File No. 33-52929
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. 1 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 1 [ X ]
(Check appropriate box or boxes.)
Dreyfus International Recovery Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
X on February 28, 1995 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 ending May 31, 1995 will be filed on or about July 31, 1995.
Dreyfus International Recovery Fund, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 3
4 General Description of Registrant 4
5 Management of the Fund 14
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 25
7 Purchase of Securities Being Offered 16
8 Redemption or Repurchase 21
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
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10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-28
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-16
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
Dreyfus International Recovery Fund, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-26
18 Capital Stock and Other Securities B-28
19 Purchase, Redemption and Pricing B-18, B-23
of Securities Being Offered
20 Tax Status *
21 Underwriters B-1, B-14
22 Calculations of Performance Data B-27
23 Financial Statements B-29
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-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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PROSPECTUS FEBRUARY 28, 1995
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
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DREYFUS INTERNATIONAL RECOVERY FUND, INC. (THE "FUND") IS AN
OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL
FUND. ITS GOAL IS TO PROVIDE YOU WITH CAPITAL GROWTH. THE FUND WILL INVEST
PRIMARILY IN THE EQUITY SECURITIES OF FOREIGN COMPANIES THAT ARE GOING
THROUGH A DIFFICULT PERIOD BUT WHERE, IN THE JUDGMENT OF THE FUND'S
SUB-INVESTMENT ADVISER, THE MARKETPLACE IS UNDERVALUING THE PROSPECTS OF
RECOVERY. SEE "DESCRIPTION OF THE FUND -- INVESTMENT APPROACH."
YOU CAN INVEST, REINVEST OR REDEEM FUND SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY IMPOSED BY THE FUND. YOU CAN PURCHASE OR REDEEM SHARES BY
TELEPHONE USING DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION ("DREYFUS") WILL SERVE AS THE FUND'S
INVESTMENT ADVISER. DREYFUS HAS ENGAGED M&G INVESTMENT MANAGEMENT LIMITED
("M&G") TO SERVE AS THE FUND'S SUB-INVESTMENT ADVISER AND PROVIDE DAY-TO-DAY
MANAGEMENT OF THE FUND'S INVESTMENTS. DREYFUS AND M&G ARE REFERRED TO
COLLECTIVELY AS THE "ADVISERS."
THE FUND BEARS CERTAIN COSTS PURSUANT TO A DISTRIBUTION PLAN ADOPTED
IN ACCORDANCE WITH RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940 AND A
SHAREHOLDER SERVICES PLAN.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED FEBRUARY 28, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO
THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR
CALL 1-800-554-4611. WHEN TELEPHONING, ASK FOR OPERATOR 666.
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............................ 14
HOW TO BUY FUND SHARES............................ 15
SHAREHOLDER SERVICES.............................. 17
HOW TO REDEEM FUND SHARES......................... 20
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN... 23
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 23
PERFORMANCE INFORMATION........................... 24
GENERAL INFORMATION............................... 25
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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
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees .................................... .75%
12b-1 Fees.......................................... .50%
Other Expenses...................................... 1.41%
Total Fund Operating Expenses....................... 2.66%
<TABLE>
<CAPTION>
Example: 1 YEAR 3 YEARS
<S> <C> <C>
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: $27 $83
</TABLE>
- ----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
- ----------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. The information in the foregoing table does not reflect any fee
waivers or expense reimbursement arrangements that may be in effect. Certain
Service Agents (as defined below) may charge their clients direct fees for
effecting transactions in Fund shares; such fees are not reflected in the
foregoing table. Long-term investors could pay more in 12b-1 fees than the
economic equivalent of paying a front-end sales charge. For a further
description of the various costs and expenses incurred in the operation of
the Fund, as well as expense reimbursement or waiver arrangements, see
"Management of the Fund," "How to Buy Fund Shares" and "Distribution Plan and
Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The table below sets forth certain information covering the Fund's
investment results for the period indicated. 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 the Fund for the period June 29, 1994
(commencement of operations) through November 30, 1994 (unaudited). This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period................................................. $12.50
-------
INVESTMENT OPERATIONS:
Investment income--net............................................................... .08
Net realized and unrealized (loss) on investments.................................... (.58)
-------
TOTAL FROM INVESTMENT OPERATIONS..................................................... (.50)
-------
Net asset value, end of period....................................................... $12.00
=======
TOTAL INVESTMENT RETURN ............................................................. (4.00%)*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............................................. --
Ratio of net investment income to average net assets................................. .65%*
Decrease reflected in above expense ratio due to undertaking by Dreyfus.............. 1.13%*
Portfolio Turnover Rate ............................................................. 5.17%*
Net Assets, end of period (000's omitted)............................................ $5,856
_________________
* Not annualized.
</TABLE>
Page 3
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's goal is to provide you with capital growth. The Fund's
investment objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
INVESTMENT APPROACH
M&G, the Fund's sub-investment adviser, intends to employ a style of
investing it calls "recovery investing." This style involves identifying
companies that are going through a difficult period, but where, in M&G's
judgment, the market place is undervaluing the prospects of recovery. These
companies may be identified from characteristics such as reduced dividends,
low cash flow, high leverage, slowdown in earnings momentum, product failures
and management problems. See "Risk Factors -- Other Investment
Considerations." Companies, that are suitable investments for the Fund have or
are expected to have, in M&G's opinion, sufficient financial and management
strength to achieve the anticipated recovery and to provide the desired
measure of capital growth over a two to three year period. M&G expects that a
significant proportion of the Fund's investments will be selected among
medium (companies with market capitalizations of between $750 million and
$2.5 billion) and smaller (companies with market capitalizations of less than
$750 million) capitalized companies; however, the Fund will not limit the
market capitalizations of companies in which it invests. M&G continually will
seek new holdings to replace those where the prospects of recovery appear to
have been fulfilled or where they seem to have been unfounded. Capital growth
is the Fund's sole objective and income is not a consideration when
investments are selected. M&G has been applying this particular investment
discipline for more than 24 years and currently manages over $2 billion in
U.K. unit trusts, which are similar to mutual funds, using this style of
investment.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that at least 65% of the value
of its total assets (except when maintaining a temporary defensive position)
will be invested in equity securities of foreign (non-U.S.) issuers located
throughout the world. Equity securities consist of common stocks, convertible
securities and preferred stocks. Under normal market conditions, it is
expected that substantially all of the Fund's assets will be invested in
securities of foreign issuers. While there are no prescribed limits on
geographic asset distribution outside the United States, the Fund ordinarily
will seek to invest its assets in at least three foreign countries. The Fund
may invest up to 35% of its total assets in companies whose principal
activities are in emerging markets. The Fund may invest up to 5% of its
assets in securities of companies that have been in continuous operation for
fewer than three years. The Fund also may invest up to 5% of its assets in
debt securities, without limitation as to rating, of foreign issuers that
show "recovery" characteristics similar to those shown by the Fund's equity
investments. The Fund's policy is to purchase marketable securities traded in
markets throughout the world; however the Fund may invest up to 15% of the val
ue of its net assets in securities as to which a liquid trading market does
not exist. See "Certain Portfolio Securities_Illiquid Securities" below.
The Fund may invest, in anticipation of investing cash positions, in
money market instruments consisting 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 "Certain Portfolio Securities"
below. The Fund also may hold U.S. Government securities to meet certain
asset segregation requirements. Under normal market conditions, the Fund
expects to have less than 20% of its assets invested in money market
instruments. However, when the Advisers determine that adverse market
conditions exist, the Fund may adopt a temporary defensive posture and invest
all of its assets in money market instruments.
Page 4
INVESTMENT TECHNIQUES
The Fund may engage in various investment techniques, such as foreign
exchange transactions, options and futures transactions and lending portfolio
securities, each of which involves risk. See "Risk Factors" below. Options
and futures transactions involve so-called "derivative securities."
FOREIGN CURRENCY TRANSACTIONS -- The Fund may engage in currency exchange
transactions to the extent consistent with its investment objective or to
hedge its portfolio. The Fund will conduct its currency exchange transactions
either on a spot (i.e., cash) basis at the rate prevailing in the currency
exchange market, or through entering into forward contracts to purchase or
sell currencies. A forward currency exchange contract involves an obligation
to purchase or sell a specific currency at a future date, which must be more
than two days from the date of the contract, at a price set at the time of
the contract. Forward currency exchange contracts are entered into in the
interbank market conducted directly between currency traders (typically
commercial banks or other financial institutions) and their customers. The
Fund also may combine forward currency exchange contracts with investments in
securities denominated in other currencies.
The Fund also may maintain short positions in forward currency
exchange transactions, which would involve the Fund agreeing to exchange an
amount of a currency it did not currently own for another currency at a
future date in anticipation of a decline in the value of the currency sold
relative to the currency the Fund contracted to receive in the exchange. The
Fund will maintain in a segregated custodial account cash or U.S. Government
securities or other high quality liquid debt securities at least equal to the
aggregate amount of its short positions, plus accrued interest, in certain
cases, in accordance with releases promulgated by the Securities and Exchange
Commission.
OPTIONS ON FOREIGN CURRENCY -- The Fund may purchase and sell call and put
options on foreign currency for the purpose of hedging against changes in
future currency exchange rates. Call options convey the right to buy the
underlying currency at a price which is expected to be lower than the spot
price of the currency at the time the option expires. Put options convey the
right to sell the underlying currency at a price which is anticipated to be
higher than the spot prices of the currency at the time the option expires.
The Fund may use foreign currency options for the same purposes as forward
currency exchange and futures transactions, as described herein. See also
"Call and Put Options on Specific Securities" and "Currency Futures and
Options on Currency Futures" below.
CALL AND PUT OPTIONS ON SPECIFIC SECURITIES -- The Fund may invest up to 5%
of its assets, represented by the premium paid, in the purchase of call and
put options in respect of specific securities (or groups or "baskets" of
specific securities) in which the Fund may invest. The Fund may write covered
call and put option contracts to the extent of 20% of the value of its net
assets at the time such option contracts are written. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell,
the underlying security at the exercise price at any time during the option
period. Conversely, a put option gives the purchaser of the option the right
to sell, and obligates the writer to buy, the underlying security at the
exercise price at any time during the option period. A covered call option
sold by the Fund, which is a call option with respect to which the Fund owns
the underlying security, exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of
the underlying security or to possible continued holding of a security which
might otherwise have been sold to protect against depreciation in its market
price. The principal reason for writing covered call options is to realize,
through the receipt of premiums, a greater return than would be realized on
the Fund's portfolio securities alone. A covered put option sold by the Fund
exposes the Fund during the term of the option to a decline in price of the
underlying security. Similarly, the principal reason for writing covered put
options is to realize income in the form of premiums. A put option sold by
the Fund is covered when, among other things, cash or liquid securities are
placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken.
To close out a position when writing covered options, the Fund may
make a "closing purchase transaction" by purchasing an option on the same
security with the same exercise price and expiration
Page 5
date as the option it has previously written. To close out a position as a
purchaser of an option, the Fund may make a "closing sale transaction," which
involves liquidating the Fund's position by selling the option previously
purchased. The Fund will realize a profit or loss from a closing purchase or
sale transaction depending upon the difference between the amount paid to
purchase an option and the amount received from the sale thereof.
The Fund intends to treat options in respect of specific securities
that are not traded on a U.S. or foreign national securities exchange and the
securities underlying covered call options written by the Fund as illiquid
securities. See "Certain Portfolio Securities_Illiquid Securities" below.
The Fund will purchase options only to the extent permitted by the
policies of state securities authorities in states where shares of the Fund
are qualified for offer and sale.
STOCK INDEX OPTIONS -- The Fund may purchase and write put and call options
on stock indices listed on U.S. or foreign securities exchanges or traded in
the over-the-counter market. A stock index fluctuates with changes in the
market values of the stocks included in the index.
The effectiveness of purchasing or writing stock index options will
depend upon the extent to which price movements in the Fund's investments
correlate with price movements of the stock index selected. Because the value
of an index option depends upon movements in the level of the index rather
than the price of a particular stock, whether the Fund will realize a gain or
loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or, in
the case of certain indexes, in an industry or market segment, rather than
movements in the price of a particular stock. Accordingly, successful use by
the Fund of options on stock indexes will be subject to the Advisers' ability
to predict correctly movements in the direction of the stock market generally
or of a particular industry. This requires different skills and techniques
than predicting changes in the price of individual stocks.
When the Fund writes an option on a stock index, the Fund will place
in a segregated account with its custodian or sub-custodian cash or liquid
securities in an amount at least equal to the market value of the underlying
stock index and will maintain the account while the option is open or
otherwise will cover the transaction.
FUTURES TRANSACTIONS--IN GENERAL -- The Fund will not be a commodity pool.
However, as a substitute for a comparable market position in the underlying
securities or for hedging purposes, the Fund may engage in futures and
options on futures transactions, as described below.
The Fund may trade futures contracts and options on futures contracts
in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or, to the
extent permitted under applicable law, on exchanges located outside the
United States, such as the London International Financial Futures Exchange
and the Sydney Futures Exchange Limited. Foreign markets may offer advantages
such as trading in commodities that are not currently traded in the United
States or arbitrage possibilities not available in the United States. Foreign
markets, however, may have greater risk potential than domestic markets. See
"Risk Factors_Foreign Commodity Transactions" below.
The Fund's commodities transactions must constitute bona fide hedging
or other permissible transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission (the "CFTC"). In addition, the Fund may
not engage in such transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired commodity options, other than for
bona fide hedging transactions, would exceed 5% of the liquidation value of
the Fund's assets, after taking into account unrealized profits and
unrealized losses on such contracts it has entered into; provided, however,
that in the case of an option that is in-the-money at the time of purchase,
the in-the-money amount may be excluded in calculating the 5%. Pursuant to
regulations and/or published positions of the Securities and Exchange
Commission, the Fund may be required to segregate cash or high quality money
market instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity. To the
extent the Fund engages in the use of futures and options on futures for
other than bona fide hedging purposes, the Fund may be subject to additional
risk.
Page 6
Initially, when purchasing or selling futures contracts the Fund will
be required to deposit with its custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and
is in the nature of a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures position,
assuming all contractual obligations have been satisfied. Subsequent
payments, known as "variation margin," to and from the broker will be made
daily as the price of the index or securities underlying the futures contract
fluctuates, making the long and short positions in the futures contract more
or less valuable, a process known as "marking-to-market." At any time prior
to the expiration of a futures contract, the Fund may elect to close the
position by taking an opposite position, at the then prevailing price, which
will operate to terminate the Fund's existing position in the contract.
Although the Fund intends to purchase or sell futures contracts only
if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could move
to the limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and potentially
subjecting the Fund to substantial losses. If it is not possible, or the Fund
determines not, to close a futures position in anticipation of adverse price
movements, the Fund will be required to make daily cash payments of variation
margin. In such circumstances, an increase in the value of the portion of the
portfolio being hedged, if any, may offset partially or completely losses on
the futures contract. However, no assurance can be given that the price of
the securities being hedged will correlate with the price movements in a
futures contract and thus provide an offset to losses on the futures
contract.
To the extent the Fund is engaging in a futures transaction as a
hedging device, because of the risk of an imperfect correlation between
securities in the Fund's portfolio that are the subject of a hedging
transaction and the futures contract used as a hedging device, it is possible
that the hedge will not be fully effective if, for example, losses on the
portfolio securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities. For futures contrac
ts based on indexes, the risk of imperfect correlation increases as the
composition of the Fund's portfolio varies from the composition of the index.
In an effort to compensate for the imperfect correlation of movements in the
price of the securities being hedged and movements in the price of futures
contracts, the Fund may buy or sell futures contracts in a greater or lesser
dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the futures contract has been less or greater than
that of the securities. Such "over hedging" or "under hedging" may adversely
affect the Fund's net investment results if the market does not move as
anticipated when the hedge is established.
Successful use of futures by the Fund also is subject to the
Advisers' ability to predict correctly movements in the direction of the
market or interest rates. For example, if the Fund has hedged against the
possibility of a decline in the market adversely affecting the value of
securities held in its portfolio and prices increase instead, the Fund will
lose part or all of the benefit of the increased value of securities which it
has hedged because it will have offsetting losses in its futures positions.
Furthermore if in such circumstances the Fund has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. The Fund
may have to sell such securities at a time when it may be disadvantageous to
do so.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the option exercise
period. The writer of the option is required
Page 7
upon exercise to assume an offsetting futures position (a short position if
the option is a call and a long position if the option is a put). Upon
exercise of the option, the assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery of the
accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
Call options sold by the Fund with respect to futures contracts will
be covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which
are expected to move relatively consistently with the instruments underlying,
the futures contract. Put options sold by the Fund with respect to futures
contracts will be covered in the same manner as put options on specific
securities as described above.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES -- The Fund may
purchase and sell stock index futures contracts and options on stock index
futures contracts as a substitute for a comparable market position in the
underlying securities or for hedging purposes.
A stock index future obligates the seller to deliver (and the
purchaser to take) an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the agreement is
made. No physical delivery of the underlying stocks in the index is made.
With respect to stock indexes that are permitted investments, the Fund
intends to purchase and sell futures contracts on the stock index for which
it can obtain the best price with consideration also given to liquidity.
The price of stock index futures may not correlate perfectly with the
movement in the stock index because of certain market distortions. First, all
participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the index
and futures markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market also may cause temporary price distortions.
CURRENCY FUTURES AND OPTIONS ON CURRENCY FUTURES -- The Fund may purchase and
sell currency futures contracts and options thereon. See "Call and Put
Options on Specific Securities" above. By selling foreign currency futures,
the Fund can establish the number of U.S. dollars it will receive in the
delivery month for a certain amount of a foreign currency. In this way, if
the Fund anticipates a decline of a foreign currency against the U.S. dollar,
the Fund can attempt to fix the U.S. dollar value of some or all of its
securities that are denominated in that currency. By purchasing foreign
currency futures, the Fund can establish the number of U.S. dollars it will
be required to pay for a specified amount of a foreign currency in the
delivery month. Thus, if the Fund intends to buy securities in the future and
expects the U.S. dollar to decline against the relevant foreign currency
during the period before the purchase is effected, the Fund, for the price of
the currency future, can attempt to fix the price in U.S. dollars of the
securities it intends to acquire.
The purchase of options on currency futures will allow the Fund, for
the price of the premium it must pay for the option, to decide whether or not
to buy (in the case of a call option) or to sell (in the case of a put
option) a futures contract at a specified price at any time during the period
before the option expires. If the Fund, in purchasing an option, has been
correct in its judgment concerning the direction in which the price of a
foreign currency would move as against the U.S. dollar, it may exercise the
option and thereby take a futures position to hedge against the risk it had
correctly anticipated or close out the option position at a gain that will
offset, to some extent, currency exchange losses otherwise suffered by the
Fund. If exchange rates move in a way the Fund did not anticipate, the Fund
will have incurred the expense of the option without obtaining the expected
benefit. As a result, the Fund's profits on the underlying securities
transactions may be reduced or overall losses incurred.
Page 8
FUTURE DEVELOPMENTS -- The Fund may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and
any other derivative investments which are not presently contemplated for use
by the Fund or which are not currently available but which may be developed,
to the extent such opportunities are both consistent with the Fund's
investment objective and legally permissible for the Fund. Before entering
into such transactions or making any such investment, the Fund will provide
appropriate disclosure in its prospectus.
LENDING PORTFOLIO SECURITIES -- From time to time, the Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the Fund's total assets. In
connection with such loans, the Fund will receive collateral consisting of
cash, U.S. Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Fund can increase its income
through the investment of such collateral. The Fund continues to be entitled
to payments in amounts equal to the interest, dividends and other
distributions payable on the loaned security and receives interest on the
amount of the loan. Such loans will be terminable at any time upon specified
notice. The Fund might experience risk of loss if the institution with which
it has engaged in a portfolio loan transaction breaches its agreement with
the Fund.
BORROWING MONEY--As a fundamental policy, the Fund is permitted to borrow to
the extent permitted under the Investment Company Act of 1940. However, the
Fund currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the Fund's total assets, the
Fund will not make any additional investments.
CERTAIN PORTFOLIO SECURITIES
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS -- The Fund's assets
may be invested in the securities of foreign issuers in the form of American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs"). These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically
issued by a United States bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depositary Receipts ("CDRs"), are
receipts issued in Europe typically by non-United States banks and trust
companies that evidence ownership of either foreign or domestic securities.
Generally, ADRs in registered form are designed for use in the United States
securities markets and EDRs and CDRs in bearer form are designed for use in
Europe.
CONVERTIBLE SECURITIES -- The Fund may purchase convertible securities, which
are fixed-income securities, such as bonds or preferred stocks, that may be
converted at either a stated price or stated rate into underlying shares of
common stock. Convertible securities have general characteristics similar to
both fixed-income and equity securities. Although to a lesser extent than
with fixed-income securities generally, the market value of convertible
securities tends to decline as interest rates increase and, conversely, tends
to increase as interest rates decline. In addition, because of the conversion
feature, the market value of convertible securities tends to vary with
fluctuations in the market value of the underlying common stock, and
therefore, also will react to variations in the general market for equity
securities. A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.
Page 9
As fixed-income securities, convertible securities are investments
that provide for a stable stream of income with generally higher yields than
common stocks. Of course, like all fixed-income securities, there can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation. A
convertible security, in addition to providing fixed income, offers the
potential for capital appreciation through the conversion feature, which
enables the holder to benefit from increases in the market price of the
underlying common stock. There can be no assurance of capital appreciation,
however, because securities prices fluctuate.
Convertible securities generally are subordinated to other similar
but non-convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right of payment to
all equity securities, and convertible preferred stock is senior to common
stock, of the same issuer. Because of the subordination feature, however,
convertible securities typically have lower ratings than similar
non-convertible securities.
MONEY MARKET INSTRUMENTS -- The Fund may invest, in the circumstances
described under "Management Policies" above, in the following types of money
market instruments.
U.S. GOVERNMENT SECURITIES. The Fund may purchase securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities,
which include U.S. Treasury securities. Some obligations issued or guaranteed
by U.S. Government agencies and instrumentalities, for example, Government
National Mortgage Association pass-through certificates, are supported by the
full faith and credit of the U.S. Treasury; others, such as those of the
Federal Home Loan Banks, by the right of the issuer to borrow from the U.S.
Treasury; others, such as those issued by the Federal National Mortgage
Association, by discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality; and others, such as
those issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While the
U.S. Government provides financial support to such U.S. Government-sponsored
agencies or instrumentalities, no assurance can be given that it will always
do so, because the U.S. Government is not obligated to do so by law.
BANK OBLIGATIONS. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations of domestic
banks, foreign subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, domestic savings
and loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries
of domestic banks, and domestic and foreign branches of foreign banks, the
Fund 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. Such risks include possible future political and
economic developments, the possible imposition of foreign withholding taxes
on interest income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on these
securities and the possible seizure or nationalization of foreign deposits.
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 at a stated interest rate. Time
deposits which may be held by the Fund will not benefit from insurance from
the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation. The Fund will not
invest more than 15% of the value of its net assets in time deposits that are
illiquid and in other illiquid securities.
Page 10
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 of the drawer to pay the face amount of
the instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
REPURCHASE AGREEMENTS. Repurchase agreements involve the acquisition
by the Fund of an underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Fund to resell, the instrument at a fixed price
usually not more than one week after its purchase. Certain costs may be
incurred by the Fund in connection with the sale of the securities if the
seller does not repurchase them in accordance with the repurchase agreement.
In addition, if bankruptcy proceedings are commenced with respect to the
seller of the securities, realization on the securities by the Fund may be
delayed or limited.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS. 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 Investors Service, Inc.
("Moody's"), A-1 by Standard & Poor's Corporation ("S&P"), F-1 by Fitch
Investors Service, Inc. ("Fitch") or Duff-1 by Duff & Phelps Credit Rating
Co. ("Duff"), (b) issued by companies having an outstanding unsecured debt
issue currently rated not lower than Aa3 by Moody's or AA- by S&P, Fitch or
Duff, or (c) if unrated, determined by the Advisers to be of comparable
quality to those rated obligations which may be purchased by the Fund. The
Fund may purchase floating and variable rate demand notes and bonds, which
are obligations ordinarily having stated maturities in excess of one year,
but which permit the holder to demand payment of principal at any time or at
specified intervals.
WARRANTS -- The Fund may invest up to 5% of its net assets in warrants,
except that this limitation does not apply to warrants acquired in units or
attached to securities. 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.
ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain options traded
in the over-the-counter market and securities used to cover such options. As
to these securities, the Fund is subject to a risk that should the Fund
desire to sell them when a ready buyer is not available at a price the Fund
deems representative of their value, the value of the Fund's net assets could
be adversely affected.
CERTAIN FUNDAMENTAL POLICIES
The Fund may (i) borrow money to the extent permitted under the
Investment Company Act of 1940; and (ii) invest up to 25% of the value of its
total assets in the securities of issuers in a single industry, provided that
there is no such limitation on investments in securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities. This paragraph
describes fundamental policies of the Fund that cannot be changed without
approval by the holders of a majority (as defined in the Investment Company
Act of 1940) of the Fund's outstanding voting shares. See "Investment
Objective and Management Policies_Investment Restrictions" in the Fund's
Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
The Fund may (i) purchase securities of any company having less than
three years' continuous operation (including operations of any predecessors)
if such purchase does not cause the value of the Fund's investments in all
such companies to exceed 5% of the value of its total assets; (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (iii) invest up to 15% of the value of its net
assets in repurchase agreements providing for settlement in more than seven
days after notice
Page 11
and in other illiquid securities. See "Investment Objective and Management
Policies_Investment Restrictions" in the Fund's Statement of Additional
Information.
RISK FACTORS
INVESTING IN FOREIGN SECURITIES -- Foreign securities markets generally are
not as developed or efficient as those in the United States. Securities of
some foreign issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States. The issuers of
some of these securities, such as foreign bank obligations, may be subject to
less stringent or different regulations than are U.S. issuers. In addition,
there may be less publicly available information about a non-U.S. issuer, and
non-U.S. issuers generally are not subject to uniform accounting and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. issuers.
Because stock certificates and other evidences of ownership of such
securities usually are held outside the United States, the Fund will be
subject to additional risks which include possible adverse political and
economic developments, possible seizure or nationalization of foreign
deposits and possible adoption of governmental restrictions that might
adversely affect the payment of principal, interest and dividends on the
foreign securities or might restrict the payment of principal, interest and
dividends to investors located outside the country of the issuers, whether
from currency blockage or otherwise. Custodial expenses for a portfolio of
non-U.S. securities generally are higher than for a portfolio of U.S.
securities.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Fund have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have
adverse effects on the economies and securities markets of certain of these
countries. In an attempt to control inflation, wage and price controls have
been imposed in certain developing countries.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations. Some currency exchange costs may be
incurred when the Fund changes investments from one country to another.
Furthermore, some of these securities may be subject to brokerage
taxes levied by foreign governments, which have the effect of increasing the
cost of such investment and reducing the realized gain or increasing the
realized loss on such securities at the time of sale. Income received by the
Fund from sources within foreign countries may be reduced by withholding or
other taxes imposed by such countries. Tax conventions between certain
countries and the United States, however, may reduce or eliminate such taxes.
All such taxes paid by the Fund will reduce its net income available for
distribution to investors.
FOREIGN CURRENCY EXCHANGE -- Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by
the forces of supply and demand in the foreign exchange markets and the
relative merits of investments in different countries, actual or perceived
changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or central
banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad.
The foreign currency market offers less protection against defaults
in the forward trading of currencies than is available when trading in
currencies occurs on an exchange. Since a forward currency contract is not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits or force the Fund to cover its
commitments for purchase or resale, if any, at the current market price.
Page 12
FOREIGN COMMODITY TRANSACTIONS -- Unlike trading on domestic commodity
exchanges, trading on foreign commodity exchanges is not regulated by the
CFTC and may be subject to greater risks than trading on domestic exchanges.
For example, some foreign exchanges are principal markets so that no common
clearing facility exists and a trader may look only to the broker for
performance of the contract. In addition, unless the Fund hedges against
fluctuations in the exchange rate between the U.S. dollar and the currencies
in which trading is done on foreign exchanges, any profits that the Fund
might realize in trading could be eliminated by adverse changes in the
exchange rate, or the Fund could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not.
OTHER INVESTMENT CONSIDERATIONS -- The Fund's net asset value is not fixed
and should be expected to fluctuate. You should purchase Fund shares only as
a supplement to an overall investment program and only if you are willing to
undertake the risks involved.
The securities in which the Fund invests may be subject to more
abrupt or erratic market movements than the securities of companies which are
not going through the difficulties that have made them attractive investments
for the Fund. This risk occurs principally because these issuers typically
are subject to a greater degree to changes, and anticipated changes, in
earnings and prospects. As a result, the Fund may be subject to greater
investment risks than those assumed by some other investment companies. Small
capitalization companies may be subject to a greater degree of changes in
earnings and business prospects and are more volatile than larger companies.
Investors should be aware that equity securities fluctuate in value,
often based on factors unrelated to the value of the issuer of the
securities, and that fluctuations can be pronounced. Changes in the value of
the Fund's securities will result in changes in the value of a Fund share and
thus the Fund's return to investors.
The use of investment techniques such as engaging in financial
futures and options transactions and lending portfolio securities involves
greater risk than that incurred by many other funds with similar objectives.
These risks are described above under "Investment Techniques." In addition,
using these techniques may produce higher than normal portfolio turnover and
may affect the degree to which the Fund's net asset value fluctuates. Higher
portfolio turnover rates are likely to result in comparatively greater
brokerage commissions or transaction costs. Short-term gains realized from
portfolio transactions are taxable to shareholders as ordinary income. The
Fund's ability to engage in certain short-term transactions may be limited by
the requirement that, to qualify as a regulated investment company, the Fund
must earn less than 30% of its gross income from the disposition of
securities held for less than three months. This 30% test limits the extent
to which the Fund may sell securities held for less than three months, write
options expiring in less than three months and invest in certain futures
contracts, among other strategies. With the exception of the above
requirement, the amount of portfolio activity will not be a limiting factor
when making portfolio decisions. Under normal market conditions, the Fund's
portfolio turnover rate generally will not exceed 150%. See "Portfolio
Transactions" in the Statement of Additional Information.
The Fund's classification 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 Investment Company Act of
1940. A "diversified" investment company is required by the Investment
Company Act of 1940 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
and to hold not more than 10% of the outstanding voting securities of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"), which requires that, at the
end of each quarter of its taxable year, (i) at least 50% of the market value
of the Fund's total assets be invested in cash, U.S. Government securities,
the securities of other regulated investment com-
Page 13
panies and other securities, with such other securities of any one issuer
limited for the purposes of this
calculation to an amount not greater than 5% of the value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets be invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies). 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 within the same industry or
economic sector, the Fund's portfolio securities may be more susceptible to
any single economic, political or regulatory occurrence than the portfolio
securities of a diversified investment company.
Investment decisions for the Fund are made independently from those
of other investment companies or accounts advised by Dreyfus or M&G. However,
if such other investment companies or accounts are prepared to invest in, or
desire to dispose of, securities of the type in which the Fund invests at the
same time as the Fund, available investments or opportunities for sales will
be allocated equitably to each. In some cases, this procedure may adversely
affect the size of the position obtained for or disposed of by the Fund or
the price paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
Dreyfus, located at 200 Park Avenue, New York, New York 10166, was
formed in 1947 and serves as the Fund's investment adviser. Dreyfus is a
wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-owned
subsidiary of Mellon Bank Corporation ("Mellon"). As of November 30, 1994,
Dreyfus managed or administered approximately $71 billion in assets for more
than 1.9 million investor accounts nationwide.
Dreyfus supervises and assists in the overall management of the
Fund's affairs under a Management Agreement with the Fund, subject to the
overall authority of the Fund's Board of Directors in accordance with
Maryland law.
Dreyfus has engaged M&G, located at Three Quays Tower Hill, London
EC3R 6BQ, England, to serve as the Fund's sub-investment adviser. M&G, a
registered investment adviser formed in 1961, is a wholly-owned subsidiary of
M&G Group P.L.C. As of November 30, 1994, M&G managed or advised
approximately $23.8 billion in assets and serves as the investment adviser of
three other Dreyfus-managed investment companies.
M&G, subject to the supervision and approval of Dreyfus, provides
investment advisory assistance and the day-to-day management of the Fund's
investments, as well as investment research and statistical information,
under a Sub-Investment Advisory Agreement with Dreyfus, subject to the
overall authority of the Fund's Board of Directors in accordance with
Maryland law. The Fund's primary portfolio manager is Paul D.A. Nix. He has
been employed by M&G since 1968. The Fund's other portfolio managers are ident
ified under "Management of the Fund" in the Fund's Statement of Additional
Information. Dreyfus also provides research services for the Fund, as well as
for other funds advised by Dreyfus, 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, including Dreyfus, Mellon managed more than $201 billion
in assets as of September 30, 1994, including approximately $76 billion in
mutual fund assets. As of September 30, 1994, various subsidiaries of Mellon
provided non-investment services, such as custodial or administration
services, for approximate-
Page 14
ly $659 billion in assets, including approximately $108 billion in mutual
fund assets.
Under the Management Agreement, the Fund has agreed to pay Dreyfus a
monthly fee at the annual rate of .75 of 1% of the value of the Fund's
average daily net assets. For the period from June 29, 1994 (commencement of
operations) through November 30, 1994, no management fee was paid by the Fund
pursuant to an undertaking by Dreyfus.
Under the Sub-Investment Advisory Agreement, Dreyfus has agreed to
pay M&G a monthly fee at the annual rate of .30 of 1% of the value of the
Fund's average daily net assets. For the period from June 29, 1994
(commencement of operations) through November 30, 1994, no sub-investment
advisory fee was paid by Dreyfus to M&G pursuant to an undertaking by M&G.
EXPENSES
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by Dreyfus and/or M&G. The
expenses borne by the Fund include: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Directors, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of independent pricing services, costs of maintaining the
Fund's existence, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders' reports
and meetings, and any extraordinary expenses. The Fund is subject to an
annual distribution fee for advertising, marketing and distributing its
shares and an annual service fee for ongoing personal services relating to
shareholder accounts and services related to the maintenance of shareholder
accounts. See "Distribution Plan and Shareholder Services Plan."
The management fee payable by the Fund is higher than that paid by
most other investment companies. From time to time, Dreyfus may waive receipt
of its fee and/or voluntarily assume certain expenses of the Fund, which
would have the effect of lowering the overall expense ratio of the Fund and
increasing yield to investors at the time such amounts are waived or assumed,
as the case may be. The Fund will not pay Dreyfus at a later time for any
amounts it may waive, nor will the Fund reimburse Dreyfus for any amounts it
may assume.
Dreyfus may pay the Fund's distributor for shareholder services from
Dreyfus' 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 Service Agents in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
The Bank of New York, 110 Washington Street, New York, New York
10286, is the Fund's Custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode Island
02940-9671, is the Fund's Transfer and Dividend Disbursing Agent (the
"Transfer Agent").
HOW TO BUY FUND SHARES
You can purchase Fund shares through the Distributor or certain
financial institutions, securities dealers and other industry professionals
(collectively, "Service Agents") that have entered into agreements with the
Distributor. 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.
Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable
Page 15
regulatory authority, may charge their clients direct fees which would be in
addition to any amounts which might be received under Shareholder Services
Plan. Each Service Agent has agreed to transmit to its clients a schedule of
such fees. You should consult your Service Agent in this regard. See
"Distribution Plan and Shareholder Services Plan."
The minimum initial investment is $2,500, or $1,000 if you are a
client of a Service Agent which has made an aggregate minimum initial
purchase for its customers of $2,500. Subsequent investments must be at least
$100. The initial investment must be accompanied by the Fund's Account
Application. For full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries, directors of Dreyfus, Board members of a fund
advised by Dreyfus, including members of the Fund's Board, or the spouse or
minor child of any of the foregoing, the minimum initial investment is
$1,000. For full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries who elect to have a portion of their pay directly
deposited into their Fund account, the minimum initial investment is $50. The
Fund reserves the right to offer Fund shares without regard to minimum
purchase requirements to employees participating in certain qualified or
non-qualified employee benefit plans or other programs where contributions or
account information can be transmitted in a manner and form acceptable to the
Fund. The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
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 #8900103817/Dreyfus
International Recovery 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 Fund's Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the
Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be made in
U.S. dollars and, to avoid fees and delays, should be drawn only on U.S.
banks. A charge will be imposed if any check used for investment in your
account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through compatible
computer facilities.
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
Page 16
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 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 of Directors. For further information regarding the methods
employed in valuing the Fund's investments, see "Determination of Net Asset
Value" in the Fund's Statement of Additional Information.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). All present holdings of shares of funds in the Dreyfus Family of
Funds by Eligible Benefit Plans will be aggregated to determine the fee
payable with respect to each purchase of Fund shares. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE
You may purchase Fund shares (minimum $500, maximum $150,000 per day)
by telephone if you have checked the appropriate box and supplied the
necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between the bank account designated in one of these documents and
your Fund account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
The Fund may modify or terminate this Privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those in
this Prospectus. You should consult your Service Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of the Fund, shares of
certain other funds managed or administered by Dreyfus, to the extent such
shares are offered for sale in your state of residence. These funds have
different investment objectives which may be of interest to you. If you
desire to use this ser-
Page 17
vice, you should consult your Service Agent or call 1-800-645-6561 to
determine if it is available and whether any conditions are imposed on
its use.
To request an exchange, you or your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing or by
telephone. Before any exchange, you must obtain and should review a copy of
the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of
Personal Retirement Plans, the shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new account by
exchange, the shares being exchanged must have a value of at least the
minimum initial investment required for the fund into which the exchange is
being made. The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless you check the relevant "NO"
box on the Account Application indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a separate signed Shareholder Services Form, also available by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
or, if you are calling from overseas, call 1-401-455-3306. See "How to Redeem
Fund Shares_Procedures." Upon an exchange into a new account, the following
shareholder services and privileges, as applicable and where available, will
be automatically carried over to the fund into which the exchange is made:
Telephone Exchange Privilege, 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 of the fund from
which you are exchanging were: (a) purchased with a sales load, (b) acquired
by a previous exchange from shares purchased with a sales load, or (c)
acquired through reinvestment of dividends or distributions paid with respect
to the foregoing categories of shares. To qualify, at the time of your
exchange you must notify the Transfer Agent or your Service Agent must notify
the Distributor. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
in the Statement of Additional Information. No fees currently are charged
shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal fee in accordance with rules promulgated by the
Securities and Exchange Commission. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges may
be modified or terminated at any time upon notice to shareholders.
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.
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 currently an investor. 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 day
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 canceled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege at
any time by mailing written
Page 18
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. The exchange of shares of
one fund for shares of another is treated for Federal income tax purposes as a
sale of the shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize a taxable gain or loss. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
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 days. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. To establish a Dreyfus-AUTOMATIC Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the
necessary authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. To
enroll in Dreyfus Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment that
you desire to include in 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 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 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. If you
are investing in a fund that charges a contingent deferred sales charge, the
shares purchased will be subject on redemption to the contingent deferred
sales charge, if any, applicable to the purchased shares. See "Shareholder
Services" in the Statement of Additional Information. Dreyfus Dividend ACH
permits you to transfer electronically on the payment date dividends or
dividends and capital gain distributions, if any, from the Fund to a
designated bank account. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated.
Banks may charge a fee for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family
Page 19
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 or IRAs are not
eligible for Dreyfus Dividend Sweep.
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 Dreyfus Service
Corporation, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Fund may
modify or terminate this Privilege at any time or charge a service fee. No
such fee currently is contemplated.
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. There is a service
charge of 50cents for each withdrawal check. The Automatic Withdrawal Plan
may be ended at any time by you, the Fund or the Transfer Agent. Shares for
which 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; and for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Service Agents may charge 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 BUILDER AND
SUBSEQUENT-
Page 20
LY 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 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, the Wire Redemption Privilege, the Telephone
Redemption Privilege, or the Dreyfus TELETRANSFER Privilege. Other redemption
procedures may be in effect for investors who effect transactions in Fund
shares through Service Agents. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select 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 from any person representing himself or herself to be you or a
representative of your Service Agent, and reasonably believed by the Transfer
Agent to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification,
to confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent instructions. Neither the Fund nor the Transfer
Agent will be liable for following telephone instructions reasonably believed
to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a 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
Fund shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information." Redemption requests
must be signed by each shareholder, including each owner of a joint account,
and each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper
form generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange
Page 21
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. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You 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 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306. The Fund reserves the right
to refuse any redemption request, including requests made shortly after a chan
ge of address, and may limit the amount involved or the number of such
requests. This Privilege may be modified or terminated at any time by the
Transfer Agent or the Fund. The Fund's Statement of Additional Information
sets forth instructions for transmitting redemption requests by wire. Shares
held under Keogh Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may redeem Fund shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares for
which certificates have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE -- You may redeem Fund shares (minimum $500
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in one
of these documents. Only such an account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate
this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares
issued in certificate form, are not eligible for this Privilege.
Page 22
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Fund shares are subject to a Distribution Plan and a Shareholder
Services Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund (a) reimburses the Distributor for
payments to certain Service Agents for distributing Fund shares and (b) pays
Dreyfus, Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus,
and any affiliate of either of them for advertising and marketing relating to
the Fund, at an aggregate annual rate of .50 of 1% of the value of the Fund's
average daily net assets. The Distributor may pay one or more Service Agents
in respect of distribution services. The Distributor determines the amounts,
if any, to be paid to Service Agents under the Distribution Plan and the
basis on which such payments are made. The fees payable under the
Distribution Plan are payable without regard to actual expenses incurred.
The Fund bears the costs of preparing and printing prospectuses and
statements of additional information used for regulatory purposes and for
distribution to existing Fund shareholders. Under the Distribution Plan, the
Fund bears (a) the costs of preparing, printing and distributing prospectuses
and statements of additional information used for other purposes and (b) the
costs associated with implementing and operating the Distribution Plan, the
aggregate of such amounts not to exceed in any fiscal year of the Fund the
greater of $100,000 or .005 of 1% of the value of the Fund's average daily
net assets for such fiscal year.
SHAREHOLDER SERVICES PLAN
Under the Shareholder Services Plan, the Fund pays the Distributor
for the provision of certain services to Fund shareholders a fee at the
annual rate of .25 of 1% of the value of the Fund's average daily net assets.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. Each Service Agent is required to
disclose to its clients any compensation payable to it by the Fund pursuant
to the Shareholder Services Plan and any other compensation payable by their
clients in connection with the investment of their assets in Fund shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from its net investment income and
distributes net realized securities gains, if any, once a year, but the Fund
may make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner consistent
with the provisions of the Investment Company Act of 1940. The Fund will not
make distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose
whether to receive dividends and distributions in cash or to reinvest in
additional Fund shares at net asset value. All expenses are accrued daily and
deducted before declaration of dividends to investors.
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.
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 Fund
shares. The Code provides that the net capital gain of an individual
generally will not be subject to Federal income tax at a rate in excess of
28%. Dividends and distributions may be subject to state and local taxes.
Page 23
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.
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.
It is expected that the Fund will qualify as a "regulated investment
company" under the Code so long as such qualification is in the best
interests of its shareholders. Such qualification relieves the Fund of any
liability for Federal income tax to the extent its earnings are distributed
in accordance with applicable provisions of the Code. In addition, the Fund
is subject to a non-deductible 4% excise tax, measured with respect to
certain undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on the
basis of average annual total return and/or total return.
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. Computations of average
annual total return for periods of less than one year represent an
annualization of the Fund's actual total return for the applicable period.
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
Page 24
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., Morgan Stanley Capital International World Index,
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 March 31, 1994, and
commenced operations on June 29, 1994. 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 Investment Company Act of 1940,
ordinarily it will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider each year the
election of Directors or the appointment of auditors. However, pursuant to
the Fund's By-Laws, the holders of at least 10% of the shares outstanding and
entitled to vote may require the Fund to hold a special meeting of
shareholders for purposes of removing a Director from office or for any other
purpose. Fund shareholders may remove a Director by the affirmative vote of a
majority of the Fund's outstanding voting shares. In addition, the Board of
Directors will call a meeting of shareholders for the purpose of electing
Directors if, at any time, less than a majority of the Directors then holding
office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
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; on Long Island, call
794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 25
International
Recovery
Fund, Inc.
Prospectus
(Lion Logo)
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
096p2022895
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FEBRUARY 28, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus International Recovery Fund, Inc. (the "Fund"), dated February 28,
1995, as it may be revised from time to time. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free -- 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser. Dreyfus has engaged M&G Investment Management Limited ("M&G") to
serve as the Fund's sub-investment adviser and provide day-to-day management
of the Fund's investments, subject to the supervision of Dreyfus. Dreyfus
and M&G are referred to collectively as the "Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . B-10
Management Arrangements . . . . . . . . . . . . . . . B-14
Distribution Plan and Shareholder Services Plan . . . B-16
Purchase of Fund Shares . . . . . . . . . . . . . . . B-18
Redemption of Fund Shares . . . . . . . . . . . . . . B-19
Shareholder Services. . . . . . . . . . . . . . . . . B-21
Determination of Net Asset Value. . . . . . . . . . . B-24
Dividends, Distributions and Taxes. . . . . . . . . . B-25
Portfolio Transactions. . . . . . . . . . . . . . . . B-27
Performance Information . . . . . . . . . . . . . . . B-28
Information About the Fund. . . . . . . . . . . . . . B-29
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . B-29
Financial Statement (Audited) . . . . . . . . . . . . B-30
Report of Independent Auditors. . . . . . . . . . . . B-31
Financial Statement (Unaudited) . . . . . . . . . . . B-32
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Description of the
Fund."
Portfolio Securities
Bank Obligations. Domestic commercial banks organized under Federal
law are supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to have their
deposits insured by the Federal Deposit Insurance Corporation (the "FDIC").
Domestic banks organized under state law are supervised and examined by
state banking authorities but are members of the Federal Reserve System only
if they elect to join. In addition, state banks whose certificates of
deposit ("CDs") may be purchased by the Fund are insured by the FDIC
(although such insurance may not be of material benefit to the Fund,
depending on the principal amount of the CDs of each bank held by the Fund)
and are subject to Federal examination and to a substantial body of Federal
law and regulation. As a result of Federal or state laws and regulations,
domestic branches of domestic banks whose CDs may be purchased by the Fund
generally are required, among other things, to maintain specified levels of
reserves, are limited in the amounts which they can loan to a single
borrower and are subject to other regulation designed to promote financial
soundness. However, not all of such laws and regulations apply to the
foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries
of domestic banks and domestic and foreign branches of foreign banks, such
as CDs and time deposits ("TDs"), may be general obligations of the parent
banks in addition to the issuing branch, or may be limited by the terms of a
specific obligation and governmental regulation. Such obligations are
subject to different risks than are those of domestic banks. These risks
include foreign economic and political developments, foreign governmental
restrictions that may adversely affect payment of principal and interest on
the obligations, foreign exchange controls and foreign withholding and other
taxes on interest income. These foreign branches and subsidiaries are not
necessarily subject to the same or similar regulatory requirements that
apply to domestic banks, such as mandatory reserve requirements, loan
limitations, and accounting, auditing and financial record keeping
requirements. In addition, less information may be publicly available about
a foreign branch of a domestic bank or about a foreign bank than about a
domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by Federal or state
regulation as well as governmental action in the country in which the
foreign bank has its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which the branch is
located if the branch is licensed in that state.
In addition, Federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the regulator, by depositing assets with a
designated bank within the state, a certain percentage of their assets as
fixed from time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the foreign bank
payable at or through all of its agencies or branches within the state. The
deposits of Federal and State Branches generally must be insured by the FDIC
if such branches take deposits of less than $100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign
subsidiaries of domestic banks, by foreign branches of foreign banks or by
domestic branches of foreign banks, the Advisers carefully evaluate such
investments on a case-by-case basis.
Emerging Market Securities. Emerging markets will include any
countries (i) having an "emerging stock market" as defined by the
International Finance Corporation; (ii) with low- to middle-income economies
according to the World Bank; or (iii) listed in World Bank publications as
developing. Currently, the countries not included in these categories are
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden,
Switzerland, the United Kingdom and the United States. Issuers whose
principal activities are in countries with emerging markets include issuers:
(1) organized under the laws of, (2) whose securities have their primary
trading market in, (3) deriving at least 50% of their revenues or profits
from goods sold, investments made, or services performed in, or (4) having
at least 50% of their assets located in a country with, an emerging market.
Repurchase Agreements. The Fund's custodian or sub-custodian will have
custody of, and will hold in a segregated account, securities acquired by
the Fund under a repurchase agreement. Repurchase agreements are considered
by the staff of the Securities and Exchange Commission to be loans by the
Fund. In an attempt to reduce the risk of incurring a loss on a repurchase
agreement, the Fund will enter into repurchase agreements only with domestic
banks with total assets in excess of one billion dollars, or primary
government securities dealers reporting to the Federal Reserve Bank of New
York, with respect to securities of the type in which the Fund may invest,
and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below the resale price.
The Advisers will monitor on an ongoing basis the value of the collateral to
assure that it always equals or exceeds the repurchase price. The Fund will
consider on an ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements.
Commercial Paper and Other Short-Term Corporate Obligations. Variable
rate demand notes 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. As mutually agreed between the parties, the Fund may increase the
amount under the notes at any time up to the full amount provided by the
note agreement, or decrease the amount, and the borrower may repay up to the
full amount of the note without penalty. 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. In
connection with floating and variable rate demand obligations, the Advisers
will consider, on an ongoing basis, earning power, cash flow and other
liquidity ratios of the borrower, and the borrower's ability 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.
American, European and Continental Depositary Receipts. The Fund may
invest in the securities of foreign issuers in the form of American,
European and Continental Depositary Receipts through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by
the issuer of the underlying security and a depositary, whereas a depositary
may establish an unsponsored facility without participation by the issuer of
the deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary of an
unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts in
respect of the deposited securities.
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 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, if a
substantial market of qualified institutional buyers develops pursuant to
Rule 144A under the Securities Act of 1933, as amended, for certain
unregistered securities held by the Fund, the Fund intends to treat certain
unregistered securities as liquid securities in accordance with procedures
approved by the Fund's Board of Directors. Because it is not possible to
predict with assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Fund's Board of Directors has directed the
Advisers to monitor carefully the Fund's investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a
period of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, the Fund's investing in such securities
may have the effect of increasing the level of illiquidity in the Fund's
portfolio during such period.
Management Policies
The Fund engages in the following practices in furtherance of its
objective.
Options Transactions. The Fund may engage in options transactions,
such as purchasing or writing covered call or put options. In return for a
premium, the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike price
for the life of the option (or until a closing purchase transaction can be
effected). Nevertheless, the call writer retains the risk of a decline in
the price of the underlying security. The writer of a covered put option
accepts the risk of a decline in the price of the underlying security. The
size of the premiums that the Fund may receive may be adversely affected as
new or existing institutions, including other investment companies, engage
in or increase their option-writing activities.
Options written ordinarily will have expiration dates between one and
nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at
the time the options are written. In the case of call options, these
exercise prices are referred to as "in-the-money," "at-the-money" and "out-
of-the-money," respectively. The Fund may write (a) in-the-money call
options when the Advisers expect that the price of the underlying security
will remain stable or decline moderately during the option period, (b) at-
the-money call options when the Advisers expect that the price of the
underlying security will remain stable or advance moderately during the
option period and (c) out-of-the-money call options when the Advisers expect
that the premiums received from writing the call option plus the
appreciation in market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price,
the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put
options (the reverse of call options as to the relation of exercise price to
market price) may be utilized in the same market environments that such call
options are used in equivalent transactions.
So long as the Fund's obligation as the writer of an option continues,
the Fund may be assigned an exercise notice by the broker-dealer through
which the option was sold, requiring the Fund to deliver, in the case of a
call, or take delivery of, in the case of a put, the underlying security
against payment of the exercise price. This obligation terminates when the
option expires or the Fund effects a closing purchase transaction. The Fund
can no longer effect a closing purchase transaction with respect to an
option once it has been assigned an exercise notice.
While it may choose to do otherwise, the Fund generally will purchase
or write only those options for which the Advisers believe there is an
active secondary market so as to facilitate closing transactions. There is
no assurance that sufficient trading interest to create a liquid secondary
market on a securities exchange will exist for any particular option or at
any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated
trading activity or order flow, or other unforeseen events, at times have
rendered certain clearing facilities inadequate and resulted in the
institution of special procedures, such as trading rotations, restrictions
on certain types of orders or trading halts or suspensions in one or more
options. There can be no assurance that similar events, or events that
otherwise may interfere with the timely execution of customers' orders, will
not recur. In such event, it might not be possible to effect closing
transactions in particular options. If as a covered call option writer the
Fund is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise or it otherwise
covers its position.
Stock Index Options. The Fund may purchase and write put and call
options on stock indices listed on U.S. or foreign securities exchanges or
traded in the over-the-counter market. A stock index fluctuates with
changes in the market values of the stocks included in the index.
Options on stock indices are similar to options on stock except that
(a) the expiration cycles of stock index options are generally monthly,
while those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make
delivery of a stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal to
(i) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by
(ii) a fixed "index multiplier." Receipt of this cash amount will depend
upon the closing level of the stock index upon which the option is based
being greater than, in the case of a call, or less than, in the case of a
put, the exercise price of the option. The amount of cash received will be
equal to such difference between the closing price of the index and the
exercise price of the option expressed in dollars times a specified
multiple. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a
closing transaction on an exchange or it may let the option expire
unexercised.
Futures Contracts and Options on Futures Contracts. Upon exercise of
an option, the writer of the option will deliver to the holder of the option
the futures position and the accumulated balance in the writer's futures
margin account, which represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less than, in the
case of a put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of options on futures contracts
is limited to the premium paid for the option (plus transaction costs).
Because the value of the option is fixed at the time of sale, there are no
daily cash payments to reflect changes in the value of the underlying
contract; however, the value of the option does change daily and that change
would be reflected in the net asset value of the Fund.
Foreign Currency Transactions. If the Fund enters into a currency
transaction, it will deposit, if so required by applicable regulations, with
its custodian cash or readily marketable securities in a segregated account
of the Fund in an amount at least equal to the value of the Fund's total
assets committed to the consummation of the forward contract. If the value
of the securities placed in the segregated account declines, additional cash
or securities will be placed in the account so that the value of the account
will equal the amount of the Fund's commitment with respect to the contract.
At or before the maturity of a forward contract, the Fund either may
sell a security and make delivery of the currency, or retain the security
and offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency which it is obligated to
deliver. If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or loss to the extent movement has occurred
in forward contract prices. Should forward prices decline during the period
between the Fund's entering into a forward contract for the sale of a
currency and the date it enters into an offsetting contract for the purchase
of the currency, the Fund will realize a gain to the extent the price of the
currency it has agreed to sell exceeds the price of the currency it has
agreed to purchase. Should forward prices increase, the Fund will suffer a
loss to the extent the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to sell.
The cost to the Fund of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period and
the market conditions then prevailing. Because transactions in currency
exchange usually are conducted on a principal basis, no fees or commissions
are involved. The use of forward currency exchange contracts does not
eliminate fluctuations in the underlying prices of the securities, but it
does establish a rate of exchange that can be achieved in the future. If a
devaluation generally is anticipated, the Fund may not be able to contract
to sell the currency at a price above the devaluation level it anticipates.
The requirements for qualification as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the "Code"), may cause the
Fund to restrict the degree to which it engages in currency transactions.
See "Dividends, Distributions and Taxes."
Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund can
increase its income through the investment of the cash collateral. For
purposes of this policy, the Fund considers collateral consisting of U.S.
Government securities or irrevocable letters of credit issued by banks whose
securities meet the standards for investment by the Fund to be the
equivalent of cash. From time to time, the Fund may return to the borrower
or a third party which is unaffiliated with the Fund, and which is acting as
a "placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(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 of Directors must terminate the loan and
regain the right to vote the securities if a material event adversely
affecting the investment occurs. These conditions may be subject to future
modification.
Risk Factors--Lower Rated Securities. The Fund is permitted to invest
in securities rated below Baa by Moody's Investors Service, Inc. ("Moody's")
and below BBB by Standard & Poor's Corporation ("S&P"), Fitch Investors
Service, Inc. ("Fitch") and Duff & Phelps Credit Rating Co. ("Duff") and as
low as the lowest rating assigned by Moody's, S&P, Fitch or Duff. Such
securities, though higher yielding, are characterized by risk. Although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of these securities.
The Fund will rely on the Advisers' judgment, analysis and experience in
evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities and will fluctuate over time. These securities are
considered by S&P, Moody's, Fitch and Duff, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation and generally will involve more
credit risk than securities in the higher rating categories.
Issues of certain of these securities often are highly leveraged and
may not have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the securities of such issuers
generally is greater than is the case with the higher rated securities. For
example, during an economic downturn or a sustained period of rising
interest rates, highly leveraged issuers of these securities may not have
sufficient revenues to meet their interest payment obligations. The
issuer's ability to service its debt obligations also may be affected
adversely by specific corporate developments, forecasts, or the
unavailability of additional financing. The risk of loss because of default
by the issuer is significantly greater for the holders of these securities
because such securities generally are unsecured and often are subordinated
to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's securities and
calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic downturns.
It is likely that any economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with the Distributor or any other persons concerning the
acquisition of such securities, and the Advisers will review carefully the
credit and other characteristics pertinent to such new issues.
Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 8 as fundamental policies. These restrictions cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "Act")) of the Fund's
outstanding voting shares. Investment restrictions numbered 9 through 14
are not fundamental policies and may be changed by vote of a majority of the
Fund's Directors at any time. The Fund may not:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
2. 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.
3. 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 or real estate investment trusts.
4. Borrow money, except to the extent permitted under the Act. 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.
5. 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 of Directors.
6. 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.
7. Issue any senior security (as such term is defined in Section 18(f)
of the Act), except to the extent the activities permitted in Investment
Restriction Nos. 2, 4, 11 and 12 may be deemed to give rise to a senior
security.
8. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
9. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessor) 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.
10. 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.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options 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.
12. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of Additional
Information.
13. 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.
14. Purchase securities of other investment companies, except to the
extent permitted under the Act.
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
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors of the Fund
*DAVID P. FELDMAN, Director. Corporate Vice President-Investment Management
of AT&T. He is also a trustee of Corporate Property Investors, a real
estate investment company. His address is One Oak Way, Berkeley
Heights, New Jersey 07922.
JOHN M. FRASER, JR., Director. President of Fraser Associates, a service
company for planning and arranging corporate meetings and other events.
From September 1975 to June 1978, he was Executive Vice President of
Flagship Cruises, Ltd. Prior thereto, he was Senior Vice President and
Resident Director of the Swedish-American Line for the United States
and Canada. His address is 133 East 64th Street, New York, New York
10021.
ROBERT R. GLAUBER, Director. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University since January 1992. 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 and, from 1985 to 1989, Chairman of its Advanced Management
Program. He is also a director of MidOcean Reinsurance Co. Ltd. and
Cooke & Bieler, Inc., investment counselors. His address is 79 John F.
Kennedy Street, Cambridge, Massachusetts 02138.
JAMES F. HENRY, Director. President of the Center for Public Resources, 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. From September 1971 to December 1976, he was
President and a director of the Edna McConnell Clark Foundation, a
philanthropic organization. His address is c/o Center for Public
Resources, 366 Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Director. 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 Vice President of
Macy's, New York. Her address is c/o Corporate Property Investors, 305
East 47th Street, New York, New York 10017.
*IRVING KRISTOL, Director. Consultant to the Manager on economic matters.
He is also John M. Olin Distinguished Fellow of the American Enterprise
Institute for Public Policy Research and also co-editor of The Public
Interest magazine and an author or co-editor of several books. 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. From 1975 to 1990, he was a director of Lincoln
National Corporation, an insurance company, and from 1977 to 1990, he
was a director of Warner-Lambert Company, a pharmaceutical and consumer
products company. His address is c/o The Public Interest, 1112 16th
Street, N.W., Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Director. President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center. He was Vice President for
Health Sciences and Director of the Cancer Center at Columbia
University from 1973 to September 1980, and Professor of Medicine and
of Human Genetics and Development at Columbia University from 1968 to
1982. From 1976 to 1991 he was a director of Charles H. Revson
Foundation. From 1992 to 1993 he was a director of Biotechnology
General, Inc., a biotechnology development company. He is also a
director of Pfizer, Inc., a pharmaceutical company, Life Technologies,
Inc., a life science company providing products for cell and molecular
biology and microbiology, National Health Laboratories, a national
chemical diagnostic laboratory, and Tularik, Inc., a biotechnology
company. His address is c/o Memorial Sloan-Kettering Cancer Center,
1275 York Avenue, New York, New York 10021.
DR. MARTIN PERETZ, Director. 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 a director of
Leukosite Inc., a biopharmaceutical company. He was a director of Bank
Leumi Trust Company of New York from 1988 to 1989 and Carmel Container
Corporation from 1988 to 1991. His address is c/o The New Republic,
1220 19th Street, N.W., Washington, D.C. 20036.
BERT W. WASSERMAN, Director. Executive Vice President and Chief Financial
Officer since January 1990 and a director from January 1990 to March
1993 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.
He is also a member of the Chemical Bank National Advisory Board, a
trustee of the Baruch School of the College of the City of New York and
a director of the New Germany Fund. His address is c/o Time Warner
Inc., 75 Rockefeller Plaza, New York, New York 10019.
Mrs. Jacobs, Messrs. Fraser, Glauber, Henry , Kristol and Wasserman and
Drs. Marks and Peretz are also directors of Dreyfus A Bonds Plus, Inc.,
Dreyfus Balanced Fund, Inc., Dreyfus Growth Opportunity Fund, Inc., Dreyfus
Global Bond Fund, Inc., Dreyfus Growth and Income Fund, Inc., Dreyfus
International Equity Fund, Inc., Dreyfus Capital Growth Fund (A Premier
Fund) and Dreyfus Money Market Instruments, Inc., and trustees of Dreyfus
Institutional Money Market Fund and Dreyfus Variable Investment Fund. Ms.
Jacobs is also a trustee of Dreyfus BASIC Money Market Fund, Inc., Dreyfus
BASIC U.S. Government Money Market Fund, Dreyfus California Intermediate
Municipal Bond Fund, Dreyfus Connecticut Intermediate Municipal Bond Fund,
Dreyfus Massachusetts Intermediate Municipal Bond Fund, Dreyfus New Jersey
Intermediate Municipal Bond Fund, Dreyfus Pennsylvania Intermediate
Municipal Bond Fund, Dreyfus Strategic Governments Income, Inc., Dreyfus
Strategic Income and Dreyfus Strategic Investing. Mr. Fraser is also a
director of The Dreyfus Focus Funds, Inc. In addition, Mr. Glauber is a
director of Dreyfus Asset Allocation Fund, Inc., Dreyfus California
Municipal Income, Inc., The Dreyfus Fund Incorporated, Dreyfus Municipal
Income, Inc., Dreyfus New York Municipal Income, Inc., Dreyfus Short-Term
Income Fund, Inc. and Dreyfus Worldwide Dollar Money Market Fund, Inc., The
401(k) Fund and a trustee of Dreyfus U.S. Government Income Fund, Dreyfus
Institutional Short Term Treasury Fund and Dreyfus Short-Intermediate
Municipal Bond Fund.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Directors of the Fund who are not "interested persons" of the Fund, as
defined in the Act, will be selected and nominated by the Directors who are
not "interested persons" of the Fund.
The Fund does not pay any remuneration to its officers. Fees and
expenses of Directors paid by the Fund totalled $7,391 for the period June
29, 1994 (commencement of operations) through November 30, 1994 for all
Directors as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment companies
advised or administered by Dreyfus. From December 1991 to July 1994,
she was President and Chief Compliance Officer of Funds Distributor,
Inc., a wholly-owned subsidiary of The Boston Company, Inc. Prior to
December 1991, she served as Vice President and Controller, and later
as Senior Vice President, of The Boston Company Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From February 1992 to
July 1994, he served as Counsel for The Boston Company Advisors, Inc.
From August 1990 to February 1992, he was employed as an Associate at
Ropes & Gray, and prior to August 1990, he was employed as an Associate
at Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Secretary. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of Springs
Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate General
Counsel of the Distributor and an officer of other investment companies
advised or administered by Dreyfus. From September 1992 to August
1994, he was an attorney with the Board of Governors of the Federal
Reserve System.
JOSEPH S. TOWER,III, Assistant Treasurer. Senior Vice President, Treasurer
and Chief Financial Officer of the Distributor and an officer of other
investment companies advised or administered by Dreyfus. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the distributor and
an officer of other investment companies advised or administered by
Dreyfus. From 1984 to July 1994, he was Assistant Vice President in
the Mutual Fund Accounting Department of Dreyfus.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of Premier
Mutual Fund Services and an officer of other investment companies
advised or administered by Dreyfus. From January 1992 to July 1994, he
was a Senior Legal Product Manager, and, from January 1990 to January
1992, he was a mutual fund accountant, for The Boston Company Advisors,
Inc.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of Common Stock outstanding on December 22, 1994.
The following persons are known by the Fund to won of record or
beneficially 5% or more of the Fund's outstanding voting securities as of
December 22, 1994; Major Trading Corporation, attn. Maurice Bendrihem, 200
Park Avenue, New York, New York 10166 - 49.2%. M&G Limited, M&G House,
Victoria Rd., Clemsford CM1 1FB - 49.1%.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
Management Agreement. Dreyfus supervises investment management of the
Fund pursuant to the Management Agreement (the "Management Agreement") dated
August 24, 1994 between Dreyfus and the Fund. The Management Agreement is
subject to annual approval by (i) the Fund's Board of Directors or (ii) vote
of a majority (as defined in the Act) of the Fund's outstanding voting
securities, provided that in either event its continuance also is approved
by a majority of the Fund's Directors who are not "interested persons" (as
defined in the Act) of the Fund or Dreyfus, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Management
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Directors or by vote of the holders of a majority of the Fund's shares, or,
on not less than 90 days' notice, by Dreyfus. The Management Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of Dreyfus: Howard
Stein, Chairman of the Board and Chief Executive Officer; Julian M.
Smerling, Vice Chairman of the Board of Directors; Joseph S. DiMartino,
President and a director; W. Keith Smith, Chief Operating Officer and a
director; Paul H. Snyder, Vice President and Chief Financial Officer; Daniel
C. Maclean, Vice President and General Counsel; Elie M. Genadry, Vice
President-Wholesale; Henry D. Gottmann, Vice President-Retail; Jeffrey N.
Nachman, Vice President-Mutual Fund Administration; Diane M. Coffey, Vice
President-Corporate Communications; Jay R. DeMartine, Vice President-Retail
Marketing; Barbara E. Casey, Vice President-Retirement Services; Lawrence S.
Kash, Vice Chairman-Distribution; Philip L. Toia, Vice Chairman-Operations
and Administration; Katherine C. Wickham, Vice President-Human Resources;
Mark N. Jacobs, Secretary and Vice President-Fund Legal and Compliance;
Maurice Bendrihem, Controller; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and David B. Truman, directors.
Dreyfus maintains office facilities on behalf of the Fund, and
furnishes the Fund statistical and research data, clerical help, accounting,
data processing, bookkeeping and internal auditing and certain other
required services to the Fund. Dreyfus also may make such advertising and
promotional expenditures using its own resources, as it from time to time
deems appropriate.
Sub-Investment Advisory Agreement. M&G provides investment advisory
assistance and day-to-day management of the Fund's investments pursuant to
the Sub-Investment Advisory Agreement (the "Sub-Advisory Agreement") dated
August 24, 1994 between M&G and Dreyfus. The Sub-Advisory Agreement is
subject to annual approval by (i) the Fund's Board of Directors or (ii) vote
of a majority (as defined in the Act) of the Fund's outstanding voting
securities, provided that in either event the continuance also is approved
by a majority of the Fund's Directors who are not "interested persons" (as
defined in the Act) of the Fund or M&G, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Sub-Advisory
Agreement is terminable without penalty, (i) by Dreyfus on 60 days' notice,
(ii) by the Fund's Board of Directors or by vote of the holders of a
majority of the Fund's shares on 60 days' notice, or (iii) by M&G on not
less than 90 days' notice. The Sub-Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the Act) or upon
the termination of the Management Agreement for any reason.
The following persons are officers and/or directors of M&G: David L.
Morgan, Chairman of the Board of Directors; John P. Allard, John W.
Boeckmann, Gordon P. Craig, James H.S. Denham, Charles C.M. Glasse, Patrick
A. Harrington, Martin E. Harrison, Robert A. R. Hayes, Richard S. Hughes,
David J. Hutchins, Peter D. Jones, James R.D. Korner, Paul R. Marsh, Michael
G. McLintock, Nigel D. Morrison, Roger D. Nightingale, Paul D.A. Nix,
William J. Nott, Neil A. Pegrum, Duncan N. Robertson, J. Christopher
Whitaker, directors; and Anthony J. Ashplant, Secretary.
M&G provides day-to-day management of the Fund's investments in
accordance with the stated policies of the Fund, subject to the supervision
of Dreyfus and approval of the Fund's Board of Directors. Dreyfus and M&G
provide the Fund with portfolio managers who are authorized by the Board of
Directors to execute purchases and sales of securities. The Fund's
portfolio managers are David L. Morgan, Paul D.A. Nix and William Vincent.
Dreyfus also maintains a research department with a professional staff of
portfolio managers and securities analysts who provide research services for
the Fund as well as other funds advised by Dreyfus. All purchases and sales
are reported for the Board of Directors' review at the meeting subsequent to
such transactions.
Expenses. All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by Dreyfus and/or
M&G. The expenses borne by the Fund include: organizational costs, taxes,
interest, brokerage fees and commissions, if any, fees of Board members,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining 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, and any extraordinary expenses.
The Fund is subject to an annual distribution fee for advertising, marketing
and distributing its shares and an annual service fee for ongoing personal
services relating to shareholder accounts and services related to the
maintenance of shareholder accounts. See "Distribution Plan and Shareholder
Services Plan."
As compensation for Dreyfus' services, the Fund has agreed to pay
Dreyfus a monthly management fee at the annual rate of .75 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 period from June 29, 1994 (commencement of operations) through
November 30, 1994, no management fee was paid by the Fund pursuant to
undertakings by Dreyfus.
As compensation for M&G's services, Dreyfus has agreed to pay M&G a
monthly Sub-advisory fee at the annual rate of .30 of 1% of the value of the
Fund's average daily net assets. For the period June 29, 1994 (commencement
of operations) through November 30, 1994, no sub-investment advisory fee was
paid by Dreyfus pursuant to an undertaking by M&G.
Dreyfus and M&G have agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of interest, taxes, brokerage 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, Dreyfus and M&G
will bear the excess expense in proportion to their management fee and sub-
advisory fee to the extent required by state law. Such payment, if any,
will be estimated daily, and reconciled and paid on a monthly basis.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distribution Plan and
Shareholder Services Plan."
Fund shares are subject to a Distribution Plan and a Shareholder
Services Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the Act provides, among other things, that an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board of
Directors has adopted such a plan (the "Distribution Plan") with respect to
the Fund's shares, pursuant to which the Fund reimburses the Distributor for
distributing Fund shares and pay Dreyfus, Dreyfus Service Corporation, a
wholly-owned subsidiary of Dreyfus, and any affiliate of either of them for
advertising and marketing relating to the Fund. Under the Distribution
Plan, the Distributor may make payments to certain financial institutions,
securities dealers and other financial industry professionals (collectively,
"Service Agents") in respect to distribution services. The Fund's Board of
Directors believes that there is a reasonable likelihood that the
Distribution Plan will benefit the Fund and its shareholders. In some
states, certain financial institutions effecting transactions in Fund shares
may be required to register as dealers pursuant to state law.
A quarterly report of the amounts expended under the Distribution Plan,
and the purposes for which such expenditures were incurred, must be made to
the Directors for their review. In addition, the Distribution Plan provides
that it may not be amended to increase materially the costs which Fund
shareholders may bear for distribution pursuant to the Distribution Plan
without shareholder approval and that other material amendments of the
Distribution Plan must be approved by the Board of Directors, and by the
Directors who are not "interested persons" (as defined in the Act) of the
Fund and have no direct or indirect financial interest in the operation of
the Distribution Plan or in any agreements entered into in connection with
the Distribution Plan, by vote cast in person at a meeting called for the
purpose of considering such amendments. The Distribution Plan is subject to
annual approval by such vote of the Directors cast in person at a meeting
called for the purpose of voting on the Distribution Plan. The Distribution
Plan was so approved by the Directors at a meeting held on June 13, 1994.
The Distribution Plan may be terminated at any time by vote of a majority of
the Directors who are not "interested persons" and have no direct or
indirect financial interest in the operation of the Distribution Plan or in
any agreements entered into in connection with the Distribution Plan or by
vote of the holders of a majority of the Fund's shares.
For the period August 24, 1994 through November 30, 1994, the amounts
payable by the Fund under the Distribution Plan was $8,567, of which $8,248
was charged for advertising, marketing and servicing the Fund's shares and
$319 was charged for preparing, printing and distributing prospectuses and
statements of additional information. Pursuant to undertakings in effect,
the amount chargeable to the Fund pursuant to the Distribution Plan was
reduced by $8,567, resulting in a net fee of $0.
Shareholder Services Plan. The Fund has adopted a Shareholder Services
Plan, pursuant to which the Fund pays the Distributor for the provision of
certain services to Fund shareholders.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Directors for their review. In addition, the
Shareholder Services Plan provides that it may not be amended without
approval of the Directors, and by the Directors who are not "interested
persons" (as defined in the Act) of the Fund and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Shareholder Services Plan is subject to
annual approval by such vote of the Directors cast in person at a meeting
called for the purpose of voting on the Shareholder Services Plan. The
Shareholder Services Plan was so approved on June 13, 1994. The Shareholder
Services Plan is terminable at any time by vote of a majority of the
Directors who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan.
For the period August 24, 1994 through November 30, 1994, the amount
charged to the Fund under the Shareholder Services Plan was $4,124.
Prior Distribution Plan. As of August 24, 1994 the Fund terminated its
then existing Distribution Plan, which provided for payments to be made to
Dreyfus Service Corporation for advertising, marketing and distributing Fund
shares at the annual rate of .50% for the period of June 29, 1994
(commencement of operations) through August 23, 1994, the amounts payable by
the Fund under the Distribution Plan was $4,919 of which $8,248 was charged
for advertising, marketing and servicing the Fund's shares and $181 was
charged for preparing, printing and distributing prospectuses and statements
of additional information. Pursuant to undertakings in effect, the amount
chargeable to the Fund pursuant to the Plan was reduced by $4,919, resulting
in a net fee of $0.
Prior Shareholder Services Plan. As of august 24, 1994, the Fund also
terminated its then existing Shareholder Services Plan, which provided for
payments to be made to Dreyfus Service Corporation for expenses related to
providing shareholder services. For the period June 29, 1994 (commencement
of operations) through August 23, 1994, the amounts charged to the Fund
under the Shareholder Services Plan was $2,369.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time, on
any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open. Such purchases will be credited to the
shareholder's Fund account on the next bank business day. To qualify to use
the Dreyfus TeleTransfer Privilege, the initial payment for purchase of Fund
shares must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder Services
Form on file. If the proceeds of a particular redemption are to be wired to
an account at any other bank, the request must be in writing and signature-
guaranteed. See "Redemption of Fund Shares--Dreyfus TeleTransfer
Privilege."
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.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund
Shares."
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, or a representative of the investor's Service Agent, 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 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.
Redemption proceeds, if wired, must be in the amount of $1,000 or more and
will be wired to the investor's account at the bank of record designated in
the investor's file at the Transfer Agent, if the investor's bank is a
member of the Federal Reserve System, or to a correspondent bank if the
investor's bank is not a member. Fees ordinarily are imposed by such bank
and usually are 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
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 of Directors reserves the right to make payments in whole
or in part in 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 portfolio is 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 other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a sales
load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of dividends
or distributions of any such funds (collectively referred to herein as
"Purchased Shares") may be exchanged for shares of other funds sold
with a sales load (referred to herein as "Offered Shares"), provided
that, if the sales load applicable to the Offered Shares exceeds the
maximum sales load that could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares were acquired),
without giving effect to any reduced loads, the difference will be
deducted.
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 or the investor's Service Agent
acting on the investor's behalf must give exchange instructions to the
Transfer Agent in writing or by telephone. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless the investor checks the relevant "No" box on the Account Application,
indicating that the investor specifically refuses this Privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer Agent
to act on telephonic instructions from any person representing himself or
herself to be the investor or a representative of the investor's Service
Agent, and reasonably believed by the Transfer Agent to be genuine.
Telephone exchanges may be subject to limitations as to the amount involved
or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.
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 set forth under "Fund Exchanges" above.
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 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
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. There is a service charge of $.50 for each withdrawal check.
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 on the payment date 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 that impose a contingent deferred sales charge and the
applicable contingent deferred sales charge, if any, will be imposed upon
redemption of such shares.
Corporate Pension/Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In addition,
the Fund makes available Keogh Plans, IRAs, including SEP-IRAs and IRA
"Rollover Accounts," and 403(b)(7) Plans. Plan support services 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 a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity 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.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
Valuation of Portfolio Securities. The Fund's 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. Any assets or liabilities initially expressed in terms of
foreign currency will be translated into dollars at the midpoint of the New
York interbank market spot exchange rate as quoted on the day of such
translation by the Federal Reserve Bank of New York or if no such rate is
quoted on such date, at the exchange rate previously quoted by the Federal
Reserve Bank of New York or at such other quoted market exchange rate as may
be determined to be appropriate by the Advisers. Forward currency contracts
will be valued at the current cost of offsetting the contract. Because of
the need to obtain prices as of the close of trading on various exchanges
throughout the world, the calculation of net asset value does not take place
contemporaneously with the determination of prices of certain of the Fund's
securities. Short-term investments are carried at amortized cost, which
approximates value. 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 Fund's Board of Directors. Expenses and fees of the
Fund, including the management fee paid by the Fund and distribution and
service fees, 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
market quotations are not readily available, or are not valued by a pricing
service approved by the Board of Directors, are valued at fair value as
determined in good faith by the Board of Directors. The Board of Directors
will review the method of valuation on a current basis. In making their
good faith valuation of restricted securities, the Directors 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 of Directors if the Directors believe that it 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 of
Directors.
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."
It is expected that the Fund will qualify as a "regulated investment
company" under the Code, as long as such qualification is in the best
interests of its shareholders. As a regulated investment company, the Fund
will pay no Federal income tax on net investment income and net realized
securities gains to the extent that such income and gains are distributed to
shareholders in accordance with applicable provisions of the Code. To
qualify as a regulated investment company, the Fund must pay out to its
shareholders at least 90% of its net income (consisting of net investment
income and net short-term capital gain), must derive less than 30% of its
annual gross income from gain on the sale of securities held for less than
three months, and must meet certain asset diversification and other
requirements. Accordingly, the Fund may be restricted in the selling of
securities held for less than three months. The Code, however, allows the
Fund to net certain offsetting positions, making it easier for the Fund to
satisfy the 30% test. The term "regulated investment company" does not
imply the supervision of management or investment practices or policies by
any government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of the shares below the
cost of the investment. Such a dividend or distribution would be a return
of investment in an economic sense, although taxable as stated above. In
addition, the Code provides that if a shareholder holds shares of the Fund
for six months or less and has received a capital gain distribution with
respect to such shares, any loss incurred on the sale of such shares will be
treated as long-term capital loss to the extent of the capital gain
distribution received.
Depending upon the composition of the Fund's income, the entire amount
or a portion of the dividends from net investment income may qualify for the
dividends received deduction allowable to qualifying U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income
of the Fund distributed to the Fund's 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 more than 46 days and
has received a dividend from net investment income with respect to such
shares, the portion designated by the Fund as qualifying for the dividends
received deduction will not be eligible for such shareholder's dividends
received deduction. In addition, the Code provides other limitations with
respect to the ability of a qualifying corporate shareholder to claim the
dividends received deduction in connection with holding Fund shares.
The Fund may qualify for and may make an election permitted under
Section 853 of the Code so that shareholders may be eligible to claim a
credit or deduction on their Federal income tax returns for, and will be
required to treat as part of the amounts distributed to them, their pro rata
portion of qualified taxes paid or incurred by the Fund to foreign countries
(which taxes relate primarily to investment income). The Fund may make an
election under Section 853, provided that more than 50% of the value of the
Fund's total assets at the close of the taxable year consists of securities
in foreign corporations, and the Fund satisfies the applicable distribution
provisions of the Code. The foreign tax credit available to shareholders is
subject to certain limitations imposed by the Code.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, a portion of the gain or
loss realized from the disposition of foreign currencies (including foreign
currency denominated bank deposits) and non-U.S. dollar denominated
securities (including debt instruments and certain forward contracts and
options) may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of any gain realized from the sale or
other disposition of certain market discount bonds will be treated as
ordinary income under Section 1278. Finally, all or a portion of the gain
realized from engaging in "conversion transactions" may be treated as
ordinary income under Section 1258. "Conversion transactions" are defined
to include certain forward, futures, option and straddle transactions,
transactions marketed or sold to produce capital gains, or transactions
described in Treasury regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss the Fund realizes from
certain forward contracts and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such contracts and options
as well as from closing transactions. In addition, any such contracts or
options remaining unexercised at the end of the Fund's taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain foreign
currency forward contracts or options may constitute "straddles."
"Straddles" are defined to include "offsetting positions" in actively traded
personal property. The tax treatment of "straddles" is governed by Sections
1092 and 1258 of the Code, which, in certain circumstances, overrides or
modifies the provisions of Sections 1256 and 988 of the Code. As such, all
or a portion of any short or long-term capital gain from certain "straddle"
and/or conversion transactions may be recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles" were
governed by Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which election is
made, if any, the results to the Fund may differ. If no election is made,
to the extent the "straddle" rules apply to positions established by the
Fund, losses realized by the Fund will be deferred to the extent of
unrealized gain in the offsetting position. Moreover, as a result of the
"straddle" and the conversion transaction rules, short-term capital loss on
"straddle" positions may be recharacterized as long-term capital loss, and
long-term capital gains may be treated as short-term capital gains or
ordinary income.
If the Fund acquires shares in an entity that is classified as a
"passive foreign investment company" ("PFIC") for federal income tax
purposes, the operation of certain provisions of the Code applying to PFICs
could result in the imposition of certain federal income taxes on the Fund.
In addition, gain realized from the sale or other disposition of PFIC shares
may be treated as ordinary income under Section 1291 of the Code.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could under special tax rules affect the amount, timing and
character of distributions to shareholders by causing the Fund to recognize
income prior to the receipt of cash payments. For example, the Fund could
be required to accrue as income each year a portion of the discount (or
deemed discount) at which such securities were issued and to distribute such
income. In such case, the Fund may have to dispose of securities which it
might otherwise have continued to hold in order to generate cash to satisfy
these distribution requirements.
PORTFOLIO TRANSACTIONS
Dreyfus assumes general supervision over placing orders on behalf of
the Fund for the purchase or sale of investment securities. Allocation of
brokerage transactions, including their frequency, is made in the Advisers'
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
will include those that supplement the Advisers' research facilities with
statistical data, investment information, economic facts and opinions.
Information so received is in addition to and not in lieu of services
required to be performed by the Advisers, and the Advisers' fees are not
reduced as a consequence of the receipt of such supplemental information.
Such information may be useful to Dreyfus in serving both the Fund and
other funds which it advises and to M&G in serving both the Fund and the
other funds or accounts it advises, and, conversely, supplemental
information obtained by the placement of business of other clients may be
useful to the Advisers in carrying out their obligations to the Fund.
Brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad distribu-
tions, provided the primary consideration is met. Large block trades may,
in certain cases, result from two or more funds advised or administered by
Dreyfus being engaged simultaneously in the purchase or sale of the same
security. Certain of the Fund's transactions in securities of foreign
issuers may not benefit from the negotiated commission rates available to
the Fund for transactions in securities of domestic issuers. When
transactions are executed in the over-the-counter market, the Fund will deal
with the primary market makers unless a more favorable price or execution
otherwise is obtainable. Foreign exchange transactions are made with banks
or institutions in the interbank market at prices reflecting a mark-up or
mark-down and/or commission.
Portfolio turnover may vary from year to year as well as within a year.
It is anticipated that in any fiscal year the turnover rate may approach the
150% level; however, in periods in which extraordinary market conditions
prevail, the Advisers will not be deterred from changing investment strategy
as rapidly as needed, in which case higher turnover rates can be anticipated
which would result in greater brokerage expenses. The overall
reasonableness of brokerage commissions paid is evaluated by the Advisers
based upon their knowledge of available information as to the general level
of commissions paid by other institutional investors for comparable
services.
For the period June 29, 1994 (commencement of operations) through
November 30, 1994, the Fund paid total brokerage commissions of $30,087,
none of which was paid to the Distributor.
For the period June 29, 1994 (commencement of operations) through November
30, 1994, there were no gross spreads and concessions on principal
transactions.
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 average annual return for the period June 29, 1994
(commencement of operations) through November 30, 1994 was -9.16%. Average
annual total return is calculated by determining the ending redeemable value
of an investment purchased at a 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 June 29, 1994 (commencement of
operations) through November 30, 1994 was -4.00%. 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.
Comparative performance may be used from time to time in advertising
the Fund's shares, including data from Lipper Analytical Services, Inc.,
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average, Money Magazine, Morningstar, Inc. and other industry publications.
From time to time, the Fund may compare its performance against inflation
with the performance of other instruments against inflation, such as short-
term Treasury Bills (which are direct obligations of the U.S. Government)
and FDIC-insured bank money market accounts. In addition, advertising for
the Fund may indicate that investors may consider diversifying their
investment portfolios in order to seek protection of the value of their
assets against inflation. From time to time, advertising materials for the
Fund may refer to or discuss then-current or past economic or financial
conditions, developments and/or events. The Fund's advertising materials
also may refer to the integration of the world's securities markets, discuss
the investment opportunities available worldwide and mention the increasing
importance of an investment strategy including foreign investments. In
addition, advertising materials for the Fund also may refer to, or include
commentary by the Fund's portfolio managers relating to, their investment
strategy, portfolio holdings, recovery investing, current or past business,
political, economic or financial conditions and other matters of general
interest to shareholders. Such materials may also describe awards bestowed
upon M&G or refer to the clients of M&G.
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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a subsidiary
of First Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-
9671, is the Fund's transfer and dividend disbursing agent. Neither The
Bank of New York nor The Shareholder Services Group, Inc. has any part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-
2696, as counsel for the Fund, has rendered its opinion as to certain legal
matters regarding the due authorization and valid issuance of the shares of
Common Stock being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
Statement of Assets and Liabilities
June 17, 1994
ASSETS
Cash $100,000
Deferred organization and initial offering expenses 73,000
--------
Total Assets $173,000
LIABILITIES
Accrued organization and initial offering expenses 73,000
---------
NET ASSETS applicable to 8,000 shares of
Common Stock ($.001 par value) issued
and outstanding (300 million
Shares authorized) . . . . . . . . . . . . . . . . . . . . . . .$100,000
========
NET ASSET VALUE offering and redemption price per
share ($100,000 / 8,000 shares). . . . . . . . . . . . . . . . .$ 12.50
========
NOTE - Dreyfus International Recovery Fund, Inc. (the "Fund") was organized
as a Maryland corporation on March 31, 1994 and has had no operations since
that date other than matters relating to its organization and registration
as a non-diversified, open-end investment company under the Investment
Company Act of 1940 and the Securities Act of 1933 and the sale and issuance
of 8,000 shares of Common Stock to The Dreyfus Corporation ("Initial
Shares"). Organization expenses payable by the Fund have been deferred and
will be amortized from the date operations commence over a period which it
is expected that a benefit will be realized, not to exceed five years. If
any of the Initial Shares are redeemed during the amortization period by any
holder thereof, the redemption proceeds will be reduced by any unamortized
organization expenses in the same proportion as the number of Initial Shares
being redeemed bears to the number of Initial Shares outstanding at the time
of the redemption.
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Directors
Dreyfus International Recovery Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Dreyfus International Recovery Fund, Inc. as of June 17, 1994. The
statement of assets and liabilities is the responsibility of the Fund's
management. Our responsibility is to express an opinion on the statement of
assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
statement of assets and liabilities. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall statement of assets and liabilities
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Dreyfus
International Recovery Fund, Inc. at June 17, 1994, in conformity with
generally accepted accounting principles.
New York, New York
June 17, 1994
Ernst & Young
<PAGE>
Dreyfus
International
Recovery
Fund, Inc.
Semi-Annual
Report
November 30, 1994
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
STATEMENT OF INVESTMENTS NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
COMMON STOCKS--98.6% SHARES VALUE
---------- ----------
<C> <S> <C> <C>
AUSTRALIA--5.1% Hardie (James) Industries............... 40,000 $ 59,336
Renison Goldfields Consolidated......(a) 35,000 131,815
TNT..................................(a) 60,000 106,989
----------
298,140
----------
AUSTRIA--1.8% OEMV A.G.............................(a) 1,250 104,769
----------
FRANCE--8.2% Credit Lyonnais......................(a) 1,400 124,011
Essilor International................... 790 111,495
Nord Est................................ 5,600 143,094
Vallourec Usines a Tubes
de Lorraine Escaut...................(a) 1,900 98,793
----------
477,393
----------
HONG KONG--4.2% Orient Overseas International........... 240,000 159,824
Vtech Holdings.......................... 84,000 89,067
----------
248,891
----------
ITALY--5.5% Avir Finanziaria S.P.A.................. 16,000 91,273
Fiat S.P.A...........................(a) 34,000 126,817
Montedison S.P.A.....................(a) 145,000 104,045
----------
322,135
----------
JAPAN--33.2% All Nippon Airways...................... 10,000 112,178
Alps Electric........................(a) 7,000 94,795
Asahi Organic Chemicals Industry........ 10,000 83,881
Daikin Industries....................... 10,000 91,056
Daiwa Danchi.........................(a) 16,000 79,232
Hamada Printing Press................(a) 12,000 109,146
Jamco................................... 7,000 79,232
Japan Central Real Estate............(a) 20,000 80,950
Kawasaki Steel.......................(a) 24,000 102,840
Kioritz..............................(a) 22,000 81,152
Kyushu Matsushita Electric.............. 3,000 75,493
Mitsukoshi.............................. 10,000 95,604
Nikko Securities........................ 7,000 74,280
Nintendo................................ 2,000 108,135
Nippon Yusen Kabushiki Kaish............ 16,000 106,397
Okamura................................. 12,000 103,567
Olympus Optical......................... 8,000 87,317
Shintom..............................(a) 12,000 102,476
Shinwa Kaiun Kaisha..................(a) 26,000 96,170
Tosoh................................(a) 25,000 103,840
Unitika..............................(a) 22,000 75,816
----------
1,943,557
----------
MALAYSIA--2.0% Malaysian Airline System................ 42,000 115,023
----------
<PAGE>
</TABLE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) SHARES VALUE
---------- ----------
<C> <S> <C> <C>
MEXICO--5.5% Grupo Financiero Bancomer S.A., Ser.
C....................................... 130,000 $ 157,965
Grupo Financiero Serfin S.A., Cl. L,
A.D.R................................... 7,000 112,875
Transportacion Maritima Mexicana S.A.,
A.D.R................................... 7,000 50,750
----------
321,590
----------
NORWAY--0.7% Vard A.S.............................(a) 16,000 43,307
----------
SINGAPORE--3.7% IPCO Inter national..................... 21,000 95,130
Singmarine Industries................... 45,000 119,836
----------
214,966
----------
SOUTH AFRICA--2.3% ISCOR, South African Iron & Steel
Industrial.............................. 101,200 114,956
Penrose Holdings.....................(a) 200,000 20,388
----------
135,344
----------
SPAIN--8.0% Banco Central Hispanoamericano S.A...... 7,500 173,341
El Aguila S.A........................(a) 10,000 85,812
Espanola de Tubos Por Extrusion
S.A..................................(a) 92,307 92,237
Tabacalera S.A., Ser. A................. 4,000 115,179
----------
466,569
----------
SWITZERLAND--1.3% Oerlikon-Buehrle Holding A.G.........(a) 800 78,343
----------
UNITED KINGDOM--16.1% APV PLC................................. 65,000 64,107
BET PLC................................. 50,000 79,840
Booker PLC.............................. 12,000 76,647
British Steel PLC....................... 45,000 112,012
Costain Group PLC....................(a) 200,000 72,013
Fisons PLC.............................. 50,000 94,713
Lucas Industries PLC.................... 30,000 97,218
MTM PLC................................. 100,000 125,240
Spring Ram PLC.......................... 140,000 95,339
TSB Group PLC........................... 35,000 126,023
----------
943,152
----------
UNITED STATES--1.0% Amax Gold............................(a) 10,000 61,250
----------
TOTAL INVESTMENTS (cost $6,055,039)......................................... 98.6% $5,774,429
------ ----------
------ ----------
CASH AND RECEIVABLES (NET).................................................. 1.4% $ 81,083
------ ----------
------ ----------
NET ASSETS.................................................................. 100.0% $5,855,512
------ ----------
------ ----------
<FN>
- --------------------------------------------------------------------------------
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $6,055,039)--see statement............................................ $5,774,429
Cash.......................................................................... 53,155
Dividends and interest receivable............................................. 11,859
Prepaid expenses--Note 1(e)................................................... 65,700
Due from The Dreyfus Corporation.............................................. 49,373
----------
5,954,516
LIABILITIES:
Due to the Distributor........................................................ $ 2,440
Accrued expenses and other liabilities........................................ 96,564 99,004
------- ----------
NET ASSETS...................................................................... $5,855,512
----------
----------
REPRESENTED BY:
Paid-in capital............................................................... $6,100,000
Accumulated undistributed investment income--net.............................. 39,483
Accumulated net realized (loss) on investments and
foreign currency transactions............................................... (3,216)
Accumulated net unrealized (depreciation) on investments
and foreign currency transactions........................................... (280,755)
----------
NET ASSETS at value applicable to 488,000 shares outstanding
(300 million shares of $.001 par value Common Stock authorized)............... $5,855,512
----------
----------
NET ASSET VALUE, offering and redemption price per share
($5,855,512 / 488,000 shares)................................................. $12.00
------
------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM JUNE 29, 1994 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1994
(UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $3,256 foreign taxes withheld at source)......... $ 27,309
Interest................................................................ 12,174
---------
TOTAL INCOME.......................................................... $ 39,483
EXPENSES:
Management fee--Note 2(a)............................................... 19,480
Shareholder servicing costs--Note 2(b,c)................................ 19,929
Directors' fees and expenses--Note 2(d)................................. 7,391
Organization expenses--Note 1(f)........................................ 7,300
Custodian fees.......................................................... 7,219
Auditing fees........................................................... 3,000
Registration fees....................................................... 2,069
Prospectus and shareholders' reports--Note 2(b)......................... 1,000
Legal fees.............................................................. 500
Miscellaneous........................................................... 964
---------
68,852
Less--expense reimbursement from Manager due to
undertaking--Note 2(a)................................................ 68,852
---------
TOTAL EXPENSES........................................................ --
---------
INVESTMENT INCOME--NET................................................ 39,483
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments and foreign currency
transactions--Note 3(a)................................................. $ (3,216)
Net unrealized (depreciation) on investments and foreign currency
transactions............................................................ (280,755)
---------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS..................... (283,971)
---------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(244,488)
---------
---------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM JUNE 29, 1994 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1994
(UNAUDITED)
<TABLE>
<S> <C>
OPERATIONS:
Investment income--net.......................................................... $ 39,483
Net realized (loss) on investments.............................................. (3,216)
Net unrealized (depreciation) on investments for the period..................... (280,755)
----------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (244,488)
----------------
CAPITAL STOCK TRANSACTIONS;
Net proceeds from shares sold................................................... 6,000,000
----------------
TOTAL INCREASE IN NET ASSETS.................................................. 5,755,512
NET ASSETS:
Beginning of period--Note 1..................................................... 100,000
----------------
End of period (including undistributed investment income--net of $39,483)....... $5,855,512
----------------
----------------
<CAPTION>
SHARES
<S> <C>
----------------
CAPITAL SHARE TRANSACTIONS;
Shares sold..................................................................... 480,000
----------------
----------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (UNAUDITED)
Reference is made to page three of the Prospectus dated February 28, 1995.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus International Recovery Fund, Inc. (the "Fund") was incorporated on
March 31, 1994 and had no operations until June 29, 1994 (commencement of
operations) other than matters relating to its organization and registration as
a non-diversified open-end management investment company under the Investment
Company Act of 1940 ("Act") and the Securities Act of 1933 and the sale and
issuance of 8,000 shares of Common Stock ("Initial Shares") to The Dreyfus
Corporation ("Dreyfus"), the Fund's investment adviser. M&G Investment
Management Limited ("M&G") serves as the Fund's sub-investment adviser. Dreyfus
Service Corporation, a wholly-owned subsidiary of Dreyfus, until August 24,
1994, acted as the distributor of the Fund's shares, which are sold to the
public without a sales load. The Fund's fiscal year ends on May 31. Effective
August 24, 1994, Dreyfus became a direct subsidiary of Mellon Bank, N.A.
As of November 30, 1994, Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, held 248,000 shares. Mellon Bank Investments
Corporation is a subsidiary of Mellon Bank.
On August 24, 1994, Premier Mutual Fund Services Inc. (the "Distributor")
was engaged as the Fund's distributor. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of
Institutional Administration Services, Inc., a provider of mutual fund
administration services, the parent company of which is Boston Institutional
Group, Inc.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Short-term investments are carried at
amortized cost, which approximates value. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rate.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain, if any, are normally declared and paid annually, but the Fund may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. 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.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund 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.
(F) OTHER: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from June 29, 1994, the date
operations commenced, over the period during which it is expected that a benefit
will be realized, not to exceed five years. At November 30, 1994, the
unamortized balance of such expenses amounted to $65,700. In the event that any
of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses in
the same proportion as the number of such shares being redeemed bears to the
number of such shares outstanding at the time of such redemption.
NOTE 2--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a Management Agreement with Dreyfus, the management fee is
computed at the annual rate of .75 of 1% of the average daily value of the
Fund's net assets and is payable monthly. Dreyfus and M&G have agreed that if in
any full fiscal year the Fund's aggregate expenses, exclusive of interest,
taxes, brokerage and extraordinary expenses, exceed the expense limitation of
any state having jurisdiction over the Fund, Dreyfus and M&G will bear the
excess expense in proportion to their management fee and sub-advisory fee 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 distribution expenses and certain
expenses as described above) exceed 2 1/2% of the first $30 million, 2% of the
next $70 million and 1 1/2% of the excess over $100 million of the average value
of the Fund's net assets in accordance with California "blue sky" regulations.
However, Dreyfus has undertaken from June 29, 1994 to reimburse all fees
and expenses of the Fund. The expense reimbursement pursuant to the undertaking
amounted to $68,852 for the period ended November 30, 1994.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and M&G,
the sub-advisory fee is computed at the annual rate of .30 of 1% of the average
daily value of the Fund's net assets and is payable monthly by Dreyfus.
(B) On August 2, 1994, the shareholders approved a revised Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the Plan,
effective August 24, 1994, the Fund (a) reimburses the Distributor for payments
to certain Service Agents for distributing the Fund's shares and (b) pays the
Manager, Dreyfus Service Corporation and any affiliate of either of them for
advertising and marketing
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
relating to the Fund, at an aggregate annual rate of .50 of 1% of the value of
the Fund's average daily net assets. The Distributor may pay one of more Service
Agents in respect of distribution services. The Distributor determines the
amounts, if any, to be paid to Service Agents under the Plan and the basis on
which such payments are made. The fees payable under the Plan are payable
without regard to actual expenses incurred. The Plan also separately provides
for the Fund to bear the costs of preparing, printing and distributing certain
of the Fund's prospectuses and statements of additional information and costs
associated with implementing and operating the Plan, not to exceed the greater
of $100,000 or .005 of 1% of the Fund's average daily net assets for any full
fiscal year.
Prior to August 24, 1994, the Fund's Distribution Plan ("prior Distribution
Plan") provided that the Fund pay Dreyfus Service Corporation at an annual rate
of .50 of 1% of the value of the Fund's average daily net assets, for costs and
expenses in connection with advertising, marketing and distributing the Fund's
shares and for servicing shareholder accounts. Dreyfus Service Corporation made
payments to one or more Service Agents based on the value of the Fund's shares
owned by clients of the Service Agent. The prior Distribution Plan also
separately provided for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of additional
information and costs associated with implementing and operating the prior
Distribution Plan, not to exceed the greater of $100,000 or .005 of 1% of the
Fund's average daily net assets for any full fiscal year.
During the period ended November 30, 1994, $8,567 was charged to the Fund
pursuant to the Plan and $4,919 was charged to the Fund pursuant to the prior
Distribution Plan.
(C) Pursuant to the Fund's Shareholder Services Plan, the Fund pays the
Distributor an annual rate of .25 of 1% of the value of the Fund's average daily
net assets for servicing shareholder accounts. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
From June 29, 1994 through August 23, 1994, $2,369 was charged to the Fund by
Dreyfus Service Corporation and from August 24, 1994 through November 30, 1994
$4,124 was charged to the Fund by the Distributor pursuant to the Shareholder
Services Plan.
(D) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of Dreyfus and/or Dreyfus
Service Corporation. Each director who is not an "affiliated person" receives an
annual fee of $1,000 and an attendance fee of $250 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended November 30, 1994
amounted to $6,325,863 and $268,582, respectively.
(B) At November 30, 1994, accumulated net unrealized depreciation on
investments was $280,610, consisting of $299,566 gross unrealized appreciation
and $580,176 gross unrealized depreciation.
At November 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting purposes
(see the Statement of Investments).
<PAGE>
[Logo]
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
M&G Investment Management Limited
Three Quays, Tower Hill
London, EC3R 6BQ, England
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 096SA9411
Dreyfus International Recovery 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 June 29,
1994 (commencement of operations) to November 30, 1994
(unaudited).
Included in Part B of the Registration Statement:
Statement of Investments--November 30, 1994 (unaudited).
Statement of Assets and Liabilities--November 30, 1994
(unaudited).
Statement of Operations--for the period from June 29, 1994
(commencement of operations) to November 30, 1994
(unaudited).
Statement of Changes in Net Assets--for the period from June
29, 1994 (commencement of operations) to November 30, 1994
(unaudited).
Notes to Financial Statements (unaudited).
Statement of Assets and Liabilities dated June 17, 1994.
Report of Ernst & Young, Independent Auditors, dated
June 17, 1994.
Schedules No. I through VII 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 Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on June 23, 1994.
(2) Registrant's By-Laws, as amended, are incorporated by reference to
Exhibit (2) of Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on June 23, 1994.
(4) Specimen certificate for the Registrant's securities is incorporated
by reference to Exhibit (4) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on June 23, 1994.
(5) Management Agreement.
(5a) A Sub-Investment Advisory Agreement.
(6) Distribution Agreement.
(8) Custody Agreement is incorporated by reference to Exhibit 8 of Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-1A,
filed on June 23, 1994.
(9) Shareholder Services Plan.
(10) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on June 23, 1994.
(11) Consent of Independent Auditors.
(15) Distribution Plan.
(16) Schedules of Computation of Performance Data.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney.
(b) Certificate of Secretary.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of December 22, 1994
______________ _____________________________
Common Stock
(Par value $.001) 3
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer, underwriter
or affiliated person of the Registrant is insured or indemnified in
any manner against any liability which may be incurred in such
capacity, other than insurance provided by any director, officer,
affiliated person or underwriter for their own protection, is
incorporated by reference to Item 27 of Part II of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed on
June 23, 1994.
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 of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International
Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President, and The Dreyfus Trust Company++;
Director Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
JOSEPH S. DiMARTINO Director:
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837;
Vice President and former Treasurer and
Director:
National Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
W. KEITH SMITH Chairman and Chief Executive Officer:
Chief Operating Officer The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
PAUL H. SNYDER Director:
Vice President and Chief Pennsylvania Economy League
Financial Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania;
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman, Distribution Executive Officer:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
LAWRENCE S. KASH Executive Vice President
(cont'd) Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
JAY R. DEMARTINE Chairman of the Board and President:
Vice President, Marketing The Woodbury Society
16 Woodbury Lane
Ogunquit, ME 03907;
Former Managing Director:
Bankers Trust Company
280 Park Avenue
New York, NY 10017;
BARBARA E. CASEY President:
Vice President, Dreyfus Retirement Services;
Retirement Services Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate Communications
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Security Savings
Director Bank, F.S.B.+;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ELIE M. GENADRY President:
Vice President, Institutional Services Division of Dreyfus
Wholesale Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President, Fund
Administration
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice Chairman, Operations Dreyfus Thrift & Commerce****;
and Administration Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
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
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President, Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President, Fund The Dreyfus Consumer Credit Corporation*;
Legal and Compliance Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
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 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
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) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, 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 Michigan Municipal Money Market Fund, Inc.
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 Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) Dreyfus Short-Term Income Fund, Inc.
66) The Dreyfus Socially Responsible Growth Fund, Inc.
67) Dreyfus Strategic Growth, L.P.
68) Dreyfus Strategic Income
69) Dreyfus Strategic Investing
70) Dreyfus Tax Exempt Cash Management
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) First Prairie Cash Management
77) First Prairie Diversified Asset Fund
78) First Prairie Money Market Fund
79) First Prairie Municipal Money Market Fund
80) First Prairie Tax Exempt Bond Fund, Inc.
81) First Prairie U.S. Government Income Fund
82) First Prairie U.S. Treasury Securities Cash Management
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
91) Pacific American Fund
92) Peoples Index Fund, Inc.
93) Peoples S&P MidCap Index Fund, Inc.
94) Premier Insured Municipal Bond Fund
95) Premier California Municipal Bond Fund
96) Premier GNMA Fund
97) Premier Growth Fund, Inc.
98) Premier Municipal Bond Fund
99) Premier New York Municipal Bond Fund
100) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly Director, President and Chief President and
Operating Officer Treasurer
Joseph F. Tower, III Senior Vice President and Chief Assistant
Financial Officer Treasurer
John E. Pelletier Senior Vice President and General Vice President
Counsel and Secretary
Frederick C. Dey Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman Vice President and Associate Vice President
General Counsel and Assistant
Secretary
John J. Pyburn Vice President Assistant
Treasurer
Jean M. O'Leary Assistant Secretary None
Ruth D. Leibert Assistant Vice President Assistant
Secretary
Paul D. Furcinito Assistant Vice President Assistant
Secretary
John W. Gomez Director None
William J. Nutt Director None
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 28 day of December, 1994.
DREYFUS INTERNATIONAL RECOVERY 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 date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Marie E. Connolly* President (Principal Executive, 12/28/94
___________________________ Financial Accounting Officer)
Marie E. Connolly and Treasurer
/s/David P. Feldman Director 12/28/94
___________________________
David P. Feldman
/s/John M. Fraser, Jr.* Director 12/28/94
__________________________
John M. Fraser, Jr.
/s/Robert R. Glauber* Director 12/28/94
__________________________
Robert R. Glauber
/s/James F. Henry* Director 12/28/94
___________________________
James F. Henry
/s/Rosalind G. Jacobs* Director 12/28/94
__________________________
Rosalind G. Jacobs
/s/Irving Kristol* Director 12/28/94
__________________________
Irving Kristol
/s/Paul A. Marks* Director 12/28/94
__________________________
Paul A. Marks
/s/Martin Peretz* Director 12/28/94
__________________________
Martin Peretz
/s/Bert W. Wasserman* Director 12/28/94
__________________________
Bert W. Wasserman
*BY: Eric B. Fischman
-----------------
Eric B. Fischman,
Attorney-in-Fact
INDEX OF EXHIBITS
PAGE
(5a) Management Agreement
(5b) Sub-Investment Advisory Agreement
(9) Shareholder Services Plan
(6) Distribution Agreeement
(11) Consent of Independent Auditors
(15) Distribution Plan
(16) Schedules of Computation of Performance Data
OTHER EXHIBIT
(a) Powers of Attorney
(b) Certificate of Secretary
MANAGEMENT AGREEMENT
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers or employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect. We have discussed and concur
in your employing on this basis M&G Investment Management
Limited to act as the Fund's sub-investment adviser (the "Sub-
Investment Adviser") to provide day-to-day management of the
Fund's investments.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of the Fund's
portfolio in accordance with the Fund's investment objectives
and policies as stated in its Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will supervise the continuous program
of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets conducted by the Sub-
Investment Adviser. You will furnish to the Fund such
statistical information, with respect to the investments which
the Fund may hold or contemplate purchasing, as the Fund may
reasonably request. The Fund wishes to be informed of important
developments materially affecting its portfolio and shall expect
you, on your own initiative, to furnish to the Fund from time to
time such information as you may believe appropriate for this
purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to the Fund's
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of the Fund's shares;
and generally assist in all aspects of the Fund's operations.
You shall have the right, at your expense, to engage other
entities to assist you in performing some or all of the
obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering
the services to be provided to the Fund hereunder and the Fund
agrees as an inducement to your undertaking the same that
neither you nor the Sub-Investment Adviser shall be liable
hereunder for any error of judgment or mistake of law or for any
loss suffered by the Fund, provided that nothing herein shall be
deemed to protect or purport to protect you or the Sub-
Investment Adviser against any liability to the Fund or to its
security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder, or
to which the Sub-Investment Adviser would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence
in the performance of its duties under its Sub-Investment
Advisory Agreement with you or by reason of its reckless
disregard of its obligations and duties under said Agreement.
In consideration of services rendered pursuant to
this Agreement, the Fund will pay you on the first business day
of each month a fee at the annual rate of .75 of 1% of the value
of the Fund's average daily net assets. Net asset value shall
be computed on such days and at such time or times as described
in the Fund's then-current Prospectus and Statement of
Additional Information. The fee for the period from the date of
the commencement of the public sale of the Fund's shares to the
end of the month during which such sale shall have been
commenced shall be pro-rated according to the proportion which
such period bears to the full monthly period, and upon any
termination of this Agreement before the end of any month, the
fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agree-
ment.
For the purpose of determining fees payable to you,
the value of the Fund's net assets shall be computed in the
manner specified in the Fund's charter documents for the
computation of the value of the Fund's net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement and will pay
all fees of the Sub-Investment Adviser in connection with its
duties in respect of the Fund. All other expenses to be
incurred in the operation of the Fund (other than those borne by
the Sub-Investment Adviser) will be borne by the Fund, except to
the extent specifically assumed by you. The expenses to be
borne by the Fund include, without limitation, the following:
organizational costs, taxes, interest, loan commitment fees,
interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members
who are not officers, directors, employees or holders of 5% or
more of the outstanding voting securities of you or the Sub-
Investment Adviser or any affiliate of you or the Sub-Investment
Adviser, Securities and Exchange Commission fees and state Blue
Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of independent pricing services, costs of
maintaining the Fund's existence, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and
for distribution to existing stockholders, costs of
stockholders' reports and meetings, and any extraordinary
expenses.
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to this Agreement, but excluding
interest, taxes, brokerage and, with the prior written consent
of the necessary state securities commissions, extraordinary
expenses) exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund may deduct from the fees to
be paid hereunder, or you will bear, such excess expense to the
extent required by state law. Your obligation pursuant hereto
will be limited to the amount of your fees hereunder. Such
deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a
monthly basis.
The Fund understands that you and the Sub-Investment
Adviser now act, and that from time to time hereafter you or the
Sub-Investment Adviser may act, as investment adviser to one or
more other investment companies and fiduciary or other managed
accounts, and the Fund has no objection to your and the Sub-
Investment Adviser's so acting, provided that when the purchase
or sale of securities of the same issuer is suitable for the
investment objectives of two or more such companies or accounts
which have available funds for investment, the available
securities will be allocated in a manner believed to be
equitable to each company or account. It is recognized that in
some cases this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtainable for
or disposed of by the Fund.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render
services of whatever kind or nature.
Neither you nor the Sub-Investment Adviser shall be
liable for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to
which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by
you of your obligations and duties under this Agreement and, in
the case of the Sub-Investment Adviser, for a loss resulting
from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard
by it of its obligations and duties under its Sub-Investment
Advisory Agreement. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an
officer, Board member, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner,
employee or agent or one under your control or direction even
though paid by you.
This Agreement shall continue until June 13, 1996,
and thereafter shall continue automatically for successive
annual periods ending on June 13th of each year, provided such
continuance is specifically approved at least annually by (i)
the Fund's Board or (ii) vote of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event its continuance also
is approved by a majority of the Fund's Board members who are
not "interested persons" (as defined in said Act) of any party
to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is
terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of holders of a majority of the Fund's shares
or, upon not less than 90 days' notice, by you. This Agreement
also will terminate automatically in the event of its assignment
(as defined in said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities
(including other investment companies) and that such other
entities may include the name "Dreyfus" as part of their name,
and that your corporation or its affiliates may enter into
investment advisory or other agreements with such other
entities. If you cease to act as the Fund's investment adviser,
the Fund agrees that, at your request, the Fund will take all
necessary action to change the name of the Fund to a name not
including "Dreyfus" in any form or combination of words.
The Fund is agreeing to the provisions of this
Agreement that limit the Sub-Investment Adviser's liability and
other provisions relating to the Sub-Investment Adviser so as to
induce the Sub-Investment Adviser to enter into its Sub-
Investment Advisory Agreement with you and to perform its
obligations thereunder. The Sub-Investment Adviser is expressly
made a third party beneficiary of this Agreement with rights as
respects the Fund to the same extent as if it had been a party
hereto.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS INTERNATIONAL RECOVERY
FUND, INC.
By:___________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
SUB-INVESTMENT ADVISORY AGREEMENT
THE DREYFUS CORPORATION
200 Park Avenue
New York, New York 10166
August 24, 1994
M&G Investment Management Limited
Three Quays, Tower Hill
London EC3R 6BQ England
Dear Sirs:
As you are aware, Dreyfus International Recovery Fund,
Inc. (the "Fund") desires to employ its capital by investing and
reinvesting the same in investments of the type and in accordance
with the limitations specified in its charter documents and in its
Prospectus and Statement of Additional Information as from time to
time in effect, copies of which have been or will be submitted to
you, and in such manner and to such extent as from time to time
may be approved by the Fund's Board. The Fund intends to employ
The Dreyfus Corporation (the "Adviser") to act as its investment
adviser pursuant to a written agreement (the "Management
Agreement"), a copy of which has been furnished to you. The
Adviser desires to employ you to act as the Fund's sub-investment
adviser.
In this connection, it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist you
in the performance of this Agreement. Such person or persons may
be officers or employees who are employed by both you and the
Fund. The compensation of such person or persons shall be paid by
you and no obligation may be incurred on the Fund's behalf in any
such respect.
Subject to the supervision and approval of the Adviser,
you will provide investment management of the Fund's portfolio in
accordance with the Fund's investment objectives and policies as
stated in the Fund's Prospectus and Statement of Additional
Information as from time to time in effect. In connection
therewith, you will supervise the Fund's investments and conduct a
continuous program of investment, evaluation and, if appropriate,
sale and reinvestment of the Fund's assets. You will furnish to
the Adviser or the Fund such statistical information, with respect
to the investments which the Fund may hold or contemplate
purchasing, as the Adviser or the Fund may reasonably request.
The Fund and the Adviser wish to be informed of important
developments materially affecting the Fund's portfolio and shall
expect you, on your own initiative, to furnish to the Fund or the
Adviser from time to time such information as you may believe
appropriate for this purpose.
You shall exercise your best judgment in rendering the
services to be provided hereunder, and the Adviser agrees as an
inducement to your undertaking the same that you shall not be
liable hereunder for any error of judgment or mistake of law or
for any loss suffered by the Fund or the Adviser, provided that
nothing herein shall be deemed to protect or purport to protect
you against any liability to the Adviser, the Fund or the Fund's
security holders to which you would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Adviser will pay you, on the first business day of
each month, out of the management fee it receives and only to the
extent thereof, a fee calculated daily and paid monthly at the
annual rate of .30 of 1% of the Fund's average daily net assets,
for the preceding month.
Net asset value shall be computed on such days and at
such time or times as described in the Fund's then-current
Prospectus and Statement of Additional Information. The fee for
the period from the date following the commencement of sales of
the Fund's shares (after any sales are made to the Adviser) to the
end of the month during which such sales shall have been commenced
shall be pro-rated according to the proportion which such period
bears to the full monthly period, and upon any termination of this
Agreement before the end of any month, the fee for such part of a
month shall be pro-rated according to the proportion which such
period bears to the full monthly period and shall be payable
within 10 business days of date of termination of this Agreement.
For the purpose of determining fees payable to you, the
value of the Fund's net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of the Fund's net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund (other than
those borne by the Adviser) will be borne by the Fund, except to
the extent specifically assumed by you. The expenses to be borne
by the Fund include, without limitation, the following:
organizational costs, taxes, interest, loan commitment fees,
interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members who
are not officers, directors, employees or holders of 5% or more of
the outstanding voting securities of you or the Adviser or any
affiliate of you or the Adviser, Securities and Exchange Commis-
sion fees and state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing
services, costs of maintaining the Fund's existence, costs
attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of preparing, printing
and distributing prospectuses and statements of additional
information, costs of stockholders' reports and meetings, and any
extraordinary expenses.
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to the Fund's Management Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any state
having jurisdiction over the Fund, the Adviser may deduct from the
fees to be paid hereunder, or you will bear such excess expense on
a pro-rata basis with the Adviser, in the proportion that the sub-
advisory fee payable to you pursuant to this Agreement bears to
the fee payable to the Adviser pursuant to the Management
Agreement, to the extent required by state law. Your obligation
pursuant hereto will be limited to the amount of your fees here-
under. 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 Adviser understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other managed
accounts, and the Adviser has no objection to your so acting,
provided that when purchase or sale of securities of the same
issuer is suitable for the investment objectives of two or more
companies or accounts managed by you which have available funds
for investment, the available securities will be allocated in a
manner believed by you to be equitable to each company or account.
It is recognized that in some cases this procedure may adversely
affect the price paid or received by the Fund or the size of the
position obtainable for or disposed of by the Fund.
In addition, it is understood that the persons employed
by you to assist in the performance of your duties hereunder will
not devote their full time to such services and nothing contained
herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or the Adviser
in connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith or
gross negligence on your part in the performance of your duties or
from reckless disregard by you of your obligations and duties
under this Agreement. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an
officer, Board member, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner,
employee, or agent or one under your control or direction even
though paid by you.
This Agreement shall continue until June 13, 1996, and
thereafter shall continue automatically for successive annual
periods ending on June 13th of each year, provided such
continuance is specifically approved at least annually by (i) the
Fund's Board or (ii) vote of a majority (as defined in the
Investment Company Act of 1940, as amended) of the Fund's
outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Fund's Board
members who are not "interested persons" (as defined in said Act)
of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This
Agreement is terminable without penalty (i) by the Adviser upon 60
days' notice to you, (ii) by the Fund's Board or by vote of the
holders of a majority of the Fund's shares upon 60 days' notice to
you, or (iii) by you upon not less than 90 days' notice to the
Fund and the Adviser. This Agreement also will terminate
automatically in the event of its assignment (as defined in said
Act). In addition, notwithstanding anything herein to the
contrary, if the Management Agreement terminates for any reason,
this Agreement shall terminate effective upon the date the
Management Agreement terminates.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
THE DREYFUS CORPORATION
By:_________________________
Accepted:
M&G INVESTMENT MANAGEMENT LIMITED
By:__________________________
DISTRIBUTION AGREEMENT
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
DREYFUS INTERNATIONAL RECOVERY FUND,
INC.
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Reapproval Date Reapproval Day
June 13, 1996 June 13th
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan under which the Fund would pay the Fund's
distributor (the "Distributor") for providing services to (a)
shareholders of each series of the Fund or class of Fund shares
set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time, or (b) if no series or classes are set forth
on such Exhibit, shareholders of the Fund. The Distributor would
be permitted to pay certain financial institutions, securities
dealers and other industry professionals (collectively, "Service
Agents") in respect of these services. The Plan is not to be
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "Act"), and the fee under the Plan is
intended to be a "service fee" as defined in Article III, Section
26, of the NASD Rules of Fair Practice.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use Fund assets for such purposes.
In voting to approve the implementation of such a plan,
the Board has concluded, in the exercise of its reasonable
business judgment and in light of applicable fiduciary duties,
that there is a reasonable likelihood that the plan set forth
below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor a fee at the
annual rate set forth on Exhibit A in respect of the provision of
personal services to shareholders and/or the maintenance of
shareholder accounts. The Distributor shall determine the
amounts to be paid to Service Agents and the basis on which such
payments will be made. Payments to a Service Agent are subject
to compliance by the Service Agent with the terms of any related
Plan agreement between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, as applicable, shall be computed in the
manner specified in the Fund's charter documents for the
computation of net asset value.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a majority
of the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on
the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the Board,
provided that any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this
Plan.
Dated: June 13, 1994
As Revised: August 24, 1994
EXHIBIT A
Fee
.25 of 1% of
average daily
net assets
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Custodian,
Transfer and Dividend Disbursing Agent, Counsel and Independent Auditors"
and to the use of our report dated June 17, 1994, in this Registration
Statement (Form N-1A No. 33-52929) of Dreyfus International Recovery
Fund, Inc.
ERNST & YOUNG LLP
New York, New York
December 23, 1994
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
DISTRIBUTION PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Distribution
Plan (the "Plan") in accordance with Rule 12b-1 promulgated
under the Investment Company Act of 1940, as amended (the
"Act"), with respect to (a) each series of the Fund or class of
Fund shares set forth on Exhibit A hereto, as such Exhibit may
be revised from time to time, or (b) if no series or classes are
set forth on such Exhibit, the Fund. Under the Plan, the Fund
would pay for the costs and expenses of preparing, printing and
distributing its prospectuses and statements of additional
information, and would (a) reimburse the Fund's distributor (the
"Distributor") for payments to third parties for distributing
the Fund's shares (the payments in this clause (a) being
referred to as the "Distributor Payments") and (b) pay The
Dreyfus Corporation, Dreyfus Service Corporation and any
affiliate of either of them (collectively, "Dreyfus") for
advertising and marketing relating to the Fund (the payments in
this clause (b) being referred to as "Dreyfus Payments"). If
this proposal is to be implemented, the Act and said Rule 12b-1
require that a written plan describing all material aspects of
the proposed financing be adopted by the Fund.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such information as it deemed necessary to an informed
determination as to whether a written plan should be implemented
and has considered such pertinent factors as it deemed necessary
to form the basis for a decision to use assets of the Fund for
such purposes.
In voting to approve the implementation of such a
plan, the Board members have concluded, in the exercise of their
reasonable business judgment and in light of their respective
fiduciary duties, that there is a reasonable likelihood that the
plan set forth below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay all costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
shareholders. The Fund also shall pay an amount of the costs
and expenses in connection with (a) preparing, printing and
distributing the Fund's prospectuses and statements of
additional information used for other purposes and (b)
implementing and operating this Plan, such aggregate amount not
to exceed in any fiscal year of the Fund the greater of $100,000
or .005 of 1% of the average daily value of the Fund's net
assets for such fiscal year.
2. (a) The aggregate annual fee the Fund may pay
under this Plan for Distributor Payments and Dreyfus Payments is
.50 of 1% of the value of the Fund's average daily net assets
for such year (the "Aggregate Amount").
(b) The Fund shall reimburse the Distributor in
respect of Distributor Payments an amount not to exceed an
annual rate of .50 of 1% of the value of the Fund's average
daily net assets for such year (the "Distributor Amount").
(c) The Fund shall pay Dreyfus in respect of
Dreyfus Payments an annual fee equal to the difference between
the Aggregate Amount and the Distributor Amount for such year.
(d) The Distributor may pay third parties in
respect of distribution services. The Distributor shall
determine the amounts to be paid to such persons under this Plan
and the basis on which such payments will be made. Such
payments are subject to compliance by such persons with the
terms of any related Plan agreement between such person and the
Distributor.
3. For the purposes of determining the fees payable
under this Plan, the value of the Fund's net assets shall be
computed in the manner specified in the Fund's charter documents
as then in effect for the computation of the value of the Fund's
net assets.
4. The Fund's Board shall be provided, at least
quarterly, with a written report of all amounts expended
pursuant to this Plan. The report shall state the purpose for
which the amounts were expended.
5. This Plan will become effective upon approval
by (a) holders of a majority of the Fund's outstanding shares,
and (b) a majority of the Board members, including a majority of
the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on
the approval of this Plan.
6. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 5(b)
hereof.
7. This Plan may be amended at any time by the
Fund's Board, provided that (a) any amendment to increase
materially the costs which the Fund may bear pursuant to this
Plan shall be effective only upon approval by a vote of the
holders of a majority of the Fund's outstanding shares, and (b)
any material amendments of the terms of this Plan shall become
effective only upon approval as provided in paragraph 5(b)
hereof.
8. This Plan is terminable without penalty at any
time by (a) vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and
have no direct or indirect financial interest in the operation
of this Plan or in any agreements entered into in connection
with this Plan or (b) vote of the holders of a majority of the
Fund's outstanding shares.
Dated: June 13, 1994
As Revised: August 24, 1994
EXHIBIT A
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from inception through 11/30/94
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 11/30/94 of a $1,000
hypothetical investment made on 6/29/94 (inception)
0.425
1000( 1 + T ) = 960.00
T = -9.16%
==========
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
TOTAL RETURN COMPUTATION
Total return computation from inception through 11/30/94
based upon the following formula:
[ C + ( C x B ) ] - A
---------------------
T = A
where: A = NAV at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
T = Total return
T = [ 12.00 + ( 12.00 x 0.0000 ) ] - 12.50
--------------------------------------------
12.50
T = -4.00%
========
Other Exhibit (b)
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
Assistant Secretary's Certificate
The undersigned, Ruth D. Leibert, Assistant Secretary of Dreyfus
International Recovery Fund, Inc. (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 August 30, 1994, authorizing the signing by
Federick C. Dey, Eric B. Fischman, Ruth D. Leibert 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 Frederick
C. Dey, Eric B. Fischman, Ruth D. Leibert 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 attorneys-in-fact, and each of them, shall have full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in connection with such Registration Statement and any and all
amendments and supplements thereto, as fully to all intents and purposes as
the officer for whom he is acting as attorney-in-fact, might or could do in
person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Fund on December 23, 1994.
Ruth D. Leibert
Assistant Secretary
(SEAL)
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000921101
<NAME> DREYFUS INTERNATIONAL RECOVERY FUND, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> MAY-31-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 6,055
<INVESTMENTS-AT-VALUE> 5,775
<RECEIVABLES> 12
<ASSETS-OTHER> 168
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,955
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 99
<TOTAL-LIABILITIES> 99
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,100
<SHARES-COMMON-STOCK> 488
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 40
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (281)
<NET-ASSETS> 5,856
<DIVIDEND-INCOME> 28
<INTEREST-INCOME> 12
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 40
<REALIZED-GAINS-CURRENT> (3)
<APPREC-INCREASE-CURRENT> (281)
<NET-CHANGE-FROM-OPS> (244)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 480
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,756
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 69
<AVERAGE-NET-ASSETS> 6,116
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> (.58)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints Frederick C.
Dey, Eric B. Fischman, Ruth D. Leibert 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 for each Fund listed on Schedule
A attached 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.
John M. Fraser, Jr.,
Director/Trustee
Robert R. Glauber,
Director/Trustee
James F. Henry,
Director/Trustee
Rosalind Gersten Jacobs,
Director/Trustee
Irving Kristol,
Director/Trustee
Paul A. Marks,
Director/Trustee
Martin Peretz,
Director/Trustee
Bert W. Wasserman,
Director/Trustee
Date: August 30, 1994
SCHEDULE A
GROUP II
Dreyfus A Bonds Plus, Inc.
Dreyfus Balanced Fund, Inc.
Dreyfus Capital Growth Fund (A Premier Fund)
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
