SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement Confidential, For Use of the
X Definitive Proxy Statement Commission Only (as permitted
Definitive Additional Materials by Rule 14a-6(e)(2))
Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
Comstock Partners Funds, Inc.
(Name of Registrant as Specified In Its Charter)
Comstock Partners Funds, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, par value $.01 per share
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
/X / None.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
COMSTOCK PARTNERS FUNDS, INC.
10 Exchange Place, Suite 2010,
Jersey City, New Jersey 07302-3913
(201) 332-4436
November 11, 1996
Dear Fellow Stockholder:
The enclosed Proxy Statement includes proposals to be voted upon by
stockholders of Comstock Partners Strategy Fund and Comstock Partners Capital
Value Fund, each a portfolio offered by Comstock Partners Funds, Inc. (the
"Company"). Certain of the proposals are being presented to you at this time
in order to comply with the requirements of federal law.
The Board of Directors of the Company, including the independent
directors, carefully considered each of the matters described in the Proxy
Statement and has unanimously recommended that you vote "for" approval of each
of the Proposals which are applicable to your Fund.
Please take the time to consider and act upon the proposals applicable
to your Fund which are presented in the enclosed Proxy Statement. The Notice of
Special Meeting which follows identifies those proposals that apply to your
Fund. Your vote is extremely important, and I urge you to complete and promptly
return the enclosed proxy card in the enclosed envelope in order to spare the
Company additional proxy solicitation expenses.
Sincerely,
/s/ CHARLES L. MINTER
____________________________________
Charles L. Minter
Chairman of the Board of Directors
<PAGE>
COMSTOCK PARTNERS FUNDS, INC.
10 Exchange Place, Suite 2010,
Jersey City, New Jersey 07302-3913
(201) 332-4436
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
November 11, 1996
To the Stockholders:
A Special Meeting of Stockholders of the Comstock Partners Funds, Inc.
(the "Company") will be held at 10 Exchange Place, Suite 2010, Jersey City, New
Jersey 07302, on Friday, December 20, 1996, at 11:00 a.m., for the purpose of
considering and voting upon:
1. The approval of a new Investment Advisory Agreement between the
Company, on behalf of Comstock Partners Strategy Fund (the "Strategy Fund"),
and Comstock Partners, Inc. (the "Investment Adviser"), containing the same
terms and conditions as the existing Investment Advisory Agreement between the
Company, on behalf of the Strategy Fund, and the Investment Adviser. Proposal 1
shall be voted upon only by stockholders of the Strategy Fund.
2. The approval of a new Investment Advisory Agreement between the
Company, on behalf of Comstock Partners Capital Value Fund (the "Capital Value
Fund"), and the Investment Adviser, containing the same terms and conditions as
the existing Investment Advisory Agreement between the Company, on behalf of
the Capital Value Fund, and the Investment Adviser. Proposal 2 shall be voted
upon only by stockholders of the Capital Value Fund.
3. The approval of a new Sub-Investment Advisory Agreement between the
Company, on behalf of the Strategy Fund, and The Dreyfus Corporation
("Dreyfus"), containing the same terms and conditions as the existing Sub-
Investment Advisory Agreement between the Company, on behalf of the Strategy
Fund, and Dreyfus. Proposal 3 shall be voted upon only by stockholders of the
Strategy Fund.
4. The election of directors. Proposal 4 shall be voted upon by all of
the Company's stockholders.
5. The ratification of the selection of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending April 30, 1997.
Proposal 5 shall be voted upon by all of the Company's stockholders.
6. To transact any other business that may properly come before the
meeting.
The close of business on November 8, 1996 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting.
By Order of the Board of Directors,
W. Troy Hottenstein
Secretary
<PAGE>
WE NEED YOUR PROXY VOTE IMMEDIATELY.
YOU MAY THINK YOUR VOTE IS NOT IMPORTANT, BUT IT IS VITAL. THE MEETING OF
STOCKHOLDERS OF THE COMPANY WILL BE UNABLE TO CONDUCT ANY BUSINESS IF IT DOES
NOT ACHIEVE A QUORUM. THE COMPANY, AT STOCKHOLDERS' EXPENSE, MAY CONTINUE TO
SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM, OR OBTAIN THE REQUIRED
VOTE, AS THE CASE MAY BE. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE
COMPANY TO HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD
IMMEDIATELY. YOU AND ALL OTHER STOCKHOLDERS WILL BENEFIT FROM YOUR COOPERATION.
Instructions for Signing Proxy Cards
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense involved in validating your vote if you
fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Each stockholder named should sign.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. . . . . . . . . . . . . . . . . . . . John Doe, Treasurer
(2) ABC Corp. . . . . . . . . . . . . . . . . . . . John Doe
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan . . . . . . . . . John Doe, Trustee
Trust Accounts
(1) ABC Trust . . . . . . . . . . . . . . . . . . . Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee . . . . . . . . . . . . . Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust. . . . . . . . . . . . . . John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith . . . . . . . . . . . . . . . . . John B. Smith,
Jr., Executor
<PAGE>
COMSTOCK PARTNERS FUNDS, INC.
10 Exchange Place, Suite 2010,
Jersey City, New Jersey 07302-3913
(201) 332-4436
PROXY STATEMENT
This proxy statement is furnished in connection with a solicitation by the
Board of Directors of the Comstock Partners Funds, Inc. (the "Company") of
proxies to be used at the Special Meeting of Stockholders of the Company (the
"Meeting") to be held at 10 Exchange Place, Suite 2010, Jersey City, New Jersey
07302, on December 20, 1996, at 11:00 a.m. (and at any adjournment or
adjournments thereof) for the purposes set forth in the accompanying Notice of
Special Meeting of Stockholders. This proxy statement and the accompanying form
of proxy are first being mailed to stockholders on or about November 11, 1996.
Stockholders who execute proxies retain the right to revoke them at any time
prior to the voting thereof by: (i) written instructions by the Secretary of
the Company at any time before they are voted; (ii) attendance at the meeting
and voting in person; or (iii) signing and returning a new proxy card (if
returned and received in time to be voted). Unrevoked proxies will be voted in
accordance with the specifications thereon and, unless specified to the
contrary, will be voted FOR Proposals 1, 2, 3, 4 and 5. The close of business
on November 8, 1996 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting. Each stockholder
is entitled to one vote for each full share and an appropriate fraction of a
vote for each fractional share held.
As of the record date, the total number of shares issued and outstanding
for the Company was 56,727,426 shares, consisting of 28,711,128 shares of the
Strategy Fund and 28,016,298 shares of the Capital Value Fund.
In the event that a quorum is not present at the Meeting, the stockholders
present in person or by proxy at the meeting, by majority vote, may adjourn the
meeting from time to time until a quorum shall attend. Under the Company's
Articles of Incorporation, the presence in person or by proxy of the holders of
one-third of the shares of stock of the Company entitled to vote constitutes a
quorum at any meeting of the stockholders, except with respect to any matter
which requires the approval of one or more classes of stock, in which case the
presence in person or by proxy of the holders of one-third of the shares of
stock of all classes entitled to vote on the matter shall constitute a quorum.
A copy of the most recent annual report of the Strategy Fund may be
obtained without charge by writing to Comstock Partners Funds, Inc., 10
Exchange Place, Suite 2010, Jersey City, New Jersey 07302-3913, or calling
(201) 332-4436. A copy of the most recent annual report of The Dreyfus Capital
Value Fund, Inc., the predecessor of the Capital Value Fund, may be obtained
without charge by writing to The Dreyfus Corporation, 144 Glen Curtiss
Boulevard, Uniondale, New York 11556-0144, or by calling 1-800-645-6561.
<PAGE>
PROPOSALS 1 AND 2:
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
FOR THE STRATEGY FUND
(PROPOSAL 1)
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
FOR THE CAPITAL VALUE FUND
(PROPOSAL 2)
Background
The Investment Adviser acts as investment adviser to the Strategy Fund and
the Capital Value Fund pursuant to separate investment advisory agreements with
the Company. Proposals 1 and 2 are being submitted to stockholders as a result
of the death of Stanley D. Salvigsen, the former Chairman of the Board of the
Company and the Investment Adviser, on August 30, 1996. Mr. Salvigsen had owned
in excess of 25% of the outstanding voting shares of the Investment Adviser.
Under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), the transfer of in excess of 25% of the outstanding voting shares of an
investment adviser may be deemed to be a change in control of the investment
adviser, which is deemed to constitute an "assignment" of an investment
advisory agreement with that investment adviser. The Investment Company Act
provides that investment advisory agreements terminate automatically upon their
"assignment."
Because Mr. Salvigsen's death may be deemed to have resulted in an
"assignment" and termination of the Investment Adviser's then-existing
investment advisory agreements with the Company on behalf of each Fund
(together, the "Existing Investment Advisory Agreements"), on September 11,
1996 the Board of Directors of the Company approved new investment advisory
agreements with the Company on behalf of each Fund (together, the "New
Investment Advisory Agreements"), dated as of the date of Mr. Salvigsen's
death. Except for different effective and termination dates, the terms of each
New Investment Advisory Agreement are identical in all respects to the terms of
the Existing Investment Advisory Agreement which it replaces.
In their consideration of the New Investment Advisory Agreements, the
Directors received and reviewed information from the Investment Adviser. The
most significant factors in the deliberations of the Directors were the
capabilities and resources of the Investment Adviser following the death of Mr.
Salvigsen, and the nature, quality and scope of services expected to be
rendered by the Investment Adviser; the intention of the Investment Adviser to
continue to manage the Funds utilizing the same investment philosophy, policies
and strategies as have previously been employed; and the investment advisory
fees and other terms of the Existing and New Investment Advisory Agreements.
The Directors also considered the investment advisory fees and expense ratios
of other investment companies and the historical performance of the Funds, and
inquired as to the economies of scale realized by the Investment Adviser, the
profitability to the Investment Adviser of its relationship with the Funds and
possible alternatives to the Funds to the arrangements with the Investment
Adviser.
The rules under the Investment Company Act provide that the New Investment
Advisory Agreements may continue in effect without stockholder approval for a
period of up to 120 days from the date thereof. If approved by stockholders,
each New Investment Advisory Agreement will continue in effect for a period of
one year from the date thereof, and thereafter shall continue for successive
annual periods, subject to the provisions described below. In the event the
<PAGE>
stockholders of a Fund do not approve the New Investment Advisory Agreement
with respect to that Fund, the Board of Directors of the Company will consider
the appropriate course of action.
The Proposals
Under Proposal 1, stockholders of the Strategy Fund are being asked to
approve the New Investment Advisory Agreement between the Company, on behalf of
the Strategy Fund, and the Investment Adviser. Under Proposal 2, stockholders
of the Capital Value Fund are being asked to approve the New Investment
Advisory Agreement between the Company, on behalf of the Capital Value Fund,
and the Investment Adviser.
The shares of the Investment Adviser which had been owned by Stanley D.
Salvigsen were held by the Estate of Stanley D. Salvigsen until November 11,
1996. Under an agreement that had been entered into by stockholders of the
Investment Adviser, the Investment Adviser repurchased these shares on November
11, 1996, at which time such shares were cancelled. In the event that such
repurchase is deemed to be a further "assignment" of the New Investment
Advisory Agreements, stockholder approval of Proposals 1 and 2, as the case may
be, shall also be deemed to constitute approval of such further assignment of
the relevant New Investment Advisory Agreement in connection with such
repurchase.
THE DIRECTORS, INCLUDING THE "NON-INTERESTED DIRECTORS", UNANIMOUSLY
RECOMMEND THAT THE STOCKHOLDERS OF EACH FUND VOTE "FOR" APPROVAL OF THE NEW
INVESTMENT ADVISORY AGREEMENT RELATING TO THAT FUND.
Required Vote
Approval of the New Investment Advisory Agreement between the Company, on
behalf of the Strategy Fund, and the Investment Adviser requires the
affirmative vote of a majority of the outstanding shares of the Strategy Fund.
Approval of the New Investment Advisory Agreement between the Company, on
behalf of the Capital Value Fund, and the Investment Adviser requires the
affirmative vote of a majority of the outstanding shares of the Capital Value
Fund. As defined in the Investment Company Act, "majority of the outstanding
shares" of a Fund means the vote of (i) 67% or more of the Fund's outstanding
shares present at a meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50%
of the Fund's outstanding shares, whichever is less. Abstentions and broker
non-votes will have the same effect as a vote against the Proposals.
Description of the Existing Investment Advisory
Agreements and the New Investment Advisory Agreements
As indicated above, except for different effective and termination dates,
the terms of each New Investment Advisory Agreement are identical in all
respects to the terms of the Existing Investment Advisory Agreement which it
replaces. The Existing Investment Advisory Agreement between the Company, on
behalf of the Strategy Fund, and the Investment Adviser was dated as of August
1, 1991, amended as of February 8, 1996. That agreement was last approved by
the stockholders of the Strategy Fund on June 14, 1991, when the agreement was
first entered into. The Existing Investment Advisory Agreement between the
Company, on behalf of the Capital Value Fund, and the Investment Adviser was
dated as of July 25, 1996. The agreement was approved by the initial sole
stockholder of the Capital Value Fund on July 24, 1996, when the agreement was
first entered into. The New Investment Advisory Agreements were entered into as
of August 30, 1996.
Under the terms of New Investment Advisory Agreement between the Company,
on behalf of the Strategy Fund, and the Investment Adviser, the Investment
Adviser manages the Strategy Fund's assets in accordance with the Strategy
<PAGE>
Fund's investment objective and policies and in accordance with relevant
statutory requirements. Under the agreement, the Investment Adviser is
responsible for making all investment decisions for the Strategy Fund as well
as placing purchase and sale orders on behalf of the Strategy Fund. The
Investment Adviser furnishes office space, equipment and personnel to the
Strategy Fund in connection with the performance of its investment management
responsibilities. For its services, the Investment Adviser receives from the
Company, on behalf of the Strategy Fund, a monthly fee at an annual rate of
.60% of the Strategy Fund's average daily net assets.
Under the terms of New Investment Advisory Agreement between the Company,
on behalf of the Capital Value Fund, and the Investment Adviser, the Investment
Adviser manages the Capital Value Fund's assets in accordance with the Capital
Value Fund's investment objective and policies and in accordance with relevant
statutory requirements. Under the agreement, the Investment Adviser is
responsible for making all investment decisions for the Capital Value Fund as
well as placing purchase and sale orders on behalf of the Capital Value Fund.
The Investment Adviser furnishes office space, equipment and personnel to the
Capital Value Fund in connection with the performance of its investment
management responsibilities. For its services, the Investment Adviser is
entitled to receive an annual fee from the Company, on behalf of the Capital
Value Fund, computed daily and paid monthly at the following annual rate: .40
of 1% of the first $300 million of the Capital Value Fund's average daily net
assets, .45 of 1% of the Capital Value Fund's average daily net assets between
$300 million and $750 million, .50 of 1% of the Capital Value Fund's average
daily net assets between $750 million and $1 billion and .55 of 1% of the
Capital Value Fund's average daily net assets in excess of $1 billion.
If approved by stockholders of the relevant Fund, each New Investment
Advisory Agreement will continue in effect for a period of one year from the
date thereof, and thereafter shall continue for successive annual periods,
provided that each continuation is specifically approved at least annually (i)
by the vote of a majority of the relevant Fund's outstanding voting securities
(as defined in the Investment Company Act) or by the Company's Board of
Directors, and (ii) by the vote, cast in person at a meeting called for such
purpose, of a majority of the Company's Directors who are not parties to the
agreement or "interested persons" (as defined in the Investment Company Act) of
any such party. Each New Investment Advisory Agreement may be terminated
without penalty, at any time, by a vote of the Board of Directors or by vote of
the outstanding voting securities of the relevant Fund, or by the Investment
Adviser on 60 days' written notice. Each New Investment Advisory Agreement will
also terminate automatically in the event of its assignment (as defined in the
Investment Company Act).
Each New Investment Advisory Agreement, like each Existing Investment
Advisory Agreement, provides that, in the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of the Investment Adviser in the
performance of its duties, or (ii) reckless disregard of its obligations and
duties under that agreement, the Investment Adviser shall not be liable to the
Company (including the Funds), or to any shareholder of the Company, for any
error of judgment or mistake of law or for any loss suffered by the Company
(including the Funds) in connection with the performance of its duties under
the agreements.
Under the Existing Investment Advisory Agreement between the Company, on
behalf of the Strategy Fund, and the Investment Adviser, for the Company's
fiscal year ended April 30, 1996, the investment advisory fees paid by the
Strategy Fund to the Investment Adviser amounted to $1,977,868. The Capital
Value Fund did not commence operations until July 25, 1996.
The New Investment Advisory Agreements relating to the Strategy Fund and
the Capital Value Fund are attached to this Proxy Statement as Exhibit A and
<PAGE>
Exhibit B, respectively, and the description of the New Investment Advisory
Agreements set forth in this Proxy Statement is qualified in its entirety by
reference to Exhibit A and Exhibit B.
Additional Information Regarding Comstock Partners, Inc.
The Investment Adviser was founded in October 1986. The Investment Adviser
has served as investment adviser to Comstock Partners Strategy Fund since that
Fund's inception in 1988 and to Comstock Partners Capital Value Fund since that
Fund's inception in 1996. The Investment Adviser served as sub-investment
adviser to the Capital Value Fund's predecessor, the Dreyfus Capital Value
Fund, from April 30, 1987 until July 25, 1996. The Investment Adviser has also
served as sub-investment adviser to the Dreyfus Variable Investment
Fund-Managed Assets Portfolio since May 21, 1990. In addition, the Investment
Adviser also provides investment advisory services through discretionary
accounts having aggregate assets as of July 30, 1996 of approximately $44
million. It is the publisher of the Comstock Investment Strategy Review and the
Comstock Investment Strategy Commentary, investment strategy publications
furnished to subscribers. The principal address of the Investment Adviser is 10
Exchange Place, Suite 2010, Jersey City, New Jersey 07302-3913.
Each Fund's investment portfolio is managed by the Investment Committee of
the Investment Adviser, which consists of Charles L. Minter, W. Troy
Hottenstein and Martin Weiner. Mr. Minter was one of the founders of the
Investment Adviser together with Stanley Salvigsen. Mr. Minter joined Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") in 1966 and in
1970 became a member of its New York Institutional Sales office. From 1976 to
1986 Mr. Minter was Vice President - Institutional Sales at Merrill Lynch. In
that capacity he serviced institutional accounts and supervised portfolios that
included commodity and financial futures, options, foreign securities and zero
coupon bonds. Mr. Minter has been with the Investment Adviser since its
inception in 1988, and is presently the Chairman of the Board and President of
the Investment Adviser. Mr. Hottenstein joined the Investment Adviser in 1991
as an investment analyst. He graduated from Princeton University with a degree
in economics. He has worked closely with Mr. Minter and Mr. Salvigsen in
implementation of investment policy. He is a Chartered Financial Analyst and is
the Secretary and Chief Operating Officer of the Investment Adviser. Mr. Weiner
joined the Investment Adviser in 1995. Mr. Weiner began his career as a
financial analyst at the Securities and Exchange Commission in 1959. From 1966
to 1968 he served as Equity Analyst and Division Chief at the Value Line
Investment Survey. From 1969 to 1974 he was an Equity Analyst and ultimately a
Vice President at Standard & Poor's Intercapital. In 1974, Mr. Weiner joined
the Grumman Corporation where he served as Senior Equity Portfolio Manager for
the employee benefit plan from 1978 to 1994. Mr. Weiner has been a Chartered
Financial Analyst since 1969. Mr. Minter owns all of the outstanding voting
securities of the Investment Adviser. The address of Messrs. Minter,
Hottenstein and Weiner is 10 Exchange Place, Suite 2010, Jersey City, New
Jersey 07302-3913.
The Investment Adviser serves as the sub-investment adviser to the
following registered investment company with similar investment objectives as
the Funds. The approximate net assets of this fund and the annual advisory fee
payable by it are as follows:
<PAGE>
<TABLE> Annual Fee as a
<CAPTION>
Percentage of
Net Assets as of Average
Fund October 15, 1996 Daily Net Assets
<S> <C> <C>
Dreyfus Variable Investment Fund - $22,888,226.58 .375 of 1 %
Managed Assets Portfolio
</TABLE>
PROPOSAL 3: APPROVAL OF A NEW SUB-INVESTMENT ADVISORY AGREEMENT
FOR THE STRATEGY FUND
Background
Dreyfus acts as sub-investment adviser to the Strategy Fund pursuant to a
sub-investment advisory agreement between the Investment Adviser and Dreyfus.
Proposal 3 is being submitted to stockholders of the Strategy Fund because the
possible change of control of the Investment Adviser as described under
Proposals 1 and 2 above may also be deemed to have resulted in an "assignment"
and termination of the then-existing sub-investment advisory agreement between
the Investment Adviser and Dreyfus with respect to the Strategy Fund. No
similar termination of the Sub-Investment Advisory and Administration Agreement
relating to the Capital Value Fund may be deemed to have occurred because the
Investment Adviser is not a party to that agreement.
Because an "assignment" and termination of the then-existing sub-
investment advisory agreement between the Investment Adviser and Dreyfus with
respect to the Strategy Fund (the "Existing Sub-Investment Advisory Agreement")
may be deemed to have occurred as described above, on September 11, 1996 the
Board of Directors of the Company approved a new sub-investment advisory
agreement between the Investment Adviser and Dreyfus with respect to the
Strategy Fund (the "New Sub-Investment Advisory Agreement") dated as of August
30, 1996. Except for different effective and termination dates, the terms of
the New Sub-Investment Advisory Agreement are identical in all respects to the
terms of the Existing Sub-Investment Advisory Agreement which it replaces.
In their consideration of the New Sub-Investment Advisory Agreement, the
Directors received and reviewed information from Dreyfus. The most significant
factors in the deliberations of the Directors were the capabilities and
resources of Dreyfus; the nature, quality and scope of services provided by
Dreyfus; the sub-investment advisory fees and other terms of the Existing and
New Investment Sub-Advisory Agreements; the investment advisory fees and
expense ratios of other investment companies; the historical performance of the
Strategy Fund; economies of scale realized by Dreyfus; and possible
alternatives to the Strategy Fund to the arrangements with Dreyfus.
The rules under the Investment Company Act provide that the New Sub-
Investment Advisory Agreement may continue in effect without stockholder
approval for a period of up to 120 days from the date thereof. If approved by
stockholders of the Strategy Fund, the New Sub-Investment Advisory Agreement
will continue in effect for a period of one year from the date thereof, and
thereafter shall continue for successive annual periods, subject to the
provisions described below. In the event the stockholders of the Strategy Fund
do not approve the New Sub-Investment Advisory Agreement, the Board of
Directors of the Company will consider the appropriate course of action.
The Proposal
Under Proposal 3, stockholders of the Strategy Fund are being asked to
approve the New Sub-Investment Advisory Agreement between the Investment
Adviser and Dreyfus.
The shares of the Investment Adviser which had been owned by Stanley D.
Salvigsen were held by the Estate of Stanley D. Salvigsen until November 11,
1996. Under an agreement that had been entered into by stockholders of the
Investment Adviser, the Investment Adviser repurchased these shares on November
<PAGE>
11, 1996, at which time such shares were cancelled. In the event that such
repurchase is deemed to be a further "assignment" of the New Sub-Investment
Advisory Agreement, stockholder approval of Proposal 3 shall also be deemed to
constitute approval of such further assignment of the New Sub-Investment
Advisory Agreement in connection with such repurchase.
THE DIRECTORS, INCLUDING THE "NON-INTERESTED DIRECTORS", UNANIMOUSLY
RECOMMEND THAT THE STOCKHOLDERS OF THE STRATEGY FUND VOTE "FOR" APPROVAL OF THE
NEW SUB-INVESTMENT ADVISORY AGREEMENT.
Required Vote
Approval of the New Sub-Investment Advisory Agreement requires the
affirmative vote of a "majority of the outstanding shares" (as defined above)
of the Strategy Fund. Abstentions and broker non-votes will have the same
effect as a vote against the Proposal.
Description of the Existing Sub-Investment Advisory
Agreement and the New Sub-Investment Advisory Agreement
As indicated above, except for different effective and termination dates,
the terms of the New Sub-Investment Advisory Agreement are identical in all
respects to the terms of the Existing Sub-Investment Advisory Agreement which
it replaces. The Existing Sub-Investment Advisory Agreement was dated August
24, 1994, amended as of February 8, 1996. That agreement was last approved by
the stockholders of the Strategy Fund on August 1, 1994, when the agreement was
first entered into. The New Sub-Investment Advisory Agreement was entered into
as of August 30, 1996.
Under the terms of the New Sub-Investment Advisory Agreement, the
Sub-Investment Adviser manages the short-term cash and cash equivalent
investments of the Strategy Fund and provides investment research and other
advice regarding the Strategy Fund's portfolio. The Sub-Investment Adviser also
provides general advice regarding economic factors and trends, including
statistical and other factual information. For such services, at no cost to the
Strategy Fund, the Investment Adviser pays the Sub-Investment Adviser a monthly
fee at an annual rate of .15% of the Strategy Fund's average daily net assets.
If approved by stockholders of the Strategy Fund, the New Sub-Investment
Advisory Agreement will continue in effect for a period of one year from the
date thereof, and thereafter shall continue for successive annual periods,
provided that each continuation is specifically approved at least annually (i)
by the vote of a majority of the Strategy Fund's outstanding voting securities
(as defined in the Investment Company Act) or by the Company's Board of
Directors, and (ii) by the vote, cast in person at a meeting called for such
purpose, of a majority of the Company's Directors who are not parties to the
agreement or "interested persons" (as defined in the Investment Company Act) of
any such party. The New Sub-Investment Advisory Agreement may be terminated
without penalty on not less than 60 days' notice by the Investment Adviser or
Dreyfus, by a vote of the Board of Directors or by vote of the outstanding
voting securities of the Strategy Fund. The New Sub-Investment Advisory
Agreement will also terminate automatically in the event of its assignment (as
defined in the Investment Company Act).
The New Sub-Investment Advisory Agreement, like the Existing Sub-
Investment Agreement, provides that, in the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of Dreyfus in the performance of its
duties, or (ii) reckless disregard by it of its obligations and duties under
the New Sub-Investment Advisory Agreements, Dreyfus shall not be liable to the
Investment Adviser or to the Company (including the Strategy Fund), or to any
Shareholder of the Company for any error of judgement or mistake of law or for
any loss suffered by the Investment Adviser or the Company (including the
<PAGE>
Strategy Fund) in connection with the performance of its duties under the
agreement.
Under the Existing Sub-Investment Advisory Agreement, Dreyfus is obligated
to reimburse the Investment Adviser in proportion to the respective fees
received by them to the extent that any expense limitations applicable to the
Strategy Fund imposed by state securities laws are exceeded.
For the Company's fiscal year ended April 30, 1996, Dreyfus received fees
from the Investment Adviser with respect to the Strategy Fund in the amount of
$494,467. For further information with respect to payments to Dreyfus see
"Additional Information - Service and Distributions Plans" below.
The New Sub-Investment Advisory Agreement is attached to this Proxy
Statement as Exhibit C and the description of the New Sub-Investment Advisory
Agreement set forth in this Proxy Statement is qualified in its entirety by
reference to Exhibit C.
Additional Information Regarding The Dreyfus Corporation, the Sub-Investment
Adviser
Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). Dreyfus was
formed in 1947 and, as of October 31, 1996, managed or administered
approximately $82 billion in assets for approximately 1.7 million investor
accounts nationwide. The principal address of Dreyfus is 200 Park Avenue, New
York, New York 10166.
Listed below are the names and addresses and principal occupations of the
principal executive officer and each of the directors of Dreyfus.
Name, Position and Address Principal Occupation
Christopher M. Condron, President and Chief Executive Officer of Dreyfus
Director and Chief
Executive Officer
200 Park Avenue
New York, New York 10166
Mandell L. Berman, Director Real Estate Consultant
200 Park Avenue
New York, New York 10166
Frank V. Cahouet, Director Chairman, President and Chief Executive
One Mellon Bank Center Officer of Mellon
Pittsburgh, Pennsylvania 15258
Stephen E. Canter, Director Vice Chairman and Chief Investment Officer
200 Park Avenue of Dreyfus
New York, New York 10166
Alvin E. Friedman, Director Retired
200 Park Avenue
New York, New York 10166
Lawrence M. Greene, Director Retired
200 Park Avenue
New York, New York 10166
Lawrence S. Kash, Director Vice Chairman - Distribution of Dreyfus
200 Park Avenue
New York, New York 10166
<PAGE>
Julian M. Smerling, Director Retired
200 Park Avenue
New York, New York 10166
W. Keith Smith, Chairman Vice Chairman of Mellon
and Director
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Philip L. Toia, Director Vice Chairman - Operations and Administration of
200 Park Avenue Dreyfus
New York, New York 10166
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., AFCO Credit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its subsidiaries (including
Dreyfus), Mellon managed approximately $220 billion in assets as of June 30,
1996, including approximately $83 billion in proprietary mutual fund assets. As
of June 30, 1996, various subsidiaries of Mellon provided non-investment
services, such as custodial or administration services, for more than $876
billion in assets including approximately $57 billion in mutual fund assets.
The principal address of Mellon is One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258.
Dreyfus serves as the investment adviser or subadviser to the following
registered investment companies with similar investment objectives as the
Strategy Fund. The approximate net assets of each such fund (or portfolio) and
the annual advisory fee payable by each are as follows:
<TABLE>
<CAPTION>
Annual Fee as a
Net Assets as of Percentage of
Fund October 15, 1996 Average Daily Net
Assets
<S> <C> <C>
Dreyfus Asset Allocation Fund -
Total Return Portfolio $58.69 million .75 of 1%
Dreyfus Life Time Portfolios
Income Portfolio $22.022 million .60 of 1%
Growth & Income Portfolio $127.243 million .75 of 1%
Dreyfus Variable Investment Fund,
Managed Assets Portfolio $22.888 million .375 of 1%
Premier Balanced Fund $143.742 million 1%
Dreyfus Balanced Fund, Inc. $271.486 million .60 of 1%
</TABLE>
PROPOSAL 4: ELECTION OF DIRECTORS
At the meeting, five Directors are to be considered for election to the
Company's Board of Directors, Messrs. Minter, Adelberg, Kelley, Karlen and
Smith. Messrs. Minter and Smith have both served on the Company's Board of
Directors since 1988. Mr. Kelley has served since 1989. Mr. Adelberg has served
since 1995 and Mr. Karlen since 1996.
<PAGE>
Because the Company does not hold regular annual stockholder meetings,
each nominee, if elected, will hold office until his successor is elected and
qualified. As a Maryland corporation registered under the Investment Company
Act, the Company is not required to hold an annual meeting in any year in which
the Act does not require the election of Directors.
Information regarding the nominees for election as Directors is provided
below. The persons named in the accompanying form of proxy intend, in the
absence of contrary instructions, to vote all proxies for the election of such
nominees. If you give no voting instructions, your Shares will be voted for all
nominees named herein for Director and in favor of any remaining proposals
described in this proxy statement. Should any of the nominees become unable or
unwilling to accept nomination or election, the persons named in the proxy will
exercise their voting power to vote for such person or persons as the
management of the Fund may recommend. All of the nominees have consented to
being named in this proxy statement and to serve if elected. The Company knows
of no reason why any nominee would be unable or unwilling to serve if elected.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY VOTE "FOR" THE ELECTION OF ALL OF THE NOMINEES.
Required Vote
The favorable vote of a plurality of the votes cast at a meeting of
stockholders, at which a quorum is present, is required for the election of
Directors. For purposes of the election of directors, abstentions and broker
non-votes will not be considered votes cast, and will not affect the plurality
vote required for directors. If the nominees are not approved by the
stockholders of the Company, the Board will consider alternative nominations.
Information Regarding Nominees
The following information is provided for each nominee in the following
table. It includes his name, position with the Fund, age, length of
Directorship, amount of Shares of the Fund beneficially owned, principal
occupation(s) or employment during the past five years, and directorships with
other companies which file reports periodically with the Securities and
Exchange Commission.
Shares
Beneficially Principal
Owned, Directly or Occupation(s)
Name, Address, Position(s) Director Indirectly as at During Past 5
and Age with Company Since October 18, 1996 Years
*Charles L. Minter Director, 1988 128,085 Class A Director and
10 Exchange Place Chairman of Capital Value Fund Chairman of the
Suite 2010 the Board 1 Class B Capital Board of
Jersey City, NJ and Value Fund Comstock
07302-3913 President 1 Class C Capital Partners, Inc.
55 years old Value Fund President of
1 Class R Capital Comstock
Value Fund Partners, Inc.
18,192 Class A since 1994 and
Strategy Fund Vice Chairman
229 Class C of the Board of
Strategy Fund Comstock
54,262 Class O Partners, Inc.
Strategy Fund** from 1987 to
1996.
<PAGE>
M. Bruce Adelberg Director, 1995 11,842 Class A Consultant, MBA
MBA Research Group Member of Capital Value Fund Research Group
33 Channel Lane Audit and Director of
Salem, SC 29676 Committee Pallet
59 years old Management
Systems, Inc.
(pallet
manufacturing
and services)
E.W. Kelley Director, 1989 10,000 Class O Managing General
Kelley & Partners, Member of Strategy Fund Partner, Kelley
Ltd. Audit & Partners, Ltd.
36 South Committee (consumer
Pennsylvania products and
Street services).
Suite 550 Chairman,
Indianapolis, IN Consolidated
46204 Products, Inc.
79 years old (food services).
Sven B. Karlen, Director, 1996 -- General Partner
Jr. Member of of Grandview
Grandview Audit Partners, L.P.
Partners, L.P. Committee (investments)
One Financial Director of
Center Harbourton
Suite 1600 Mortgage
Boston, MA 02111 Securities
53 years old (mortgage bank)
Robert M. Smith Director, 1988 1,000 Class O President and
Smith Advisers, Member of Strategy Fund Chairman, Smith
Ltd. Audit Advisers, Ltd.
812 Coachway Committee (Registered
Annapolis, MD Investment
21401 Advisers). From
66 years old January 1983 -
November 1995,
President and
Director of
Ansbacher
(Dublin) Asset
Management Ltd.
* Interested person as defined in the 1940 Act, because of affiliations with
Comstock Partners, Inc., the Investment Adviser.
** Includes 1 share of Class A Capital Value Fund, 1 share of Class B Capital
Value Fund, 1 share of Class C Capital Value Fund, 1 share of Class R
Capital Value Fund, 229 shares of Class C Strategy Fund and 21,843 shares
of Class O Strategy Fund owned by Comstock Partners, Inc., as to which
beneficial ownership is disclaimed.
For so long as the Class A, Class B or Class C Service and Distribution
Plans remain in effect, the Directors of the Company who are not "interested
persons" of the Company, as defined in the 1940 Act, will be selected and
nominated by the Directors who are not "interested persons" of the Company.
<PAGE>
Except as discussed herein there have been no purchases or sales of the
Investment Adviser's or Dreyfus' securities by any Director since the beginning
of the Company's current fiscal year which ends April 30, 1997. Other than Mr.
Minter, no nominee has had during the past five years any material interest,
direct or indirect, in the Investment Adviser or Dreyfus.
Director Compensation
The Company currently pays each non-interested director a fee of $20,000
per year (consisting of $10,000 per portfolio of the Company), and reimburses
each such director for expenses of attendance.
No Director of the Company serves as a director of any other investment
company advised or administered by The Dreyfus Corporation, the Funds' sub-
investment adviser. None of the Company's officers, nor any affiliated persons
of the Company, received aggregate compensation in excess of $60,000 from the
Company during the fiscal year ended April 30, 1996. For the fiscal year ended
April 30, 1996, the aggregate amount of fees and expenses received by each
Director from the Company were as follows:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Estimated From
Aggregate Accrued as Annual Company
Compensation Part Benefits Paid to
From of Company Upon Board
Name of Board Member Company* Expenses Retirement Member*
<S> <C> <C> <C> <C>
Stanley D. Salvigsen 0 0 0 0
Charles L. Minter 0 0 0 0
M. Bruce Adelberg $ 8,750 0 0 $ 8,750
Robert M. Goodyear, Jr. $ 2,500 0 0 $ 2,500
Sven B. Karlen, Jr. $ 500 0 0 $ 500
E. W. Kelley $17,500 0 0 $17,500
Bruce C. Lueck $ 2,500 0 0 $ 2,500
Robert M. Smith $17,500 0 0 $17,500
<FN>
_____________
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $2,313.99 for the Company.
The officers and directors of the Company own less than 1% of each Class
of the Funds.
</FN>
</TABLE>
Executive Officers
Information about the Company's principal executive officers, other than
Mr. Minter, including their names, ages, positions with the Company, length of
such positions and principal occupation or employment during the past five
years, is set forth below.
<PAGE>
Position(s) with Principal Occupation(s)
Name and Age Company During Past 5 Years
*W. Troy Hottenstein, Secretary Chief Operating Officer and
CFA Secretary of Comstock
10 Exchange Place Partners, Inc. since 1995.
Suite 2010 Research Analyst at Comstock
Jersey City, NJ 07302- Partners, Inc. since 1991.
3913
27 years old
*Robert C. Ringstad Vice President, Vice President Operations -
10 Exchange Place Treasurer, Chief Regent Investor Services,
Suite 2010 Financial Officer 1990 - 1994.
Jersey City, NJ 07302- and Assistant Vice President - Comstock
3913 Secretary Partners, Inc. since 1995.
66 years old
_________________
* Interested person as defined in the 1940 Act, because of affiliations with
Comstock Partners, Inc., the Investment Adviser.
Board Meetings and Committees
The Board of Directors has an Audit Committee composed entirely of
Independent Directors. Currently, Messrs. Adelberg, Kelley, Karlen and Smith
are members of the Audit Committee. The Audit Committee reviews with the Fund's
independent auditors, among other things, the scope of the annual audit, the
internal control structure of the Company, and the type of services to be
rendered by the Company's independent auditors.
During the Company's fiscal year ended April 30, 1996, there were six
meetings of the Board of Directors and two meetings of the Audit Committee.
Each Director attended 75% or more of the aggregate number of Board meetings
and applicable committee meetings held during the period for which he was a
Director.
PROPOSAL 5: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
A majority of the Company's Independent Directors have selected Ernst &
Young LLP as the independent auditors of the Company for the fiscal year ending
April 30, 1997. The appointment of independent auditors is approved annually by
the Board of Directors. Although the Company is not required to hold annual
meetings to consider the selection of independent auditors, the stockholders
are being asked to consider the ratification of the selection of independent
auditors because the Meeting is being held. Ernst & Young LLP has informed the
Company that neither the firm nor any of its partners has any material direct
or indirect financial interest in the Company. A representative of Ernst &
Young LLP will be available to answer questions concerning the audit of the
Company's financial statements by conference telephone during the Meeting.
Prior to January 1996, the Company's independent auditors were Deloitte &
Touche LLP. In January 1996, in connection with the anticipated reorganization
of The Dreyfus Capital Value Fund, Inc. as the Comstock Partners Capital Value
Fund, the Audit Committee of the Company's Board of Directors made the decision
to retain Ernst & Young LLP as the Company's independent auditors. Ernst &
Young LLP had previously served as the independent auditors of The Dreyfus
Capital Value Fund, Inc., and it was determined that the Company should retain
a single auditing firm for both of its investment portfolios that had
previously audited one of the two portfolios. At no time in the past two years
has the independent auditors' report on the financial statements of the Company
<PAGE>
contained an adverse opinion or a disclaimer of opinion, nor was it qualified
or modified as to uncertainty, audit scope, or accounting principles.
THE DIRECTORS, INCLUDING ALL OF THE "NON-INTERESTED DIRECTORS",
UNANIMOUSLY RECOMMEND THAT STOCKHOLDERS OF THE COMPANY VOTE "FOR" RATIFICATION
OF THE SELECTION OF INDEPENDENT AUDITORS.
Required Vote
Ratification of the selection of Ernst & Young LLP as independent auditors
of the Company requires the affirmative vote of a majority of the votes cast at
a meeting of stockholders at which a quorum is present. For purposes of this
proposal, abstentions and broker non-votes will not be considered votes cast.
ADDITIONAL INFORMATION
Administrators
Under the terms of the Amended Administration Agreement between Princeton
Administrators, L.P. ("Princeton") and the Strategy Fund, Princeton performs or
arranges for the performance of certain administrative services necessary for
the operation of the Strategy Fund. The principal address of Princeton is 800
Scudders Mill Road, Plainsboro, New Jersey 08536.
Under the terms of the Sub-Investment Advisory and Administration
Agreement relating to the Capital Value Fund, Dreyfus has agreed to perform or
arrange for the performance of certain administrative services necessary for
the operation of the Capital Value Fund. For its services under this agreement,
Dreyfus is entitled to receive an annual fee computed daily and paid monthly by
the Company at the following annual rate: .35 of 1% of the first $300 million
of the Capital Value Fund's average daily net assets, .30 of 1% of the Capital
Value Fund's average daily net assets between $300 million and $750 million,
.25 of 1% of the Capital Value Fund's average daily net assets between $750
million and $1 billion and .20 of 1% of the Capital Value Fund's average daily
net assets in excess of $1 billion.
Distributor
The Company's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Suite 1300, Boston, Massachusetts
02109. The Distributor's ultimate parent is Boston Institutional Group, Inc.
Service and Distribution Plans
Under the various Service and Distribution Plans adopted by the Company,
the Class A, B and C shares of the Funds may bear expenses under these plans
for such services as advertising, marketing, and other services relating to the
shares. Such fees can be up to an aggregate annual rate of .25 of 1% of the
value of the average daily net assets for Class A shares of each fund. For the
Class B and Class C shares such fees can be up to an annual rate of .75 of 1%
of the value of the average daily net assets of Class B or Class C of each
Fund. Dreyfus is eligible to receive payments under these plans.
Beneficial or Record Ownership of the Funds' Securities
As of October 18, 1996, the following entities were known by the Capital
Value Fund to own, of record or beneficially, 5% or more of the Capital Value
Fund's outstanding voting securities: Merrill Lynch, Pierce, Fenner & Smith
Incorporated was the record owner of 20.7457% of the outstanding Class A
shares, 31.6548% of the outstanding Class B shares and 55.4636% of the
outstanding Class C shares, of the Capital Value Fund; and Westcliff Capital
Management and Dreyfus Trust Co. Custodian FBO Vance C. Brown, respectively,
<PAGE>
were the record owners of 66.1214% and 30.4916% of the outstanding Class R
shares.
As of October 18, 1996, the following entities were known by the Strategy
Fund to own, of record or beneficially, 5% or more of the Strategy Fund's
outstanding voting securities: Merrill Lynch, Pierce, Fenner & Smith
Incorporated was the record owner of 53.9926% of the outstanding Class O
shares, 47.2472% of the outstanding Class A shares and 79.0772% of the
outstanding Class C shares, of the Strategy Fund. Southtrust Estate Trust
Company was the record owner of 7.8952% of the outstanding Class C shares.
Portfolio Transactions
The Strategy Fund's portfolio turnover rate for the fiscal year ended
April 30, 1996 was 96%. The Capital Value Fund commenced operations on July 25,
1996.
The Investment Adviser has discretion to select brokers and dealers to
execute portfolio transactions initiated by the Investment Adviser and to
select the markets in which such transactions are to be executed. Each
Investment Advisory Agreement provides, in substance, that in executing
portfolio transactions and selecting brokers or dealers, the primary
responsibility of the Investment Adviser is to seek the best combination of net
price and execution for the relevant Fund. It is expected that securities will
ordinarily be purchased in the primary markets, and that in assessing the best
net price and execution available to a Fund, the Investment Adviser will
consider all factors it deems relevant, including the breadth of the market in
the security, the size of the transaction, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis). Transactions in foreign securities markets may involve the
payment of fixed brokerage commissions, which are generally higher than those
in the United States. The purchase by a Fund of participations may be pursuant
to privately negotiated transactions pursuant to which that Fund may be
required to pay fees to the seller or forego a portion of payments in respect
of the participation.
In selecting brokers to execute particular transactions and in evaluating
the best net price and execution available, the Investment Adviser is
authorized to consider "brokerage and research services" (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934). The
Investment Adviser is also authorized to cause a Fund to pay to a broker who
provides such brokerage and research services a commission for executing a
portfolio transaction which is in excess of the amount of commission another
broker would have charged for effecting that transaction. The Investment
Adviser must determine in good faith, however, that such commission was
reasonable in relation to the value of the brokerage and research services
provided, viewed in terms of that particular transaction or in terms of all the
accounts over which the Investment Adviser exercises investment discretion. The
Investment Adviser may also have arrangements with brokers pursuant to which
such brokers provide research services to the Investment Adviser in exchange
for the placement of transactions with such brokers. Research services
furnished by brokers through whom a Fund effects securities transactions may be
used by the Investment Adviser in servicing all of the accounts of the Fund for
which investment discretion is exercised by the Investment Adviser, and not all
such services may be used by the Investment Adviser in connection with the
Funds. The research services provided may include, among other things, market
quotation and news services, portfolio analytic systems and support, access to
economic databases and analyses of macroeconomic and financial trends.
Each Investment Advisory Agreement requires the Investment Adviser to
provide fair and equitable treatment to the relevant Fund in the selection of
<PAGE>
portfolio investments and the allocation of investment opportunities as between
that Fund and the Investment Adviser's other investment management clients, but
does not obligate the Investment Adviser to give that Fund exclusive or
preferential treatment. It is likely that from time to time the Investment
Adviser may make similar investment decisions for a Fund and its other clients.
In some cases, the simultaneous purchase or sale of the same security by a Fund
and another client of the Investment Adviser could have a detrimental effect on
the price or volume of the security to be purchased or sold, as far as that
Fund is concerned. In other cases, coordination with transactions for other
clients and the ability to participate in volume transactions could benefit the
Fund engaging in the transaction.
Stockholder Proposals
Under the corporate law of Maryland, the Company's state of incorporation,
and the Company's By-Laws (except as required under the 1940 Act), the Company
is not required to hold annual stockholder meetings. Stockholders who wish to
present a proposal for action at the next meeting or suggestions as to nominees
for the Board of Directors should submit the proposal or suggestions to the
Secretary of the Fund, W. Troy Hottenstein, c/o Comstock Partners Funds, Inc.,
10 Exchange Place, Suite 2010, Jersey City, New Jersey 07302-3913, to be
considered for inclusion in the Company's proxy statement for a subsequent
meeting.
Expenses of Proxy Solicitation
The cost of preparing, assembling and mailing material in connection with
this solicitation of proxies will be borne by the Company. The Company, if
necessary, may retain Tritech Services, an indirect affiliate of Princeton, to
assist in the solicitation of proxies for a fee not to exceed $5,000, plus
reimbursement of expenses. In addition to the use of the mails, proxies may
also be solicited personally by regular employees of the Company, Comstock
Partners, Inc., Dreyfus, Princeton, or by telephone or telegraph, or other
electronic means. Brokerage houses, banks and other fiduciaries may be
requested to forward proxy solicitation material to their principals to obtain
authorization for the execution of proxies, and they will be reimbursed by the
Company for reasonable out-of-pocket expenses incurred in this connection.
Other Matters
The Directors do not know of any matters to be presented at the Meeting
other than those set forth in this Proxy Statement. If any other business
should come before the Meeting, the persons named in the accompanying proxy
will vote thereon in accordance with their best judgment.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
November 11, 1996
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
Agreement, dated as of August 30, 1996, by and between COMSTOCK PARTNERS
FUNDS, INC., a Maryland corporation (the "Company"), on behalf of COMSTOCK
PARTNERS STRATEGY FUND (the "Fund"), and COMSTOCK PARTNERS, INC., a Delaware
corporation (the "Adviser").
The Company, on behalf of the Fund, and the Adviser hereby agree as
follows:
1. Investment Description. The Company is an open-end investment company
which, as of the date hereof, consists of two series: the Fund and the Comstock
Partners Capital Value Fund. The Company desires to employ the Fund's capital
by investing and reinvesting in investments of the kind, and in accordance with
the limitations, specified in the Company's Articles of Incorporation, as
amended from time to time (the "Articles of Incorporation"), and in the Fund's
Prospectus and Statement of Additional Information contained in the Company's
Registration Statement on Form N-1A, as in effect from time to time (the
"Registration Statement"), filed by the Company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the Securities Act of 1933, as
amended, and in such manner and to such extent as may from time to time be
approved by the Company's Board of Directors. Copies of the Articles of
Incorporation and the Registration Statement currently in effect have been
submitted to the Adviser. Any amendments to these documents shall be furnished
to the Adviser promptly.
2. Appointment. The Company, on behalf of the Fund, desires to employ
and hereby appoints the Adviser to act as the Fund's investment adviser. The
Adviser accepts the appointment and agrees to furnish the services set forth
below for the compensation set forth below.
3. Duties of the Adviser. Subject to the supervision and direction of
the Company's Board of Directors, the Adviser shall (a) act in strict
conformity with the Articles of Incorporation, the 1940 Act and the Investment
Advisers Act of 1940, as amended, (b) manage the Fund's assets in accordance
with the Fund's investment objective and policies as stated in the Registration
Statement and in accordance with the provisions of the Internal Revenue Code of
1986, as amended, relating to regulated investment companies, (c) make all
investment decisions for the Fund and (d) place purchase and sale orders on
behalf of the Fund. In rendering such services, the Adviser will provide
investment research and supervision of the Fund's investments and conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. In addition, the Adviser will furnish the
Fund with whatever statistical information the Fund may reasonably request with
respect to the securities that the Fund may hold or contemplate purchasing.
4. Expenses Payable by the Fund. Except as otherwise provided in
Paragraphs 3 and 5 hereof, the Company, on behalf of the Fund, will pay all
expenses incurred in connection with its operation, including, among other
things, expenses for legal, accounting and auditing services, taxes, costs of
printing and distributing shareholder reports, proxy materials, prospectuses
and stock certificates, charges of the custodian, the registrar, the transfer
agent, the dividend disbursing agent and the dividend reinvestment plan agent,
Securities and Exchange Commission fees, listing fees, fees and expenses of
non-interested directors, salaries of shareholder relations personnel,
insurance, interest, brokerage costs, litigation and other extraordinary or
non-recurring expenses.
5. Expenses Payable by the Adviser. The Adviser shall, at its expense,
(a) provide the Fund with office space, equipment and personnel reasonably
necessary for the operation of the Fund, (b) employ or associate itself with
<PAGE>
such persons as it believes appropriate to assist it in performing its
obligations under this Agreement and (c) provide the Company with persons
satisfactory to the Company's Board of Directors to serve as directors,
officers and employees of the Company or the Fund, including a Chairman, Vice
Chairman, President, Secretary and Treasurer. The Adviser shall also pay all
expenses which it may incur in performing its duties under Paragraph 3 hereof.
6. Compensation of the Adviser. As compensation for the services
provided by the Adviser pursuant to this Agreement, the Company, on behalf of
the Fund, shall pay to the Adviser on the first business day of each calendar
month a fee for the previous month at an annual rate equal to .60% of the
average daily net assets of the Fund. For the purpose of determining fees
payable to the Adviser, the value of the Fund's net assets shall be computed at
the times and in the manner specified in the Registration Statement. Upon
termination of this Agreement before the end of a month, the fee for such part
of that month shall be pro-rated according to the proportion that such period
bears to the full monthly period and shall be payable within seven (7) days
after the date of termination of this Agreement.
7. Expense Limitations. If the aggregate expenses incurred by, or
allocated to, the Fund in any fiscal year shall exceed the expense limitations
applicable to the Fund imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered from time to time, the
Adviser and Princeton Administrators, Inc., the Fund's Administrator, shall
reimburse the Fund for such excess in proportion to the respective fees payable
by the Fund to the Adviser and the Administrator. The Adviser's and the
Administrator's reimbursement obligation will be limited to the amount of fees
they receive from the Fund during the period in which such expense limitations
were exceeded, unless otherwise required by applicable laws or regulations.
With respect to portions of a fiscal year in which this contract shall be in
effect, the foregoing limitations shall be prorated according to the proportion
which that portion of the fiscal year bears to the full fiscal year. Any
payments required to be made by this Paragraph 7 shall be made once a year
promptly after the end of the Fund's fiscal year.
8. Brokerage. In executing transactions for the Fund and selecting
brokers or dealers, the Adviser will use its best efforts to seek the best
combination of net price and execution for the Fund. In assessing the best
combination of net price and execution for any transaction on behalf of the
Fund, the Adviser will consider all factors it deems relevant including, but
not limited to, the breadth of the market in the security, the size of the
transaction, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of any commission
(for the specific transaction and on a continuing basis). In selecting brokers
to execute a particular transaction and in evaluating the best combination of
net price and execution available, the Adviser may consider "brokerage and
research services" (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended), statistical quotations,
specifically the quotations necessary to determine the Fund's net asset value,
and other information provided to the Fund and/or to the Adviser (or their
affiliates). The Adviser is authorized, to the fullest extent now or hereafter
permitted by law, to cause the Fund to pay to a broker who provides such
brokerage and research services a commission for executing a portfolio
transaction in excess of the amount of commission another broker would have
charged for effecting that transaction, if the Adviser determines in good faith
that such commission is reasonable in relation to the value of the brokerage
and research services provided by such broker, viewed in terms of that
particular transaction or in terms of all other accounts over which the Adviser
exercises investment discretion. It is understood that certain of the services
<PAGE>
provided by such broker may benefit one or more other accounts for which
investment discretion is exercised by the Adviser.
9. Information Provided to the Company. The Adviser will keep the
Company informed of developments materially affecting the Fund, and will, on
its own initiative, furnish the Company from time to time with whatever
information the Adviser believes is appropriate for this purpose.
10. Limitations on the Employment of the Adviser. The services of the
Adviser to the Company on behalf of the Fund shall not be deemed exclusive, and
the Adviser may engage in any other business or render similar or different
services to others so long as its services to the Company on behalf of the Fund
hereunder are not impaired thereby, and provided that the Adviser shall provide
fair and equitable treatment to the Fund in the selection of portfolio
investments and the allocation of investment opportunities as between the Fund
and other investment management clients of the Adviser. Nothing in this
Agreement shall limit or restrict the right of any director, officer or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to any other business, whether of a similar or dissimilar
nature.
11. Standard of Care; Protection of the Adviser. The Adviser shall
exercise its best judgment in rendering the services described in paragraphs 3
and 7 above. The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company (including the Fund) in
connection with the matters to which this Agreement relates, provided that
nothing in this paragraph shall be deemed to protect or purport to protect the
Adviser against any liability to the Company (including the Fund) or to its
shareholders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Adviser's reckless disregard of
its obligations and duties under this Agreement.
12. Effectiveness, Duration and Termination of Agreement. This Agreement
shall remain in effect until August 30, 1997 and thereafter shall continue
automatically for successive annual periods ending on August 30 of each year,
provided such continuance is specifically approved at least annually by (a) the
vote of the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities or by the Board of Directors of the Company and
(b) the vote of a majority of the Company's directors who are not parties to
this Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated at any time, without the payment of
any penalty, on sixty (60) days written notice by the vote of the holders of a
majority of the outstanding voting securities of the Fund, by the vote of the
Company's Board of Directors or by the Adviser. This Agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act and the rules thereunder).
13. Name. The Company (including the Fund) may, so long as this Agreement
remains in effect, use "Comstock" as part of its name. The Adviser may, upon
termination of this Agreement, require the Company (including the Fund) to
refrain from using the name "Comstock" in any form or combination in its name
or in its business, and the Company (including the Fund) shall, as soon as
practicable following its receipt of any such request from the Adviser, so
refrain from using such name.
14. Notices. Any notice under this Agreement shall be given in writing,
delivered against receipt or mailed, first class certified or registered mail,
return receipt requested, postage prepaid, addressed to the other party at its
then principal office.
<PAGE>
15. Governing Law. This Agreement shall be governed by the laws of the
State of New York applicable to contracts made and wholly to be performed in
such State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
COMSTOCK PARTNERS FUNDS, INC.,
on behalf of
COMSTOCK PARTNERS STRATEGY FUND
By: /s/ CHARLES L. MINTER
_______________________________
COMSTOCK PARTNERS, INC.
By: /s/ ROBERT C. RINGSTAD
_________________________________
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
Agreement, dated as of August 30, 1996 by and between COMSTOCK PARTNERS
FUNDS, INC., a Maryland corporation (the "Company"), on behalf of COMSTOCK
PARTNERS CAPITAL VALUE FUND (the "Fund"), and COMSTOCK PARTNERS, INC., a
Delaware corporation (the "Adviser").
The Fund and the Adviser hereby agree as follows:
1. Investment Description. The Company is an open-end investment company
which, as of the date hereof, consists of two series: the Comstock Partners
Strategy Fund and the Fund. The Company desires to employ the Fund's capital by
investing and reinvesting in investments of the kind, and in accordance with
the limitations, specified in the Company's Articles of Incorporation, as
amended from time to time (the "Articles of Incorporation"), and in the Fund's
Prospectus and Statement of Additional Information contained in the Company's
Registration Statement on Form N-1A, as in effect from time to time (the
"Registration Statement"), filed by the Company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the Securities Act of 1933, as
amended, and in such manner and to such extent as may from time to time be
approved by the Company's Board of Directors. Copies of the Articles of
Incorporation and the Registration Statement currently in effect have been
submitted to the Adviser. Any amendments to these documents shall be furnished
to the Adviser promptly.
2. Appointment. The Company, on behalf of the Fund, desires to employ
and hereby appoints the Adviser to act as the Fund's investment adviser. The
Adviser accepts the appointment and agrees to furnish the services set forth
below for the compensation set forth below.
3. Duties of the Adviser. Subject to the supervision and direction of
the Company's Board of Directors, the Adviser shall (a) act in strict
conformity with the Articles of Incorporation, the 1940 Act and the Investment
Advisers Act of 1940, as amended, (b) manage the Fund's assets in accordance
with the Fund's investment objective and policies as stated in the Registration
Statement and in accordance with the provisions of the Internal Revenue Code of
1986, as amended, relating to regulated investment companies, (c) make all
investment decisions for the Fund and (d) place purchase and sale orders on
behalf of the Fund. In rendering such services, the Adviser will provide
investment research and supervision of the Fund's investments and conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. In addition, the Adviser will furnish the
Fund with whatever statistical information the Fund may reasonably request with
respect to the securities that the Fund may hold or contemplate purchasing.
4. Expenses Payable by the Fund. Except as otherwise provided in
Paragraphs 3 and 5 hereof, the Company, on behalf of the Fund, will pay all
expenses incurred in connection with its operation, including, among other
things, organizational costs, taxes, interest, loan commitment fees, interest
and distributions paid on securities sold short, brokerage fees and
commissions, if any, Securities and Exchange Commission fees and Blue Sky
qualification fees, fees and expenses of non-interested directors, officers'
and employees' fees (other than officers or employees of The Dreyfus
Corporation, Comstock Partners or any affiliate thereof), investment and sub-
investment 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 the Company's or the
Fund's existence, payments to service organizations, costs of independent
pricing services, costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
<PAGE>
existing shareholders, costs of shareholder reports and meetings and any
extraordinary expenses.
5. Expenses Payable by the Adviser. The Adviser shall, at its expense,
(a) provide the Fund with office space, equipment and personnel reasonably
necessary for the operation of the Fund, (b) employ or associate itself with
such persons as it believes appropriate to assist it in performing its
obligations under this Agreement and (c) provide the Company with persons
satisfactory to the Company's Board of Directors to serve as directors,
officers and employees of the Company or the Fund, including a Chairman, Vice
Chairman, President, Secretary and Treasurer. The Adviser shall also pay all
expenses which it may incur in performing its duties under Paragraph 3 hereof.
6. Compensation of the Adviser. As compensation for the services
provided by the Adviser pursuant to this Agreement, the Company, on behalf of
the Fund, shall pay to the Adviser on the first business day of each calendar
month a fee for the previous month at the following annual rate: .40 of 1% of
the first $300 million of the Fund's average daily net assets, .45 of 1% of the
Fund's average daily net assets between $300 million and $750 million, .50 of
1% of the Fund's average daily net assets between $750 million and $1 billion
and .55 of 1% of the Fund's average daily net assets in excess of $1 billion.
For the purpose of determining fees payable to the Adviser, the value of the
Fund's net assets shall be computed at the times and in the manner specified in
the Registration Statement. Upon termination of this Agreement before the end
of a month, the fee for such part of that month shall be pro-rated according to
the proportion that such period bears to the full monthly period and shall be
payable within seven (7) days after the date of termination of this Agreement.
7. Expense Limitations. If the aggregate expenses incurred by, or
allocated to, the Fund in any fiscal year shall exceed the expense limitations
applicable to the Fund imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered from time to time, the
Company, on behalf of the Fund, may deduct from the fees payable to the
Adviser, or the Adviser shall bear, such excess expense; provided, that, the
Adviser's obligation hereunder will be limited to the amount of fees it
receives from the Company, on behalf of the Fund, during the period in which
such expense limitations were exceeded, unless otherwise required by applicable
laws or regulations. With respect to portions of a fiscal year in which this
contract shall be in effect, the foregoing limitations shall be prorated
according to the proportion which that portion of the fiscal year bears to the
full fiscal year.
8. Brokerage. In executing transactions for the Fund and selecting
brokers or dealers, the Adviser will use its best efforts to seek the best
combination of net price and execution for the Fund. In assessing the best
combination of net price and execution for any transaction on behalf of the
Fund, the Adviser will consider all factors it deems relevant including, but
not limited to, the breadth of the market in the security, the size of the
transaction, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of any commission
(for the specific transaction and on a continuing basis). In selecting brokers
to execute a particular transaction and in evaluating the best combination of
net price and execution available, the Adviser may consider "brokerage and
research services" (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended), statistical quotations,
specifically the quotations necessary to determine the Fund's net asset value,
and other information provided to the Fund and/or to the Adviser (or their
affiliates). The Adviser is authorized, to the fullest extent now or hereafter
permitted by law, to cause the Fund to pay to a broker who provides such
brokerage and research services a commission for executing a portfolio
transaction in excess of the amount of commission another broker would have
<PAGE>
charged for effecting that transaction, if the Adviser determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker, viewed in terms of
that particular transaction or in terms of all other accounts over which the
Adviser exercises investment discretion. It is understood that certain of the
services provided by such broker may benefit one or more other accounts for
which investment discretion is exercised by the Adviser.
9. Information Provided to the Company. The Adviser will keep the
Company informed of developments materially affecting the Company, and will, on
its own initiative, furnish the Fund from time to time with whatever
information the Adviser believes is appropriate for this purpose.
10. Limitations on the Employment of the Adviser. The services of the
Adviser to the Company, on behalf of the Fund, shall not be deemed exclusive,
and the Adviser may engage in any other business or render similar or different
services to others so long as its services to the Company, on behalf of the
Fund, hereunder are not impaired thereby, and provided that the Adviser shall
provide fair and equitable treatment to the Fund in the selection of portfolio
investments and the allocation of investment opportunities as between the Fund
and other investment management clients of the Adviser. Nothing in this
Agreement shall limit or restrict the right of any director, officer or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to any other business, whether of a similar or dissimilar
nature.
11. Standard of Care; Protection of the Adviser. The Adviser shall
exercise its best judgment in rendering the services described in paragraphs 3,
8 and 9 above. The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing in this
paragraph shall be deemed to protect or purport to protect the Adviser against
any liability to the Company (including the Fund) or to its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
by reason of the Adviser's reckless disregard of its obligations and duties
under this Agreement.
12. Effectiveness, Duration and Termination of Agreement. This Agreement
shall remain in effect until August 30, 1997 and thereafter shall continue
automatically for successive annual periods ending on August 30 of each year,
provided such continuance is specifically approved at least annually by (a) the
vote of the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities or by the Board of Directors of the Company and
(b) the vote of a majority of the Company's directors who are not parties to
this Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated at any time, without the payment of
any penalty, on sixty (60) days written notice by the vote of the holders of a
majority of the outstanding voting securities of the Fund, by the vote of the
Company's Board of Directors or by the Adviser. This Agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act and the rules thereunder).
13. Name. The Company (including the Fund) may, so long as this Agreement
remains in effect, use "Comstock" as part of its name. The Adviser may, upon
termination of this Agreement, require the Company (including the Fund) to
refrain from using the name "Comstock" in any form or combination in its name
or in its business, and the Company (including the Fund) shall, as soon as
practicable following its receipt of any such request from the Adviser, so
refrain from using such name.
<PAGE>
14. Notices. Any notice under this Agreement shall be given in writing,
delivered against receipt or mailed, first class certified or registered mail,
return receipt requested, postage prepaid, addressed to the other party at its
then principal office.
15. Governing Law. This Agreement shall be governed by the laws of the
State of New York applicable to contracts made and wholly to be performed in
such State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
COMSTOCK PARTNERS FUNDS, INC.,
on behalf of Comstock Capital
Value Fund
By: /s/ CHARLES L. MINTER
_____________________________
COMSTOCK PARTNERS, INC.
By: /s/ ROBERT C. RINGSTAD
_______________________________
<PAGE>
EXHIBIT C
SUB-INVESTMENT ADVISORY AGREEMENT
COMSTOCK PARTNERS, INC.
10 Exchange Place
Suite 2010
Jersey City, New Jersey 07302-3913
August 30, 1996
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
Comstock Partners, Inc., a Delaware corporation ("Comstock"), serves as
the investment adviser to Comstock Partners Strategy Fund (the "Fund"), a
series of Comstock Partners Funds, Inc., an open-end registered investment
company (the "Company"), pursuant to an investment advisory agreement dated as
of August 30, 1996 (the "Comstock Advisory Agreement"). Comstock herewith
confirms its Agreement with you ("Dreyfus") as follows:
The Company desires to employ the Fund's capital by investing and
reinvesting the same in investments of the type, and in accordance with the
limitations, specified in the Fund's Prospectus and Statement of Additional
Information contained in the Company's Registration Statement on Form N-1A from
time to time in effect, copies of which have been or will be submitted to
Dreyfus, and in such manner and to such extent as may from time to time be
approved by the Company's Board of Directors. Comstock intends to employ
Dreyfus as sub-investment adviser with regard to providing investment advice to
the Fund.
1. Sub-Investment Adviser Services
Dreyfus will manage the short term cash and cash equivalent investments of
the Fund and will provide investment research, statistical information and
advice regarding the Fund's portfolio. Dreyfus will furnish to Comstock or the
Fund such general advice regarding economic factors and trends, including
statistical and other factual information, and such statistical information
with respect to the investments which the Fund may hold or contemplate
purchasing, as Comstock or the Fund may reasonably request. Comstock and the
Fund wish to be informed of important developments materially affecting the
Fund's portfolio and shall expect Dreyfus, on its own initiative, to furnish to
Comstock and the Fund from time to time such information as Dreyfus may believe
appropriate for this purpose. Dreyfus shall exercise its best judgment in
rendering these services.
Comstock and the Company, on behalf of the Fund, understand that Dreyfus
now acts and will continue to act as investment adviser or sub-investment
adviser to various investment companies and fiduciary or other managed
accounts, and Comstock and the Company have no objection to Dreyfus' so acting.
In addition, it is understood that the persons employed by Dreyfus to assist in
the performance of its duties hereunder will not devote their full time to such
service and nothing herein contained shall be deemed to limit or restrict the
right of Dreyfus or any affiliate of Dreyfus to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
2. Fees and Expenses
In consideration of the sub-investment advisory services rendered pursuant
to this Agreement, Comstock will pay Dreyfus a monthly fee at an annual rate of
.15% of the value of the Fund's average daily net assets.
<PAGE>
Each such payment shall be made promptly after payment to Comstock of its
monthly fee from the Company, on behalf of the Fund, and, if Comstock's then
agreed-upon fee is not paid in full when due for any reason, then Comstock may
withhold from the fees payable to Dreyfus for the same period, an amount equal
to the same proportion of Dreyfus' fee that the amount withheld from Comstock
bears to Comstock's fee, with restitution to Dreyfus if, as and when the amount
withheld from Comstock's fee is paid to Comstock by the Company on behalf of
the Fund.
In the event that the agreed amount or rate of the investment advisory fee
that Comstock is entitled to receive from the Company on behalf of the Fund is
reduced for any reason based upon the services agreed to be provided to the
Fund pursuant to the Comstock Advisory Agreement or as a result of the expenses
payable by the Company on behalf of the Fund exceeding any applicable
limitations imposed by state law, then the monthly fee for Dreyfus'
sub-investment advisory services described in paragraph 2 hereof, if and when
payable, shall be reduced by one-third of the percentage that Comstock's
investment advisory fee from the Company on behalf of the Fund is reduced.
The fee for the period from the date of this Agreement to the end of such
month shall be pro-rated according to the proportion which such period bears to
the full monthly period, and upon any termination of this Agreement other than
at the end of any month, the fee for the month during which termination shall
occur shall be pro-rated according to the proportion which the period thereof
prior to termination bears to the full monthly period and shall be payable
within seven (7) days after the date of termination of this Agreement.
For the purpose of determining fees payable to Dreyfus, the value of the
Fund's net assets shall be computed in the same manner as computed for the
purpose of determining Comstock's fee from the Company, on behalf of the Fund.
Dreyfus will from time to time employ or associate with itself such person
or persons as Dreyfus may believe to be particularly fitted to assist it in the
performance of this Agreement. Such person or persons may be officers and
employees who are employed by both Dreyfus and the Company. The compensation of
such person or persons shall be paid by Dreyfus and no obligation may be
incurred on behalf of the Company in such respect.
Dreyfus will bear all expenses in connection with the performance of its
services under this Agreement.
The Company, on behalf of the Fund, and Comstock shall bear such expenses
as are described in the Comstock Advisory Agreement.
3. Limitation of Liability
Dreyfus shall not be liable for any error of judgment or mistake of law or
for any loss suffered by Comstock or the Company (including the Fund) in
connection with the matters to which this Agreement relates, except for a loss
resulting from willful misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
officer, director, employee or agent of Dreyfus who may be or become an
officer, director, employee or agent of the Company (including the Fund) shall
be deemed, when rendering services to the Company (including the Fund) or
acting on any business of the Company (including the Fund), to be rendering
such services to or acting solely for the Company (including the Fund) and not
as an officer, director, employee or agent or one under the control or
direction of Dreyfus even though paid by it.
4. Term
This Agreement shall continue until August 30, 1997 and thereafter shall
continue automatically for successive annual periods ending on August 30 of
each year, provided such continuance is specifically approved at least annually
<PAGE>
by (i) the Company's Board of Directors or (ii) by a vote of a majority (as
defined in the Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either such event the continuance is also approved
by a majority of the noninterested Directors of the Company (as defined in said
Act) by vote cast in person at a meeting called for the purpose of voting on
such approval. This Agreement is terminable without penalty, on not less than
60 days' notice, by either party hereto, by the Company's Board of Directors or
by vote of holders of a majority of the Fund's shares and this Agreement will
also terminate automatically in the event of its assignment (as defined in said
Act).
5. Successors and Assigns
Successors and assigns of Dreyfus and Comstock will be bound by this
Agreement. For this purpose, any investment adviser registered under the
Investment Advisers Act of 1940 controlled by Charles Minter, as the term
"control" is used in the Investment Company Act of 1940, will be deemed to be a
successor to Comstock.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
COMSTOCK PARTNERS, INC.
By: /s/ CHARLES L. MINTER
Accepted:
THE DREYFUS CORPORATION
By: /s/ STEPHEN E. CANTER
_________________________
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Please return the proxy card in the enclosed envelope.
Please fold and detach card at perforation before mailing
COMSTOCK PARTNERS FUNDS, INC.
SPECIAL MEETING OF STOCKHOLDERS - DECEMBER 20, 1996
This Proxy is Solicited on Behalf of the Directors
The undersigned hereby appoints Mr. Charles L. Minter, Mr. W. Troy
Hottenstein and Mr. Robert C. Ringstad, and each of them, attorneys-in-fact
and proxies for the undersigned, with full power of substitution and
revocation to represent the undersigned at the Special Meeting of
Stockholders of the Company to be held at 10 Exchange Place, Suite 2010,
Jersey City, New Jersey 07302-3413 on Friday, December 20, 1996, at
11:00 a.m., and at any adjournments thereof, upon the matters set forth in
the Notice of Meeting and Proxy Statement dated November 11, 1996 and upon
all other matters properly coming before said meeting.
Please Sign, Date and Return the Proxy Card
Promptly Using the Enclosed Envelope.
Change of Address and or
Comments Mark Here
Note: Please sign exactly as your
name appears on this Proxy. If joint
owners, EACH should sign this Proxy.
When signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your
full title.
Date __________, 1996
______________________
____________________________
Signature(s), Title(s), if applicable
COMSTOCK
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Please return the proxy card in the enclosed envelope.
Please fold and detach card at perforation before mailing
This proxy, if properly executed, will be voted in the manner directed
by the stockholder. If no direction is made, this proxy will be voted FOR
Proposals 1, 2, 3, 4 (including all nominees for Director) and 5, and in the
appointed proxies' discretion upon such other business as may properly come
before the meeting. Please refer to the Proxy Statement for a discussion of
the Proposals.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3,
4, (including all nominees for Director) AND 5.
Please vote by filling in the appropriate box below, as shown, using blue or
black ink or dark pencil. Do not use red ink.
(1) Approval of the New Investment Advisory Agreement for the Strategy Fund
FOR / / AGAINST / / ABSTAIN / /
(2) Approval of the New Investment Advisory Agreement for the Capital Value
Fund
FOR / / AGAINST / / ABSTAIN / /
(3) Approval of the New Sub-Investment Advisory Agreement for the Strategy
Fund
FOR / / AGAINST / / ABSTAIN / /
(4) Election of Directors
Charles L. Minter, M. Bruce Adelberg, E.W. Kelley, Sven B. Karlen
Jr., Robert M. Smith
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write the nominee's name on the
line below.)
__________________________________________________________________________
FOR all nominees / / WITHHOLD AUTHORITY / / * EXCEPTIONS / /
listed below to vote for all
nominees
(5) The ratification of the selection of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending April 30,
1997
FOR / / AGAINST / / ABSTAIN / /
COMSTOCK
