LETTER TO SHAREHOLDERS
Dear Shareholder:
Dreyfus International Recovery Fund, Inc. began operations on June 29,
1994. As it turned out, the Fund's first fiscal year, starting on that date
and ended May 31, 1995, spanned a period of great volatility for stocks of
the kind in which the Fund specializes.
As you know, the Fund's managers employ an investment style which we term
"recovery investing." This style involves identifying companies that are
going through a difficult period, but where, in the manager's judgement, the
marketplace is undervaluing the prospects of recovery.
During the 11 months under review, there was no shortage of companies on
the international markets experiencing difficulties. However, few of these
companies had won broad investor support by the time that the reporting
period ended.
It follows, then, that the results for the first fiscal year were not
what we would have wished. For the fiscal period ended May 31, 1995, the Fund
had a total return of -13.93%.* The Fund's benchmark market index is the
Morgan Stanley Capital International Europe, Australasia, Far East (EAFE(R))
Index. That index has a very different makeup of stocks than the type held by
your Fund. Nonetheless, the EAFE(R) Index is a broadly based index of
international stocks that comes closer than any of the other broad stock
market gauges as a yardstick for your Fund. For the 12 months ended May 31,
the Morgan Stanley EAFE(R) Index had a positive total return of 4.93%.**
In recent months, global factors have swamped company-specific factors
within the portfolio. For example, the collapse of the Mexican peso was a
major factor holding back shares of "recovery"-type companies. In addition,
the general weakness in 1994 and early 1995 in many of the emerging markets
caused an unusual level of international fund redemptions.
Inevitably, when cash-ins take place, the first group of stocks to be
sold are those with perceived higher risk, the smaller companies, and those
without dividend protection. This difference between larger and small
companies can be seen clearly in Japan where the smaller company index
declined at a faster rate than for the main index. The International Recovery
Fund, by definition, holds stocks with a smaller average market
capitalization than in the EAFE(R) Index. Thus the Fund was particularly
vulnerable to the smaller company impact. The flight to quality was also
negative for the larger company turnaround situations where no dividend
support exists.
When rational investment judgements replace emotional reactions, the
value of the stocks within the portfolio will, in our opinion, become
apparent to other investors.
In late May, the Japanese portion of the portfolio accounted for
approximately 30% of total assets. While we have recently lightened the
Japanese holdings, we still regard Japan as a potentially fruitful area of
investment, particularly in the "turnaround" situations the Fund searches
for. The United Kingdom is the second largest country weighting, around 18%.
This market has been volatile, with individual price changes in recent months
ranging from a fall of 46% for Costain to a rise of 59% for Fisons, our
largest U.K. holdings since 1/1/95.
The Fund was also well represented in France, Italy and Spain, with
smaller holdings in a number of other countries including Australia, Hong
Kong and Switzerland.
The investment strategy for the Dreyfus International Recovery Fund
involves careful selection of those companies which have problems but whose
prospects for recovery are, in the managers' opinion, undervalued or even
ignored. Construction of the portfolio during this first year of operations
has taken time as on-site visits are usually required to confirm the
fundamental analysis.
The country weightings of the portfolio have evolved from the
availability of suitable recovery stocks. This has led to the emphasis in the
portfolio on Europe and Japan.
Investors in this style of management should be prepared to put up with
periods when its performance has a low correlation with mainstream
competitors as measured, for example, by the Lipper International Index,
since the whole key to the investment philosophy is the identification of
deeply undervalued equities.
We regard the portfolio as fairly compact with about 50 stocks currently
spread over some 12 countries. This kind of portfolio is always likely to
appear somewhat unbalanced relative to most core international investment
funds, but this is an inevitable consequence of this style of investing.
Meanwhile, your manager will, as time goes on, continue to seek new recovery
ideas to replace those that have fulfilled their expectations, and these will
often be found in the less fashionable and underperforming equity markets of
the world. Furthermore, in keeping with the Investment Approach as described
in the Prospectus, a significant proportion (approximately two-thirds) has
been invested in small and medium capitalization companies.
As recovery takes hold in the economies where the Fund is invested, we
expect that the value of the companies that we have uncovered as suitable
"recovery" candidates will be more broadly recognized.
Sincerely,
Sir William Vincent
Portfolio Manager
Dreyfus International Recovery Fund
M & G Investment Management, Ltd.
June 21, 1995
London, U.K.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE(R)) Index is an unmanaged
index composed of a sample of companies representative of the market
structure of European and Pacific Basin Countries. The return indicated
includes net dividends reinvested. The Index is the property of Morgan
Stanley & Co. Incorporated.
DREYFUS INTERNATIONAL RECOVERY FUND, INC. MAY 31, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS INTERNATIONAL
RECOVERY FUND, INC.
AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST
(EAFERegistration Mark) INDEX
(EXHIBIT A)
In Dollars
$10,347
Morgan Stanley Capital International Europe, Australasia, Far East (EAFE
Registration Mark) Index*
$8,607
Dreyfus International Recovery Fund
*Source:Lipper Analytical Services, Inc.
ACTUAL AGGREGATE TOTAL RETURNS
From Inception (6/29/94) to May 31, 1995................ (13.93%)
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment in Dreyfus International
Recovery Fund on 6/29/94 (Inception Date) to a $10,000 investment made in the
Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE Registration Mark) Index on that date. For comparative purposes, the
value of the Index on 6/30/94 is used as the beginning value on 6/29/94. All
dividends and capital gain distributions are reinvested.
The Fund's aggregate total return is not annualized. The Fund's performance
shown in the line graph takes into account all applicable fees and expenses.
The Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE Registration Mark) Index, which is the property of Morgan Stanley & Co.
Incorporated, is an unmanaged index composed of a sample of companies
representative of the market structure of 16 European and Pacific Basin
countries and includes net dividends reinvested. Further information relating to
Fund performance, including expense reimbursements, if applicable, is contained
in the Condensed Financial Information section of the Prospectus and elsewhere
in this report.
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
STATEMENT OF INVESTMENTS MAY 31,1995
COMMON STOCKS-91.7% SHARES VALUE
------------ ------------
<S> <C> <C> <C>
AUSTRALIA- 3.7% Hardie (James) Industries.................................. 40,000 $ 61,418
Renison Goldfields Consolidated............................ 43,671 134,736
------------
196,154
------------
AUSTRIA-- 2.5% OEMV A.G................................................(a) 1,250 133,155
------------
FRANCE- 8.5% Credit Lyonnais.........................................(a) 2,600 147,180
Nord Est............................... 5,600 162,450
Vallourec Usines a Tubes de Lorraine Escaut.............(a) 2,800 137,631
------------
447,261
------------
HONG KONG- 3.9% Orient Overseas International.............................. 260,000 124,369
Vtech Holdings............................................. 84,000 79,276
------------
203,645
------------
ITALY- 7.0% Avir Finanziaria S.P.A..................................... 16,000 106,406
Fiat S.P.A..............................................(a) 34,000 134,320
Montedison S.P.A........................................(a) 178,000 127,500
------------
368,226
------------
JAPAN- 29.3% All Nippon Airways......................................... 10,000 113,033
Alps Electric.............................................. 7,000 77,465
Asahi Organic Chemicals Industry........................... 10,000 87,441
Daikin Industries.......................................... 10,000 79,976
Daiwa Danchi............................................(a) 16,000 81,517
Hamada Printing Press...................................(a) 12,000 103,791
Jamco...................................................... 7,000 51,422
Japan Central Real Estate...............................(a) 20,000 66,351
Kawasaki Steel..........................................(a) 10,000 37,796
Kioritz.................................................(a) 22,000 67,773
Mitsui Fudosan............................................. 1,000 11,244
Mitsukoshi................................................. 10,000 83,175
Nikko Securities........................................... 7,000 62,204
Nintendo................................................... 2,000 120,616
Okamura.................................................... 12,000 99,668
Olympus Optical............................................ 8,000 71,090
Shintom.................................................(a) 12,000 59,431
Shinwa Kaiun Kaisha.....................................(a) 26,000 72,085
Toshoku.................................................... 2,000 11,066
Tosoh...................................................(a) 25,000 111,374
Unitika.................................................(a) 22,000 69,858
------------
1,538,376
------------
MEXICO-2.0% Grupo Financiero Bancomer S.A., Ser. B..................(a) 130,000 28,045
Grupo Financiero Bancomer S.A., Ser. L..................(a) 4,814 999
Grupo Financiero Serfin, S.A., A.D.R....................(a) 7,000 28,000
Transportacion Maritima Mexicana S.A.,
A.D.R., Cl. L...........................................(a) 7,000 47,250
------------
104,294
------------
SINGAPORE-1.1% IPCO International......................................... 17,000 56,100
------------
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31,1995
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
SOUTH AFRICA-.5% Penrose Holdings........................................(a) 400,000 $ 23,923
------------
SPAIN-8.6% Banco Central Hispanoamericano S.A......................... 7,500 171,429
El Aguila S.A...........................................(a) 10,000 79,837
Energias e Industrias Aragonesas........................(a) 6,000 33,110
Espanola de Tubos Por Extrusion S.A.....................(a) 180,002 166,043
------------
450,419
------------
SWITZERLAND-5.0% Compagnie Financiere Michelin...........................(a) 300 122,780
Oerlikon-Buehrle Holding A.G............................(a) 1,600 137,280
------------
260,060
------------
UNITED KINGDOM-18.6% APV PLC 65,000 77,464
BET PLC.................................................... 50,000 103,285
Booker PLC................................................. 12,000 81,706
British Steel PLC.......................................... 45,000 126,027
Costain Group PLC.......................................(a) 200,000 34,958
Fisons PLC................................................. 50,000 139,038
Lucas Industries PLC....................................... 30,000 90,573
MTM PLC.................................................... 88,000 111,866
Spring Ram PLC............................................. 140,000 91,209
TSB Group PLC.............................................. 29,000 116,585
------------
972,711
------------
UNITED STATES-1.0% Amax Gold...............................................(a) 10,000 53,750
------------
TOTAL COMMON STOCKS
(cost $5,556,930)....................................... $4,808,074
=============
PRINCIPAL
SHORT-TERM INVESTMENTS-6.9% AMOUNT
------------
UNITED STATES; U.S. Treasury Bills:
5.01%, 6/01/95............................................. $ 8,000 $ 8,000
6.02%, 6/22/95............................................. 106,000 105,656
6.37%, 7/06/95............................................. 143,000 142,223
6.25%, 7/20/95............................................. 105,000 104,205
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $360,077)...................................... $ 360,084
=============
TOTAL INVESTMENTS (cost $5,917,007)......................................................... 98.6% $5,168,158
============ =============
CASH AND RECEIVABLES (NET).................................................................. 1.4% $ 76,107
============ =============
NET ASSETS.................................................................................. 100.0% $5,244,265
============ =============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $5,917,007)-see statement....................................... $5,168,158
Cash.................................................................... 27,486
Dividends and interest receivable....................................... 14,759
Receivable for investment securities sold............................... 13,055
Prepaid expenses-Note 1(f).............................................. 72,755
Due from The Dreyfus Corporation........................................ 3,420
-----------
5,299,633
LIABILITIES:
Due to the Distributor.................................................. $ 3,419
Payable for investment securities purchased............................. 19,527
Accrued expenses........................................................ 32,422 55,368
------------ -------------
NET ASSETS ................................................................ $5,244,265
=============
REPRESENTED BY:
Paid-in capital......................................................... $6,135,191
Accumulated net realized (loss) on investments and
foreign currency transactions......................................... (142,216)
Accumulated net unrealized (depreciation) on investments
and foreign currency transactions..................................... (748,710)
-----------
NET ASSETS at value applicable to 494,353 shares outstanding
(300 million shares of $.001 par value Common Stock authorized)......... $5,244,265
=============
NET ASSET VALUE, offering and redemption price per share
($5,244,265 / 494,353 shares)........................................... $10.61
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
STATEMENT OF OPERATIONS
FROM JUNE 29, 1994 (COMMENCEMENT OF OPERATIONS) TO MAY 31, 1995
INVESTMENT INCOME:
<S> <C> <C>
INCOME:
Cash dividends (net of $8,901 foreign taxes withheld at source)....... $ 63,319
Interest.............................................................. 17,945
TOTAL INCOME...................................................... $ 81,264
EXPENSES:
Management fee-Note 2(a).............................................. 39,587
Shareholder servicing costs-Note 2(b,c)............................... 41,380
Directors' fees and expenses-Note 2(d)................................ 17,194
Custodian fees........................................................ 14,757
Organization expenses-Note 1(f)....................................... 14,600
Prospectus and shareholders' reports-Note 2(b)........................ 12,368
Auditing fees......................................................... 6,000
Registration fees..................................................... 5,044
Legal fees............................................................ 1,000
Miscellaneous......................................................... 1,540
-----------
153,470
Less--expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 113,337
-----------
TOTAL EXPENSES.................................................... 40,133
-----------
INVESTMENT INCOME-NET................................................. 41,131
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments and foreign currency
transactions-Note 3(a)................................................ $(142,216)
Net unrealized (depreciation) on investments and foreign
currency transactions................................................. (748,710)
-----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS..................... (890,926)
-----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(849,795)
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FROM JUNE 29, 1994 (COMMENCEMENT OF OPERATIONS) TO MAY 31, 1995
<S> <C> <C>
OPERATIONS:
Investment income-net....................................................................... $ 41,131
Net realized (loss) on investments.......................................................... (142,216)
Net unrealized (depreciation) on investments for the period................................. (748,710)
-----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................... (849,795)
-----------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net.................................................................. (41,131)
In excess of investment income-net.......................................................... (6,134)
From paid-in capital........................................................................ (33,255)
-----------
TOTAL DIVIDENDS........................................................................... (80,520)
-----------
CAPITAL STOCK TRANSACTIONS:
Net Proceeds from shares sold............................................................... 6,000,000
Dividends reinvested........................................................................ 74,580
-----------
INCREASE IN NET ASSETS FORM CAPITAL STOCK TRANSACTIONS.................................... 6,074,580
-----------
TOTAL INCREASE IN NET ASSETS.......................................................... 5,144,265
NET ASSETS:
Beginning of period-Note 1.................................................................. 100,000
-----------
End of period .............................................................................. $5,244,265
===========
SHARES
-----------
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................................. 480,000
Shares issued for dividends reinvested...................................................... 6,353
-----------
TOTAL INCREASE IN SHARES OUTSTANDING...................................................... 486,353
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
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 period June 29, 1994 (commencement
of operations) to May 31, 1995. This information has been derived from the
Fund's financial statements.
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $12.50
-------
INVESTMENT OPERATIONS:
Investment income-net.................................................................... .09
Net realized and unrealized (loss) on investments
and foreign currency transactions...................................................... (1.81)
-------
TOTAL FROM INVESTMENT OPERATIONS................................................... (1.72)
-------
DISTRIBUTIONS:
Dividends from investment income-net..................................................... (.09)
Dividends in excess of investment income-net............................................. (.01)
Dividends from paid-in capital .......................................................... (.07)
-------
TOTAL DISTRIBUTIONS................................................................ (.17)
-------
Net asset value, end of period........................................................... $10.61
=======
TOTAL INVESTMENT RETURN...................................................................... (13.93%)*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................................................. .70%*
Ratio of net investment income to average net assets..................................... .72%*
Decrease reflected in above expense ratio due to undertaking by Dreyfus.................. 1.98%*
Portfolio Turnover Rate.................................................................. 28.95%*
Net Assets, end of period (000's Omitted)................................................ $5,244
*Not annualized.
See notes to financial statements.
</TABLE>
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
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. Effective August 24, 1994,
Dreyfus became a direct subsidiary of Mellon Bank, N.A.
As of May 31, 1995, Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, held 251,492 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
FDI Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
(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.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates.
(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.
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (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.
Dividends in excess of investment income-net for financial statement
purposes result from Federal income tax distribution requirements.
Amounts distributed from paid-in capital represent distributions in
excess of investment income-net
During the year ended May 31, 1995, the Fund reclassified $39,389 from
undistributed investment income to paid-in capital; net assets were not
affected by the change.
(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 May 31, 1995, the
unamortized balance of such expenses amounted to $58,400. 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 TRANSACT
IONS 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 had undertaken from June 29, 1994 through December 31,
1994 to reimburse all fees and expenses of the Fund. Dreyfus has currently
undertaken from January 1, 1995 to May 31, 1995 to waive receipt of the
management, service and distribution fees. The expense reimbursement pursuant
to the undertaking amounted to $113,337 for the period ended May 31, 1995.
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 May 31, 1995, $30,040 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 May
31, 1995, $10,827 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
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. The Chairman of the
Board receives an additional 25% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short term securities, during the period ended May 31, 1995
amounted to $7,075,559 and $1,494,613, respectively.
(B) At May 31, 1995, accumulated net unrealized depreciation on
investments was $748,849, consisting of $278,905 gross unrealized
appreciation and $1,027,754 gross unrealized depreciation, excluding foreign
currency transactions.
At May 31, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS 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., including the statement of
investments, as of May 31, 1995, and the related statements of operations and
changes in net assets and financial highlights for the period from June 29,
1994 (commencement of operations) to May 31, 1995. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our 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 financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1995 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus International Recovery Fund, Inc. at May 31, 1995, and
the results of its operations, the changes in its net assets and the
financial highlights for the period from June 29, 1994 (commencement of
operations) to May 31, 1995, in conformity with generally accepted accounting
principles.
(Ernst & Young LLP Signature Logo)
New York, New York
June 29, 1995
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding the dividend of $.165 per share paid by the Fund on
December 6, 1994:
- taxes paid to foreign countries amounts to $.00667 per share. This
amount was included as ordinary income in arriving at the rate of $.17167 per
share for 1994 tax reporting purposes, and
- the portion of the $.17167 per share representing income sourced from
foreign countries is $.12982 per share.
DREYFUS INTERNATIONAL RECOVERY FUND, INC.
200 Park Avenue
New York, NY 10166
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. 096AR955
International
Recovery
Fund, Inc.
Annual Report
May 31, 1995
(Dreyfus Logo)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS INTERNATIONAL RECOVERY FUND, INC. AND THE MORGAN
STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR
EAST (EAFE(R)) INDEX
EXHIBIT A:
________________________________________________________
| | | MORGAN STANLEY |
| | DREYFUS | CAPITAL |
| PERIOD | INTERNATIONAL | INTERNATIONAL EUROPE, |
| | RECOVERY | AUSTRALASIA, FAR EAST |
| | FUND | (EAFE(R)) INDEX * |
|-----------|----------------- | ----------------------|
| 6/29/94 | 10,000 | 10,000 |
| 8/31/94 | 10,312 | 10,335 |
| 11/30/94 | 9,600 | 9,846 |
| 2/28/95 | 8,518 | 9,500 |
| 5/31/95 | 8,607 | 10,347 |
|-------------------------------------------------------|
* Source: Lipper Analytical Services, Inc.
