SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant / x /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ x / Preliminary Proxy Statement / / Confidential, For Use of the Commission
/ / Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / 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:
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PRELIMINARY COPY
COMSTOCK PARTNERS FUNDS, INC.
10 Exchange Place, Suite 2010,
Jersey City, New Jersey 07302-3913
(201) 332-4436
October [ ], 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 return
promptly the enclosed proxy card in the enclosed envelope in order to spare the
Company additional proxy solicitation expenses.
Sincerely,
Charles L. Minter
Chairman of the Board of Directors
<PAGE>
PRELIMINARY COPY
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 [ ], 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 [ ], November [ ], 1996, at 11:00 a.m., for
the purposes 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. Amendment of the fundamental investment restriction of the
Strategy Fund with respect to lending. Proposal 6 shall be voted
upon only by stockholders of the Strategy Fund.
<PAGE>
7. To transact any other business that may properly come before the
meeting.
The close of business on October [ ], 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
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.
<PAGE>
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: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the
registration.
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 PlanJohn Doe, Trustee
Trust Accounts
---------------
(1) ABC TrustJane B. Doe, Trustee
(2) Jane B. Doe, TrusteeJane 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 November
[ ], 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 October [ ], 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, 5 and 6. The close of business on October [ ],
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 [ ] shares, consisting of [
] shares of the Strategy Fund and [ ] 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 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
<PAGE>
for successive annual periods, subject to the provisions described below. In
the event the 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 are currently held by the Estate of Stanley D. Salvigsen.
Under an agreement that had been entered into by stockholders of the Investment
Adviser, the Investment Adviser will repurchase the shares of the Investment
Adviser which are currently held by the Estate of Stanley D. Salvigsen. 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 any 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
<PAGE>
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 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
<PAGE>
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 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, CFA, 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
<PAGE>
employee benefit plan from 1978 to 1994. Mr. Weiner has been a Chartered
Financial Analyst since 1969. The address of Messrs. Minter, Hottenstein and
Weiner is 10 Exchange Place, Suite 2010, Jersey City, New Jersey 07302-3913.
Mr. Minter owns 39.2% of the voting securities of the
Investment Adviser. The remaining shares of the Investment Adviser are held by
the Estate of Stanley D. Salvigsen, [address], which owns 60.8% of the voting
securities of the Investment Adviser.
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:
Annual Fee as a
Net Assets as of Percentage of Average
Fund October 15, 1996 Daily Net Assets
Dreyfus Variable Investment
Fund - Managed Assets Portfolio $22,888,226.58 .375 of 1%
<PAGE>
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 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 are currently held by the Estate of Stanley D. Salvigsen.
<PAGE>
Under an agreement that had been entered into by stockholders of the Investment
Adviser, the Investment Adviser will repurchase the shares of the Investment
Adviser which are currently held by the Estate of Stanley D. Salvigsen. 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 any 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).
<PAGE>
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 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 September 30, 1996, managed or
administered approximately $81 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.
<PAGE>
Name, Position and Principal
Address Occupation
------------------ ----------
Christopher M. Condron, Vice Chairman and
Director and Chief Chief Investment
Executive Officer Officer of
200 Park Avenue Dreyfus
New York, New York
10166
Mandell L. Berman, Real Estate
Director Consultant
200 Park Avenue
New York, New York
10166
Frank V. Cahouet, Chairman and
Director Chief Executive
One Mellon Bank Center Officer of Mellon
Pittsburgh,
Pennsylvania 15258
Stephen E. Canter, Vice Chairman and
Director Chief Investment
200 Park Avenue Officer of
New York, New York Dreyfus
10166
Alvin E. Friedman, Retired
Director
200 Park Avenue
New York, New York
10166
Lawrence M. Greene, Retired
Director
200 Park Avenue
New York, New York
10166
Lawrence S. Kash, Vice Chairman of
Director Dreyfus
200 Park Avenue
New York, New York
10166
Julian M. Smerling, Retired
Director
200 Park Avenue
New York, New York
10166
W. Keith Smith, Vice Chairman of
Director Mellon
One Mellon Bank Center
Pittsburgh,
Pennsylvania 15258
Philip L. Toia, Vice Chairman of
Director Dreyfus
200 Park Avenue
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 the Sub-Investment Adviser), 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:
Annual Fee as a
Percentage of
Net Assets as of Average Daily
Fund October 15, 1996 Net Assets
---- ---------------- ---------------
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%
<PAGE>
PROPOSAL 4. ELECTION OF DIRECTORS
At the meeting, 5 Directors are to be elected 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.
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
Position(s) Owned, Directly or Occupation(s)
Name, Address, with Director Indirectly as at During Past 5
and Age Company Since October 18, 1996 Years
- --------------- ----------- -------- ------------------- -------------
*Charles L. Minter Director, 1988 128,085 Class A Director,
10 Exchange Place Chairman of Capital Value Fund Chairman of the
Suite 2010 the Board 1 Class B Capital Board and
Jersey City, NJ and Value Fund Secretary of
07302-3913 President 1 Class C Capital Comstock
55 years old Value Fund Partners, Inc.
1 Class R Capital since January
Value Fund 1987, President
18,192 Class A of Comstock
Strategy Fund Partners, Inc.
229 Class C since March
Strategy Fund 1994, and
54,262 Class O Chairman of the
Strategy Fund** Board of
Comstock
Partners Funds,
Inc. since
October 1996.
M. Bruce Adelberg Director, 1995 11,842 Class A Consultant, MBA
MBA Research 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.
(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.
Except as discussed herein there have been no purchases or
sales of the Investment Adviser's or Dreyfus's 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:
<PAGE>
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*
-------------------- ------------ ---------- ---------- -------
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
* 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.
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.
Position(s) with Principal Occupation(s)
Name and Age Company During Past 5 Years
- ------------- ---------------- -----------------------
*W. Troy Hottenstein, CFA Secretary Chief Operating Officer since
10 Exchange Place 1995. Since 1991, Research
Suite 2010 Analyst at Comstock Partners,
Jersey City, NJ 07302-3913 Inc.
27 years old
*Robert C. Ringstad Vice President, Vice President Operations -
10 Exchange Place Treasurer, Chief Regent Investor Services,
Suite 2010 Financial Officer January 1990 - November 1994.
Jersey City, NJ 07302-3913 and Assistant Vice President - Comstock
66 years old Secretary Partners, Inc. since September
1995.
* 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.
<PAGE>
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 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 for the foregoing purpose.
<PAGE>
PROPOSAL 6. AMENDMENT OF THE FUNDAMENTAL INVESTMENT RESTRICTION OF THE
STRATEGY FUND WITH RESPECT TO LENDING
Background
Stockholders of the Strategy Fund are being asked to approve
certain changes to the fundamental investment restrictions of that Fund in
order to make the language of the restriction consistent with that of the
Capital Value Fund and facilitate the management of the Company's portfolios.
The existing fundamental restriction provides that the Strategy
Fund may not:
make loans of securities to other persons in excess of 33-1/3%
of its total assets; provided the Fund may invest without
limitation in short-term obligations (including repurchase
agreements) and publicly distributed obligations.
The proposed fundamental restriction would provide that the
Strategy Fund may not:
make loans to others, except through the purchase of debt
obligations or the entry into repurchase agreements. However,
the Fund may lend its portfolio securities in any amount not to
exceed 33-1/3% of the value of its total assets. Any loans of
portfolio securities will be made according to guidelines
established by the Securities and Exchange Commission and the
Company's Board of Directors.
Explanation of Proposed Change
The current fundamental restriction of the Strategy Fund limits
addresses only the lending of securities by the Fund. The proposed restriction
addresses both lending in general and the lending of securities. The proposed
restriction also makes clear that securities lending will done only in
accordance with applicable guidelines of the Securities Exchange Commission and
the Company's Board of Directors.
THE DIRECTORS, INCLUDING THE "NON-INTERESTED DIRECTORS",
UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS OF THE STRATEGY FUND VOTE "FOR"
APPROVAL OF THE CHANGE IN INVESTMENT RESTRICTIONS.
Required Vote
Approval of the amendment to the fundamental investment
restrictions of the Strategy Fund 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.
<PAGE>
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, were
the record owners of [ ]% and [ ]% 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
<PAGE>
shares, 47.2472% of the outstanding Class A shares and 79.0772% of the
outstanding Class C shares, of the Strategy Fund; and Southtrust Estate Trust
Company and National Bank of Georgia Trustee, respectively, were the record
owners of 7.8952% and [ ]% 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 portfolio investments and the allocation of investment
<PAGE>
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 has retained [ ] to assist in the solicitation of proxies for
a fee estimated at $[ ] 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., The Dreyfus Corporation,
Princeton Administrators, L.P., 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
October [ ], 1996
<PAGE>
PRELIMINARY COPY
COMSTOCK PARTNERS FUNDS, INC.
SPECIAL MEETING OF STOCKHOLDERS - [ ] [ ], 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 [ ] [ ], 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 [ ] [ ],1996 and upon
all other matters properly coming before said meeting.
Please indicate your vote by an "X" in the appropriate box on the
reverse side. 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(a), 1(b), 2, 3 (including all nominees for Director)
and 4, 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.
(Continued, and to be signed and dated, on the reverse side)
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" PROPOSALS 1, 2, 3, 4, (including all nominees for
Director), 5 , AND 6.
(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
FOR all nominees / / WITHHOLD AUTHORITY / / *EXCEPTIONS / /
listed below to vote for all nominees
(INSTRUCTIONS: To withhold authority to vote for
any individual nominee, mark the "Exceptions" box
and strike a line through that nominee's name).
Charles L. Minter, M. Bruce Adelberg, E.W. Kelley,
Sven B. Karlen Jr., Robert M. Smith
(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 / /
(6) Approval of the amendment to the fundamental
investment restrictions of the Strategy Fund with
respect to lending.
FOR / / AGAINST / / ABSTAIN / /
<PAGE>
Change of Address and or / /
Comments Mark Here
Note: Please sign exactly
as your name appears on
this Proxy. If joint owners,
EITHER may 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
Please Sign, Date and Return the Proxy Votes MUST be
Promptly Using the Enclosed Envelope. indicated
(x) in Black
or Blue ink.
