File Nos. 33-50350
811-7068
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 6 [X]
(Check appropriate box or boxes.)
Dreyfus Balanced Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
X on January 2, 1997 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended August 31, 1996 was filed on October 28, 1996.
Dreyfus Balanced Fund, Inc.
Cross-Reference Sheet Pursuant to Rule 495(b)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 3
4 General Description of Registrant 4
5 Management of the Fund 6
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 16
7 Purchase of Securities Being Offered 7
8 Redemption or Repurchase 12
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-26
13 Investment Objectives and Policies B-2
14 Management of the Fund B-10
15 Control Persons and Principal B-14
Holders of Securities
16 Investment Advisory and Other B-14
Services
_________________________________
NOTE: * Omitted since answer is negative or inapplicable.
Dreyfus Balanced Fund, Inc.
Cross-Reference Sheet Pursuant to Rule 495(b) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-22
18 Capital Stock and Other Securities B-26
19 Purchase, Redemption and Pricing B-16, B-18,
of Securities Being Offered B-23
20 Tax Status *
21 Underwriters Cover, B-16
22 Calculations of Performance Data B-25
23 Financial Statements B-33
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-4
Common Control with Registrant
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of C-5
Investment Adviser
29 Principal Underwriters C-10
30 Location of Accounts and Records C-13
31 Management Services C-13
32 Undertakings C-13
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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PROSPECTUS JANUARY 2, 1997
DREYFUS BALANCED FUND, INC.
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DREYFUS BALANCED FUND, INC. (THE "FUND") IS AN OPEN-END,
NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND. THE
FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE LONG-TERM CAPITAL GROWTH AND
CURRENT INCOME, CONSISTENT WITH REASONABLE INVESTMENT RISK.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY. YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED JANUARY 2, 1997, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. THE SECURITIES AND EXCHANGE COMMISSION
MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE FUND. FOR A FREE COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION, WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD,
UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK
FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
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TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES ................... 3
CONDENSED FINANCIAL INFORMATION................... 3
DESCRIPTION OF THE FUND........................... 4
MANAGEMENT OF THE FUND............................ 6
HOW TO BUY SHARES................................. 7
SHAREHOLDER SERVICES.............................. 9
HOW TO REDEEM SHARES.............................. 12
SHAREHOLDER SERVICES PLAN......................... 14
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 14
PERFORMANCE INFORMATION........................... 16
GENERAL INFORMATION............................... 16
APPENDIX.......................................... 18
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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[This Page Intentionally Left Blank]
Page 2
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C> <C> <C> <C>
Management Fees .................................................................... .60%
Other Expenses...................................................................... .40%
Total Fund Operating Expenses ...................................................... 1.00%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period: $10 $32 $55 $122
</TABLE>
- ------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the Fund, the payment of which will reduce
investors' annual return. You can purchase Fund shares without charge
directly from the Fund's distributor; you may be charged a nominal fee if you
effect transactions in Fund shares through a securities dealer, bank or other
financial institution. See "Management of the Fund" and "Shareholder Services
Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst
&Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------------------------------
PER SHARE DATA: 1993(1) 1994 1995 1996
------------ ----------- ---------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of year................................... $12.50 $13.28 $13.72 $15.61
------------ ----------- ---------- --------
INVESTMENT OPERATIONS:
Investment income--net .............................................. .39 .41 .54 .51
Net realized and unrealized gain on investments...................... .71 .59 1.99 .29
------------ ----------- ---------- --------
TOTAL FROM INVESTMENT OPERATIONS..................................... 1.10 1.00 2.53 .80
------------ ----------- ---------- --------
DISTRIBUTIONS:
Dividends from investment income-net................................. (.32) (.42) (.51) (.53)
Dividends from net realized gain on investments...................... -- (.14) (.13) (.75)
------------ ----------- ---------- --------
TOTAL DISTRIBUTIONS.................................................. (.32) (.56) (.64) (1.28)
------------ ----------- ---------- --------
Net asset value, end of year......................................... $13.28 $13.72 $15.61 $15.13
============ =========== ========== ========
TOTAL INVESTMENT RETURN................................................ 8.88%(2) 7.73% 19.03% 5.19%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ............................. .23%(2) .69% 1.04% 1.00%
Ratio of net investment income to average net assets................. 3.46%(2) 3.26% 3.99% 3.37%
Decrease reflected in above expense ratios due to undertakings
by The Dreyfus Corporation........................................... 1.13%(2) .41% -- --
Portfolio Turnover Rate.............................................. 46.42%(2) 58.22% 72.42% 186.23%
Average commission rate paid(3)...................................... -- -- -- $.0684
Net Assets, end of year (000's omitted).............................. $48,315 $82,848 $165,909 $269,869
(1) From September 30, 1992 (commencement of operations) to August 31, 1993.
(2) Not annualized.
(3) For fiscal years beginning September 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of investment securities.
</TABLE>
Page 3
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide you with long-term
capital growth and current income, consistent with reasonable investment
risk. It cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"))
of the Fund's outstanding voting shares. There can be no assurance that the
Fund's investment objective will be achieved.
MANAGEMENT POLICIES
The Fund is managed as a balanced fund and invests in equity and debt
securities. The proportion of the Fund's assets invested in each type of
security will vary from time to time in accordance with The Dreyfus
Corporation's assessment of economic conditions and investment opportunities.
Under normal market conditions, equity investments will range from 45% to 65%
of the Fund's portfolio, with a benchmark allocation of 50%. Fixed-income
investments will range from 25% to 55%, with a benchmark allocation of 40%.
Cash and cash equivalents will comprise between 0% and 25% of the Fund's
portfolio, with a benchmark allocation of 10%.
In determining whether the Fund should invest in a particular equity
security, The Dreyfus Corporation generally employs a value-oriented
approach, utilizing a "bottom-up" equity selection process. Unlike a process
that seeks equity securities of companies that are experiencing significant
capital growth with the prospect that such growth will continue, the process
used by the Fund involves seeking equity securities of companies that are
generally disfavored or undervalued in the marketplace, but which, in the
view of The Dreyfus Corporation, have certain characteristics indicating that
those equity securities may achieve significant capital growth. The Dreyfus
Corporation considers an equity security to be disfavored or undervalued if,
among other things, that security is selling with a relatively low price to
book ratio, low price to earnings ratio or higher than average dividend
payment in relation to price. Of course, there can be no assurance that the
equity securities actually purchased by the Fund under this process will
produce such returns.
In determining whether the Fund should invest in a particular debt
security, The Dreyfus Corporation reviews the terms of the instrument and
evaluates the creditworthiness of the issuer of the instrument, considering
all factors which it deems relevant, including, as deemed applicable, a
review of an issuer's cash flow; level of short-term debt; leverage;
capitalization; the quality and depth of management; profitability; return on
assets; and economic factors relative to the issuer's industry. The Dreyfus
Corporation, however, will not rely on its ability to predict correctly
movements in the direction of interest rates. The Fund will seek to provide a
positive real rate of return each year from its debt security investments by
investing in debt securities that have short to intermediate maturities and
offer the highest return relative to investment grade instruments in general.
The equity securities in which the Fund may invest consist of common
stocks, preferred stocks and convertible securities, as well as warrants to
purchase such securities. The Fund will be particularly alert to companies
which offer opportunities for capital appreciation and growth of earnings.
The debt securities in which the Fund may invest must be rated at
least Baa by Moody's Investors Service, Inc. ("Moody's") or at least BBB by
Standard & Poor's Ratings Group ("S&P"), Fitch Investors Service, L.P.
("Fitch") or Duff & Phelps Credit Rating Co. ("Duff") or, if unrated, deemed
to be of comparable quality by The Dreyfus Corporation. Debt securities rated
Baa by Moody's and BBB by S&P, Fitch and Duff are considered investment grade
obligations which lack outstanding investment characteristics and have
speculative characteristics as well. See "Appendix" in the Statement of
Additional Information. The debt securities in which the Fund invests have
remaining maturities of 40 years or less
Page 4
and, under normal market conditions, the dollar-weighted average maturity of
the Fund's portfolio invested in debt securities is expected to be between
two and ten years. During periods of rapidly rising interest rates, the
dollar-weighted average portfolio maturity of the Fund's debt portfolio may
be shortened to one year or less.
The money market instruments in which the Fund may invest consist of
U.S. Government securities, certificates of deposit, time deposits, bankers'
acceptances, short-term investment grade corporate bonds and other short-term
debt instruments, and repurchase agreements, as set forth under
"Appendix_Certain Portfolio Securities_Money Market Instruments." Under
normal market conditions, the Fund does not expect to have a substantial
portion of its assets invested in money market instruments. However, when The
Dreyfus Corporation determines that adverse market conditions exist, the Fund
may adopt a temporary defensive posture and invest all of its assets in money
market instruments.
The Fund's annual portfolio turnover rate is not expected to exceed
100%. In an effort to increase returns, the Fund may engage in various
investment techniques, such as options and futures transactions, leveraging
and lending portfolio securities. For a discussion of the investment
techniques and their related risks, see "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objective and
Management Policies--Management Policies"in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an overall
investment program and should invest only if they are willing to undertake
the risks involved. See "Investment Objective and Management
Policies_Management Policies" in the Statement of Additional Information for
a further discussion of certain risks.
EQUITY SECURITIES -- Equity securities fluctuate in value, often based on
factors unrelated to the value of the issuer of the securities, and such
fluctuations can be pronounced. Changes in the value of the Fund's
investments will result in changes in the value of its shares and thus the
Fund's total return to investors.
The securities of the smaller companies in which the Fund may invest
may be subject to more abrupt or erratic market movements than larger, more
established companies, because these securities typically are traded in lower
volume and the issuers typically are subject to a greater degree to changes
in earnings and prospects.
FIXED-INCOME SECURITIES -- Even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. The values
of fixed-income securities also may be affected by changes in the credit
rating or financial condition of the issuer. Certain securities purchased by
the Fund, such as those rated Baa by Moody's and BBB by S&P, Fitch and Duff,
may be subject to such risk with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a portfolio security has been changed, the
Fund will consider all circumstances deemed relevant in determining whether
to continue to hold the security. See "Appendix" in the Statement of
Additional Information.
FOREIGN SECURITIES -- The Fund's portfolio may contain securities of foreign
issuers which may subject the Fund to additional investment risks with
respect to those securities that are different in some respects from those
incurred by a fund which invests only in securities of domestic issuers. Such
risks include possible adverse political and economic developments, seizure
or nationalization of foreign deposits, and adoption of governmental
restrictions which might adversely affect the payment of prinicipal and
interest on the foreign securities or restrict the payment of principal and
interest to investors located outside the country of the issuer, whether from
currency blockage or otherwise.
USE OF DERIVATIVES -- The Fund may invest in derivatives ("Derivatives").
These are financial instruments which derive their performance, at least in
part, from the performance of an underlying asset,
Page 5
index or interest rate. The Derivatives the Fund may use include options
and futures, mortgage-related securities and asset-backed securities.
While Derivatives can be used effectively in furtherance of the Fund's
investment objective, under certain market conditions, they can increase
the volatility of the Fund's net asset value, can decrease the liquidity of
the Fund's portfolio and make more difficult the accurate pricing of the
Fund's portfolio. See "Appendix -- Investment Techniques -- Use of
Derivatives" below and "Investment Objective and Management Policies --
Management Policies -- Derivatives"in the Statement of Additional
Information.
NON-DIVERSIFIED STATUS -- The classification of the Fund as a
"non-diversified" investment company means that the proportion of the Fund's
assets that may be invested in the securities of a single issuer is not
limited by the 1940 Act. A "diversified" investment company is required by
the 1940 Act generally, with respect to 75% of its total assets, to invest
not more than 5% of such assets in the securities of a single issuer. Since a
relatively high percentage of the Fund's assets may be invested in the
securities of a limited number of issuers, some of which may be in the same
industry, the Fund's portfolio may be more sensitive to changes in the
market value of a single issuer or industry. However, to meet Federal tax
requirements, at the close of each quarter the Fund may not have more than
25% of its total assets invested in any one issuer and, with respect to 50%
of total assets, not more than 5% of its total assets invested in any one
issuer. The Fund may not invest more than 25% of its assets in any one
industry. These limitations do not apply to U.S. Government securities.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are made
independently from those of the other investment companies advised by The
Dreyfus Corporation. If, however, such other investment companies desire to
invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of November 29, 1996, The Dreyfus Corporation
managed or administered approximately $84 billion in assets for approximately
1.7 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the authority of the Fund's Board in accordance with Maryland law.
The Fund's primary portfolio manager is Timothy M. Ghriskey, Senior Portfolio
Manager for The Dreyfus Corporation. He has held that position since March
1996, and has been employed by The Dreyfus Corporation since July 1995. From
1985 to June 1995, Mr. Ghriskey was Vice President and Associate Managing
Partner of Loomis, Sayles & Company. The Fund's other portfolio managers are
identified in the Statement of Additional Information. The Dreyfus Corporation
also provides research services for the Fund and for other funds advised by
The Dreyfus Corporation through a professional staff of portfolio managers
and securities analysts.
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,
Page 6
Mellon managed more than $226 billion in assets as of September 30, 1996,
including approximately $85 billion in proprietary mutual fund assets. As
of September 30, 1996, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
more than $905 billion in assets, including approximately $60 billion in
mutual fund assets.
For the fiscal year ended August 31, 1996, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .60 of 1% of the
value of the Fund's average daily net assets. From time to time, The Dreyfus
Corporation may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the overall
expense ratio of the Fund and increasing yield to investors. The Fund will
not pay The Dreyfus Corporation at a later time for any amounts it may waive
nor will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume.
In allocating brokerage transactions for the Fund, The Dreyfus
Corporation seeks to obtain the best execution of orders at the most
favorable net price. Subject to this determination, The Dreyfus Corporation
may consider, among other things, the receipt of research services and/or the
sale of shares of the Fund or other funds managed, advised or administered by
The Dreyfus Corporation as factors in the selection of broker-dealers to
execute portfolio transactions for the Fund. See "Portfolio Transactions" in
the Statement of Additional Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers, banks or other financial institutions in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). Mellon Bank, N.A., One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258, serves as the Fund's Custodian.
HOW TO BUY SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution. Stock certificates are issued
only upon your written request. No certificates are issued for fractional
shares. The Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of a securities dealer, bank or other financial institution which
maintains an omnibus account in the Fund and has made an aggregate minimum
initial purchase for its customers of $2,500. Subsequent investments must be
at least $100. However, the minimum initial investment for Dreyfus-sponsored
Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is
$750, with no minimum for subsequent purchases. Individuals who open an IRA
also may open a non-working spousal IRA with a minimum initial investment of
$250. Subsequent investments in a spousal IRA must be at least $250. The
initial investment must be accompanied by the Account Application. For
full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board
members of a fund advised by The Dreyfus Corporation, including members of
the Fund's Board, or the spouse or minor child of any of the foregoing, the
minimum initial investment is $1,000. For full-time or part-time employees of
The Dreyfus Corporation or any of its affiliates or subsidiaries who elect to
have a portion of their pay directly deposited into their Fund account, the
minimum initial investment is $50. The Fund reserves the right to offer Fund
shares without regard to minimum purchase require-
Page 7
ments to employees participating in certain qualified or non-qualified
employee benefit plans or other programs where contributions or account
information can be transmitted in a manner and form acceptable to the Fund.
The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time. Fund shares also are offered
without regard to the minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset BuilderRegistration Mark, Dreyfus Government Direct
Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to the Dreyfus
Step Program described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will
not protect an investor against loss in a declining market.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds" or, if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account Application.
For subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to The Dreyfus
Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus
retirement plan accounts, both initial and subsequent investments should be
sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. Neither initial nor subsequent investments should be
made by third party check. Purchase orders may be delivered in person only to
a Dreyfus Financial Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND
WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the nearest
Dreyfus Financial Center, please call one of the telephone numbers listed
under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900117176/Dreyfus Balanced
Fund, Inc., for purchase of Fund shares in your name. The wire must include
your Fund account number (for new accounts, your Taxpayer Identification
Number ("TIN") should be included instead), account registration and dealer
number, if applicable. If your initial purchase of Fund shares is by wire,
please call 1-800-645-6561 after completing your wire payment to obtain your
Fund account number. Please include your Fund account number on the Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
Fund shares are sold on a continuous basis at net asset value per
share next determined after an order in proper form is received by the
Transfer Agent or other agent. Net asset value per share is determined as of
the close of trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), on each day the New York Stock Exchange is open
for business. For purposes of determining net asset value, options and
futures contracts will be valued 15 minutes after the close of trading on the
floor
Page 8
of the New York Stock Exchange. Net asset value per share is computed
by dividing the value of the Fund's net assets (i.e., the value of its assets
less liabilities) by the total number of shares outstanding. The Fund's
investments are valued based on market value or, where market quotations are
not readily available, based on fair value as determined in good faith by the
Fund's Board. Certain securities may be valued by an independent pricing
service approved by the Fund's Board and are valued at fair value as
determined by the pricing service. For further information regarding the
methods employed in valuing the Fund's investments, see "Determination of Net
Asset Value" in the Statement of Additional Information.
For certain institutions that have entered into agreements with the
Distributor, payment for the purchase of Fund shares may be transmitted, and
must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be canceled and the institution
could be held liable for resulting fees and/or losses.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plan or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds $1,000,000 ("Eligible Benefit Plans").
Shares of funds in the Dreyfus Family of Funds then held by Eligible Benefit
Plans will be aggregated to determine the fee payable. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Account Application for further information concerning this requirement.
Failure to furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase shares (minimum $500,
maximum $150,000) by telephone if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between the bank account designated in one of these documents and
your Fund account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
The Fund may modify or terminate this Privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
FUND EXCHANGES -- You may purchase, in exchange for shares of the Fund,
shares of certain other funds managed or administered by The Dreyfus
Corporation, to the extent such shares are offered for sale in your state of
residence. These funds have different investment objectives which may be of
interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any conditions are
imposed on its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a value of at least the minimum initial investment required for the fund into
which
Page 9
the exchange is being made. The ability to issue exchange instructions
by telephone is given to all Fund shareholders automatically, unless you
check the applicable "No" box on the Account Application, indicating that you
specifically refuse this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request signed by all
shareholders on the account, by a separate signed Shareholder Services Form
available by calling 1-800-645-6561, or by oral request from any of the
authorized signatories on the account by calling 1-800-645-6561. If you have
established the Telephone Exchange Privilege, you may telephone exchange
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system) by calling 1-800-645-6561. If you are calling from
overseas, call 516-794-5452. See "How to Redeem Shares _ Procedures." Upon an
exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange
Privilege, Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TELETRANSFER Privilege and the dividend/capital gain distribution option
(except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing categories
of shares. To qualify, at the time of the exchange you must notify the
Transfer Agent. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
in the Statement of Additional Information. No fees currently are charged
shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
Fund Exchanges may be modified or terminated at any time upon notice to
shareholders. See "Dividends, Distributions and Taxes."
DREYFUS AUTO-EXCHANGE PRIVILEGE -- Dreyfus Auto-Exchange Privilege enables
you to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of the Fund, in shares of other funds in the
Dreyfus Family of Funds of which you are a shareholder. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth of the month according to the schedule you have selected.
Shares will be exchanged at the then-current net asset value; however, a
sales load may be charged with respect to exchanges into funds sold with a
sales load. See "Shareholder Services" in the Statement of Additional
Information. The right to exercise this Privilege may be modified or
cancelled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by mailing written notification to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
The Fund may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. For more information concerning this Privilege and
the Funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form, please
call toll free 1-800-645-6561. See "Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark -- Dreyfus-AUTOMATIC Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both
Page 10
days. Only an account maintained at a domestic financial institution which is
an Automated Clearing House member may be so designated. To establish a
Dreyfus-AUTOMATIC Asset Builder account, you must file an authorization form
with the Transfer Agent. You may obtain the necessary authorization form by
calling 1-800-645-6561. You may cancel your participation in this Privilege
or change the amount of your purchase at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671, or, if for Dreyfus retirement plan accounts, to
The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode
Island 02940-6427. The notification will be effective three business days
following receipt. The Fund may modify or terminate this Privilege at any
time or charge a service fee. No such fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE -- Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in the
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
Death or legal incapacity will terminate your participation in this
Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Fund may
terminate your participation upon 30 days' notice to you.
DREYFUS PAYROLL SAVINGS PLAN -- Dreyfus Payroll Savings Plan permits you to
purchase Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, you may
have part or all of your paycheck transferred to your existing Dreyfus
account electronically through the Automated Clearing House system at each
pay period. To establish a Dreyfus Payroll Savings Plan account, you must
file an authorization form with your employer's payroll department. Your
employer must complete the reverse side of the form and return it to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may change the amount of purchase or cancel the authorization only by
written notification to your employer. It is the sole responsibility of your
employer, not the Distributor, The Dreyfus Corporation, the Fund, the
Transfer Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for this Privilege.
DREYFUS STEP PROGRAM -- Dreyfus Step Program enables you to purchase Fund
shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-AUTOMATIC-Asset BuilderRegistration Mark, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a
Dreyfus Step Program account, you must supply the necessary information on
the Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing your participation in Dreyfus-AUTOMATIC Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the
case may be, as provided under the terms of such Privilege(s). The Fund may
modify or terminate this Program at any time. Investors who wish to purchase
Fund shares through the Dreyfus Step Program in conjunction with a
Dreyfus-sponsored retirement plans may do so only for IRAs, SEP- IRAs and IRA
"Rollover Accounts."
DREYFUS DIVIDEND OPTIONS -- Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if any,
paid by the Fund in shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. Shares of the other fund will be purchased at
Page 11
the then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced sales
load. See "Shareholder Services" in the Statement of Additional Information.
Dreyfus Dividend ACH permits you to transfer electronically dividends or
dividends and capital gain distributions, if any, from the Fund to a
designated bank account. Only such an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. Banks may charge a fee for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dreyfus Dividend Sweep. The Fund may modify or
terminate these privileges at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs or other
retirement plans are not eligible for Dreyfus Dividend Sweep.
AUTOMATIC WITHDRAWAL PLAN -- The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, the Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS -- The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; or for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time. When a request
is received in proper form, the Fund will redeem the shares at the next
determined net asset value.
The Fund imposes no charges when shares are redeemed. Securities
dealers, banks and other financial institutions may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the redemption
request. The value of the shares redeemed may be more or less than their
original cost, depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDERRegistration
Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER
AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK
CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-
AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR
MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF
EIGHT BUSINESS DAYS
Page 12
AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS
TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST
WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR
SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT
COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO
THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE
AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Wire
Redemption Privilege, the Telephone Redemption Privilege or the Dreyfus
TELETRANSFER Privilege. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities. The Fund reserves the right to refuse any request made
by wire or telephone, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
The Fund may modify or terminate any redemption Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans,
and shares for which certificates have been issued, are not eligible for the
Wire Redemption, Telephone Redemption or Dreyfus TELETRANSFER Privilege.
You may redeem shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system), from any person representing himself or herself to be you
and reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent
may be liable for any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement
plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Redemption requests may be delivered in
person only to a Dreyfus Financial Center. THESE REQUESTS WILL BE FORWARDED
TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location
of the nearest Dreyfus Financial Center, please call one of the telephone
numbers listed under "General Information." Redemption requests must be
signed by each shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit
Page 13
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program.
If you have any questions with respect to signature-guarantees, please call
one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day)made out to the owners of record and mailed
to your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
DREYFUS TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by calling l-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which it
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of The
Dreyfus Corporation, an amount not to exceed an annual rate of .25 of 1% of
the value of the Fund's average daily net assets for certain allocated
expenses of providing personal services and/or maintaining shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares and pays dividends from net investment
income quarterly, and distributes net realized securities gains, if any, once
a year, but it may make distributions on a more frequent basis to comply with
the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose whether
to receive dividends and distributions in cash or to reinvest in additional
Fund shares at net asset value. All expenses are accrued daily and deducted
before declaration of dividends to investors.
Page 14
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund will be taxable to U.S. shareholders
as ordinary income whether received in cash or reinvested in Fund shares.
Depending upon the composition of the Fund's income, all or a portion of the
dividends derived from net investment income may qualify for the dividends
received deduction allowable to certain U.S. corporations. Distributions from
net realized long-term securities gains of the Fund will be taxable to U.S.
shareholders as long-term capital gains for Federal income tax purposes,
regardless of how long shareholders have held their Fund shares and whether
such distributions are received in cash or reinvested in shares. The Code
provides that the net capital gain of an individual generally will not be
subject to Federal income tax at a rate in excess of 28%. Dividends and
distributions may be subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by
the Fund to a foreign investor as well as the proceeds of any redemptions
from a foreign investor's account, regardless of the extent to which gain or
loss may be realized, generally will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor certifies his
non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended August 31, 1996 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify if such qualification is
in the best interests of its shareholders. Such qualification relieves the
Fund of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
Page 15
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, average annual total return and/or total
return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of current
yield may reflect absorbed expenses pursuant to any undertaking that may be
in effect. See "Management of the Fund."
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, or for shorter periods depending upon the
length of time during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Standard & Poor's 500 Composite Stock Price Index,
Standard & Poor's MidCap 400 Index, the Dow Jones Industrial Average,
Morningstar, Inc. and other industry publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on June 9, 1992, and
commenced operations on September 30, 1992. The Fund is authorized to issue
300 million shares of Common Stock, par value $.001 per share. Each share has
one vote.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of auditors. However, pursuant to the Fund's By-laws, the
holders of at least l0% of the shares outstanding and entitled to vote may
require the Fund to hold a special meeting of shareholders for purposes of
removing a Board member from office and for any other purpose. Fund
shareholders may remove a Board member by the affirmative vote of a majority
of the Fund's outstanding voting shares. In addition, the Fund's Board will
call a meeting of shareholders for
Page 16
the purpose of electing Board members if, at any time, less than a majority
of the Board members then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561. In New York City, call 1-718-895-1206; outside the U.S.
and Canada, call 516-794-5452.
Page 17
APPENDIX
INVESTMENT TECHNIQUES
LEVERAGE -- Leveraging will exaggerate the effect on net asset value of any
increase or decrease in the market value of the Fund's portfolio. Money
borrowed for leveraging will be limited to 331/3% of the value of the Fund's
total assets. These borrowings will be subject to interest costs which may or
may not be recovered by appreciation of the securities purchased; in certain
cases, interest costs may exceed the return received on the securities
purchased.
The Fund may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves the transfer by the Fund
of an underlying debt instrument in return for cash proceeds based on a
percentage of the value of the security. The Fund retains the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Fund repurchases the security at principal plus accrued
interest. Except for these transactions, the Fund's borrowings generally will
be unsecured.
LENDING PORTFOLIO SECURITIES -- The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest, dividends or other
distributions payable on the loaned securities which affords the Fund an
opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed 331/3%
of the value of the Fund's total assets, and the Fund will receive collateral
consisting of cash, U.S. Government securities or irrevocable letters of
credit which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. The Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund.
USE OF DERIVATIVES -- The Fund may invest in the types of Derivatives
enumerated under "Description of the Fund--Investment Considerations and
Risks--Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objective and Management
Policies_Management Policies_Derivatives" in the Statement of Additional
Information.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level
of risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses if its
Derivatives were poorly correlated with its other investments or if the Fund
were unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable
changes in the prices for Derivatives.
Although the Fund will not be a commodity pool, Derivatives subject
the Fund to the rules of the Commodity Futures Trading Commission, which
limit the extent to which the Fund can invest in certain Derivatives. The
Fund may invest in futures contracts and options with respect thereto for
hedging purposes without limit. However, the Fund may not invest in such
contracts and options for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such con-
Page 18
tracts and options; provided, however, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded
in calculating the 5% limitation.
The Fund may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. The Fund may write
(i.e., sell) covered call and put option contracts to the extent of 20% of
the value of its net assets at the time such option contracts are written.
When required by the Securities and Exchange Commission, the Fund will set
aside permissible liquid assets in a segregated account to cover its
obligations relating to transactions in Derivatives. To maintain this
required cover, the Fund may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate a
Derivative position at a reasonable price.
FORWARD COMMITMENTS -- The Fund may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment take
place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate receivable on a forward commitment
or when-issued security are fixed when the Fund enters into the commitment,
but the Fund does not make payment until it receives delivery from the
counterparty. The Fund will commit to purchase such securities only with the
intention of actually acquiring the securities, but the Fund may sell these
securities before the settlement date if it is deemed advisable. A segregated
account of the Fund consisting of permissible liquid assets at least equal at
all times to the amount of the commitments will be established and maintained
at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CONVERTIBLE SECURITIES -- Convertible securities may be converted at either a
stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed-income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in right of
payment to all equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the subordination feature,
however, convertible securities typically have lower ratings than similar
non-convertible securities.
WARRANTS _ A warrant is an instrument issued by a corporation which gives the
holder the right to subscribe to a specified amount of the corporation's
capital stock at a set price for a specified period of time. The Fund may
invest up to 2% of its net assets in warrants, except that this limitation
does not apply to warrants purchased by the Fund that are sold in units with,
or attached to, other securities.
MORTGAGE-RELATED SECURITIES -- Mortgage-related securities are a form of
Derivative collateralized by pools of mortgages. The mortgage-related
securities which may be purchased include those with fixed, floating and
variable interest rates, those with interest rates that change based on
multiples of changes in interest rates and those with interest rates that
change inversely to changes in interest rates, as well as stripped
mortgage-backed securities. Stripped mortgage-backed securities usually are
structured with two classes that receive different proportions of interest
and principal distributions on a pool of mortgage-backed securities or whole
loans. A common type of stripped mortgage-backed security will have one class
receiving some of the interest and most of the principal from the mortgage
collateral, while the other class will receive most of the interest and the
remainder of the principal. Although certain mortgage-related securities are
guaranteed by a third party or otherwise similarly secured, the market value
of the security, which may fluctuate, is not secured. If a mortgage-related
security is purchased at a premium, all or part of the premium may be lost if
there is a decline in the market value of the security, whether resulting
from changes in interest rates or prepayments on the underlying mortgage
collateral. As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest
rates. However, although the value of a mortgage-related security may decline
when interest rates rise, the converse is not necessarily true,
Page 19
since in periods of declining interest rates the mortgages underlying the
security are more likely to be prepaid. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages, and, therefore, it is not possible
to predict accurately the security's return to the Fund. Moreover, with
respect to stripped mortgage-backed securities, if the underlying mortgage
securities experience greater than anticipated prepayments of principal, the
Fund may fail to fully recoup its initial investment even if the securities
are rated in the highest rating category by a nationally recognized
statistical rating organization. During periods of rapidly rising interest
rates, prepayments of mortgage-related securities may occur at slower than
expected rates. Slower prepayments effectively may lengthen a mortgage-
related security's expected maturity which generally would cause the value of
such security to fluctuate more widely in response to changes in interest
rates. Were the prepayments on the Fund's mortgage-related securities to
decrease broadly, the Fund's effective duration, and thus sensitivity to
interest rate fluctuations, would increase. For further discussion concerning
the investment considerations involved, see "Description of the Fund --
Investment Considerations and Risks -- Fixed-Income Securities" and "Illiquid
Securities" below.
ASSET-BACKED SECURITIES -- Asset-backed securities are a form of Derivative.
The securitization techniques used for asset-backed securities are similar to
those used for mortgage-related securities. These securities include debt
securities and securities with debt-like characteristics. The collateral for
these securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital account receivables. The Fund may
invest in these and other types of asset-backed securities that may be
developed in the future.
Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities may provide the
Fund with a less effective security interest in the related collateral than
do mortgage-backed securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available
to support payments on these securities.
MONEY MARKET INSTRUMENTS -- The Fund may invest, in the circumstances
described under "Description of the Fund--Management Policies," in the
following types of money market instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support to such U.S. Government-sponsored agencies and instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
BANK OBLIGATIONS. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Fund
Page 20
may be subject to additional investment risks that are different in some
respects from those incurred by a fund which invests only in debt obligations
of U.S. domestic issuers. See "Description of the Fund_Investment
Considerations and Risks_Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Fund will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's,
A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated at least Aa3 by Moody's or
AA- by S&P, Fitch or Duff, or (c) if unrated, determined by The Dreyfus
Corporation to be of comparable quality to those rated obligations which may
be purchased by the Fund.
ZERO COUPON SECURITIES _ The Fund may invest in zero coupon U.S. Treasury
securities, which are Treasury Notes and Bonds that have been stripped of
their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Zero coupon securities also are issued by corporations and financial
institutions which constitute a proportionate ownership of the issuer's pool
of underlying U.S. Treasury securities. A zero coupon security pays no
interest to its holder during its life and is sold at a discount to its face
value at maturity. The market prices of zero coupon securities generally are
more volatile than the market prices of securities that pay interest
periodically and are likely to respond to a greater degree to changes in
interest rates than non-zero coupon securities having similar maturities and
credit qualities.
ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, certain mortgage-backed
securities and certain privately negotiated, non-exchange traded options and
securities used to cover such options. As to these securities, the Fund is
subject to a risk that should the Fund desire to sell them when a ready buyer
is not available at a price the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 21
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Page 23
Balanced
Fund, Inc.
Prospectus
Registration Mark
Copy Rights 1997, Dreyfus Service Corporation
222p010297
Page 24
DREYFUS BALANCED FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 2, 1997
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Balanced Fund, Inc. (the "Fund"), dated January 2, 1997, as it
may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtis Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free -- 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . B-10
Management Agreement. . . . . . . . . . . . . . . . . . . B-14
Purchase of Shares. . . . . . . . . . . . . . . . . . . . B-16
Shareholder Services Plan . . . . . . . . . . . . . . . . B-17
Redemption of Shares. . . . . . . . . . . . . . . . . . . B-18
Shareholder Services. . . . . . . . . . . . . . . . . . . B-20
Portfolio Transactions. . . . . . . . . . . . . . . . . . B-23
Determination of Net Asset Value. . . . . . . . . . . . . B-23
Dividends, Distributions and Taxes. . . . . . . . . . . . B-24
Performance Information . . . . . . . . . . . . . . . . . B-25
Information About the Fund. . . . . . . . . . . . . . . . B-26
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . . B-26
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . B-28
Financial Statements. . . . . . . . . . . . . . . . . . . B-33
Report of Independent Auditors. . . . . . . . . . . . . . B-45
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities acquired
by the Fund under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be
loans by the Fund. In an attempt to reduce the risk of incurring a loss on
a repurchase agreement, the Fund will enter into repurchase agreements only
with domestic banks with total assets in excess of $1 billion, or primary
government securities dealers reporting to the Federal Reserve Bank of New
York, with respect to securities of the type in which the Fund may invest,
and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. These
investments include variable amount master demand notes, which are
obligations that permit the Fund to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements
between the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no established
secondary market for these obligations, although they are redeemable at
face value, plus accrued interest, at any time. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies, and the Fund may invest
in them only if at the time of an investment the borrower meets the
criteria set forth in the Fund's Prospectus for other commercial paper
issuers.
Convertible Securities. Although to a lesser extent than with fixed-
income securities generally, the market value of convertible securities
tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion
feature, the market value of convertible securities tends to vary with
fluctuations in the market value of the underlying common stock. A unique
feature of convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the
market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable
stream of income with generally higher yields than common stocks. There
can be no assurance of current income because the issuers of the
convertible securities may default on their obligations. A convertible
security, in addition to providing fixed income, offers the potential for
capital appreciation through the conversion feature, which enables the
holder to benefit from increases in the market price of the underlying
common stock. There can be no assurance of capital appreciation, however,
because securities prices fluctuate. Convertible securities, however,
generally offer lower interest or dividend yields than non-convertible
securities of similar quality because of the potential for capital
appreciation.
Mortgage-Related Securities--Government-Agency Securities.
Mortgage-related securities issued by the Government National Mortgage
Association ("GNMA") include GNMA Mortgage Pass-Through Certificates (also
known as "Ginnie Maes") which are guaranteed as to the timely payment of
principal and interest by GNMA and such guarantee is backed by the full
faith and credit of the United States. GNMA is a wholly-owned U.S.
Government corporation within the Department of Housing and Urban
Development. GNMA certificates also are supported by the authority of GNMA
to borrow funds from the U.S. Treasury to make payments under its
guarantee.
Mortgage-Related Securities--Government-Related Securities.
Mortgage-related securities issued by the Federal National Mortgage
Association ("FNMA") include FNMA Guaranteed Mortgage Pass-Through
Certificates (also known as "Fannie Maes") which are solely the obligations
of the FNMA and are not backed by or entitled to the full faith and credit
of the United States. The FNMA is a government-sponsored organization
owned entirely by private stockholders. Fannie Maes are guaranteed as to
timely payment of principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). FHLMC is a corporate
instrumentality of the United States created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment
of interest, which is guaranteed by FHLMC. FHLMC guarantees either
ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not
readily marketable, the Fund will endeavor, to the extent practicable, to
obtain the right to registration at the expense of the issuer. Generally,
there will be a lapse of time between the Fund's decision to sell any such
security and the registration of the security permitting sale. During any
such period, the price of the securities will be subject to market
fluctuations. However, where a substantial market of qualified
institutional buyers has developed for certain unregistered securities
purchased by the Fund pursuant to Rule 144A under the Securities Act of
1933, as amended, the Fund intends to treat such securities as liquid
securities in accordance with procedures approved by the Fund's Board.
Because it is not possible to predict with assurance how the market for
specific restricted securities sold pursuant to Rule 144A will develop, the
Fund's Board has directed the Manager to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level of
illiquidity in its investment portfolio during such period.
Management Policies
Leverage. For borrowings for investment purposes, the Investment
Company Act of 1940, as amended (the "1940 Act"), requires the Fund to
maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the required coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell some of its
portfolio securities within three days to reduce the amount of its
borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. The Fund also may be required to maintain minimum average balances
in connection with such borrowing or pay a commitment or other fee to
maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate. To the extent the Fund
enters into a reverse repurchase agreement, the Fund will maintain in a
segregated custodial account permissible liquid assets at least equal to
the aggregate amount of its reverse repurchase obligations, plus accrued
interest, in certain cases, in accordance with releases promulgated by the
Securities and Exchange Commission. The Securities and Exchange Commission
views reverse repurchase transactions as collateralized borrowings by the
Fund.
Lending Portfolio Securities. In connection with its securities
lending transactions, the Fund may return to the borrower or a third party
which is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of collateral
received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must
be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; (5) the Fund may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the loaned
securities may pass to the borrower, the Fund's Board must terminate the
loan and regain the right to vote the securities if a material event
adversely affecting the investment occurs.
Derivatives. The Fund may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Fund to invest
than "traditional" securities would.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. The Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and
the International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London
International Financial Futures Exchange and the Sydney Futures Exchange
Limited. Foreign markets may offer advantages, such as trading
opportunities or arbitrage positions, not available in the United States.
Foreign markets, however, may have greater risk potential than domestic
markets. For example, some foreign exchanges are principal markets so that
no common clearing facility exists and an investor may look only to the
broker for performance of the contract. In addition, any profits that the
Fund might realize in trading could be eliminated by adverse changes in the
exchange rate, or the Fund could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities that are
traded on domestic exchanges and those that are not. Unlike trading on
domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Fund that
could adversely affect the value of its net assets. Although the Fund
intends to purchase or sell futures contracts only if there is an active
market for such contracts, no assurance can be given that a liquid market
will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant
market and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract. For example,
if the Fund uses futures to hedge against the possibility of a decline in
the market value of securities held in its portfolio and the prices of such
securities instead increase, the Fund will lose part or all of the benefit
of the increased value of securities that it has hedged because it will
have offsetting losses in its future positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. The Fund may have
to sell such securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Fund may be required to segregate permissible
liquid assets in connection with its futures transactions in an amount
generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting the Fund's ability
otherwise to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell stock index
futures contracts. A stock index futures contract obligates the Fund to
pay or receive an amount of cash equal to a fixed dollar amount specified
in the futures contract multiplied by the difference between the settlement
price of the contract on the contract's last trading day and the value of
the index based on the stock prices of the securities that comprise it at
the opening of trading in such securities on the next business day.
The Fund may purchase and sell currency futures. A foreign currency
future obligates the Fund to purchase or sell an amount of a specific
currency at a future date at a specific price.
The Fund may purchase and sell interest rate futures contracts. An
interest rate future obligates the Fund to purchase or sell an amount of a
specific debt security at a future date at a specific price.
Options--In General. The Fund may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell,
the underlying security or securities at the exercise price at any time
during the option period, or at a specific date. Conversely, a put option
gives the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security or securities at the exercise price
at any time during the option period, or at a specific date.
A covered call option written by the Fund is a call option with
respect to which the Fund owns the underlying security or otherwise covers
the transaction by segregating cash or other liquid assets. A put option
written by the Fund is covered when, among other things, cash or liquid
securities having a value equal to or greater than the exercise price of
the option are placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken. The principal reason for writing
covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. The Fund receives a premium from writing covered call or
put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts
or suspensions in one or more options. There can be no assurance that
similar events or events that may otherwise interfere with the timely
execution of customer orders, will not recur. In such event, it may not be
possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position.
Specific Options Transactions. The Fund may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of
specific securities) or stock indices listed on national securities
exchanges or traded in the over-the-counter market. An option on a stock
index is similar to an option in respect of specific securities, except
that settlement does not occur by delivery of the securities comprising the
index. Instead, the option holder receives an amount of cash if the
closing level of the stock index upon which the option is based is greater
than, in the case of a call, or less than in the case of a put, the
exercise price of the option. Thus, the effectiveness of purchasing or
writing stock index options will depend upon price movements in the level
of the index rather than the price of a particular stock.
The Fund may purchase and sell call and put options on foreign
currency. These options convey the right to buy or sell the underlying
currency at a price that is expected to be lower or higher than the spot
price of the currency at the time the option is exercised or expires.
The Fund may purchase cash-settled options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps
in pursuit of its investment objective. Interest rate swaps involve the
exchange by the Fund with another party of their respective commitments to
pay or receive interest (for example, an exchange of floating-rate payments
for fixed-rate payments) denominated in U.S. dollars or a foreign currency.
Equity index swaps involve the exchange by the Fund with another party of
cash flows based upon the performance of an index or a portion of an index
of securities that usually includes dividends. A cash-settled option on a
swap gives the purchaser the right, but not the obligation, in return for
the premium paid, to receive an amount of cash equal to the value of the
underlying swap as of the exercise date. These options typically are
purchased in privately negotiated transactions from financial institutions,
including securities brokerage firms.
Successful use of futures by the Fund is subject to the Manager's
ability to predict correctly movements in the prices of individual stocks,
the stock market generally, foreign currencies or interest rates. To the
extent such predictions are incorrect, the Fund may incur losses.
Future Developments. The Fund may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and
any other Derivatives which are not presently contemplated for use by the
Fund or which are not currently available but which may be developed, to
the extent such opportunities are both consistent with the Fund's
investment objective and legally permissible for the Fund. Before entering
into such transactions or making any such investment, the Fund will provide
appropriate disclosure in its Prospectus or Statement of Additional
Information.
Forward Commitments. Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (generally changing in
the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception
of the creditworthiness of the issuer and changes, real or anticipated, in
the level of interest rates. Securities purchased on a forward commitment
or when-issued basis may expose the Fund to risks because they may
experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued basis can involve the additional risk that the
yield available in the market when the delivery takes place actually may be
higher than that obtained in the transaction itself. Purchasing securities
on a forward commitment or when-issued basis when the Fund is fully or
almost fully invested may result in greater potential fluctuation in the
value of the Fund's net assets and its net asset value per share.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 7 as
fundamental policies, which cannot be changed without approval by the
holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. Investment restrictions numbered 8 through 13
are not fundamental policies and may be changed by vote of a majority of
the Board at any time. The Fund may not:
1. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
2. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but the Fund may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate. In particular, the Fund may
purchase mortgage-backed securities and real estate investment trust
securities.
3. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this investment restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
4. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board.
5. Act as an underwriter of securities of other issuers, except to
the extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
6. Invest more than 25% of its assets in the securities of issuers
in any single industry, provided there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
7. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 1, 3, 9 and 10 may be deemed to give rise to a
senior security.
8. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and call
options and the purchase of securities on a when-issued or forward
commitment basis and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices.
10. Purchase, sell or write puts, calls or combinations thereof,
except as may be described in the Fund's Prospectus and this Statement of
Additional Information.
11. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.
12. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 15% of the value of the Fund's net assets would
be so invested.
13. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act, or those received as part of a merger
or consolidation.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interest of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Board members and officers of the Fund, together with information as
to their principal business occupations during at least the last five
years, are shown below. Each Board member who is deemed to be an
"interested person" of the Fund, as defined in the 1940 Act, is indicated
by an asterisk.
Board Members
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. He is
also Chairman of the Board of the Noel Group, Inc., a venture capital
company; and a director of The Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads, specialty yarns, home
furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals, and automotive and other
hardware, and Staffing Resources, Inc. For more than five years prior
to January 1995, he was President, a director and, until August 1994,
Chief Operating Officer of the Manager and Executive Vice President
and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager and, until August 24, 1994, the Fund's
Distributor. From August 1994 to December 31, 1994, he was a director
of Mellon Bank Corporation. Mr. DiMartino is 53 years old and his
address is c/o The Noel Group, Inc., 667 Madison Avenue, Suite 2500,
New York, New York 10021.
*DAVID P. FELDMAN, Board Member. Chairman and Chief Executive Officer of
AT&T. He is also a trustee of Corporate Property Investors, a real
estate investment company, and a director of several mutual funds in
the 59 Wall Street Mutual Funds group and of The Jeffrey Company, a
private investment company. Mr. Feldman is 57 years old and his
address is One Oak Way, Berkeley Heights, New Jersey 07922.
JOHN M. FRASER, JR., Board Member. President of Fraser Associates, a
service company for planning and arranging corporate meetings and
other events. He was Executive Vice President of Flagship Cruises
Ltd. from September 1975 to June 1978. Prior thereto, he was Senior
Vice President and Resident Director of the Swedish-American Line for
the United States and Canada. Mr. Fraser is 75 years old and his
address is 133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Board Member. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University since January 1992. He is also a director of MidOcean
Reinsurance Co. Ltd., Cooke & Bieler, Inc., investment counselors,
NASD Regulation, Inc. and the Federal Reserve Board of Boston. He was
Under Secretary of the Treasury for Finance at the U.S. Treasury
Department from May 1989 to January 1992. For more than five years
prior thereto, he was a Professor of Finance at the Graduate School of
Business Administration of Harvard University. Mr. Glauber is 57
years old and his address is 79 John F. Kennedy Street, Cambridge,
Massachusetts 02138.
JAMES F. HENRY, Board Member. President of the CPR Institute for Dispute
Resolution, a non-profit organization principally engaged in the
development of alternatives to business litigation. He was of counsel
to the law firm of Lovejoy, Wasson & Ashton from October 1975 to
December 1976 and from October 1979 to June 1983, and was a partner of
that firm from January 1977 to September 1979. He was President and a
director of the Edna McConnell Clark Foundation, a philanthropic
organization, from September 1971 to December 1976. Mr. Henry is 66
years old and his address is c/o CPR Institute for Dispute Resolution,
366 Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Board Member. Director of Merchandise and
Marketing for Corporate Property Investors, a real estate investment
company. From 1974 to 1976, she was owner and manager of a
merchandise and marketing consulting firm. Prior to 1974, she was a
Vice President of Macy's, New York. Mrs. Jacobs is 71 years old and
her address is c/o Corporate Property Investors, 305 East 47th Street,
New York, New York 10017.
IRVING KRISTOL, Board Member. John M. Olin Distinguished Fellow of the
American Enterprise Institute for Public Policy Research, co-editor of
The Public Interest magazine, and an author or co-editor of several
books. From May 1981 to December 1994, he was a consultant to the
Manager on economic matters; from 1969 to 1988, he was Professor of
Social Thought at the Graduate School of Business Administration, New
York University; from September 1969 to August 1979, he was Henry R.
Luce Professor of Urban Values at New York University. Mr. Kristol is
76 years old and his address is c/o The Public Interest, 1112 16th
Street, N.W., Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Board Member. President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center. He is also a director
emeritus of Pfizer, Inc., a pharmaceutical company, where he served as
a director from 1978 to 1996; a director of Tulerik, Inc., a
biotechnology company; and a general partner of LINC Venture Lease
Partners II, L.P., a limited partnership engaged in leasing. He was
Vice President for Health Sciences and Director of the Cancer Center
at Columbia University from 1973 to 1980, Professor of Medicine and of
Human Genetics and Development at Columbia University from 1968 to
1982; and a director of Life Technologies, Inc., a life science
company providing products for cell and molecular biology and
microbiology, from 1986 to 1996, and of Biotechnology General, Inc., a
biotechnology development company from 1992 to 1993. Dr. Marks is 70
years old and his address is c/o Memorial Sloan-Kettering Cancer
Center, 1275 York Avenue, New York, New York 10021.
DR. MARTIN PERETZ, Board Member. Editor-in-Chief of The New Republic
magazine and a lecturer in Social Studies at Harvard University, where
he has been a member of the faculty since 1965. He is a trustee of
The Center for Blood Research at the Harvard Medical School, and of
the Academy for Liberal Education, an accrediting agency for colleges
and universities certified by the U.S. Department of Education, and a
director of LeukoSite Inc., a biopharmaceutical company. From 1988 to
1991 he was a director of Carmel Container Corporation. Dr. Peretz is
57 years old and his address is c/o The New Republic, 1220 19th
Street, N.W., Washington, D.C. 20036.
BERT W. WASSERMAN, Board Member. Financial Consultant. He is also and a
director of The New Germany Fund, Mountasia Entertainment
International, Inc., the Lillian Vernon Corporation, Winstar
Communications, Inc. and International Discount Telecommunications
Corporation. From January 1990 to March 1995, he was Executive Vice
President and Chief Financial Officer, and from January 1990 to March
1993, a director, of Time Warner Inc; from 1981 to 1990, he was a
member of the office of the President and a director of Warner
Communications, Inc. Mr. Wasserman is 64 years old and his address is
126 East 56th Street, Suite 12 North, New York, New York 10022-3613.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year
ended August 31, 1996, and by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Board member's total compensation) for
the year ended December 31, 1995, is as follows:
Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Members
Joseph S. DiMartino $2,813 $448,618(93)
David P. Feldman $2,250 $113,783(37)
John M. Fraser, Jr. $2,250 $ 58,606(14)
Robert R. Glauber $2,250 $ 97,503(20)
James F. Henry $2,250 $ 53,500(10)
Rosalind Gersten Jacobs $2,000 $ 92,500(20)
Irving Kristol $2,250 $ 53,500(10)
Dr. Paul A. Marks $2,250 $ 49,427(10)
Dr. Martin Peretz $2,250 $ 53,500(10)
Bert W. Wasserman $2,250 $ 54,739(10)
___________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1,091 for all Board members as a group.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the
Fund who are not "interested persons" of the Fund, as defined in the 1940
Act, will be selected and nominated by the Board members who are not
"interested persons" of the Fund.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Operating
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. Prior to December 1991, she served
as Vice President and Controller, and later as Senior Vice President,
of The Boston Company Advisors, Inc. She is 39 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President,
General Counsel, Secretary and Clerk of the Distributor and an officer
of other investment companies advised or administered by the Manager.
From February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray. He is 32 years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager of First Data
Investor Services Group; and from 1989 to 1994, he was Vice President,
Assistant Treasurer and Tax Director - Mutual Funds of The Boston
Company, Inc. He is 40 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor, Vice President and Manager of Treasury Services and
Administration of Funds Distributor, Inc. and an officer of other
investment companies advised or administered by the Manager. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 32 years old.
ELIZABETH A. BACHMAN, Vice President and Assistant Secretary. Assistant
Vice President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 27 years
old.
DOUGLAS C. CONROY, Vice President and Assistant Treasurer. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank and Trust Company; and from December
1991 to March 1993, he was employed as a Fund Accountant at The Boston
Company, Inc. He is 27 years old.
MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor and an officer of other investment companies advised
or administered by the Manager. From August 1993 to May 1996, he
attended Hofstra University School of Law. Prior to August 1993, he
was employed as an Associate Examiner at the National Association of
Securities Dealers. He is 27 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor
and an officer of other investment companies advised or administered
by the Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc., where he held various management positions in
the Corporate Finance and Treasury areas. He is 34 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on November 29, 1996.
The following persons are known by the Fund to own of record 5% or
more of the Fund's outstanding voting securities as of November 29, 1996:
Dreyfus Trust Company, trustee for FDC Incentive Savings Plan, First Data
Corporation, 1 Cabot Road, Medford, MA 02155-5141--19.90%; Charles Schwab &
Co. Inc.--Reinvestment Account, Mutual Funds Department, 101 Montgomery
Street, San Francisco, CA 94104-4122--5.26%; Boston Safe Deposit and Trust
Company, Trustee for Dominion Resources EE Savings, One Cabot Road,
Medford, MA 02155-5158--13.42%. Under applicable trust law, Fund shares
held in trust by the Dreyfus Trust Company and Boston Safe Deposit and
Trust Company are beneficially owned by plan participants having an
interest in such trust. A shareholder who beneficially owns, directly or
indirectly, more than 25% of the Fund's voting securities may be deemed a
"control person" (as defined in the 1940 Act) of the Fund.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994, with the Fund, which is
subject to annual approval by (i) the Fund's Board or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance also is approved
by a majority of the Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting on such approval. The Board,
including a majority of the Board members who are not "interested persons"
of any party to the Agreement, last approved the Agreement at a meeting
held on May 29, 1996. Shareholders of the Fund approved the Agreement on
August 2, 1994. The Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of the
Fund's shares, or, on not less than 90 days' notice, by the Manager. The
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman--Distribution and a director; Philip L. Toia, Vice
Chairman--Operations and Administration and a director; William T.
Sandalls, Jr., Senior Vice President and Chief Financial Officer; William
F. Glavin, Jr., Vice President--Corporate Development; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Patrice M. Kozlowski, Vice
President--Corporate Communications; Mary Beth Leibig, Vice President--
Human Resources; Jeffrey N. Nachman, Vice President--Mutual Fund
Accounting; Andrew S. Wasser, Vice President--Information Services; Elvira
Oslapas, Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and Julian M. Smerling, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions, and provides
the Fund with portfolio managers who are authorized by the Fund's Board to
execute purchases and sales of securities. The Fund's portfolio managers
are Donald C. Geogerian, Timothy M. Ghriskey, Kevin M. McClintock, C.
Matthew Olson and Ernest G. Wiggins, Jr. The Manager also maintains a
research department with a professional staff of portfolio managers and
securities analysts who provide research services for the Fund as well as
for other funds advised by the Manager. All purchases and sales are
reported for the Board's review at the meeting subsequent to such
transactions.
The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes, interest,
loan commitment fees, dividends and interest on securities sold short,
brokerage fees and commissions, if any, fees of Board members who are not
officers, directors, employees or holders of 5% or more of the outstanding
voting securities of the Manager, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, all costs of insurance
obtained other than under a blanket policy covering one or more other
investment companies managed by the Manager, industry association fees,
outside auditing and legal expenses, costs of maintaining the Fund's
existence, costs of independent pricing services, costs attributable to
investor services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of preparing
and printing prospectuses for regulatory purposes and for distribution to
existing shareholders, and any extraordinary expenses. In addition, the
Fund is subject to an annual service fee for ongoing personal services
relating to shareholder accounts and services related to the maintenance of
shareholder accounts. See "Shareholder Services Plan."
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .60 of 1% of the
value of the Fund's average daily net assets. All fees and expenses are
accrued daily and deducted before declaration of dividends to shareholders.
For the fiscal years ended August 31, 1994, 1995 and 1996, the management
fees payable by the Fund amounted to $398,658, $693,265 and $1,331,747,
respectively; however, pursuant to undertakings in effect, the Manager
reduced its fee by $269,761 for the fiscal year ended August 31, 1994,
resulting in a net fee of $128,897 paid in fiscal 1994.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, such excess expense to the extent
required by state law. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies. In some
states, certain financial institutions effecting transactions in Fund
shares may be required to register as dealers pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York
Stock Exchange are open for business will be credited to the shareholder's
Fund account on the next bank business day following such purchase order.
Purchase orders made after 4:00 P.M., New York time, on any business day
the Transfer Agent and the New York Stock Exchange are open for business,
or orders made on Saturday, Sunday or any Fund holiday (e.g., when the New
York Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the
Account Application or Shareholder Services Form on file. If the proceeds
of a particular redemption are to be wired to an account at any other bank,
the request must be in writing and signature-guaranteed. See "Redemption
of Shares--Dreyfus TeleTransfer Privilege."
Transactions Through Securities Dealers. Fund shares may be purchased
and redeemed through securities dealers which may charge a nominal
transaction fee for such services. Some dealers will place the Fund's
shares in an account with their firm. Dealers also may require the
following: that the customer invest more than the Fund's stated minimum
investment; the customer not take physical delivery of share certificates;
the customer not request redemption checks to be issued in the customer's
name; fractional shares not be purchased; or other conditions.
There is no sales or service charge by the Fund or the Distributor,
although investment dealers, banks and other institutions may make
reasonable charges to investors for their services. The services provided
and the applicable fees are established by each dealer or other institution
acting independently of the Fund. The Fund has been given to understand
that these fees may be charged for customer services including, but not
limited to, same-day investment of client funds; same-day access to client
funds; advice to customers about the status of their accounts, yield
currently being paid or income earned to date; provision of periodic
account statements showing security and money market positions; other
services available from the dealer, bank or other institution; and
assistance with inquiries related to their investment. Any such fees will
be deducted monthly from the investor's account, which on smaller accounts
could constitute a substantial portion of distributions. Small, inactive,
long-term accounts involving monthly service charges may not be in the best
interest of investors. Investors should be aware that they may purchase
shares of the Fund directly from the Fund without imposition of any
maintenance or service charges, other than those already described herein.
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation for certain
allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Board for its review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board, and by the Board
members who are not "interested persons" (as defined in the 1940 Act) of
the Fund or the Manager and have no direct or indirect financial interest
in the operation of the Plan, by vote cast in person at a meeting called
for the purpose of considering such amendments. The Plan is subject to
annual approval by such vote cast in person at a meeting called for the
purpose of voting on the Plan. The Plan was last so approved on May 29,
1996. The Plan is terminable at any time by vote of a majority of the
Board members who are not "interested persons" and have no direct or
indirect financial interest in the operation of the Plan.
For the fiscal year ended August 31, 1996, the Fund reimbursed Dreyfus
Service Corporation $554,895 pursuant to the Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer Agent
receives the redemption request in proper form. Redemption proceeds
($1,000 minimum) will be transferred by Federal Reserve wire only to the
commercial bank account specified by the investor on the Account
Application or Shareholder Services Form, or to a correspondent bank if the
investor's bank is not a member of the Federal Reserve System. Fees
ordinarily are imposed by such bank and borne by the investor. Immediate
notification by the correspondent bank to the investor's bank is necessary
to avoid a delay in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board reserves the right to make payments in whole or in part
in securities (which may include non-marketable securities) or other assets
in case of an emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing shareholders. In
such event, the securities would be valued in the same manner as the Fund's
securities are valued. If the recipient sold such securities, brokerage
charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Shares of funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect
to any reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions (including
over The Dreyfus TouchRegistration Mark automated telephone system) from
any person representing himself or herself to be the investor, and
reasonably believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
personal retirement plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value as described above under "Fund
Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are made
in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available
to shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
the Dreyfus Auto-Exchange Privilege may be modified or terminated at any
time upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of another fund in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
other funds purchased pursuant to this privilege will be purchased on the
basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds which impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Fund
makes available Keogh Plans, IRAs, including SEP-IRAs and IRA "Rollover
Accounts," and 403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including an SEP-IRA, may request from
the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum or subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA may also open a
non-working spousal IRA with a minimum investment of $250.
The investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
PORTFOLIO TRANSACTIONS
The Manager supervises the placement of orders on behalf of the Fund
for the purchase or sale of portfolio securities. Allocation of brokerage
transactions, including their frequency, is made in the Manager's best
judgment and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt execution of orders at the most favorable
net price. Subject to this consideration, the brokers selected include
those that supplement the Manager's research facilities with statistical
data, investment information, economic facts and opinions. Information so
received is in addition to and not in lieu of services required to be
performed by the Manager and the Manager's fee is not reduced as a
consequence of the receipt of such supplemental information. Such
information may be useful to the Manager in serving both the Fund and other
clients which it advises and, conversely, supplemental information obtained
by the placement of business of other clients may be useful to the Manager
in carrying out its obligation to the Fund. Brokers also are selected
because of their ability to handle special executions such as are involved
in large block trades or broad distributions, provided the primary
consideration is met. Large block trades, in certain cases, may result
from two or more clients the Manager might advise being engaged
simultaneously in the purchase or sale of the same security. Certain of
the Fund's transactions in securities of foreign issuers may not benefit
from the negotiated commission rates available to the Fund for transactions
in securities of domestic issuers. Foreign exchange transactions are made
with banks or institutions in the interbank market at prices reflecting a
mark-up or mark-down and/or commission. When transactions are executed in
the over-the-counter market, the Fund will deal with the primary market
makers unless a more favorable price or execution otherwise is obtainable.
Portfolio turnover may vary from year to year, as well as within a
year. High turnover rates are likely to result in comparatively greater
brokerage expenses. The overall reasonableness of brokerage commissions
paid is evaluated by the Manager based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
For the fiscal years ended 1994, 1995 and 1996, the Fund paid total
brokerage commissions of $71,142, $104,786 and $663,260, respectively, none
of which was paid to the Distributor. The increase in the brokerage
commissions paid in 1996 is a result of the significant restructuring of
the Fund's portfolio. The above figures for brokerage commissions do not
include gross spreads and concessions on principal transactions, which,
where determinable, amounted to $244,004, $54,186 and $301,284,
respectively, for such periods, none of which was paid to the Distributor.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."
Valuation of Portfolio Securities. Portfolio securities, including
covered call options written by the Fund, are valued at the last sale price
on the securities exchange or national securities market on which such
securities primarily are traded. Securities not listed on an exchange or
national securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except in the case of open short positions where the asked price is
used for valuation purposes. Bid price is used when no asked price is
available. Market quotations of foreign securities in foreign currencies
are translated into U.S. dollars at the prevailing rates of exchange. Any
securities or other assets for which recent market quotations are not
readily available are valued at fair value as determined in good faith by
the Board. Expenses and fees, including the management fee, are accrued
daily and taken into account for the purpose of determining the net asset
value of Fund shares.
Restricted securities, as well as securities or other assets for which
recent market quotations are not readily available, or are not valued by a
pricing service approved by the Fund's Board, are valued at fair value as
determined in good faith by the Board. The Board will review the method of
valuation on a current basis. In making their good faith valuation of
restricted securities, Board members generally will take the following
factors into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a
public market exists usually will be valued at market value less the same
percentage discount at which purchased. This discount will be revised
periodically by the Board if it believes that the discount no longer
reflects the value of the restricted securities. Restricted securities not
of the same class as securities for which a public market exists usually
will be valued initially at cost. Any subsequent adjustment from cost will
be based upon considerations deemed relevant by the Board.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management believes that the Fund qualified as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"),
for the fiscal year ended August 31, 1996. The Fund intends to continue to
so qualify if such qualification is in the best interests of its
shareholders. Qualification as a regulated investment company relieves the
Fund from any liability for Federal income taxes to the extent its earnings
are distributed in accordance with the applicable provisions of the Code.
The term "regulated investment company" does not imply the supervision of
management or investment practices or policies by any government agency.
Depending on the composition of the Fund's income, all or a portion of
the dividends paid by the Fund from net investment income may qualify for
the dividends received deduction allowable to certain U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income
of the Fund distributed to qualifying corporate shareholders will be
eligible for the dividends received deduction only to the extent that the
Fund's income consists of dividends paid by U.S. corporations. However,
Section 246(c) of the Code provides that if a qualifying corporate
shareholder has disposed of Fund shares not held for 46 days or more and
has received a dividend from net investment income with respect to such
shares, the portion designated by the Fund as qualifying for dividend
received deduction will not be eligible for such shareholder's dividend
received deduction. In addition, the Code provides other limitations with
respect to the ability of a qualifying corporate shareholder to claim the
dividends received deduction in connection with holding Fund shares.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the aggregate net asset value of his shares
below the cost of his investment. Such a dividend or distribution would be
a return on investment in an economic sense, although taxable as stated
above. In addition, the Code provides that if a shareholder holds shares
of the Fund for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on the sale of
such shares will be treated as a long-term capital loss to the extent of
the capital gain distribution received.
Investment by the Fund in securities issued or acquired at a discount,
or providing for deferred interest or for payment of interest in the form
of additional obligations could under special tax rules affect the amount,
timing and character of distributions to shareholders by causing the Fund
to recognize income prior to the receipt of cash payments. For example,
the Fund could be required to accrue a portion of the discount (or deemed
discount) at which the securities were issued each year and to distribute
such income in order to maintain its qualification as a regulated
investment company. In such case, the Fund may have to dispose of
securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund's current yield for the 30-day period ended August 31, 1996
was 3.64%. Current yield is computed pursuant to a formula which operates
as follows: The amount of the Fund's expenses accrued for the 30-day
period (net of reimbursements) is subtracted from the amount of the
dividends and interest earned (computed in accordance with regulatory
requirements) by the Fund during the period. That result is then divided
by the product of: (a) the average daily number of shares outstanding
during the period that were entitled to receive dividends, and (b) the net
asset value per share on the last day of the period less any undistributed
earned income per share reasonably expected to be declared as a dividend
shortly thereafter. The quotient is then added to 1, and that sum is
raised to the 6th power, after which 1 is subtracted. The current yield is
then arrived at by multiplying the result by 2.
The Fund's average annual total return for the 1 and 3.918 year
periods ended August 31, 1996 (the Fund's fiscal year end) was 5.19% and
10.30%, respectively. Average annual total return is calculated by
determining the ending redeemable value of an investment purchased at net
asset value per share with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking
the "n"th root of the quotient (where "n" is the number of years in the
period) and subtracting 1 from the result.
The Fund's total return for the period September 30, 1992
(commencement of operations) through August 31, 1996 (the Fund's fiscal
year end) was 46.86%. Total return is calculated by subtracting the amount
of the Fund's net asset value per share at the beginning of a stated period
from the net asset value per share at the end of the period (after giving
effect to the reinvestment of dividends and distributions during the
period), and dividing the result by the net asset value per share at the
beginning of the period.
From time to time, advertising material for a Fund may include
biographical information relating to one or more of its portfolio managers
and may refer to, or include commentary by a portfolio manager relating to
investment strategy, asset growth, current or past business, political,
economic or financial conditions and other matters of general interest to
investors. In addition, from time to time advertising materials for the
Fund may refer to Morningstar ratings and related analysis supporting the
ratings.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for the Fund during the month, and is reimbursed for
certain out-of-pocket expenses. For the period December 1, 1995 (effective
date of transfer agency agreement) through August 31, 1996, the Fund paid
the Transfer Agent $42,084.
Mellon Bank, N.A., (the "Custodian") the Manager's parent, One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, acts as custodian of the
Fund's investments. Under a custody agreement with the Fund, the Custodian
holds the Fund's securities and keeps all necessary accounts and records.
For its custody services, the Custodian receives a monthly fee based on the
market value of the Fund's assets held in custody and receives certain
securities transactions charges. For the period May 10, 1996 (effective
date of custody agreement) through August 31, 1996, the Fund paid the
Custodian $3,400.36.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX
Description of certain ratings assigned by Standard & Poor's Ratings
Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Service, L.P. ("Fitch") and Duff & Phelps Credit Rating Co. ("Duff"):
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
S&P's letter ratings may be modified by the addition of a plus (+) or
minus (-) sign designation, which is used to show relative standing within
the major rating categories, except in the AAA (Prime Grade) category.
Commercial Paper Rating
The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus sign (+) designation.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category.
The modifier 1 indicates a ranking for the security in the higher end of a
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates a ranking in the lower end of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because
of economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection
factors but still considered sufficient for prudent investment.
Considerable variability in risk during economic cycles.
Plus (+) and minus (-) signs are used with a rating symbol (except
AAA) to indicate the relative position of a credit within the rating
category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by
ample asset protection. Risk factors are minor.
<TABLE>
<CAPTION>
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL
BONDS AND NOTES-44.0% AMOUNT VALUE
__________________ _______________
<S> <C> <C>
BANKING-.9%. Citicorp, Sr. Medium-Term Notes,
7.07%, 2000.......................... $ 2,500,000 $ 2,496,363
______________
FINANCE-4.7% Associates Sr. Notes,
6 3/4%, 2001......................... 3,650,000 3,592,012
Fleet Mortgage Group, Notes,
6 1/2%, 2000......................... 2,500,000 2,451,978
Household Finance:
Sr. Medium-Term Notes,
7%, 2000............................. 2,500,000 2,493,195
Sr. Notes,
7 1/8%, 1999......................... 1,600,000 1,611,483
Wharf Capital International Limited, Notes,
8 7/8%, 2004......................... 2,600,000 2,651,431
______________
12,800,099
______________
INDUSTRIAL-3.1% Hydro Quebec, Deb.,
8.05%, 2006.......................... 2,750,000 2,886,208
PDV America, Sr. Notes,
7 1/4%, 1998......................... 3,000,000 2,969,424
Sears Roebuck Acceptance Corp.,
Medium-Term Notes,
6.86%, 2001.......................... 2,500,000 2,468,713
______________
8,324,345
______________
UTILITIES-1.7% Chilgener, Notes,
6 1/2%, 2006......................... 1,975,000 1,817,468
Indiantown Cogeneration, L.P.,
9.77%, 2020.......................... 2,500,000 2,757,031
______________
4,574,499
______________
FOREIGN-4.9% Republic of Columbia, Notes,
7 1/4%, 2003......................... 2,700,000 2,507,714
Republic of Italy, Deb.,
6 7/8%, 2023......................... 2,300,000 2,041,250
State of Israel, Bonds,
6 3/8%, 2005......................... 1,100,000 1,006,416
United Mexican States, Notes,
7.687%, 2001......................... 5,500,000(a,b) 5,522,550
Zhuhai Highway, Sr. Notes,
9 1/8%, 2006......................... 2,000,000(b) 2,042,500
______________
13,120,430
______________
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
________________ _______________
OTHER-2.9% Citibank Credit Card Master Trust,
Asset Backed Ctfs.,
Ser. 1996-1, Cl. A, Zero Coupon, 2003 $ 2,700,000 $ 1,959,660
GMAC 1993-B Grantor Trust,
Asset Backed Ctfs.,
Cl. A, 4%, 1998...................... 88,336 87,347
GS Mortgage Securities Corporation II,
Asset Backed Ctfs.,
Ser. 1996-PL, Cl. A1, 7.02%, 2027.... 2,861,686 2,824,127
MMCA Auto Owner Trust,
Asset Backed Ctfs.,
Ser. 1995-1, Cl. A, 5.70%, 2000...... 1,921,132 1,910,681
Structured Asset Securities Corporation,
Asset Backed Ctfs.,
Ser. 1996-CFL, Cl. A1B, 5.751%, 2028. 980,000 960,553
______________
7,742,368
______________
U.S. GOVERNMENT
AND AGENCIES-25.8% Federal Home Loan Mortgage Corp., Deb.,
6 1/2%, 8/15/2021.................... 1,650,000 1,538,559
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit:
Ser.93-146B, Zero Coupon,
1/31/1997 (c)................... 628,369 591,060
Ser.93-178, Cl. PB, 5%,
4/25/2006....................... 3,734 3,720
Ser.1996-M3, Cl. A1, 7.385%,
3/1/2021........................ 4,969,890 5,028,908
6 1/2%, 9/1/1999................ 2,006,526 1,980,180
6%, 5/1/2011.................... 14,067,754 13,188,520
6 1/2%, 11/1/2025............... 3,695,865 3,417,522
Overseas Private Investment,
7.63%, 7/15/2002..................... 2,314,891 2,352,393
U.S. Treasury Bonds,
7 1/4%, 5/15/2016.................... 16,750,000 16,718,594
U.S. Treasury Notes:
6 3/4%, 4/30/2000.................... 5,000,000 5,017,969
5 7/8%, 6/30/2000.................... 9,700,000 9,448,406
6 1/8%, 9/30/2000.................... 3,000,000 2,940,938
5 3/4%, 8/15/2003.................... 8,000,000 7,516,250
______________
69,743,019
______________
TOTAL BONDS AND NOTES
(cost $120,669,339).................. $118,801,123
==============
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
COMMON STOCKS-52.9% SHARES VALUE
________________ ________________
CONSUMER DURABLES-2.3% D.R. Horton,........................... 450,568 (d) $ 3,998,791
Topps.................................. 490,900 (d) 2,331,775
______________
6,330,566
______________
CONSUMER
NON-DURABLES-7.2% Authentic Fitness...................... 162,000 2,146,500
Dole Food ............................. 41,300 1,708,787
First Brands........................... 109,000 2,479,750
Jones Apparel Group.................... 86,800 (d) 4,806,550
Kimberly-Clark......................... 36,000 2,821,500
Philip Morris Cos...................... 26,000 2,333,500
Reebok International................... 84,000 3,024,000
______________
19,320,587
______________
CONSUMER SERVICES-2.4% Carnival, Cl. A........................ 97,000 2,740,250
Circus Circus Enterprises.............. 70,000 (d) 2,380,000
New York Times, Cl. A.................. 42,700 1,334,375
______________
6,454,625
______________
ELECTRONIC
TECHNOLOGY-6.1% Amdahl................................. 207,000 (d) 2,057,062
EMC.................................... 172,900 (d) 3,328,325
Harris................................. 78,000 4,797,000
International Business Machines........ 4,300 491,813
Perkin-Elmer........................... 56,000 2,905,000
United Technologies.................... 24,500 2,762,375
______________
16,341,575
______________
ENERGY MINERALS-4.1% Amerada Hess........................... 51,000 2,594,625
Phillips Petroleum..................... 69,000 2,794,500
Tosco.................................. 57,500 2,760,000
Unocal................................. 82,500 2,825,625
______________
10,974,750
______________
FINANCE-6.3% Ahmanson (H.F.)........................ 199,900 5,047,475
Bank of New York....................... 108,400 3,021,650
Chelsea GCA Realty..................... 170,400 4,962,900
Great Western Financial................ 120,100 2,972,475
Horizon Group.......................... 44,400 932,400
______________
16,936,900
______________
HEALTH SERVICES-.2% Collaborative Clinical Research........ 32,000 (d) 464,000
______________
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
_____________ _______________
HEALTH TECHNOLOGY-5.5% Glaxo Wellcome PLC, A.D.R. ............ 100,000 $ 2,850,000
Mallinckrodt Group..................... 127,600 5,167,800
Sandoz AG.............................. 2,060 2,448,339
Warner-Lambert......................... 75,000 4,462,500
______________
14,928,639
INDUSTRIAL SERVICES-1.0% Cooper Cameron......................... 52,000 (d) 2,743,000
______________
NON-ENERGY MINERALS-1.1% ASARCO................................. 54,400 1,407,600
Lone Star Industries................... 45,500 1,478,750
______________
2,886,350
______________
PROCESS INDUSTRIES-5.1% Avery Dennison......................... 34,600 1,768,925
Boise Cascade.......................... 50,100 1,690,875
Corning................................ 150,400 5,602,400
First Mississippi...................... 72,300 1,943,062
Hoechst................................ 79,000 2,766,599
______________
13,771,861
______________
PRODUCER
MANUFACTURING-1.9% Data Documents......................... 100,000 (d) 1,100,000
Loews.................................. 20,900 1,562,275
Masco.................................. 83,000 2,417,375
______________
5,079,650
______________
RETAIL TRADE- 2.7% Limited................................ 99,875 1,847,688
Pier 1 Imports......................... 180,000 3,015,000
Price/Costco........................... 123,000 (d) 2,444,625
______________
7,307,313
______________
TECHNOLOGY SERVICES-.6% Metromail.............................. 99,000 (d) 1,732,500
______________
TRANSPORTATION-.5% Airborne Freight....................... 62,500 1,476,563
______________
UTILITIES-5.9% AT&T................................... 29,700 1,559,250
British Telecommunications, A.D.R. .... 48,000 2,814,000
Century Telephone Enterprise........... 85,000 2,879,375
GTE.................................... 65,000 2,559,375
Hong Kong Telecommunications, A.D.R. .. 145,000 2,446,875
NorAm Energy........................... 254,000 3,714,750
______________
15,973,625
______________
TOTAL COMMON STOCKS
(cost $139,161,498).................. $142,722,504
==============
DREYFUS BALANCED FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
SHORT-TERM INVESTMENTS-.2% AMOUNT VALUE
________________ ___________________
REPURCHASE AGREEMENTS; Lanston (Aubrey G.) & Co., Inc.,
5.15%, dated 8/30/1996, due 9/3/1996 in the
amount of $600,343 (fully collateralized
by $612,000 U.S. Treasury Bills due 10/17/1996,
value $607,716)
(cost $600,000)........................ $ 600,000 $ 600,000
=================
TOTAL INVESTMENTS (cost $260,430,837) ................................. 97.1% $262,123,627
========= =================
CASH AND RECEIVABLES (NET).................................................. 2.9% $ 7,745,221
========= =================
NET ASSETS.................................................................. 100.0% $269,868,848
========= =================
NOTES TO STATEMENT OF INVESTMENTS:
(a) Variable rate security-interest rate subject to periodic change.
(b) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
August 31,1996, these securities amounted to $7,565,050 or approximately
2.8% of net assets.
(c) This date represents the projected maturity date. The stated
maturity date is 5/25/2023.
(d) Non-income producing.
See notes to financial statements.
DREYFUS BALANCED FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
ASSETS:
Investments in securities, at value
(cost $260,430,837)-see statement..................................... $262,123,627
Receivable for investment securities sold............................... 15,140,396
Interest and dividends receivable....................................... 1,849,859
Receivable for shares of Common Stock subscribed........................ 5,000
Prepaid expenses........................................................ 28,398
______________
279,147,280
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 149,139
Due to Custodian........................................................ 482,520
Payable for investment securities purchased............................. 8,493,187
Payable for Common Stock redeemed....................................... 2,528
Accrued expenses and other liabilities.................................. 151,058 9,278,432
_______________ ____________
NET ASSETS ................................................................ $269,868,848
============
REPRESENTED BY:
Paid-in capital......................................................... $257,103,080
Accumulated undistributed investment income-net......................... 1,494,521
Accumulated undistributed net realized gain on investments.............. 9,578,457
Accumulated net unrealized appreciation on investments-Note 4........... 1,692,790
___________
NET ASSETS at value applicable to 17,839,221 shares outstanding
(300 million shares of $.001 par value Common Stock authorized)......... $269,868,848
============
NET ASSET VALUE, offering and redemption price per share
($269,868,848 / 17,839,221 shares)...................................... $15.13
============
See notes to financial statements.
DREYFUS BALANCED FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 7,584,035
Cash dividends (net of $24,048 foreign taxes withheld at source)...... 2,125,660
_______________
TOTAL INCOME...................................................... $9,709,695
EXPENSES:
Management fee-Note 3(a).............................................. 1,331,747
Shareholder servicing costs-Note 3(b)................................. 693,736
Registration fees..................................................... 73,707
Professional fees..................................................... 50,218
Custodian fees-Note 3(b).............................................. 29,112
Directors' fees and expenses-Note 3(c)................................ 25,630
Prospectus and shareholders' reports.................................. 3,458
Miscellaneous......................................................... 18,028
_______________
TOTAL EXPENSES.................................................... 2,225,636
_______________
INVESTMENT INCOME-NET............................................. 7,484,059
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS-Note 4:
Net realized gain on investments........................................ $ 10,594,753
Net unrealized (depreciation) on investments............................ (10,694,194)
_______________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (99,441)
_______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $7,384,618
===============
See notes to financial statements.
DREYFUS BALANCED FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
_________________________________________
1995 1996
__________________ __________________
OPERATIONS:
Investment income-net................................................... $ 4,614,250 $ 7,484,059
Net realized gain on investments........................................ 8,267,726 10,594,753
Net unrealized appreciation (depreciation) on investments for the year.. 9,201,437 (10,694,194)
__________________ __________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 22,083,413 7,384,618
__________________ __________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (3,967,630) (7,065,294)
Net realized gain on investments........................................ (839,686) (9,035,826)
__________________ __________________
TOTAL DIVIDENDS....................................................... (4,807,316) (16,101,120)
__________________ __________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 96,785,162 212,974,684
Dividends reinvested.................................................... 4,709,482 15,726,554
Cost of shares redeemed................................................. (35,709,773) (116,025,180)
__________________ __________________
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 65,784,871 112,676,058
__________________ __________________
TOTAL INCREASE IN NET ASSETS...................................... 83,060,968 103,959,556
NET ASSETS:
Beginning of year....................................................... 82,848,324 165,909,292
__________________ __________________
End of year (including undistributed investment income-net:
$1,075,756 in 1995 and $1,494,521 in 1996)............................ $ 165,909,292 $ 269,868,848
================== ==================
SHARES SHARES
__________________ ___________________
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 6,733,976 13,678,706
Shares issued for dividends reinvested.................................. 336,603 1,029,914
Shares redeemed......................................................... (2,476,932) (7,500,481)
__________________ ___________________
NET INCREASE IN SHARES OUTSTANDING.................................... 4,593,647 7,208,139
================== ===================
</TABLE>
See notes to financial statements.
DREYFUS BALANCED FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Propsectus
dated January 2, 1997.
See notes to financial statements.
DREYFUS BALANCED FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Balanced Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company. The Fund's investment objective is to provide
investors with long-term capital growth and current income, consistent with
reasonable investment risk. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. ("Mellon") Premier Mutual Fund Services, Inc. acts as the distributor of
the Fund's shares, which are sold to the public without a sales charge.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Most debt securities (excluding short-term
investments) are valued each business day by an independent pricing service
("Service") approved by the Board of Directors. Debt securities for which
quoted bid prices are readily available and are representative of the bid
side of the market in the judgment of the Service are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other debt securities are
carried at fair value as determined by the Service, based on methods which
include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Other securities are valued at the average of
the most recent bid and asked prices in the market in which such securities
are primarily traded, or at the last sales price for securities traded primari
ly on an exchange or the national securities market. In the absence of
reported sales of securities traded primarily on an exchange or national
securities market, the average of the most recent bid and asked prices is
used. Bid price is used when no asked price is available. Securities for
which there are no such valuations are valued at fair value as determined in
good faith under the direction of the Board of Directors. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
DREYFUS BALANCED FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are
declared and paid quarterly. Dividends from net realized capital gain are
normally declared and paid annually, but the Fund may make distributions on a
more frequent basis to comply with the distribution requirements of the
Internal Revenue Code. To the extent that net realized capital gain can be
offset by capital loss carryovers, if any, it is the policy of the Fund not
to distribute such gain.
On September 27, 1996, the Board of Directors declared a cash dividend of
$.126 per share from undistributed investment income-net, payable on
September 30, 1996 (ex-dividend date), to shareholders of record as of the
close of business on September 27, 1996.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed Funds in a 300 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ending August 31, 1996 the Fund did not
borrow under the line of credit.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, exceed the expense limitation of any state having jurisdiction over
the Fund, the Fund may deduct from payments to be made to the Manager, or the
Manager will bear the amount of such excess to the extent required by state
law. The most stringent state expense limitation applicable to the Fund
presently requires reimbursement of expenses in any full fiscal year that
such expenses (exclusive of certain expenses as described above) exceed 21\2%
of the first $30 million, 2% of the next $70 million and 11\2% of the excess
over $100 million of the average value of the Fund's net assets in accordance
with California "blue sky" regulations. There was no expense reimbursement
for the year ended August 31, 1996.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the year ended August 31, 1996, the Fund was charged an aggregate of
$554,895 pursuant to the Shareholder Services Plan.
DREYFUS BALANCED FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a
transfer agency agreement for providing personnel and facilities to perform
transfer agency services for the Fund. Such compensation amounted to $42,084,
for the period from December 1, 1995 through August 31, 1996.
Effective May 10, 1996, the Fund entered into a custody agreement with
Mellon to provide custodial services for the Fund. For the period from May
10, 1996 through August 31, 1996, $3,436 was paid to Mellon pursuant to the
custody agreement.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended August 31, 1996
amounted to $499,940,393 and $397,252,189, respectively.
At August 31, 1996, accumulated net unrealized appreciation on
investments was $1,692,790, consisting of $8,598,009 gross unrealized
appreciation and $6,905,219 gross unrealized depreciation.
At August 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS BALANCED FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BALANCED FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Balanced Fund, Inc., including the statement of investments, as of
August 31, 1996, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Balanced Fund, Inc. at August 31, 1996, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(Ernst & Young LLP Signature)
New York, New York
October 2, 1996
Dreyfus Balanced Fund, Inc.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from
September 30,1992 (commencement of operations) to August 31,
1993 and for each of the three years in the period ended
August 31, 1996.
Included in Part B of the Registration Statement:
Statement of Investments--August 31, 1996.
Statement of Assets and Liabilities--August 31, 1996.
Statement of Operations--year ended August 31, 1996.
Statement of Changes in Net Assets--for each of the two
years ended August 31, 1996.
Notes to Financial Statements.
Report of Ernst & Young LLP, Independent Auditors,
dated October 2, 1996.
All schedules and other financial statement information, for which
provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either omitted because they are not
required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes
thereto which are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Articles of Incorporation are incorporated by
reference to Exhibit (1) of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed on December 14, 1995.
(2) Registrant's By-Laws, as amended, are incorporated by reference
to Exhibit (2) of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed on December 14, 1995.
(4) Specimen certificate for the Registrant's securities is
incorporated by reference to Exhibit (4) of the
Registration Statement on Form N-1A, filed on July 31, 1992.
(5) Management Agreement is incorporated by reference to Exhibit (5)
of Post-Effective Amendment No. 4 to the Registration Statement
on Form N-1A, filed on October 26, 1994.
(6) Distribution Agreement is incorporated by reference to Exhibit
(6) of Post-Effective Amendment No. 4 to the Registration
Statement on Form N-1A, filed on October 26, 1994.
(8) Custody Agreement.
(9) Shareholder Services Plan, as revised, is incorporated by
reference to Exhibit (9) of Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on October 26, 1994.
(10) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A, filed on December 14,
1995.
(11) Consent of Independent Auditors.
(12) Financial Data Schedule.
(16) Schedules of Computation of Performance Data is incorporated by
reference to Exhibit (16) of the Post-Effective Amendment No. 2
to the Registration Statement on Form N-1A, filed on March 19,
1993.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney. Other Powers of Attorney are
incorporated by reference to "Other Exhibits (a)" of
Post-Effective Amendment Nos. 4 and 5 to the
Registration Statement on Form N-1A, filed on October
26, 1994 and December 14, 1995, respectively.
(b) Certificate of Secretary. Other Certificate of
Secretary is incorporated by reference to "Other
Exhibits (b)" of Post-Effective Amendment Nos. 4 and 5
to the Registration Statement on Form N-1A, filed on
October 26, 1994 and December 14, 1995, respectively.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of November 29, 1996
______________ _____________________________
Common Stock 4,903
(Par value $.001)
Item 27. Indemnification
_______ _______________
Reference is made to Article SEVENTH of the Registrant's Articles
of Incorporation filed as Exhibit 1 hereto. The application of
these provisions is limited by Article VIII of the Registrant's
By-Laws filed as Exhibit 2 hereto and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange
Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of such
issue.
Reference is also made to the Distribution Agreement filed as
Exhibit (6) hereto.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, manager and distributor for
sponsored investment companies registered under the Investment
Company Act of 1940 and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other
investment companies. Dreyfus Service Corporation, a wholly
owned subsidiary of Dreyfus, serves primarily as a registered
broker-dealer of shares of investment companies sponsored by
Dreyfus and of other investment companies for which Dreyfus
acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various
pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****;
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and Member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE None
Director
JULIAN M. SMERLING None
Director
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Executive Officer, The Boston Company*****;
Chief Operating Deputy Director:
Officer and a Mellon Trust****;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust
Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive
and a Director Officer:
Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
Dreyfus America Fund
The Dreyfus Consumer Credit
Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit and Trust
Company*****;
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit
Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street,
Lewes, Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place,
Boston, Massachusetts 02108.
+ The address of the business so indicated is Atrium Building,
80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Funds, Inc.
33) Dreyfus Investment Grade Bond Funds, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus MidCap Index Fund
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus S&P 500 Index Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Stock Index Fund, Inc.
67) Dreyfus Tax Exempt Cash Management
68) The Dreyfus Third Century Fund, Inc.
69) Dreyfus Treasury Cash Management
70) Dreyfus Treasury Prime Cash Management
71) Dreyfus Variable Investment Fund
72) Dreyfus Worldwide Dollar Money Market Fund, Inc.
73) General California Municipal Bond Fund, Inc.
74) General California Municipal Money Market Fund
75) General Government Securities Money Market Fund, Inc.
76) General Money Market Fund, Inc.
77) General Municipal Bond Fund, Inc.
78) General Municipal Money Market Fund, Inc.
79) General New York Municipal Bond Fund, Inc.
80) General New York Municipal Money Market Fund
81) Premier Insured Municipal Bond Fund
82) Premier California Municipal Bond Fund
83) Premier Equity Funds, Inc.
84) Premier Global Investing, Inc.
85) Premier GNMA Fund
86) Premier Growth Fund, Inc.
87) Premier Municipal Bond Fund
88) Premier New York Municipal Bond Fund
89) Premier State Municipal Bond Fund
90) Premier Strategic Growth Fund
91) Premier Value Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Roy M. Moura+ First Vice President None
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Elizabeth A. Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
New York, and State of New York on the 19th day of December, 1996.
DREYFUS BALANCED FUND, INC.
BY: /s/ Marie E. Connolly*
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
__________________________ ______________________________ _________
/s/Marie E. Connolly* President and Treasurer 12/19/96
Marie E. Connolly (Principal Executive and
Accounting Officer)
/s/Joseph F. Tower* Assistant Treasurer (Principal 12/19/96
Joseph F. Tower Financial Officer)
/s/Joseph S.DiMartino* Director 12/19/96
Joseph S. DiMartino
/s/David P. Feldman* Director 12/19/96
David P. Feldman
/s/John M. Fraser, Jr.* Director 12/19/96
John M. Fraser, Jr.
/s/Robert R. Glauber* Director 12/19/96
Robert R. Glauber
/s/James F. Henry* Director 12/19/96
James F. Henry
/s/Rosalind Gersten Jacobs* Director 12/19/96
Rosalind Gersten Jacobs
/s/Irving Kristol* Director 12/19/96
Irving Kristol
/s/Paul A. Marks* Director 12/19/96
Paul A. Marks
/s/Martin Peretz* Director 12/19/96
Martin Peretz
/s/Bert W. Wasserman* Director 12/19/96
Bert W. Wasserman
*BY: /s/ Elizabeth A. Bachman
Elizabeth A. Bachman,
Attorney-in-Fact
INDEX OF EXHIBITS
(8) Custody Agreement
(11) Consent of Independent Auditors
(12) Financial Data Schedule
Other Exhibits:
(a) Powers of Attorney
(b) Certificate of Secretary
Exhibit 8
CUSTODY AGREEMENT
AGREEMENT dated as of May 10, 1996, between Dreyfus Balanced Fund,
Inc., a corporation organized under the laws of the State of Maryland (the
"Fund"), having its principal office and place of business at 200 Park
Avenue, New York, New York 10166, and Mellon Bank, N.A., (the "Custodian"),
a national banking association with its principal place of business at One
Mellon Bank Center, Pittsburgh, PA 15258.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires,
shall have the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within
Section 2(a)3 of the 1940 Act.
(b) "Authorized Person" shall mean those persons duly authorized by
the Board of Directors of the Fund to give Oral Instructions and
Written Instructions on behalf of the Fund and listed in the
certification annexed hereto as Appendix A or such other certification
as may be received by the Custodian from time to time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury book
entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized and instructed on a
continuous and on-going basis to deposit all Securities eligible for
deposit therein, and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder.
(d) "Business Day" shall mean each day on which the Fund is required
to determine its net asset value, and any other day on which the
Securities and Exchange Commission may require the Fund to be open for
business.
(e) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Fund by any two Authorized Persons or any two
officers thereof.
(f) "Articles of Incorporation" shall mean the Articles of
Incorporation of the Fund dated June 9, 1992 as the same may be amended
from time to time.
(g) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities Exchange Act of 1934, as amended,
its successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized and instructed on a
continuous and on-going basis to deposit all Securities eligible for
deposit therein, and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder. The term
"Depository" shall further mean and include any other person to be
named in a Certificate authorized to act as a depository under the
1940 Act, its successor or successors and its nominee or nominees.
(h) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies or
instrumentalities thereof ("U.S. government securities"), commercial paper,
bank certificates of deposit, bankers' acceptances and short-term corporate
obligations, where the purchase or sale of such securities normally
requires settlement in federal funds on the same day as such purchase or
sale, and repurchase and reverse repurchase agreements with respect to any
of the foregoing types of securities and bank time deposits.
(i) "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(j) "Prospectus" shall mean the Fund's current prospectus and
statement of additional information relating to the registration of the
Fund's Shares under the Securities Act of 1933, as amended.
(k) "Shares" shall mean all or any part of each class of Common
Stock of the Fund listed in the Certificate annexed hereto as Appendix
B, as it may be amended from time to time, which from time to time are
authorized and/or issued by the Fund.
(l) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodities interests and investments from time to time
owned by the Fund.
(m) "Transfer Agent" shall mean the person which performs the
transfer agent, dividend disbursing agent and shareholder servicing
agent functions for the Fund.
(n) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system, including, without
limitation, electronic transmissions, facsimile and telex, whereby the
receiver of such communication is able to verify by codes or otherwise
with a reasonable degree of certainty the authenticity of the sender of
such communication.
(o) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies at the time owned by or in
the possession of the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
3. Compensation.
(a) The Fund will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule A and incorporated herein. Such
Fee Schedule does not include out-of-pocket disbursements of the
Custodian for which the Custodian shall be entitled to bill separately.
Out-of-pocket disbursements shall consist of the items specified in the
Schedule of Out-of-pocket charges annexed hereto as Schedule B and
incorporated herein, which schedule may be modified by the Custodian
upon not less than thirty days prior written notice to the Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule A of this Agreement a revised Fee
Schedule, dated and signed by an Authorized Officer or authorized
representative of each party hereto.
(c) The Custodian will bill the Fund as soon as practicable after the
end of each calendar month, and said billings will be detailed in
accordance with Schedule A, as amended from time to time. The Fund
will promptly pay to the Custodian the amount of such billing. The
Custodian may charge against any monies held on behalf of the Fund
pursuant to this Agreement such compensation and disbursements incurred
by the Custodian in the performance of its duties pursuant to this
Agreement. The Custodian shall also be entitled to charge against any
money held on behalf of the Fund pursuant to this Agreement the amount
of any loss, damage, liability or expense incurred with respect to the
Fund, including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets.
The Fund will deliver or cause to be delivered to the Custodian or its
permitted Sub-Custodians all Securities and monies owned by it at any
time during the period of this Agreement. The Custodian will not be
responsible for such Securities and monies until actually received by
it. The Fund shall instruct the Custodian from time to time in its
sole discretion, by means of Written Instructions, or, in connection
with the purchase or sale of Money Market Securities, by means of Oral
Instructions confirmed in writing in accordance with Section 11(h)
hereof or Written Instructions, as to the manner in which and in what
amounts Securities and monies are to be deposited on behalf of the Fund
in the Book-Entry System or the Depository. Securities and monies of
the Fund deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian
for customers, including but not limited to accounts for which the
Custodian acts in a fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for the Fund and shall credit to the
separate account all monies received by it for the account of such Fund
and shall disburse the same only:
1. In payment for Securities purchased for the Fund, as provided
in Section 5 hereof;
2. In payment of dividends or distributions with respect to the
Shares, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to
the Shares, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the Fund,
as provided in Section 8 hereof;
5. Pursuant to a Certificate setting forth the name and address
of the person to whom the payment is to be made, the amount to be
paid and the purpose for which payment is to be made, provided
that in the event of disbursements pursuant to this Sub-section
4(b)(5), the Fund shall indemnify and hold the Custodian harmless
from any claims or losses arising out of such disbursements in
reliance on such Certificate; or
6. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as provided
in Sections 3 and 11(i).
(c) Confirmation and Statements. Promptly after the close of business
on each day, the Custodian shall furnish the Fund with confirmations
and a summary of all transfers to or from the account of the Fund
during said day. Where securities purchased by the Fund are in a
fungible bulk of securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the
Depository or the Book-Entry System, the Custodian shall by book entry
or otherwise identify the quantity of those securities belonging to the
Fund. At least monthly, the Custodian shall furnish the Fund with a
detailed statement of the Securities and monies held for the Fund under
this Agreement.
(d) Registration of Securities and Physical Separation. All
Securities held for the Fund which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry
System, shall be held by the Custodian in that form; all other
Securities held for the Fund may be registered in the name of the Fund,
in the name of the Custodian, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or
nominees. The Fund reserves the right to instruct the Custodian as to
the method of registration and safekeeping of the Securities. The Fund
agrees to furnish to the Custodian appropriate instruments to enable
the Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of the
Book-Entry System or the Depository, any Securities which it may hold
for the account of the Fund and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to the Fund which are not held in the
Book-Entry System or the Depository in a separate account for the Fund
in the name of the Fund physically segregated at all times from those
of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Certificate the Custodian
will establish segregated accounts on behalf of the Fund to hold liquid
or other assets as it shall be directed by a Certificate and shall
increase or decrease the assets in such segregated accounts only as it
shall be directed by subsequent Certificate.
(f) Collection of Income and Other Matters Affecting Securities.
Unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with
respect to all Securities held for the Fund in accordance with this
Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, retired or
otherwise become payable. Notwithstanding the foregoing, the
Custodian only shall have such responsibility to the Fund for
Securities which are called if either (i) the Custodian received a
written notice of such call; or (ii) notice of such call appears
in one or more of the publications listed in Appendix C annexed
hereto, which may be amended at any time by the Custodian upon
five (5) Business Days prior notification to the Fund;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the
account of the Fund all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder for the
Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of
a Certificate, the Custodian, directly or through the use of the Book
Entry System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered to
such persons as may be designated in such Certificate, proxies,
consents, authorizations, and any other instruments whereby the
authority of the Fund as owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for the
Fund in exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for the
Fund to any protective committee, reorganization committee or
other person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement in the separate account for the Fund such certificates
of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of the Fund
and take such other steps as shall be stated in a Certificate to
be for the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund;
5. Deliver Securities upon the receipt of payment in connection
with any repurchase agreement related to such Securities entered
into by the Fund;
6. Deliver Securities owned by the Fund to the issuer thereof or
its agent when such Securities are called or otherwise become
payable. Notwithstanding the foregoing, the Custodian shall have
no responsibility for monitoring or ascertaining any call,
redemption or retirement dates with respect to put bonds which are
owned by the Fund and held by the Custodian or its nominees. Nor
shall the Custodian have any responsibility or liability to the
Fund for any loss by the Fund for any missed payments or other
defaults resulting therefrom; unless the Custodian received timely
notification from the Fund specifying the time, place and manner
for the presentment of any such put bond owned by the Fund and
held by the Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to the Fund for the accuracy
or completeness of any notification the Custodian may furnish to
the Fund with respect to put bonds
7. Deliver Securities for delivery in connection with any loans
of Securities made by the Fund but only against receipt of
adequate collateral as agreed upon from time to time by the
Custodian and the Fund which may be in the form of cash or U.S.
government securities or a letter of credit;
8. Deliver Securities for delivery as security in connection
with any borrowings by the Fund requiring a pledge of Fund assets,
but only against receipt of amounts borrowed;
9. Deliver Securities upon receipt of a Certificate from the
Fund for delivery to the Transfer Agent or to the holders of
Shares in connection with distributions in kind, as may be
described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
10. Deliver Securities as collateral in connection with short
sales by the Fund of common stock for which the Fund owns the
stock or owns preferred stocks or debt securities convertible or
exchangeable, without payment or further consideration, into
shares of the common stock sold short;
11. Deliver Securities for any purpose expressly permitted by and
in accordance with procedures described in the Fund's Prospectus;
and
12. Deliver Securities for any other proper business purpose, but
only upon receipt of, in addition to Written Instructions, a
certified copy of a resolution of the Board of Directors signed by
an Authorized Person and certified by the Secretary of the Fund,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is
hereby authorized to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the
account of the Fund.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate; and
(ii) with respect to each purchase of Money Market Securities, either a
Written Instruction or Oral Instruction, in either case specifying with
respect to each purchase: (1) the name of the issuer and the title of
the Securities; (2) the number of shares or the principal amount
purchased and accrued interest, if any; (3) the date of purchase and
settlement; (4) the purchase price per unit; (5) the total amount
payable upon such purchase; (6) the name of the person from whom or the
broker through whom the purchase was made, if any; and (7) whether or
not such purchase is to be settled through the Book-Entry System or the
Depository. The Custodian shall receive the Securities purchased by or
for the Fund and upon receipt of Securities shall pay out of the monies
held for the account of the Fund the total amount payable upon such
purchase, provided that the same conforms to the total amount payable
as set forth in such Certificate, Written or Oral Instruction.
(b) Promptly after each sale of Securities of the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities
which are not Money Market Securities, a Certificate, and (ii) with
respect to each sale of Money Market Securities, either Written
Instruction or Oral Instructions, in either case specifying with
respect to such sale: (1) the name of the issuer and the title of the
Securities; (2) the number of shares or principal amount sold, and
accrued interest, if any; (3) the date of sale; (4) the sale price per
unit; (5) the total amount payable to the Fund upon such sale; (6) the
name of the broker through whom or the person to whom the sale was
made; and (7) whether or not such sale is to be settled through the
Book-Entry System or the Depository. The Custodian shall deliver or
cause to be delivered the Securities to the broker or other person
designated by the Fund upon receipt of the total amount payable to the
Fund upon such sale, provided that the same conforms to the total
amount payable to the Fund as set forth in such Certificate, Written or
Oral Instruction. Subject to the foregoing, the Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
6. Lending of Securities.
If the Fund is permitted by the terms of the Articles of
Incorporation and as disclosed in its Prospectus to lend securities,
within 24 hours after each loan of Securities, the Fund shall deliver
to the Custodian a Certificate specifying with respect to each such
loan: (a) the name of the issuer and the title of the Securities; (b)
the number of shares or the principal amount loaned; (c) the date of
loan and delivery; (d) the total amount to be delivered to the
Custodian, and specifically allocated against the loan of the
Securities, including the amount of cash collateral and the premium, if
any, separately identified; and (e) the name of the broker, dealer or
financial institution to which the loan was made.
Promptly after each termination of a loan of Securities, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
each such loan termination and return of Securities: (a) the name of
the issuer and the title of the Securities to be returned; (b) the
number of shares or the principal amount to be returned; (c) the date
of termination; (d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting
credits as described in said Certificate); and (e) the name of the
broker, dealer or financial institution from which the Securities will
be returned. The Custodian shall receive all Securities returned from
the broker, dealer or financial institution to which such Securities
were loaned and upon receipt thereof shall pay the total amount payable
upon such return of Securities as set forth in the Certificate.
Securities returned to the Custodian shall be held as they were prior
to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian a Certificate specifying
the date of payment of any dividend or distribution, and the total
amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such Certificate, the Custodian
shall pay out the total amount payable to the Transfer Agent of the
Fund.
8. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any Shares, or whenever any shares
are redeemed, the Fund shall deliver or cause to be delivered to the
Custodian a Written Instruction from the Transfer Agent duly
specifying:
1. The net amount of money to be received by the Custodian,
where the sale of such Shares exceeds redemption; and
2. The net amount of money to be paid for such Shares, where
redemptions exceed purchases.
The Custodian understands and agrees that Written Instructions may
be furnished subsequent to the purchase of Shares and that the
information contained therein will be derived from the sales of Shares
as reported to the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 8, the Custodian shall pay all original
issue or other taxes required to be paid in connection with such
issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
(d) Upon receipt from the Transfer Agent of Written Instructions
setting forth the net amount of money to be paid for Shares received by
the Transfer Agent for redemption, the Custodian shall make payment to
the Transfer Agent of such net amount.
9. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for
investment or for temporary administrative or emergency purposes using
Securities as collateral for such borrowings, a notice or undertaking
in the form currently employed by any such bank setting forth the
amount which such bank will loan to the Fund against delivery of a
stated amount of collateral. The Fund shall promptly deliver to the
Custodian a Certificate stating with respect to each such borrowing:
(1) the name of the bank; (2) the amount and terms of the borrowing,
which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan agreement;
(3) the time and date, if known, on which the loan is to be entered
into (the "borrowing date"); (4) the date on which the loan becomes due
and payable; (5) the total amount payable to the Fund on the borrowing
date; (6) the market value of Securities to be delivered as collateral
for such loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular Securities;
and (7) a statement that such loan is in conformance with the 1940 Act
and the Fund's Prospectus.
(b) Upon receipt of the Certificate referred to in subparagraph (a)
above, the Custodian shall deliver on the borrowing date the specified
collateral and the executed promissory note, if any, against delivery
by the lending bank of the total amount of the loan payable, provided
that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank,
keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver as
additional collateral in the manner directed by the Fund from time to
time such Securities as may be specified in the Certificate to
collateralize further any transaction described in this Section 9. The
Fund shall cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered to it.
In the event that the Fund fails to specify in the Certificate all of
the information required by this Section 9, the Custodian shall not be
under any obligation to deliver any Securities. Collateral returned to
the Custodian shall be held hereunder as it was prior to being used as
collateral.
10. Persons Having Access to Assets of the Fund.
(a) No trustee or agent of the Fund, and no officer, director,
employee or agent of the Fund's investment adviser, of any sub
investment adviser of the Fund, or of the Fund's administrator, shall
have physical access to the assets of the Fund held by the Custodian or
be authorized or permitted to withdraw any investments of the Fund, nor
shall the Custodian deliver any assets of the Fund to any such person.
No officer, director, employee or agent of the Custodian who holds any
similar position with the Fund's investment adviser, with any sub
investment adviser of the Fund or with the Fund's administrator shall
have access to the assets of the Fund.
(b) Nothing in this Section 10 shall prohibit any duly authorized
officer, employee or agent of the Fund, or any duly authorized officer,
director, employee or agent of the investment adviser, of any sub
investment adviser of the Fund or of the Fund's administrator, from
giving Oral Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery of or
access to assets of the Fund prohibited by paragraph (a) of this
Section 10.
11. Concerning the Custodian.
(a) Standard of Conduct. Notwithstanding any other provision of this
Agreement, neither the Custodian nor its nominee shall be liable for
any loss or damage, including counsel fees, resulting from its action
or omission to act or otherwise, except for any such loss or damage
arising out of the negligence, misfeasance or willful misconduct of the
Custodian or any of its employees, Sub-Custodians or agents. The
Custodian may, with respect to questions of law, apply for and obtain
the advice and opinion of counsel to the Fund or of its own counsel, at
the expense of the Fund, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such
advice or opinion. The Custodian shall not be liable to the Fund for
any loss or damage resulting from the use of the Book-Entry System or
the Depository, except to the extent such loss or damage arises by
reason of any negligence, misfeasance or willful misconduct on the part
of the Custodian or any of its employees or agents.
(b) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
1. The validity of the issue of any Securities purchased by the
Fund, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
2. The legality of the sale of any Securities by the Fund or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of the Fund;
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the Custodian
actually receives and collects such money directly or by the final
crediting of the account representing the Fund's interest in the Book
Entry System or the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any
amount due to the Fund from the Transfer Agent nor to take any action
to effect payment or distribution by the Transfer Agent of any amount
paid by the Custodian to the Transfer Agent in accordance with this
Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be
under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in
default, or if payment is refused after due demand or presentation,
unless and until (a) it shall be directed to take such action by a
Certificate and (b) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such
action.
(f) Appointment of Agents and Sub-Custodians. The Custodian may
appoint one or more banking institutions, including but not limited to
banking institutions located in foreign countries, to act as Depository
or Depositories or as Sub-Custodian or as Sub-Custodians of Securities
and monies at any time owned by the Fund. The Custodian shall use
reasonable care in selecting a Depository and/or Sub-Custodian located
in a country other than the United States ("Foreign Sub-Custodian"),
which selection shall be in accordance with the requirements of Rule
17f-5 under the 1940 Act, and shall oversee the maintenance of any
Securities or monies of the Fund by any Foreign Sub-Custodian. In
addition, the Custodian shall hold the Fund harmless from, and
indemnify the Fund against, any loss, action, claim, demand, expense
and proceeding, including counsel fees, that occurs as a result of the
failure of any Foreign Sub-Custodian or Depository to exercise
reasonable care with respect to the safekeeping of Securities and
monies of the Fund. Notwithstanding the generality of the foregoing,
however, the Custodian shall not be liable for any losses resulting
from the general risk of investing or holding Securities and monies in
a particular country, including, but not limited to, losses resulting
from nationalization, expropriation, devaluation, revaluation,
confiscation, seizure, cancellation, destruction or similar action by
any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, taxes, levies or
other charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event beyond
the Custodian's control.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be
held by the Fund under the provisions of the Articles of Incorporation
and the Prospectus.
(h) Reliance on Certificates and Instructions. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the
Custodian to be genuine and to be signed by an officer or Authorized
Person of the Fund. The Custodian shall be entitled to rely upon any
Written Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this Agreement and
reasonably believed by the Custodian to be genuine and to be given by
an Authorized Person. The Fund agrees to forward to the Custodian
Written Instructions from an Authorized Person confirming such Oral
Instructions in such manner so that such Written Instructions are
received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business on the same day that such Oral
Instructions are given to the Custodian. The Fund agrees that the fact
that such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund. The
Fund agrees that the Custodian shall incur no liability to the Fund in
acting upon Oral Instructions given to the Custodian hereunder
concerning such transactions provided such instructions reasonably
appear to have been received from a duly Authorized Person.
(i) Overdraft Facility and Security for Payment. In the event that
the Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 11(h) hereof) to make
any payment or transfer of monies on behalf of the Fund for which there
would be, at the close of business on the date of such payment or
transfer, insufficient monies held by the Custodian on behalf of the
Fund, the Custodian may, in its sole discretion, provide an overdraft
(an "Overdraft") to the Fund in an amount sufficient to allow the
completion of such payment or transfer. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the Fund and the Custodian; and (b) shall accrue
interest from the date of the Overdraft to the date of payment in full
by the Fund at a rate agreed upon in writing, from time to time, by the
Custodian and the Fund. The Custodian and the Fund acknowledge that
the purpose of such Overdraft is to temporarily finance the purchase of
Securities for prompt delivery in accordance with the terms hereof, to
meet unanticipated or unusual redemption, to allow the settlement of
foreign exchange contracts or to meet other emergency expenses not
reasonably foreseeable by the Fund. The Custodian shall promptly
notify the Fund in writing (an "Overdraft Notice") of any Overdraft by
facsimile transmission or in such other manner as the Fund and the
Custodian may agree in writing. To secure payment of any Overdraft,
the Fund hereby grants to the Custodian a continuing security interest
in and right of setoff against the Securities and cash in the Fund's
account from time to time in the full amount of such Overdraft. Should
the Fund fail to pay promptly any amounts owed hereunder, the Custodian
shall be entitled to use available cash in the Fund's account and to
liquidate Securities in the account as is necessary to meet the Fund's
obligations under the Overdraft. In any such case, and without
limiting the foregoing, the Custodian shall be entitled to take such
other actions(s) or exercise such other options, powers and rights as
the Custodian now or hereafter has as a secured creditor under the
Pennsylvania Uniform Commercial Code or any other applicable law.
(j) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Fund and by the appropriate
employees of the Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book
Entry System or the Depository and with such reports on its own systems
of internal accounting control as the Fund may reasonably request from
time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter
until such time as this Agreement may be terminated in accordance with
the provisions hereof.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than 60 days after the date
of receipt of such notice. In the event such notice is given by the
Fund, it shall be accompanied by a certified vote of the Board of
Directors of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians, which shall be a
person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a
certified vote of the Board of Directors of the Fund, designating a
successor custodian or custodians. In the absence of such designation
by the Fund, the Custodian may designate a successor custodian, which
shall be a person qualified to so act under the 1940 Act. If the Fund
fails to designate a successor custodian, the Fund shall upon the date
specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held
in the Book-Entry System which cannot be delivered to the Fund) and
monies then owned by the Fund, be deemed to be its own custodian and
the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with
respect to Securities held in the Book-Entry System which cannot be
delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in
such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian on behalf of the Fund, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then
be entitled.
13. Limitation of Liability.
The Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Directors,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund, individually, but are binding only upon
the assets and property of the Fund, as provided in the Articles of
Incorporation. The execution and delivery of this Agreement have been
authorized by the Directors of the Fund, and signed by an authorized
officer of the Fund, acting as such, and neither such authorization by
such Directors nor such execution and delivery by such officer shall be
deemed to have been made by any of them or any shareholder of the Fund
individually or to impose any liability on any of them or any
shareholder of the Fund personally, but shall bind only the assets and
property of the Fund as provided in the Articles of Incorporation.
14. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event that any
such present Authorized Person ceases to be such an Authorized Person
or in the event that other or additional Authorized Persons are elected
or appointed. Until such new certification shall be received, the
Custodian shall be fully protected in acting under the provisions of
this Agreement upon Oral Instructions or signatures of the present
Authorized Persons as set forth in the last delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event any such
present officer ceases to be an officer of the Fund or in the event
that other or additional officers are elected or appointed. Until such
new certification shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon the
signature of an officer as set forth in the last delivered
certification.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at
its offices at One Mellon Bank Center, Pittsburgh, PA 15258 or at such
other place as the Custodian may from time to time designate in
writing.
(d) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund, shall be sufficiently given
if addressed to the Fund and mailed or delivered to it at its offices
at 200 Park Avenue, New York, New York 10166 or at such other place as
the Fund may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality
as this Agreement, (i) authorized, or ratified and approved by a vote
of the Board of Directors of the Fund, including a majority of the
members of the Board of Directors of the Fund who are not "interested
persons" of the Fund (as defined in the 1940 Act), or (ii) authorized,
or ratified and approved by such other procedures as may be permitted
or required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund
without the written consent of the Custodian, or by the Custodian
without the written consent of the Fund authorized or approved by a
vote of the Board of Directors of the Fund. Nothing in this Agreement
shall give or be construed to give or confer upon any third party any
rights hereunder.
(g) The Fund represents that a copy of the Articles of Incorporation
is on file with the Secretary of the State of Maryland.
(h) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Pennsylvania.
(i) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
(j) This agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective representatives duly authorized as of
the day and year first above written.
Dreyfus Balanced Fund, Inc.
By:
Name:
Title:
MELLON BANK, N.A.
By:
Name:
Title:
CUSTODIAN ACCOUNT FOR PORTFOLIO SECURITIES TRANSACTIONS
APPENDIX A
John E. Pelletier, Secretary of Dreyfus Balanced Fund, Inc., a
corporation organized under the laws of the State of Maryland (the "Fund"),
do hereby certify that:
The following individuals have been duly authorized as Authorized
Persons to give Oral Instructions and Written Instructions on behalf of the
Fund and the specimen signatures set forth opposite their respective names
are their true and correct signatures:
Name Signature
Jim Windels
Frank Brensic
Rob Robol
Helen Minaya
Lucy Dermezis
Secretary
Dated: May 10, 1996
APPENDIX B
DREYFUS BALANCED FUND, INC.
I, Eric B. Fischman, Vice President and Assistant Secretary of Dreyfus
Balanced Fund, Inc., a corporation organized and existing under the laws of
the State of Maryland (the "Fund"), do hereby certify that the only series
of shares of the Fund issued and/or authorized by the Fund as of the date
of this Custody Agreement are shares of Common Stock, $.001 par value.
Dated: May 10, 1996
APPENDIX C
The following are designated publications for purposes of Section 4 (f)
2:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
SCHEDULE A
I. Asset Based Charges
A. U.S. Securities (Net Asset Value)
First $1 Billion 0.70 Basis Points
Next $1 Billion 0.50 Basis Points
Excess 0.25 Basis Points
B. International Securities (Market Value)
Foreign Assets in all funds will be totaled by country and charged a
basis point fee by category.
Euroclear 5.00 Basis Points
Category I 8.00 Basis Points
Category II 14.00 Basis Points
Category III 16.00 Basis Points
Category IV 45.00 Basis Points
(A complete listing of countries is on page 2 of this fee
schedule)
II. Transaction Charges
A. Domestic
U.S. Buy/Sell transaction (DTC, PTC, Fed) $ 7
Physical U.S. Buy/Sell transaction $20
B. International
Euroclear $ 25
Category I $ 35
Category II $ 60
Category III $ 80
Category IV $100
C. Other Transactions
Futures Transaction $ 8
Paydown Transaction $ 5
Margin Variation Wire $ 10
F/X not executed at BSDT $ 20
Options Round Trip $ 20
Wire Transfer $ 5
III. Out-of-Pocket Expenses
The Custodian will pass through to the client any out-of-pocket
expenses including, but not limited to, postage, courier expense,
registration fees, stamp duties telex charges, custom reporting or
custom programming, internal/external tax, legal or consulting costs,
proxy voting expenses, etc.
The Custodian reserves the right to amend its fees if the service
requirements change in a way that materially affects our
responsibilities or costs. Support of other derivative investment
strategies or special processing requirements (e.g. external cash
sweep, third party securities lending etc.) may result in additional
fees.
IV. Country by Country Categories:
Category I Category II Category III CategoryIV
Australia Argentina Austria Bangladesh
Belgium Denmark Indonesia Brazil
Canada Finland Israel Colombia
France Hong Kong South Korea China
Germany Malaysia Philippines Czech Republic
Ireland Mexico Singapore Greece
Italy Norway Thailand India
Japan Spain Jordan
Netherlands Luxembourg
New Zealand Pakistan
South Africa Peru
Sweden Poland
Switzerland Portugal
United Kingdom Sri Lanka
Cedel Taiwan
Turkey
Uruguay
Venezuela
SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end
of each month all out-of-pocket expenses reasonably incurred in connection
with the assets of the Fund.
Exhibit (11)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our report
dated October 2, 1995, in this Registration Statement (Form N-1A 33-50350)
of Dreyfus Balanced Fund, Inc.
ERNST & YOUNG LLP
New York, New York
December 18, 1996
Other Exhibit (b)
DREYFUS BALANCED FUND, INC.
Assistant Secretary's Certificate
The undersigned, Elizabeth A. Bachman, Assistant Secretary of Dreyfus
Balanced Fund, Inc. Fund (the "Fund'), hereby certifies that set forth below
is a copy of the resolution adopted by the Written Consent of the Fund's
Board members on October 21, 1996, authorizing the signing by Elizabeth A.
Bachman, Marie E. Connolly, Richard W. Ingram, Mark A. Karpe and John E.
Pelletier on behalf of the proper officers of the Fund pursuant to a power of
attorney:
RESOLVED, that the Registration Statement and any and all
amendments and supplements thereto may be signed by any
one of Elizabeth A. Bachman, Marie E. Connolly, Richard
W. Ingram, Mark A. Karpe and John E. Pelletier as the
attorney-in-fact for the proper officers of the Fund,
with full power of substitution and resubstitution; and
that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved, and
that such attorney's-in-fact, and each of them, shall
have full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
connection with such Registration Statement and any and
all amendments and supplements thereto, as whom he or she
is acting as attorney-in-fact, might or could do in
person.
IN WITNESS THEREOF, I have hereunder signed by name and affixed the seal
of the Fund on December 16, 1996.
Elizabeth A. Bachman
Assistant Secretary
Other Exhibit (a)
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Elizabeth A. Bachman,
Marie E. Connolly, Richard W. Ingram, Mark A. Karpe and John E. Pelletier,
and each of them, with full power to act without the other, his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her, and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all
amendments to the Registration Statement of each Fund enumerated on Exhibit A
hereto (including post-effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
/s/Joseph S. DiMartino October 21, 1996
Joseph S. DiMartino
/s/ David P. Feldman October 21, 1996
David P. Feldman
/s/John M. Fraser, Jr. October 21, 1996
John M. Fraser, Jr.
/s/ Robert R. Glauber October 21, 1996
Robert R. Glauber
/s/James F. Henry October 21, 1996
James F. Henry
/s/RosalindGersten Jacobs October 21, 1996
Rosalind Gersten Jacobs
/s/Irving Kristol October 21, 1996
Irving Kristol
/s/Paul A. Marks October 21, 1996
Paul A. Marks
/s/Martin Peretz October 21, 1996
Martin Peretz
/s/Bert W. Wasserman October 21, 1996
Bert Wasserman
Schedule A
Group II
Dreyfus A Bonds Plus, Inc.
Dreyfus Balanced Fund, Inc.
Dreyfus Global Bond Fund, Inc.
Dreyfus Growth and Income Fund, Inc.
Dreyfus Growth Opportunity Fund, Inc.
Dreyfus Institutional Money Market Fund
Dreyfus International Equity Fund, Inc.
Dreyfus International Recovery Fund, Inc.
Dreyfus Money Market Instruments, Inc.
Dreyfus Variable Investment Fund
Premier Capital Growth Fund, Inc.
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<CIK> 0000890341
<NAME> DREYFUS BALANCED FUND, INC.
<MULTIPLIER> 1000
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<DISTRIBUTIONS-OF-INCOME> (7065)
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<SHARES-REINVESTED> 1030
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<ACCUMULATED-NII-PRIOR> 1076
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