In the absence of
any member of any such committee, the members thereof present at
any meeting, whether or not they constitute a quorum, may
appoint a member of the Board of Directors to act in the place
of such absent member.
7. INFORMAL ACTION. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written
consent to such action is signed by all members of the Board of
Directors or any such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of
the Board or any such committee.
Members of the Board of Directors or any committee
designated thereby may participate in a meeting of such Board or
committee by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in
person at a meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and
shall have a President, a Secretary and a Treasurer, who shall
be elected by the Board of Directors, and may have such other
officers, assistant officers and agents as the Board of
Directors shall authorize from time to time. Any two or more
offices, except those of President and Vice President, may be
held by the same person, but no person shall execute,
acknowledge or verify any instrument in more than one capacity,
if such instrument is required by law to be executed,
acknowledged or verified by two or more officers.
Any officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interests of the
corporation will be served thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation
in the State of Maryland prescribed by the General Corporation
Law is 32 South Street, c/o The Corporation Trust Incorporated,
Baltimore, Maryland 21202. The name and address of the resident
agent in the State of Maryland prescribed by the General
Corporation Law are: The Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland 21202.
The corporation shall maintain, at its principal
office in the State of Maryland prescribed by the General
Corporation Law or at the business office or an agency of the
corporation, an original or duplicate stock ledger containing
the names and addresses of all stockholders and the number of
shares of each class held by each stockholder. Such stock
ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual
inspection.
The corporation shall keep at said principal office in
the State of Maryland the original or a certified copy of the
by-laws, including all amendments thereto, and shall duly file
thereat the annual statement of affairs of the corporation
prescribed by Section 2-313 of the General Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the
name of the corporation and shall be in such form and contain
such other words and/or figures as the Board of Directors shall
determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation or any series
thereof shall be fixed, and shall be subject to change, by the
Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws
is vested exclusively in the Board of Directors of the
corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The
corporation shall indemnify its directors to the fullest extent
that indemnification of directors is permitted by the law. The
corporation shall indemnify its officers to the same extent as
its directors and to such further extent as is consistent with
law. The corporation shall indemnify its directors and officers
who while serving as directors or officers also serve at the
request of the corporation as a director, officer, partner,
trustee, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, other enterprise or employee
benefit plan to the same extent as its directors and, in the
case of officers, to such further extent as is consistent with
law. The indemnification and other rights provided by this
Article shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. This Article
shall not protect any such person against any liability to the
corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct").
2. ADVANCES. Any current or former director or
officer of the corporation seeking indemnification within the
scope of this Article shall be entitled to advances from the
corporation for payment of the reasonable expenses incurred by
him in connection with the matter as to which he is seeking
indemnification in the manner and to the fullest extent
permissible under the General Corporation Law. The person
seeking indemnification shall provide to the corporation a
written affirmation of his good faith belief that the standard
of conduct necessary for indemnification by the corporation has
been met and a written undertaking to repay any such advance if
it should ultimately be determined that the standard of conduct
has not been met. In addition, at least one of the following
additional conditions shall be met: (a) the person seeking
indemnification shall provide a security in form and amount
acceptable to the corporation for his undertaking; (b) the
corporation is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of directors of the
corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion,
shall have determined, based on a review of facts readily avail-
able to the corporation at the time the advance is proposed to
be made, that there is reason to believe that the person seeking
indemnification will ultimately be found to be entitled to
indemnification.
3. PROCEDURE. At the request of any person claiming
indemnification under this Article, the Board of Directors shall
determine, or cause to be determined, in a manner consistent
with the General Corporation Law, whether the standards required
by this Article have been met. Indemnification shall be made
only following: (a) a final decision on the merits by a court
or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of disabling
conduct or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person
to be indemnified was not liable by reason of disabling conduct
by (i) the vote of a majority of a quorum of disinterested
non-party directors or (ii) an independent legal counsel in a
written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
Employees and agents who are not officers or directors of the
corporation may be indemnified, and reasonable expenses may be
advanced to such employees or agents, as may be provided by
action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940, as
amended.
5. OTHER RIGHTS. The Board of Directors may make
further provision consistent with law for indemnification and
advance of expenses to directors, officers, employees and agents
by resolution, agreement or otherwise. The indemnification
provided by this Article shall not be deemed exclusive of any
other right, with respect to indemnification or otherwise, to
which those seeking indemnification may be entitled under any
insurance or other agreement or resolution of stockholders or
disinterested non-party directors or otherwise.
6. AMENDMENTS. References in this Article are to the
General Corporation Law and to the Investment Company Act of
1940 as from time to time amended. No amendment of the by-laws
shall affect any right of any person under this Article based on
any event, omission or proceeding prior to the amendment.
As Amended: January 29, 1996
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing
Agent, Custodian, Counsel and Independent Auditors" and to the use of
our report dated November 13, 1995, in this Registration Statement (Form
N-1A 2-88822) of Dreyfus Capital Value Fund, Inc.
ERNST & YOUNG LLP
New York, New York
January 26, 1996
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</TABLE>
