Registration Nos. 33-54763
811-07207
===============================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 / X /
Pre-Effective Amendment No. 1 / X /
Post-Effective Amendment No. ____ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / X /
Amendment No. ____ / /
(Check appropriate box or boxes)
DREYFUS EQUITY FUNDS, 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) 922-6130
Daniel C. Maclean, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement is declared
effective.
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)
____ on (date) pursuant to paragraph (a) of Rule 485.
<PAGE>
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
1 Cover Cover Page
2 Synopsis 4
3 Condensed Financial Information *
4 General Description of Registrant 5
5 Management of the Fund 26
5(a) Management's Discussion of Fund's
Performance *
6 Capital Stock and Other Securities 52
7 Purchase of Securities Being Offered 29
8 Redemption or Repurchase 42
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
10 Cover Page B-1
11 Table of Contents B-2
12 General Information and History *
13 Investment Objective and Policies B-3
14 Management of the Fund B-12
15 Control Persons and Principal
Holders of Securities B-13
16 Investment Advisory and Other Services B-13
17 Brokerage Allocation B-28
18 Capital Stock and Other Securities B-29
19 Purchase, Redemption and Pricing of
Securities Being Offered B-16,
B-19, B-25
20 Tax Status B-26
21 Underwriters *
22 Performance Information B-29
23 Financial Statements B-31
Items in
Part C of
Form N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-2
26 Number of Holders of Securities C-2
27 Indemnification C-2
28 Business and Other Connections of
Investment Adviser C-3
29 Principal Underwriters C-3
30 Location of Accounts and Records C-4
31 Management Services C-4
32 Undertakings C-4
- ---------
*Omitted since answer is negative or inapplicable.
<PAGE>
PROSPECTUS , 1994
DREYFUS EQUITY FUNDS, INC.
Dreyfus Equity Funds, Inc. (the "Fund") is an open-end
management investment company, known as a mutual fund. The Fund
permits investors to invest in separate portfolios. By this
Prospectus, shares of two diversified portfolios (each, a
"Portfolio") are offered:
-- The WILSHIRE 4500 PORTFOLIO'S goal is to provide
investment results that correspond to the total return
performance of publicly traded common stocks in the aggregate,
as represented by the Wilshire 4500 Stock Index. In
anticipation of taking a market position, the Portfolio is
permitted to purchase and sell stock index futures. The
Portfolio is neither sponsored by nor affiliated with Wilshire
Associates, Inc.
-- The MIDCAP VALUE PORTFOLIO'S goal is to provide
investment results that exceed the total return performance of
publicly traded common stocks in the aggregate, as represented
by the Russell Mid Cap Index. In anticipation of taking a
market position, the Portfolio is permitted to purchase and sell
stock index futures. The Portfolio is neither sponsored by nor
affiliated with Frank Russell Company.
By this Prospectus, each Portfolio is offering Investor
Class shares and Class R shares. Investor Class shares and
Class R shares are identical, except as to the services offered
to and the expenses borne by each class. Investor Class shares
are offered to any investor. Class R shares are offered only to
institutional investors acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity, such as banks
and qualified or non-qualified employee benefit plans or other
programs, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations,
partnerships, non-profit entities or state and local
governments.
Shares of each Portfolio are sold without a sales load.
Investor Class shares of each Portfolio are subject to
distribution and service fees.
Investors can purchase or redeem Investor Class shares
by telephone using Dreyfus TeleTransfer.
The Dreyfus Corporation will serve as each Portfolio's
investment adviser. The Dreyfus Corporation has engaged Mellon
Equity Associates, Inc. ("Mellon Equity Associates") to serve as
the Wilshire 4500 Portfolio's sub-investment adviser and The
Boston Company Asset Management, Inc. ("TBC Asset Management")
to serve as the Midcap Value Portfolio's sub-investment adviser.
Mellon Equity Associates and TBC Asset Management will provide
day-to-day management of the relevant Portfolio's investments.
The Dreyfus Corporation, Mellon Equity Associates and TBC Asset
Management are referred to collectively as the "Advisers."
This Prospectus sets forth concisely information about
the Fund that an investor should know before investing. It
should be read and retained for future reference.
Part B (also known as the Statement of Additional
Information), dated ________ __, 1994 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 1-800-645-
6561. 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.
<PAGE>
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses. . . . . . . .
Description of the Fund . . . . . . . . . . .
Management of the Fund. . . . . . . . . . . .
How to Buy Fund Shares. . . . . . . . . . . .
Shareholder Services. . . . . . . . . . . . .
How to Redeem Fund Shares . . . . . . . . . .
Service Plan, Distribution Plan
and Shareholder Services Plan . . . . . . .
Dividends, Distributions and Taxes. . . . . .
Performance Information . . . . . . . . . . .
General Information . . . . . . . . . . . . .
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.
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
WILSHIRE MIDCAP VALUE
4500 PORTFOLIO PORTFOLIO
___________________ ___________________
Investor Investor
Class R Class Class R Class
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees . . . . . . . . . .50% .50% .75% .75%
12b-1 Fees . . . . . . . . . . . . None .25% None .50%
Other Expenses . . . . . . . . . . ___% ___% ___% ___%
Total Portfolio Operating
Expenses . . . . . . . . . . . . ___% ___% ___% ___%
EXAMPLE:
An investor 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:
1 YEAR $___ $___ $___ $___
3 YEARS $___ $___ $___ $___
</TABLE>
_______________________________________________________________
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE
CONSIDERED AS REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER,
WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH PORTFOLIO'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
investors in understanding the various costs and expenses that
investors will bear, directly or indirectly, the payment of
which will reduce investors' return on an annual basis. Other
Expenses and Total Portfolio Operating Expenses are based on
estimated amounts for the current fiscal year. Long-term
investors in Investor Class shares could pay more in 12b-1 fees
than the economic equivalent of paying a front-end sales charge.
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. See
"Management of the Fund," "How to Buy Fund Shares" and "Service
Plan, Distribution Plan and Shareholder Services Plan."
DESCRIPTION OF THE FUND
GENERAL
The Fund is a "series fund," which is a mutual fund
divided into separate portfolios. Each Portfolio is treated as
a separate entity for certain matters under the Investment
Company Act of 1940, as amended, and for other purposes, and a
shareholder of one Portfolio is not deemed to be a shareholder
of any other Portfolio. As described below, for certain matters
Fund shareholders vote together as a group; as to others they
vote separately by Portfolio.
By this Prospectus, two classes of shares of each
Portfolio of the Fund are being offered--Investor Class shares
and Class R shares (each such class being referred to as a
"Class"). The Classes are identical, except that Investor Class
shares are subject to certain distribution and service fees
which are described under "Service Plan, Distribution Plan and
Shareholder Services Plan." The distribution and service fees
paid by the Investor Class will cause such Class to have a
higher expense ratio and to pay lower dividends than Class R.
Class R shares may not be purchased directly by
individuals, although institutions may purchase Class R shares
for accounts maintained by individuals. Such institutions have
agreed to transmit copies of this Prospectus and all relevant
Fund materials, including proxy materials, to each individual or
entity for whose account the institution purchases Class R
shares, to the extent required by law. The Fund treats the
institution investing in Class R shares as the Fund shareholder
entitled to the rights and privileges described herein.
INVESTMENT OBJECTIVE
Each Portfolio has a different investment objective
which it pursues through separate investment policies, as
described herein. The differences in objectives and policies
between the Portfolios determine the types of portfolio
securities in which each Portfolio invests, and can be expected
to affect the degree of risk to which each Portfolio is subject
and each Portfolio's return. These investment objectives are:
- -- The WILSHIRE 4500 PORTFOLIO'S goal is to provide investment
results that correspond to the total return performance of
publicly traded common stocks in the aggregate, as represented
by the Wilshire 4500 Stock Index.
- -- The MIDCAP VALUE PORTFOLIO'S goal is to provide investment
results that exceed the total return performance of publicly
traded common stocks in the aggregate, as represented by the
Russell Mid Cap Index.
Each Portfolio's investment objective cannot be changed
without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended) of such Portfolio's
outstanding voting shares. There can be no assurance that a
Portfolio's investment objective will be achieved.
MANAGEMENT POLICIES
GENERAL--Under normal market conditions, each Portfolio
will invest primarily in equity securities. Equity securities
consist of common stocks, convertible securities and preferred
stocks. Each Portfolio may invest up to 5% of its assets in
securities of companies that have been in continuous operation
for fewer than three years. The policy of each Portfolio is to
purchase marketable securities which are not restricted as to
public sale; however, each Portfolio may invest up to 15% of the
value of its net assets in securities as to which a liquid
trading market does not exist. See "Certain Portfolio
Securities--Illiquid Securities" below.
Each Portfolio 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. A Portfolio also may hold U.S. Government securities to
meet certain asset segregation requirements. Under normal
market conditions, the Midcap Value Portfolio expects to have
less than 15%, and the Wilshire 4500 Portfolio expects to have
less than 5%, of its assets invested in money market
instruments. However, when the Advisers to the Midcap Value
Portfolio determine that adverse market conditions exist, the
Portfolio may adopt a temporary defensive posture and invest all
of its assets in money market instruments.
September 9, 1994
Each Portfolio also may engage in various investment
techniques, such as options and futures transactions and lending
portfolio securities, and the Midcap Value Portfolio also may
engage in leveraging, short-selling and foreign currency
exchange transactions, each of which involves risk. Options and
futures transactions involve so-called "derivative securities."
For a discussion of such investment techniques and their related
risks, see "Investment Techniques" and "Risk Factors" below.
Inclusion of a security in an Index in no way implies
an opinion by the sponsor of the Index as to its attractiveness
as an investment. In the future, subject to the approval of the
relevant Portfolio's shareholders, one or more indices for a
Portfolio may be selected if such standard of comparison is
deemed to be more representative of the performance of the
securities such Portfolio seeks to replicate or exceed, as the
case may be. Neither Portfolio is sponsored, endorsed, sold or
promoted by the sponsor of its respective Index.
WILSHIRE 4500 PORTFOLIO--This Portfolio attempts to
replicate the investment results of the Wilshire 4500 Stock
Index, which is composed of common stocks of approximately 6,000
predominantly medium- and small-capitalization companies that
are not included in the Standard & Poor's 500 Stock Index. The
Wilshire 4500 Portfolio will invest in a sample of these stocks
based primarily on market capitalization and industry
weightings, as described below.
No attempt will be made to manage the Wilshire 4500
Portfolio's investments using economic, financial and market
analysis. The Portfolio will be managed using a computer
program to determine which securities are to be purchased or
sold to replicate, to the extent feasible, the investment
characteristics of the Wilshire 4500 Stock Index. Under normal
market conditions, at least 95% of the value of the Wilshire
4500 Portfolio's total assets will be invested in the securities
comprising the Wilshire 4500 Stock Index and in futures and
options. The Portfolio will attempt to achieve, in both rising
and falling markets, a correlation of at least 95% between the
total return of its net assets before expenses and the total
return of the Wilshire 4500 Stock Index. Perfect (100%)
correlation would be achieved if the total return of the
Portfolio's net assets increased or decreased exactly as the
total return of such Index increased or decreased. The
Portfolio's ability to match its investment performance to the
investment performance of the Index may be affected by:
Portfolio expenses; the amount of cash or cash equivalents held
by the Portfolio; the manner in which performance of the
Wilshire 4500 Stock Index is calculated; the asset size of the
Portfolio; and the timing, frequency and size of shareholder
purchases and redemptions. The Portfolio will use cash flows
from shareholder purchase and redemption activity to maintain,
to the extent feasible, the similarity of its portfolio to the
securities comprising the Wilshire 4500 Stock Index. Mellon
Equity Associates will regularly monitor the Portfolio's
correlation to the Index and will adjust the portfolio to the
extent it believes necessary to enable the Wilshire 4500
Portfolio to achieve a correlation of at least 95% with the
Wilshire 4500 Stock Index.
The Portfolio will not hold all of the stocks that
comprise the Wilshire 4500 Stock Index. Instead, the Wilshire
4500 Portfolio will use a computerized "optimizer" program to
select stocks so that the market capitalizations, industry
weightings, dividend yield and beta (a measure of stock price
volatility relative to the market generally) closely approximate
those of the Wilshire 4500 Stock Index. In addition, the
Portfolio will not invest in the securities of closed-end
investment companies or real estate investment trusts or
securities that have not traded for more than 30 days. The
sampling technique to be employed by the Wilshire 4500 Portfolio
is expected to be an effective means of seeking to achieve the
Portfolio's investment objective; however, the Portfolio is not
expected to track the Wilshire 4500 Stock Index with the same
degree of accuracy that complete replication of such Index would
have provided. Over time, the investment composition of the
Wilshire 4500 Portfolio will be altered (or "rebalanced") to
reflect changes in the characteristics of the Wilshire 4500
Stock Index.
MIDCAP VALUE PORTFOLIO--This Portfolio will invest,
under normal market conditions, at least 85% of its total assets
in common stocks of domestic and foreign issuers with market
capitalizations of between $400 million and $4 billion at the
time of purchase that the Portfolio's Advisers believe possess
the characteristics of value stocks. From this universe, the
Portfolio's Advisers will identify those stocks with a
particular combination of composite attributes or fundamental
factors expected to produce in the aggregate investment results
that exceed those of the Russell Mid Cap Index. The Portfolio's
Advisers expect to consider quantitative factors, such as price
to book value ratios, price to earnings ratios, earnings growth,
dividend payout ratios, return on equity and the company's beta.
In general, the Portfolio's Advisers believe that companies with
relatively low price to book ratios, low price to earnings
ratios and higher than average dividend payments in relation to
price should be classified as value companies. The Portfolio's
Advisers also will consider fundamental factors, such as a
company's historic earnings growth and momentum and earnings
estimates and expectations. The Midcap Value Portfolio may
invest up to 15% of the value of its total assets in the
securities of foreign issuers.
INVESTMENT TECHNIQUES
In connection with its investment objective and
policies, each Portfolio may employ, among others, the following
investment techniques:
LEVERAGE THROUGH BORROWING--(Midcap Value Portfolio) This
Portfolio may borrow for investment purposes. This borrowing,
which is known as leveraging, generally will be unsecured,
except to the extent the Portfolio enters into reverse
repurchase agreements described below. The Investment Company
Act of 1940 requires the Portfolio to maintain continuous asset
coverage (that is, total assets including borrowings, less
liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the 300% asset coverage should decline as a result
of market fluctuations or other reasons, the Portfolio may be
required to sell some of its portfolio holdings within three
days to reduce the debt and restore the 300% asset coverage,
even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Leveraging may
exaggerate the effect on net asset value of any increase or
decrease in the market value of the Portfolio's portfolio.
Money borrowed for leveraging will be subject to interest costs
that may or may not be recovered by appreciation of the
securities purchased; in certain cases, interest costs may
exceed the return received on the securities purchased. The
Portfolio also may be required to maintain minimum average
balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the
stated interest rate.
Among the forms of borrowing in which the Portfolio may
engage is the entry into reverse repurchase agreements with
banks, brokers or dealers. These transactions involve the
transfer by the Portfolio of an underlying debt instrument in
return for cash proceeds based on a percentage of the value of
the security. The Portfolio retains the right to receive
interest and principal payments on the security. At an agreed
upon future date, the Portfolio repurchases the security at
principal, plus accrued interest. In certain types of
agreements, there is no agreed upon repurchase date and interest
payments are calculated daily, often based on the prevailing
overnight repurchase rate. The Portfolio 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 reverse repurchase obligations, plus
accrued interest, in certain cases, in accordance with releases
promulgated by the Securities and Exchange Commission. The
Securities and Exchange Commission views reverse repurchase
transactions as collateralized borrowings by the Portfolio.
These agreements, which are treated as if reestablished each
day, are expected to provide the Portfolio with a flexible
borrowing tool.
SHORT-SELLING--(Midcap Value Portfolio) This Portfolio may make
short sales, which are transactions in which the Portfolio sells
a security it does not own in anticipation of a decline in the
market value of that security. To complete such a transaction,
the Portfolio must borrow the security to make delivery to the
buyer. The Portfolio then is obligated to replace the security
borrowed by purchasing it at the market price at the time of
replacement. The price at such time may be more or less than
the price at which the security was sold by the Portfolio.
Until the security is replaced, the Portfolio is required to pay
to the lender amounts equal to any dividends or interest which
accrue during the period of the loan. To borrow the security,
the Portfolio also may be required to pay a premium, which would
increase the cost of the security sold. The proceeds of the
short sale will be retained by the broker, to the extent
necessary to meet margin requirements, until the short position
is closed out.
Until the Portfolio closes its short position or
replaces the borrowed security, the Portfolio will:
(a) maintain a segregated account, containing cash or U.S.
Government securities, at such a level that (i) the amount
deposited in the account plus the amount deposited with the
broker as collateral will equal the current value of the
security sold short and (ii) the amount deposited in the
segregated account plus the amount deposited with the broker as
collateral will not be less than the market value of the
security at the time it was sold short; or (b) otherwise cover
its short position.
The Portfolio will incur a loss as a result of the
short sale if the price of the security increases between the
date of the short sale and the date on which the Portfolio
replaces the borrowed security. The Portfolio will realize a
gain if the security declines in price between those dates.
This result is the opposite of what one would expect from a cash
purchase of a long position in a security. The amount of any
gain will be decreased, and the amount of any loss increased, by
the amount of any premium or amounts in lieu of dividends or
interest the Portfolio may be required to pay in connection with
a short sale.
The Portfolio may purchase call options to provide a
hedge against an increase in the price of a security sold short
by the Portfolio. When the Portfolio purchases a call option it
has to pay a premium to the person writing the option and a
commission to the broker selling the option. If the option is
exercised by the Portfolio, the premium and the commission paid
may be more than the amount of the brokerage commission charged
if the security were to be purchased directly. See "Call and
Put Options on Specific Securities" below.
The Fund anticipates that the frequency of short sales
on behalf of the Portfolio will vary substantially under
different market conditions, and it does not intend that any
specified portion of the Portfolio's assets, as a matter of
practice, will be invested in short sales. However, no
securities will be sold short if, after effect is given to any
such short sale, the total market value of all securities sold
short would exceed 25% of the value of the Portfolio's net
assets. The Portfolio will not sell short the securities of any
single issuer listed on a national securities exchange to the
extent of more than 5% of the value of the Portfolio's net
assets and will not sell short the securities of any class of an
issuer to the extent, at the time of transaction, of more than
5% of the outstanding securities of that class.
In addition to the short sales discussed above, the
Portfolio may make short sales "against the box," a transaction
in which the Portfolio enters into a short sale of a security
which the Portfolio owns. The proceeds of the short sale will
be held by a broker until the settlement date at which time the
Fund delivers the security to close the short position. The
Fund receives the net proceeds from the short sale. At no time
will the Portfolio have more than 15% of the value of its net
assets in deposits on short sales against the box.
CALL AND PUT OPTIONS ON SPECIFIC SECURITIES--(Both Portfolios)
Each Portfolio 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 such Portfolio may invest. Each
Portfolio 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 a Portfolio, which is a call option with respect to which the
Portfolio owns the underlying security or securities, exposes
the Portfolio during the term of the option to possible loss of
opportunity to realize appreciation in the market price of the
underlying security or securities or to possible continued
holding of a security or securities which might otherwise have
been sold to protect against depreciation in the market price
thereof. A covered put option sold by a Portfolio exposes the
Portfolio during the term of the option to a decline in price of
the underlying security or securities. A put option sold by a
Portfolio 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, a
Portfolio may make a "closing purchase transaction," which
involves purchasing an option on the same security or securities
with the same exercise price and expiration date as the option
which it has previously written. To close out a position as a
purchaser of an option, a Portfolio may make a "closing sale
transaction," which involves liquidating the Portfolio's
position by selling the option previously purchased. The
Portfolio 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.
Each Portfolio intends to treat options in respect of
specific securities that are not traded on a national securities
exchange and the securities underlying covered call options
written by such Portfolio as illiquid securities. See "Certain
Portfolio Securities--Illiquid Securities" below.
Each Portfolio will purchase options only to the extent
permitted by the policies of state securities authorities in
states where shares of the Portfolio are qualified for offer and
sale.
STOCK INDEX OPTIONS--(Both Portfolios) Each Portfolio may
purchase and write put and call options on stock indexes listed
on U.S. 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 Portfolio'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 a Portfolio 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 each
Portfolio of options on stock indexes will be subject to its
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 a Portfolio writes an option on a stock index, the
Portfolio will place in a segregated account with the Fund's
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--(Both Portfolios) Neither
Portfolio is a commodity pool. However, as a substitute for a
comparable market position in the underlying securities and for
hedging purposes, each Portfolio may engage in futures and
options on futures transactions, as described below.
The Midcap Value Portfolio 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.
Each Portfolio'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, a Portfolio 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
Portfolio'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,
each Portfolio 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 a Portfolio engages in the
use of futures and options on futures for other than bona fide
hedging purposes, the Portfolio may be subject to additional
risk.
Initially, when purchasing or selling futures contracts
a Portfolio will be required to deposit with the Fund's
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 Portfolio 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 Portfolio may elect to close the position by
taking an opposite position, at the then prevailing price, which
will operate to terminate the Portfolio's existing position in
the contract.
Although each Portfolio 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 a Portfolio to
substantial losses. If it is not possible, or the Portfolio
determines not, to close a futures position in anticipation of
adverse price movements, the Portfolio 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.
In addition, to the extent a Portfolio is engaging in a
futures transaction as a hedging device, due to the risk of an
imperfect correlation between securities owned by the 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 in that, for example, losses on the
portfolio securities may be in excess of gains on the futures
contract or losses on the futures contract may be in excess of
gains on the portfolio securities that were the subject of the
hedge. In futures contracts based on indexes, the risk of
imperfect correlation increases as the composition of a
Portfolio's investments 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 Portfolio 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 a Portfolio's net
investment results if market movements are not as anticipated
when the hedge is established.
Successful use of futures by a Portfolio also is
subject to its Advisers' ability to predict correctly movements
in the direction of the market. For example, if a Portfolio 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 Portfolio 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. In addition, in such situations, if the
Portfolio has insufficient cash, it may have to sell securities
to meet daily variation margin requirements. Such sales of
securities may, but will not necessarily, be at increased prices
which reflect the rising market. The Portfolio may have to sell
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 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 a Portfolio 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 a Portfolio 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--(Both
Portfolios) Each Portfolio may purchase and sell stock index
futures contracts and options on stock index futures contracts.
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,
each Portfolio 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.
LENDING PORTFOLIO SECURITIES--(Both Portfolios) From time to
time, each Portfolio 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 a Portfolio's total
assets. In connection with such loans, the Portfolio 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. Each
Portfolio can increase its income through the investment of such
collateral. The Portfolio engaging in the loan transaction
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.
A Portfolio might experience risk of loss if the institution
with which it has engaged in a portfolio loan transaction
breaches its agreement with the Portfolio.
BORROWING MONEY--(Wilshire 4500 Portfolio) As a fundamental
policy, the Wilshire 4500 Portfolio is permitted to borrow to
the extent permitted under the Investment Company Act of 1940.
However, the Portfolio currently intends to borrow money only
for temporary or emergency (not leveraging) purposes, in an
amount up to 15% of the value of its 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 Wilshire
4500 Portfolio's total assets, the Portfolio will not make any
additional investments.
FOREIGN CURRENCY TRANSACTIONS--(Midcap Value Portfolio) The
Midcap Value Portfolio may engage in currency exchange
transactions to the extent consistent with its investment
objective or to hedge its portfolio. The Portfolio 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 Portfolio also may combine forward currency
exchange contracts with investments in securities denominated in
other currencies.
The Midcap Value Portfolio also may maintain short
positions in forward currency exchange transactions, which would
involve the Portfolio 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 Portfolio contracted
to receive in the exchange. The Portfolio 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--(Midcap Value Portfolio) The
Midcap Value Portfolio 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 Portfolio 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" above and "Currency Futures and
Options on Currency Futures" below.
CURRENCY FUTURES AND OPTIONS ON CURRENCY FUTURES--(Midcap Value
Portfolio) The Midcap Value Portfolio 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 Portfolio 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 Portfolio
anticipates a decline of a foreign currency against the U.S.
dollar, the Portfolio 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 Portfolio
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 Portfolio 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 Portfolio, 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 Midcap Value Portfolio, 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 Portfolio, 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 Portfolio. If
exchange rates move in a way the Portfolio did not anticipate,
the Portfolio will have incurred the expense of the option
without obtaining the expected benefit. As a result, the
Portfolio's profits on the underlying securities transactions
may be reduced or overall losses incurred.
FUTURE DEVELOPMENTS--(Both Portfolios) Each Portfolio 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 Portfolio or which are not currently available but
which may be developed, to the extent such opportunities are
both consistent with the Portfolio's investment objective and
legally permissible for the Portfolio. Before entering into
such transactions or making any such investment, the Fund will
provide appropriate disclosure in its prospectus.
FORWARD COMMITMENTS--(Both Portfolios) Each Portfolio may
purchase securities on a when-issued or forward commitment
basis, which means that the price is fixed at the time of
commitment, but delivery and payment ordinarily take place a
number of days after the date of the commitment to purchase.
The Portfolio will make commitments to purchase such securities
only with the intention of actually acquiring the securities,
but the Portfolio may sell these securities before the
settlement date if it is deemed advisable. The Portfolio will
not accrue income in respect of a security purchased on a when-
issued or forward commitment basis prior to its stated delivery
date.
Securities purchased on a when-issued or forward
commitment basis and certain other securities held by a
Portfolio are subject to changes in value (both generally
changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon
the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest
rates. Securities purchased on a when-issued or forward
commitment basis may expose a Portfolio to risk because they may
experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued or forward commitment
basis can involve the additional risk that the yield available
in the market when the delivery takes place actually may be
higher than that obtained in the transaction itself. A
segregated account of the Fund consisting of cash, cash
equivalents or U.S. Government securities or other high quality
liquid debt securities at least equal at all times to the amount
of the when-issued or forward commitments will be established
and maintained at the Fund's custodian bank. Purchasing
securities on a when-issued or forward commitment basis when a
Portfolio is fully or almost fully invested may result in
greater potential fluctuation in the value of the Portfolio's
net assets and its net asset value per share.
CERTAIN PORTFOLIO SECURITIES
MONEY MARKET INSTRUMENTS--(Both Portfolios) Each Portfolio may
invest, in the circumstances described under "Management
Policies--General," in the following types of money market
instruments:
U.S. GOVERNMENT SECURITIES. Each Portfolio may
purchase securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, which include U.S.
Treasury securities that differ in their interest rates,
maturities and times of issuance. Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial
maturities of one to ten years; and Treasury Bonds generally
have initial maturities of greater than ten years. 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. Each Portfolio may purchase
certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations issued by banks, savings and loan
associations and similar entities with assets in excess of $1
billion.
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 a Portfolio
will not benefit from insurance from the Bank Insurance Fund or
the Savings Association Insurance Fund administered by the
Federal Deposit Insurance Corporation.
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 a Portfolio of an underlying debt instrument,
subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the instrument at a fixed price usually not
more than one week after its purchase. Certain costs may be
incurred 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 Portfolio 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 a Portfolio 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, Inc. ("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 Portfolio's Advisers to be of comparable
quality to those rated obligations which may be purchased by the
Portfolio. Each Portfolio 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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL
ENTITIES--(Midcap Value Portfolio) The Midcap Value Portfolio
may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions,
agencies or instrumentalities that are determined by its
Advisers to be of comparable quality to the other obligations in
which the Portfolio may invest. Such securities also include
debt obligations of supranational entities. Supranational
entities include international organizations designated or
supported by governmental entities to promote economic
reconstruction or development and international banking
institutions and related government agencies. Examples include
the International Bank for Reconstruction and Development (the
World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank.
CONVERTIBLE SECURITIES--(Midcap Value Portfolio) The Midcap
Value Portfolio may purchase convertible securities, which are
fixed-income securities, such as bonds or preferred stock, which
may be converted at a stated price within a specified period of
time into a specified number of shares of common stock of the
same or a different issuer. Convertible securities are senior
to common stock in a corporation's capital structure, but
usually are subordinated to non-convertible debt securities.
While providing a fixed-income stream (generally higher in yield
than the income derivable from a common stock but lower than
that afforded by a non-convertible debt security), a convertible
security also affords an investor the opportunity, through its
conversion feature, to participate in the capital appreciation
of the common stock into which it is convertible.
In general, the market value of a convertible security
is the higher of its "investment value" (i.e., its value as a
fixed-income security) or its "conversion value" (i.e., the
value of the underlying shares of common stock if the security
is converted). As a fixed-income security, the market value of
a convertible security generally increases when interest rates
decline and generally decreases when interest rates rise.
However, the price of a convertible security also is influenced
by the market value of the security's underlying common stock.
Thus, the price of a convertible security generally increases as
the market value of the underlying stock increases, and
generally decreases as the market value of the underlying stock
declines. Investments in convertible securities generally
entail less risk than investments in the common stock of the
same issuer.
WARRANTS--(Both Portfolios) Each Portfolio 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--(Both Portfolios) Each Portfolio 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 Portfolio'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, a Portfolio is subject to a risk that should the
Portfolio desire to sell them when a ready buyer is not
available at a price such Portfolio deems representative of
their value, the value of the Portfolio's net assets could be
adversely affected.
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS--(Midcap
Value Portfolio) The Midcap Value Portfolio'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. The Portfolio may invest in ADRs,
EDRs and CDRs 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.
CERTAIN FUNDAMENTAL POLICIES
Each Portfolio may (i) borrow money to the extent
permitted under the Investment Company Act of 1940; (ii) invest
up to 5% of its total assets in the obligations of any issuer,
except that up to 25% of the value of its total assets may be
invested, and securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities may be purchased,
without regard to any such limitation; and (iii) 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 that cannot be changed
as to a Portfolio without approval by the holders of a majority
(as defined in the Investment Company Act of 1940) of such
Portfolio'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
Each Portfolio 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 its 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
and in other illiquid securities. See "Investment Objective
and Management Policies--Investment Restrictions" in the Fund's
Statement of Additional Information.
RISK FACTORS
CERTAIN INVESTMENT TECHNIQUES--(Both Portfolios) The use of
investment techniques such as short-selling, engaging in
financial futures and options transactions, leverage through
borrowing, purchasing securities on a forward commitment basis
and lending portfolio securities involves greater risk than that
incurred by many other funds with a similar objective. Using
these techniques may produce higher than normal portfolio
turnover and may affect the degree to which the Portfolio's net
asset value fluctuates. Higher portfolio turnover rates are
likely to result in comparatively greater brokerage commissions
or transaction costs.
Each Portfolio's ability to engage in certain short-
term transactions may be limited by the requirement that, to
qualify as a regulated investment company, it 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 Portfolio may sell securities held for less
than three months, effect short sales of 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 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
portfolio turnover rate of the Wilshire 4500 Portfolio and
Midcap Value Portfolio generally will not exceed 25% and 150%,
respectively. See "Portfolio Transactions" in the Fund's
Statement of Additional Information.
EQUITY SECURITIES--(Both Portfolios) 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. The securities of
midcap companies may be subject to more abrupt or erratic market
movements than larger capitalized companies, both because the
securities typically are traded in lower volume and because the
issuers typically are subject to a greater degree to changes in
earnings and prospects. Changes in the value of the common
stocks in a Portfolio's portfolio will result in changes in the
value of the Portfolio's shares and thus the Portfolio's yield
and total return to investors.
INVESTING IN FOREIGN SECURITIES--(Midcap Value Portfolio)
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 Portfolio 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.
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 Portfolio 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
Portfolio 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 Portfolio will reduce its net income available for
distribution to investors.
FOREIGN CURRENCY EXCHANGE--(Midcap Value Portfolio) 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 Portfolio of unrealized profits or force the
Portfolio to cover its commitments for purchase or resale, if
any, at the current market price.
FOREIGN COMMODITY TRANSACTIONS--(Midcap Value Portfolio) 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 Portfolio 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
such Fund might realize in trading could be eliminated by
adverse changes in the exchange rate, or such Fund could incur
losses as a result of those changes.
OTHER INVESTMENT CONSIDERATIONS--Each Portfolio's net asset
value is not fixed and should be expected to fluctuate.
Investors should purchase Portfolio shares only as a supplement
to an overall investment program and only if investors are
willing to undertake the risks involved.
Investment decisions for each Portfolio are made
independently from those of other investment companies or
accounts advised by the Advisers. However, if such other
investment companies or accounts are prepared to invest in, or
desire to dispose of, securities of the type in which a
Portfolio invests at the same time as such Portfolio, 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 a
Portfolio or the price paid or received by the Portfolio.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER--The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves
as the Fund's investment adviser. The Dreyfus Corporation is a
wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-
owned subsidiary of Mellon Bank Corporation ("Mellon"). As of
_________ __, 1994, The Dreyfus Corporation managed or
administered approximately $__ billion in assets for more than
___ million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the
overall management of the Fund's affairs under a Management
Agreement with the Fund, subject to the overall authority of the
Fund's Board of Directors in accordance with Maryland law.
The Dreyfus Corporation has engaged Mellon Equity
Associates, located at 500 Grant Street, Pittsburgh,
Pennsylvania 15258, to serve as the Wilshire 4500 Portfolio's
sub-investment adviser. Mellon Equity Associates, a registered
investment adviser formed in 1987, is an indirect wholly-owned
subsidiary of Mellon. As of _______, 1994, Mellon Equity
Associates managed approximately $________ in assets and serves
as the investment adviser of ___ other investment companies.
Mellon Equity Associates, subject to the supervision
and approval of The Dreyfus Corporation, provides investment
advisory assistance and the day-to-day management of the
Wilshire 4500 Portfolio's investments, as well as investment
research and statistical information, under a Sub-Investment
Advisory Agreement with The Dreyfus Corporation, subject to the
overall authority of the Fund's Board of Directors in accordance
with Maryland law. The Wilshire 4500 Portfolio's primary
portfolio manager will be John O'Toole. He has been employed by
Mellon Equity Associates and its affiliates for more than the
past five years. The Portfolio's other portfolio managers are
identified under "Management of the Fund" in the Fund's
Statement of Additional Information.
The Dreyfus Corporation has engaged TBC Asset
Management, located at One Boston Place, Boston, Massachusetts
02108, to serve as the Midcap Value Portfolio's sub-investment
adviser. TBC Asset Management, a registered investment adviser
formed in 1970, is an indirect wholly-owned subsidiary of
Mellon. As of ______________, 1994, TBC Asset Management
managed approximately $___________ in assets and serves as the
investment adviser of __ other investment companies.
TBC Asset Management, subject to the supervision and
approval of The Dreyfus Corporation, provides investment
advisory assistance and the day-to-day management of the Midcap
Value Portfolio's investments, as well as investment research
and statistical information, under a Sub-Investment Advisory
Agreement with The Dreyfus Corporation, subject to the overall
authority of the Fund's Board of Directors in accordance with
Maryland law. The Midcap Value Portfolio's primary portfolio
manager will be Wayne J. Archambo. He has been employed by TBC
Asset Management or its predecessor since 1989. The Midcap
Value Portfolio's other portfolio managers are identified under
"Management of the Fund" in the Fund's Statement of Additional
Information.
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, Mellon managed more than $130 billion in assets as
of July 31, 1994, including approximately $6 billion in mutual
fund assets. As of July 31, 1994, various subsidiaries of
Mellon provided non-investment services, such as custodial or
administration services, for more than $___ billion in assets,
including $___ billion in mutual fund assets.
Under the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of
.50 of 1% of the value of the Wilshire 4500 Portfolio's average
daily net assets and .75 of 1% of the value of the Midcap Value
Portfolio's average daily net assets. The management fee paid
by the Midcap Value Portfolio is higher than that paid by most
other investment companies.
Under the Sub-Investment Advisory Agreement for the
Wilshire 4500 Portfolio, The Dreyfus Corporation has agreed to
pay Mellon Equity Associates a monthly fee at the annual rate of
.__ of 1% of the value of the Wilshire 4500 Portfolio's average
daily net assets.
Under the Sub-Investment Advisory Agreement for the
Midcap Value Portfolio, The Dreyfus Corporation has agreed to
pay TBC Asset Management a monthly fee at the annual rate of .__
of 1% of the value of the Midcap Value Portfolio's average daily
net assets.
EXPENSES--All expenses incurred in the operation of the Fund
will be borne by the Fund, except to the extent specifically
assumed by The Dreyfus Corporation. The expenses to be borne by
the Fund will include: organizational costs, taxes, interest,
loan commitment fees, interest and distributions paid on
securities sold short, brokerage fees and commissions, if any,
fees of Directors who are not officers, directors, employees or
holders of 5% or more of the outstanding voting securities of
the Advisers, or their affiliates, 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
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses. Expenses attributable
to a particular Portfolio are charged against the assets of that
Portfolio; other expenses of the Fund are allocated between the
Portfolios on the basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to
the net assets of each Portfolio.
In addition, Investor Class shares of each Portfolio
are subject to certain distribution and service fees. See
"Service Plan, Distribution Plan and Shareholder Services Plan."
From time to time, The Dreyfus Corporation may waive
receipt of its fee and/or voluntarily assume certain expenses of
a Portfolio, which would have the effect of lowering the overall
expense ratio of that Portfolio and increasing yield to
investors at the time such amounts are waived or assumed, as the
case may be. The Fund will not pay The Dreyfus Corporation at a
later time for any amounts it may waive, nor will the Fund
reimburse The Dreyfus Corporation for any amounts it may assume.
The Dreyfus Corporation may pay the Fund's distributor
for shareholder services from The Dreyfus Corporation's own
assets, including past profits but not including the management
fee paid by the Fund. The Fund's distributor may use part or
all of such payments to pay Service Agents in respect of these
services.
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
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.
Investor Class shares are offered to any investor and
may be purchased through the Distributor or certain financial
institutions (which may include banks), securities dealers and
other industry professionals (collectively, "Service Agents")
that have entered into service agreements with the Distributor.
Class R shares are offered only to institutional
investors acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity, such as banks and
qualified or non-qualified employee benefit plans or other
programs, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations,
partnerships, non-profit entities or state and local governments
("Retirement Plans"). Class R shares may be purchased for a
Retirement Plan only by a custodian, trustee, investment manager
or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the
accounts of their clients may charge their clients direct fees
in connection with such transactions.
Stock certificates are issued only upon an investor's
written request. No certificates are issued for fractional
shares. The Fund reserves the right to reject any purchase
order.
The minimum initial investment is $2,500, or $1,000 if
the investor is 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. However, the
minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is
$750, with no minimum on subsequent purchases. Individuals who
open an IRA also may open a non-working spousal IRA with a
minimum initial investment of $250. Subsequent investments in a
spousal IRA must be at least $250. The initial investment must
be accompanied by the Fund's Account Application. For full-time
or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus
Corporation, Board members of a fund advised by The Dreyfus
Corporation, including members of the Fund's Board, or the
spouse or minor child of any of the foregoing, the minimum
initial investment is $1,000. For full-time or part-time
employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly
deposited into their Fund account, the minimum initial
investment is $50. The Fund reserves the right to offer Fund
shares without regard to minimum purchase 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.
The Internal Revenue Code of 1986, as amended (the
"Code"), imposes various limitations on the amount that may be
contributed to certain Retirement Plans. These limitations
apply with respect to participants at the plan level and,
therefore, do not directly affect the amount that may be
invested in the Fund by a Retirement Plan. Participants and
plan sponsors should consult their tax advisers for details.
Investors may purchase Fund shares by check or wire,
or, with respect to Investor Class shares only, 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 the
investor's Account Application indicating which Class of shares
is being purchased. For subsequent investments, the investor's
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 the investor's 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, together with the applicable
Portfolio's DDA # as shown below, for purchase of Fund shares in
the investor's name:
DDA # 8900104368 Dreyfus Equity Funds, Inc./Wilshire
4500 Portfolio--Class R;
DDA # 8900104376 Dreyfus Equity Funds, Inc./Wilshire
4500 Portfolio--Investor Class;
DDA # 8900104384 Dreyfus Equity Funds, Inc./Midcap
Value Portfolio--Class R; or
DDA # 8900104392 Dreyfus Equity Funds, Inc./Midcap
Value Portfolio--Investor Class.
The wire must include the investor's Fund account number (for
new accounts, the investor's Taxpayer Identification Number
("TIN") should be included instead), account registration and
dealer number, if applicable. If an investor's initial purchase
of Portfolio shares is by wire, the investor should call 1-800-
645-6561 after the investor has completed the wire payment in
order to obtain his or her Fund account number. The investor
should include his or her 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. Investors may obtain further
information about remitting funds in this manner from their
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 an
investor's 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. The investor must direct the institution to
transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to
credit the investor's Fund account. The instructions must
specify the investor's Fund account registration and Fund
account number preceded by the digits "1111."
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 regulatory authorities, may charge their
clients direct fees. These fees would be in addition to any
amounts which might be received under the Service Plan,
Distribution Plan or Shareholder Services Plan, as the case may
be. Service Agents may receive different levels of compensation
for selling different classes of shares. Each Service Agent has
agreed to transmit to its clients a schedule of such fees.
Investors should consult their Service Agent in this regard.
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").
The determination of the number of employees eligible for
participation in a plan or program shall be made on the date
Fund shares are first purchased by or on behalf of employees
participating in such plan or program and on each subsequent
January 1st. 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.
Shares of each Portfolio 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. Net asset value per share of
each Class is computed by dividing the value of a Portfolio's
net assets represented by such Class (i.e., the value of its
assets less liabilities) by the total number of shares of such
Class outstanding. A Portfolio'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 Board of Directors. For further information regarding the
methods employed in valuing the Portfolios' investments, see
"Determination of Net Asset Value" in the Fund's Statement of
Additional Information.
Federal regulations require that investors 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 the
investor to a $50 penalty imposed by the Internal Revenue
Service (the "IRS").
DREYFUS TeleTransfer PRIVILEGE--INVESTOR CLASS
An investor may purchase Investor Class shares (minimum
$500, maximum $150,000 per day) by telephone if he has checked
the appropriate box and supplied the necessary information on
the Fund's Account Application or has 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 the investor's 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 an investor has selected the Dreyfus TeleTransfer
PRIVILEGE, he may request a Dreyfus TeleTransfer purchase of
Investor Class shares by telephoning 1-800-221-4060 or, if
calling from overseas, 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 described in this
Prospectus. Investors should consult their Service Agent in
this regard.
EXCHANGE PRIVILEGE
The Exchange Privilege enables an investor to purchase,
in exchange for Investor Class shares or Class R shares of a
Portfolio, shares of the same class of the other Portfolio or
shares of certain other funds managed or administered by The
Dreyfus Corporation, to the extent such shares are offered for
sale in the investor's state of residence. These funds have
different investment objectives which may be of interest to
investors. To use this Privilege, investors should consult
their Service Agent or the Distributor to determine if it is
available and whether any conditions are imposed on its use.
WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS,
EXCHANGES MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN
ACCOUNT IN ANOTHER FUND.
To use this Privilege, an investor or the investor's
Service Agent acting on the investor's behalf must give exchange
instructions to the Transfer Agent in writing, by wire or by
telephone. If an investor previously has established the
Telephone Exchange Privilege, the investor may telephone
exchange instructions by calling 1-800-221-4060 or, if calling
from overseas, 1-401-455-3306. See "How to Redeem Fund Shares--
Procedures." Before any exchange, the investor 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
from the Distributor. 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. Telephone exchanges may be
made only if the appropriate "YES" box has been checked on the
Account Application, or a separate signed Shareholder Services
Form is on file with the Transfer Agent. Upon an exchange, 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: Exchange Privilege, Wire
Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TeleTransfer Privilege and the dividends and distributions
payment 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 an investor
is exchanging into a fund that charges a sales load, the
investor 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 the investor is exchanging were: (a)
purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through
reinvestment of dividends or distributions paid with respect to
the foregoing categories of shares. To qualify, at the time of
the exchange the investor must notify the Transfer Agent or the
investor's Service Agent must notify the Distributor. Any such
qualification is subject to confirmation of the investor's
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 Exchange Privilege may be modified or terminated at
any time upon notice to shareholders.
The exchange of shares of one fund or Portfolio 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, or an exchange
on behalf of a Retirement Plan which is not tax exempt may
result in, a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables a shareholder
to invest regularly (on a semi-monthly, monthly, quarterly or
annual basis), in exchange for shares of a Portfolio, in shares
of the same class of the other Portfolio or shares of other
funds in the Dreyfus Family of Funds of which such shareholder
is currently an investor. WITH RESPECT TO CLASS R SHARES HELD
BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS AUTO-
EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ANOTHER FUND. The amount the
investor designates, 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 the investor has 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. An investor may modify or cancel the
investor's exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. The Fund may charge
a service fee for the use of this Privilege. No such fee
currently is contemplated. The exchange of shares of one fund
or Portfolio 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, or an exchange on behalf of a Retirement Plan which is
not tax exempt may result in, 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 a shareholder
to purchase Portfolio shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by the
shareholder. Portfolio shares are purchased by transferring
funds from the bank account designated by the shareholder. At
the shareholder's option, the bank account designated by the
shareholder will be debited in the specified amount, and
Portfolio 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, the
shareholder must file an authorization form with the Transfer
Agent. Shareholders may obtain the necessary authorization form
from the Distributor. A shareholder may cancel his
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 DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables a shareholder to invest
automatically dividends or dividends and capital gain
distributions, if any, paid by a Portfolio in shares of the same
class of the other Portfolio or fund in the Dreyfus Family of
Funds of which the shareholder is an investor. 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 the
shareholder is investing in a fund that charges a sales load,
such shareholder may qualify for share prices which do not
include the sales load or which reflect a reduced sales load.
See "Shareholder Services" in the Statement of Additional
Information. Dreyfus Dividend ACH permits a shareholder to
transfer electronically on the payment date their 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 of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. 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 GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables a
shareholder to purchase Portfolio 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 such shareholder's Fund account. A shareholder may deposit
as much of such payments as such shareholder elects. To enroll
in Dreyfus Government Direct Deposit, the shareholder must file
with the Transfer Agent a completed Direct Deposit Sign-Up Form
for each type of payment that the shareholder desires to include
in this Privilege. The appropriate form may be obtained from
the Distributor. Death or legal incapacity will terminate a
shareholder's participation in this Privilege. A shareholder
may elect at any time to terminate his participation by
notifying in writing the appropriate Federal agency. Further,
the Fund may terminate a shareholder's participation upon 30
days' notice to such shareholder.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits a shareholder to
purchase Portfolio shares (minimum of $100 per transaction)
automatically on a regular basis. Depending upon the direct
deposit program of the shareholder's employer, a shareholder may
have part or all of his paycheck transferred to his existing
Dreyfus account electronically through the Automated Clearing
House system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, the shareholder must file an authorization
form with his employer's payroll department. The shareholder's
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. A shareholder may obtain the necessary
authorization form from the Distributor. A shareholder may
change the amount of purchase or cancel the authorization only
by written notification to the shareholder's employer. It is
the sole responsibility of the shareholder's employer, not the
Distributor, The Dreyfus Corporation, the Fund, the Transfer
Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate
this Privilege at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs
or other retirement plans are not eligible for this Privilege.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits a shareholder to
request withdrawal of a specified dollar amount (minimum of $50)
on either a monthly or quarterly basis if such shareholder has a
$5,000 minimum account. Particular Retirement Plans, including
Dreyfus sponsored retirement plans, may permit certain
participants to establish an automatic withdrawal plan from such
Retirement Plans. Participants should consult their Retirement
Plan sponsor and tax adviser for details. Such a withdrawal
plan is different than the Automatic Withdrawal Plan. An
application for the Automatic Withdrawal Plan can be obtained
from the Distributor. There is a service charge of $.50 for each
withdrawal check. The Automatic Withdrawal Plan may be ended at
any time by the shareholder, the Fund or the Transfer Agent.
Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS
Each of the Portfolios 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. An
investor 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; 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
Shareholders may request redemption of their shares at
any time. Redemption requests should be transmitted to the
Transfer Agent as described below. When a request is received
in proper form, a Portfolio 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 or other
institutions may charge their clients a nominal fee for
effecting redemptions of Portfolio shares. Any certificates
representing Portfolio 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
Portfolio's then-current net asset value.
DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS AND
CERTAIN NON-QUALIFIED DEFERRED COMPENSATION PLANS, EXCEPT
DISTRIBUTIONS REPRESENTING RETURNS OF NON-DEDUCTIBLE
CONTRIBUTIONS TO THE RETIREMENT PLAN, GENERALLY ARE TAXABLE
INCOME TO THE PARTICIPANT. DISTRIBUTIONS FROM SUCH A RETIREMENT
PLAN TO A PARTICIPANT PRIOR TO THE TIME THE PARTICIPANT REACHES
AGE 59-1/2 OR BECOMES PERMANENTLY DISABLED MAY SUBJECT THE
PARTICIPANT TO AN ADDITIONAL 10% PENALTY TAX IMPOSED BY THE IRS.
PARTICIPANTS SHOULD CONSULT THEIR TAX ADVISERS CONCERNING THE
TIMING AND CONSEQUENCES OF DISTRIBUTIONS FROM A RETIREMENT PLAN.
PARTICIPANTS IN QUALIFIED RETIREMENT PLANS WILL RECEIVE A
DISCLOSURE STATEMENT DESCRIBING THE CONSEQUENCES OF A
DISTRIBUTION FROM SUCH A PLAN FROM THE ADMINISTRATOR, TRUSTEE OR
CUSTODIAN OF THE PLAN, BEFORE RECEIVING THE DISTRIBUTION. THE
FUND WILL NOT REPORT TO THE IRS REDEMPTIONS OF PORTFOLIO SHARES
BY QUALIFIED RETIREMENT PLANS OR CERTAIN NON-QUALIFIED DEFERRED
COMPENSATION PLANS. THE ADMINISTRATOR, TRUSTEE OR CUSTODIAN OF
SUCH RETIREMENT PLANS WILL BE RESPONSIBLE FOR REPORTING
DISTRIBUTIONS FROM SUCH PLANS TO THE IRS.
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 AN INVESTOR HAS PURCHASED PORTFOLIO SHARES BY CHECK, BY
DREYFUS TeleTransfer PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC
ASSET BUILDER AND SUBSEQUENTLY SUBMITS A WRITTEN REDEMPTION
REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO THE INVESTOR PROMPTLY UPON BANK CLEARANCE OF THE
INVESTOR'S 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 THE
INVESTOR'S SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF THE
INVESTOR OTHERWISE HAS A SUFFICIENT COLLECTED BALANCE IN THE
INVESTOR'S ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO
THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES
WILL ACCRUE AND BE PAYABLE, AND THE INVESTOR WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Portfolio
shares will not be redeemed until the Transfer Agent has
received the investor's Account Application.
The Fund reserves the right to redeem an investor's
account at its option upon not less than 45 days' written notice
if the net asset value of the investor's account is $500 or less
and remains so during the notice period.
PROCEDURES
Investors may redeem shares by using the regular
redemption procedure through the Transfer Agent, the Wire
Redemption Privilege, the Telephone Redemption Privilege, or,
for Investor Class shares only, through the Dreyfus TeleTransfer
Privilege. Other redemption procedures may be in effect for
clients of certain Service Agents and institutions. The Fund
makes available to certain large institutions the ability to
issue redemption instructions through compatible computer
facilities.
Investors may redeem or exchange Portfolio shares by
telephone if they have checked the appropriate box on the Fund's
Account Application or have filed a Shareholder Services Form
with the Transfer Agent. If an investor selects the telephone
redemption or exchange privilege, such investor authorizes the
Transfer Agent to act on telephone 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. 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,
investors may experience difficulty in contacting the Transfer
Agent by telephone to request a redemption or exchange of
Portfolio shares. In such cases, investors should consider
using the other redemption procedures described herein. Use of
these other redemption procedures may result in an investor's
redemption request being processed at a later time than it would
have been if telephone redemption had been used. During the
delay, the Portfolio's net asset value may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, an
investor may redeem his shares by written request mailed to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island
02940-9671, or, if for Dreyfus retirement plan accounts, to The
Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. Redemption requests may be delivered
in person only to a Dreyfus Financial Center. THESE REQUESTS
WILL BE FORWARDED TO A PORTFOLIO AND WILL BE PROCESSED ONLY UPON
RECEIPT THEREBY. For the location of the nearest Dreyfus
Financer 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 Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock
Exchanges Medallion Program. For more information 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. An investor may request by wire or
telephone that redemption proceeds (minimum $1,000) be wired to
the investor's account at a bank which is a member of the
Federal Reserve System, or a correspondent bank if the
investor's bank is not a member. To establish the Wire
Redemption Privilege, an investor 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. An investor may direct that redemption proceeds
be paid by check (maximum $150,000 per day) made out to the
owners of record and mailed to the investor's 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 only up to
$250,000 wired within any 30-day period. An investor may
telephone redemption requests by calling 1-800-221-4060 or, if
calling from overseas, 1-401-455-3306. The Fund reserves the
right to refuse any redemption request, including requests made
shortly after a change 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. An investor may redeem Fund
shares (maximum $150,000 per day) by telephone if the investor
has checked the appropriate box on the Fund's Account
Application or has filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check
and mailed to the investor's address. An investor may telephone
redemption instructions by calling 1-800-221-4060 or, if calling
from overseas, 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--INVESTOR CLASS. An investor may
redeem Fund shares (minimum $500 per day) by telephone if the
investor has checked the appropriate box and supplied the
necessary information on the Fund's Account Application or has
filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the investor's 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 the
investor's account at an Automated Clearing House member bank
ordinarily two days after receipt of the redemption request or,
at the investor's request, paid by check (maximum $150,000 per
day) and mailed to the investor's address. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus
TeleTransfer Privilege for transfer to their bank account only
up to $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 an investor has selected the Dreyfus TeleTransfer
Privilege, the investor may request a Dreyfus TeleTransfer
redemption of Fund shares by telephoning 1-800-221-4060 or, if
calling from overseas, 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.
SERVICE PLAN, DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
(INVESTOR CLASS ONLY)
Investor Class shares of the Wilshire 4500 Portfolio
are subject to a Service Plan. Investor Class shares of the
Midcap Value Portfolio are subject to a Distribution Plan and to
a Shareholder Services Plan.
SERVICE PLAN--(Wilshire 4500 Portfolio) The Wilshire 4500
Portfolio's Investor Class shares are subject to a Service Plan
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940. Under the Service Plan, the Portfolio (a) reimburses
the Distributor for payments to certain Service Agents for
distributing the Portfolio's Investor Class shares and servicing
Investor Class shareholder accounts ("Servicing") and (b) pays
The Dreyfus Corporation, Dreyfus Service Corporation and any
affiliate of either of them (collectively, "Dreyfus") for
advertising and marketing relating to the Portfolio's Investor
Class shares and for Servicing, at an aggregate annual rate of
.25 of 1% of the value of the average daily net assets of the
Portfolio's Investor Class. Each of the Distributor and Dreyfus
may pay one or more Service Agents a fee in respect of the
Portfolio's Investor Class shares owned by shareholders with
whom the Service Agent has a Servicing relationship or for whom
the Service Agent is the dealer or holder of record. Each of
the Distributor and Dreyfus determines the amounts, if any, to
be paid to Service Agents under the Service Plan and the basis
on which such payments are made. The fees payable under the
Service Plan are payable without regard to actual expenses
incurred.
The Portfolio bears the costs of preparing and printing
prospectuses and statements of additional information used for
regulatory purposes and for distribution to existing
shareholders. Under the Service Plan, the Portfolio bears (a)
the costs of preparing, printing and distributing prospectuses
and statements of additional information used for other purposes
with respect to the Portfolio's Investor Class and (b) the costs
associated with implementing and operating the Service 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 average daily net assets of the Portfolio's Investor Class
for such fiscal year.
DISTRIBUTION PLAN--(Midcap Value Portfolio) The Midcap Value
Portfolio's Investor Class shares are subject to a Distribution
Plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940. Under the Distribution Plan, the Portfolio (a)
reimburses the Distributor for payments to certain Service
Agents for distributing the Portfolio's Investor Class shares
and (b) pays Dreyfus for advertising and marketing relating to
Investor Class shares of the Portfolio, at an aggregate annual
rate of .50 of 1% of the value of the average daily net assets
of the Portfolio's Investor Class. 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 Portfolio bears the costs of preparing and printing
prospectuses and statements of additional information used for
regulatory purposes and for distribution to existing
shareholders. Under the Distribution Plan, the Portfolio bears
(a) the costs of preparing, printing and distributing
prospectuses and statements of additional information used for
other purposes with respect to the Portfolio's Investor Class
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 average daily net assets of the
Portfolio's Investor Class for such fiscal year.
SHAREHOLDER SERVICES PLAN--(Midcap Value Portfolio) Under the
Shareholder Services Plan, the Investor Class pays the
Distributor for the provision of certain services to the holders
of the Midcap Value Portfolio's Investor Class shares a fee at
the annual rate of .25 of 1% of the value of the average daily
net assets of the Portfolio's Investor Class. The services
provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the
Portfolio and providing reports and other information, and
providing services related to the maintenance of such
shareholder accounts. Under the Shareholder Services Plan 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
Portfolio pursuant to the Shareholder Services Plan and any
other compensation payable by their clients in connection with
the investment of their assets in Portfolio shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Code, each Portfolio is treated as a separate
corporation for purposes of qualification and taxation as a
regulated investment company. Each Portfolio ordinarily pays
dividends from its net investment income and distributes net
realized securities gains, if any, once a year, but it may make
distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner
consistent with the provisions of the Investment Company Act of
1940. No Portfolio will make distributions from net realized
securities gains unless capital loss carryovers, if any, have
been utilized or have expired. Investors, other than Retirement
Plans, may choose whether to receive dividends and distributions
in cash or to reinvest in additional Portfolio shares.
Dividends and distributions paid to Retirement Plans are
reinvested automatically in additional Portfolio shares at net
asset value. All expenses are accrued daily and deducted before
declaration of dividends to investors. Dividends paid by each
Class will be calculated at the same time and in the same manner
and will be of the same amount, except that the expenses
attributable solely to the Investor Class or Trust Class will be
borne exclusively by such Class. Investor Class shares will
receive lower per share dividends than Trust Class shares
because of the higher expenses borne by the Investor Class. See
"Fee Table."
Dividends paid by a Portfolio to qualified Retirement
Plans or certain non-qualified deferred compensation plans
ordinarily will not be subject to taxation until the proceeds
are distributed from the Retirement Plan. A Portfolio will not
report dividends paid by such Portfolio to such Plans to the
IRS. Generally, distributions from such Retirement Plans,
except those representing returns of non-deductible
contributions thereto, will be taxable as ordinary income and,
if made prior to the time the participant reaches age 59-1/2,
generally will be subject to an additional tax equal to 10% of
the taxable portion of the distribution. If the distribution
from such a Retirement Plan (other than certain governmental or
church plans) for any taxable year following the year in which
the participant reaches age 70-1/2 is less than the "minimum
required distribution" for that taxable year, an excise tax
equal to 50% of the deficiency may be imposed by the IRS. The
administrator, trustee or custodian of such a Retirement Plan
will be responsible for reporting distributions from such Plans
to the IRS. Participants in qualified Retirement Plans will
receive a disclosure statement describing the consequences of a
distribution from such a Plan from the administrator, trustee or
custodian of the Plan prior to receiving the distribution.
Moreover, certain contributions to a qualified Retirement Plan
in excess of the amounts permitted by law may be subject to an
excise tax.
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 a
Portfolios will be taxable to U.S. shareholders and to certain
non-qualified Retirement Plans as ordinary income whether
received in cash or reinvested in Portfolio shares.
Distributions from net realized long-term securities gains of
the Portfolio will be taxable to U.S. shareholders and to
certain non-qualified Retirement Plans as long-term capital
gains for Federal income tax purposes, regardless of how long
shareholders have held their Portfolio shares and whether such
distributions are received in cash or reinvested in Portfolio
shares. The Code provides that the net capital gain of an
individual generally will not be subject to Federal income tax
at a rate in excess of 28%. Dividends and distributions may be
subject to state and local taxes.
Dividends derived from net investment income, together
with distributions from net realized short-term securities gains
and all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds, paid by a
Portfolio 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 a Portfolio 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 dividends and
distributions will be mailed to investors annually. Investors
also will receive periodic summaries of their account which will
include information as to dividends and distributions from
securities gains, if any, paid during the year. Participants in
a Retirement Plan should receive periodic statements from the
trustee, custodian or administrator of their Plan.
With respect to individual investors and certain non-
qualified Retirement Plans, 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 a Portfolio 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 consti-
tute 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 each Portfolio 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 Portfolio of any liability for
Federal income tax to the extent its earnings are distributed in
accordance with applicable provisions of the Code. In addition,
each Portfolio is subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of
taxable investment income and capital gains.
Investors should consult their tax advisers regarding
specific questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class
may be calculated on the basis of average annual total return
and/or total return. These total return figures reflect changes
in the price of the shares and assume that any income dividends
and/or capital gains distributions made by a Portfolio during
the measuring period were reinvested in shares of the same
Class. These figures also take into account any applicable
service and distribution fees. As a result, at any given time,
the performance of the Investor Class should be expected to be
lower than that of the Trust Class. Performance for each Class
will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in a
Portfolio 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 each Portfolio's
performance will include the Portfolio'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
Portfolio has operated. Computations of average annual total
return for periods of less than one year represent an
annualization of the Portfolio'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 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.
Investors 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.,
Morningstar, Inc., Wilshire 4500 Stock Index, Russell Mid Cap
Index, Standard & Poor's MidCap 400 Index, Standard & Poor's 500
Stock Index, the Dow Jones Industrial Average and other industry
publications.
GENERAL INFORMATION
The Fund was organized as a corporation under the laws
of Maryland on July 27, 1994, and has not engaged in active
business to the date of this Prospectus. The Fund is authorized
to issue 300 million shares of Common Stock (with 150 million
allocated to each Portfolio), par value $.001 per share. Each
Portfolio's shares are classified into two classes--Investor
Class and Trust Class. Each share has one vote and shareholders
will vote in the aggregate and not by class except as otherwise
required by law. However, only holders of Investor Class shares
will be entitled to vote on matters submitted to shareholders
pertaining to the respective Service Plan, Distribution Plan or
Shareholder Services Plan.
To date, the Fund's Board has authorized the creation
of two portfolios of shares. All consideration received by the
Fund for shares of one of the Portfolios and all assets in which
such consideration is invested will belong to that Portfolio
(subject only to the rights of creditors of the Fund) and will
be subject to the liabilities related thereto. The assets
attributable to, and the expenses of, one Portfolio (and as to
classes within a Portfolio) are treated separately from those of
the other Portfolio (and classes). The Fund has the ability to
create, from time to time, new portfolios of shares without
shareholder approval.
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 and 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.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Fund, will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding
shares of each Portfolio affected by such matter. Rule 18f-2
further provides that a Portfolio shall be deemed to be affected
by a matter unless it is clear that the interests of such
Portfolio in the matter are identical or that the matter does
not affect any interest of such Portfolio. However, that Rule
exempts the selection of independent accountants and the
election of Directors from the separate voting requirements of
the rule.
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>
DREYFUS EQUITY FUNDS, INC.
WILSHIRE 4500 Portfolio
MIDCAP VALUE Portfolio
INVESTOR CLASS AND CLASS R
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
__________, 1994
This Statement of Additional Information, which is not
a prospectus, supplements and should be read in conjunction with
the current Prospectus of the Wilshire 4500 and Midcap Value
Portfolios (each, a "Portfolio") of Dreyfus Equity Funds, Inc.
(the "Fund"), dated __________ __, 1994, as it may be revised
from time to time. To obtain a copy of the Portfolios'
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 Mellon Equity
Associates, Inc. ("Mellon Equity Associates") to serve as the
Wilshire 4500 Portfolio's sub-investment adviser and The Boston
Company Asset Management, Inc. ("TBC Asset Management") to serve
as the Midcap Value Portfolio's sub-investment adviser and in
each case to provide day-to-day management of the relevant
Portfolio's investments, subject to the supervision of Dreyfus.
Dreyfus, Mellon Equity Associates and TBC Asset Management are
referred to collectively as the "Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor")
is the distributor of the Fund's shares.
<PAGE>
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . B-3
Management of the Fund . . . . . . . . . . . . . . . . B-12
Management Arrangements . . . . . . . . . . . . . . . B-13
Purchase of Fund Shares. . . . . . . . . . . . . . . . B-16
Service Plan, Distribution Plan and
Shareholder Services Plan. . . . . . . . . . . . . . B-16
Redemption of Fund Shares. . . . . . . . . . . . . . . B-18
Shareholder Services . . . . . . . . . . . . . . . . . B-20
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 Statements . . . . . . . . . . . . . . . . . B-30
Report of Independent Auditors . . . . . . . . . . . . B-34
<PAGE>
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. (Both Portfolios) 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 each of the Portfolios are insured
by the FDIC (although such insurance may not be of material
benefit to the Portfolio, depending on the principal amount of
the CDs of each bank held by the Portfolio) 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 each Portfolio 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.
REPURCHASE AGREEMENTS. (Both Portfolios) The Fund's
custodian or sub-custodian will have custody of, and will hold
in a segregated account, securities acquired by a Portfolio
under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange
Commission to be loans by the Portfolio that enters into them.
In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, the Portfolio 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 such Portfolio 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. Each Portfolio's 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 the Portfolios enter into repurchase
agreements.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE
OBLIGATIONS. (Both Portfolios) Variable rate demand notes
include variable amount master demand notes, which are
obligations that permit a Portfolio to invest fluctuating
amounts at varying rates of interest pursuant to direct
arrangements between such Portfolio, 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 a Portfolio 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.
ILLIQUID SECURITIES. (Both Portfolios) 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 a Portfolio, the Fund
intends to treat such 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 Portfolio'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, a Portfolio's investing in
such securities may have the effect of increasing the level of
illiquidity in such Portfolio's investment portfolio during such
period.
MANAGEMENT POLICIES
Each Portfolio engages, except as noted, in the
following practices in furtherance of its objective.
OPTIONS TRANSACTIONS. (Both Portfolios) Each
Portfolio may engage in options transactions, such as purchasing
or writing covered call or put options. The principal reason
for writing covered call options is to realize, through the
receipt of premiums, a greater return than would be realized on
a Portfolio's portfolio securities alone. 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. Similarly, the principal reason for
writing covered put options is to realize income in the form of
premiums. 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 a Portfolio 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. Each Portfolio may write (a) in-the-money
call options when its 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 its
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 its 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 a Portfolio's obligation as the writer of an
option continues, the Portfolio may be assigned an exercise
notice by the broker-dealer through which the option was sold,
requiring the Portfolio 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 a Portfolio effects a
closing purchase transaction. The Portfolio 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, each Portfolio
generally will purchase or write only those options for which
its 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
Portfolio 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. (Both Portfolios) Each Portfolio
may purchase and write put and call options on stock indexes
listed on 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 indexes 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.
(Both Portfolios) 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 a Portfolio.
FOREIGN CURRENCY TRANSACTIONS. (Midcap Value
Portfolio) If the Portfolio 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 Portfolio in an amount at least equal
to the value of the Portfolio'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 Portfolio's
commitment with respect to the contract.
At or before the maturity of a forward contract, the
Portfolio 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 Portfolio will obtain, on the
same maturity date, the same amount of the currency which it is
obligated to deliver. If the Portfolio retains the portfolio
security and engages in an offsetting transaction, the
Portfolio, 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 Portfolio'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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio to restrict the
degree to which it engages in currency transactions. See
"Dividends, Distributions and Taxes."
LENDING PORTFOLIO SECURITIES. (Both Portfolios) To a
limited extent, each Portfolio 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
Portfolio 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 Portfolio to be the
equivalent of cash. From time to time, a Portfolio 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 Portfolio 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 Portfolio must be able to terminate the loan at any
time; (4) the Portfolio 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 Portfolio 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.
INVESTMENT RESTRICTIONS
Each Portfolio has adopted investment restrictions
numbered 1 through 10 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 such Portfolio's outstanding voting
shares. Investment restrictions numbered 11 through 16 are not
fundamental policies and may be changed by vote of a majority of
the Fund's Directors at any time. Neither Portfolio may:
1. Invest more than 5% of its assets in the
obligations of any single issuer, except that up to 25% of the
value of the Portfolio's total assets may be invested, and
securities issued or guaranteed by the U.S. Government, or its
agencies or instrumentalities may be purchased, without regard
to any such limitation.
2. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of the Portfolio's total
assets.
3. 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.
4. Invest in commodities, except that the Portfolio
may purchase and sell options, forward contracts, futures
contracts, including those relating to indexes, and options on
futures contracts or indexes.
5. Purchase, hold or deal in real estate, or oil, gas
or other mineral leases or exploration or development programs,
but the Portfolio 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.
6. 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 indexes, and options on futures contracts or
indexes shall not constitute borrowing.
7. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
However, the Portfolio 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 a Portfolio's Board of Directors.
8. Act as an underwriter of securities of other
issuers, except to the extent the Portfolio may be deemed an
underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
9. 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. 4, 6, 13
and 14 may be deemed to give rise to a senior security.
10. Purchase securities on margin, but the Portfolio
may make margin deposits in connection with transactions in
options, forward contracts, futures contracts, including those
relating to indexes, and options on futures contracts or
indexes.
11. 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
Portfolio's investments in all such companies to exceed 5% of
the value of its total assets.
12. Invest in the securities of a company for the
purpose of exercising management or control, but the Portfolio
will vote the securities it owns in its portfolio as a
shareholder in accordance with its views.
13. 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 indexes, and options on futures
contracts or indexes.
14. Purchase, sell or write puts, calls or
combinations thereof, except as described in a Portfolio's
Prospectus and Statement of Additional Information.
15. 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 Portfolio's net assets would be so
invested.
16. 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 Portfolio
shares in certain states. Should the Fund determine that a
commitment is no longer in the best interest of a Portfolio and
its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of such Portfolio's 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.
DIRECTORS OF THE FUND
[TO BE INSERTED]
For so long as the Fund's plans described in the
section captioned "Service Plan, 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.
OFFICERS OF THE FUND
[TO BE INSERTED]
The address of each officer of the Fund is
____________________________________.
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 each Portfolio pursuant to the Management
Agreement (the "Management Agreement"), dated _____________,
1994 between Dreyfus and the Fund. As to each Portfolio, 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 outstanding voting securities of such
Portfolio, provided that in either event the continuance also is
approved by a majority of the 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. As to each Portfolio, the Management Agreement
is terminable without penalty, on 60 days' notice, by the Fund's
Board of Directors or by vote of the holders of a majority of
such Portfolio's shares, or, upon not less than 90 days' notice,
by Dreyfus. The Management Agreement will terminate
automatically, as to the relevant Portfolio, in the event of its
assignment (as defined in the Act).
In addition to the persons named in the section
entitled "Management of the Fund," the following persons are
also officers and/or directors of Dreyfus: [to come].
Dreyfus maintains office facilities, and furnishes the
Fund statistical and research data, clerical help, accounting,
data processing, bookkeeping and internal auditing and certain
other required services. Dreyfus also may make such advertising
and promotional expenditures using its own resources, as it from
time to time deems appropriate.
SUB-INVESTMENT ADVISORY AGREEMENTS. Mellon Equity
Associates provides investment advisory assistance and day-to-
day management of the Wilshire 4500 Portfolio's investments
pursuant to the Sub-Investment Advisory Agreement dated
__________, 1994 between Mellon Equity Associates and Dreyfus.
TBC Asset Management provides investment advisory assistance and
day-to-day management of the Midcap Value Portfolio's
investments pursuant to the Sub-Investment Advisory Agreement
dated _________, 1994 between TBC Asset Management and Dreyfus.
Each Sub-Investment 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 relevant Portfolio's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Directors who
are not "interested persons" (as defined in the Act) of the Fund
or such Portfolio's Advisers, by vote cast in person at a
meeting called for the purpose of voting on such approval. Each
Sub-Investment 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
relevant Portfolio's outstanding voting securities on 60 days'
notice, or (iii) upon not less than 90 days' notice, by Mellon
Equity Associates or TBC Asset Management, as the case may be.
Each Sub-Investment Advisory Agreement will terminate
automatically, as to the relevant Portfolio, in the event of its
assignment (as defined in the Act).
The following persons are officers and/or directors of
Mellon Equity Associates: Phillip R. Roberts, Chairman of the
Board; and William P. Rydell, President and Chief Executive
Officer.
The following persons are officers and/or directors of
TBC Asset Management: Desmond J. Heathwood, Chairman of the
Board and Chief Investment Officer; William W. Carter,
President; and Mark E. Donovan, William R. Leach and Jacob
Navon, Senior Vice Presidents.
With respect to the Wilshire 4500 Portfolio, Mellon
Equity Associates provides day-to-day management of the
Portfolio's investments, subject to the supervision of Dreyfus
and the approval of the Board of Directors. With respect to the
Midcap Value Portfolio, TBC Asset Management provides day-to-day
management of the Portfolio's investments, subject to the
supervision of Dreyfus and approval of the Board of Directors.
The Advisers 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: John O'Toole and
Steven A. Falci, with respect to the Wilshire 4500 Portfolio,
and Wayne J. Archambo and David L. Diamond, with respect to the
Midcap Value Portfolio. The Advisers maintain research
departments with professional portfolio managers and securities
analysts who provide research services for the Fund as well as
for other funds advised by Dreyfus, Mellon Associates or TBC
Asset Management.
EXPENSES. All expenses incurred in the operation of
the Fund are borne by the Fund, except to the extent
specifically assumed by the Advisers. The expenses borne by the
Fund include: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities
sold short, brokerage fees and commissions, if any, fees of
Directors who are not officers, directors, employees or holders
of 5% or more of the outstanding voting securities of the
Advisers or their affiliates, 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
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses. Expenses attributable
to a particular Portfolio are charged against the assets of that
Portfolio; other expenses of the Fund are allocated between the
Portfolios on the basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to
the net assets of each Portfolio.
In addition, Investor Class shares of each Portfolio
are subject to annual distribution and service fees. See
"Service Plan, Distribution Plan and Shareholder Services Plan."
As to each Portfolio, Dreyfus has agreed that if in any
fiscal year the aggregate expenses of the Portfolio, exclusive
of taxes, brokerage, interest on borrowings and (with the prior
written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed
the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to Dreyfus
under the Management Agreement, or Dreyfus will bear, such
excess expense to the extent required by state law. Such
deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a
monthly basis.
The aggregate of the fees payable to Dreyfus is not
subject to reduction as the value of a Portfolio's net assets
increases.
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--INVESTOR CLASS.
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 Portfolio account on the next
bank business day. To qualify to use the Dreyfus TeleTransfer
Privilege, the initial payment for purchase of Investor Class
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--Investor Class."
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.
SERVICE PLAN, 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 "Service Plan, Distribution Plan and Shareholder
Services Plan."
Investor Class shares of the Wilshire 4500 Portfolio
are subject to a Service Plan and Investor Class shares of the
Midcap Value Portfolio are subject to a Distribution Plan and a
Shareholder Services Plan.
SERVICE AND DISTRIBUTION PLANS. 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 with respect to the Investor
Class shares of each Portfolio (each, a "Plan"). The Fund's
Board of Directors believes that there is a reasonable
likelihood that the Portfolio's Plan will benefit the Portfolio
and the holders of its Investor Class shares.
A quarterly report of the amounts expended under each
Plan, and the purposes for which such expenditures were
incurred, must be made to the Directors for their review. In
addition, the Plan provides that it may not be amended to
increase materially the cost which holders of Investor Class
shares of the Portfolio may bear pursuant to the Plan without
the approval of the holders of the Investor Class shares and
that other material amendments of the 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 Plan or in any agreements entered into in connection with
the Plan, by vote cast in person at a meeting called for the
purpose of considering such amendments. Each 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 Plan. Each
Plan was so approved by the Directors at a meeting held on
__________, 1994. Each 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 Plan or in any agreements entered into in
connection with the Plan or by vote of the holders of a majority
of Investor Class shares of the Portfolio.
SHAREHOLDER SERVICES PLAN. With respect to the Midcap
Value Portfolio, the Fund has adopted a Shareholder Services
Plan, pursuant to which the Portfolio pays the Distributor for
the provision of certain services to the holders of Investor
Class shares of such Portfolio.
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 neither "interested
persons" (as defined in the Act) of the Fund nor have any 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
___________, 1994. The Shareholder Services Plan is terminable
at any time by vote of a majority of the Directors who are not
"interested persons" and who 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.
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."
STOCK CERTIFICATES; SIGNATURES. Any certificates
representing Portfolio 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.
DREYFUS TELETRANSFER PRIVILEGE--INVESTOR CLASS.
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--Investor Class."
REDEMPTION COMMITMENT. The Fund has committed itself
to pay in cash all redemption requests by any shareholder of
record of a Portfolio, limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the value of such
Portfolio'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 Portfolio to
the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as a Portfolio'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 a Portfolio 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 a Portfolio'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."
EXCHANGE PRIVILEGE. Shares 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 use this Privilege, an investor or the investor's
Service Agent acting on the investor's behalf must give exchange
instructions to the Transfer Agent in writing, by wire or by
telephone. Telephone exchanges may be made only for Investor
Class shares and if the appropriate "YES" box has been checked
on the Account Application, or a separate signed Shareholder
Services Form is on file with the Transfer Agent. By using this
Privilege, the investor authorizes the Transfer Agent to act on
telephonic, telegraphic or written exchange 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.
Exchanges of Class R shares held by a Retirement Plan
may be made only between the investor's Retirement Plan account
in one fund and such investor's Retirement Plan account in
another fund.
To establish a 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 SEP-IRAs with only one participant, the minimum initial
investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and IRAs set up under a Simplified Employee
Pension Plan ("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 a Retirement Plan account, 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 a Portfolio, shares of the same class of the other
Portfolio or shares of another fund in the Dreyfus Family of
Funds. This Privilege is available only for existing accounts.
With respect to Class R shares held by a Retirement Plan,
exchanges may be made only between the investor's Retirement
Plan account in one fund and such investor's Retirement Plan
account in another fund. Shares will be exchanged on the basis
of relative net asset value as described above under "Exchange
Privilege." 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
the investor's 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.
The Exchange Privilege and Dreyfus Auto-Exchange 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 from the Distributor. Each of the
Portfolios reserves the right to reject any exchange request in
whole or in part. The Exchange Privilege or Dreyfus Auto-
Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
AUTOMATIC WITHDRAWAL. 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 Portfolio 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. An Automatic Withdrawal Plan may be
established by completing the appropriate application available
from the Distributor. 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 a
Portfolio in shares of the same class of the other Portfolio or
shares of another fund in the Dreyfus Family of Funds of which
the investor is a shareholder. Shares of the same class 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 ("CDSC") and the
applicable CDSC, if any, will be imposed upon
redemption of such shares.
CORPORATE PENSION/PROFIT-SHARING AND RETIREMENT PLANS.
Each of the Portfolios 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 Portfolio shares in
conjunction with a Keogh Plan, a 403(b)(7) Plan or an IRA,
including an SEP-IRA, may request from the Distributor forms for
adoption of such plans.
The entity acting as custodian for Keogh Plans,
403(b)(7) Plans or IRAs may charge a fee, payment of which could
require the liquidation of shares. All fees charged are
described in the appropriate form.
Shares may be purchased in connection with these plans
only by direct remittance to the entity acting as custodian.
Purchases for these plans may not be made in advance of receipt
of funds.
The minimum initial investment for corporate plans,
Salary Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more
than one participant, is $2,500 with no minimum on 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. Each Portfolio's
securities, including covered call options written by a
Portfolio, are valued at the last sale price on the securities
exchange or national securities market on which such securities
primarily are traded. Short-term investments are carried at
amortized cost, which approximates value. 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 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 a Portfolio, including the management fee
paid by such Portfolio and, with respect to an Investor Class,
the distribution and service fees, as applicable, are accrued
daily and taken into account for the purpose of determining the
net asset value of Portfolio 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 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 each Portfolio will qualify as a
"regulated investment company" under the Code, as long as such
qualification is in the best interests of its shareholders.
Qualification as a regulated investment company relieves a
Portfolio from any liability for Federal income taxes to the
extent its earnings are distributed in accordance with the
applicable provisions of the Code. The term "regulated
investment company" does not imply the supervision of management
or investment practices or policies by any government agency.
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 his investment.
Such a dividend or distribution would be a return on investment
in an economic sense, although taxable as stated above. In
addition, the Code provides that if a shareholder holds shares
of the Fund for six months or less and has received a capital
gain distribution with respect to such shares, any loss incurred
on the sale of such shares will be treated as a long-term
capital loss to the extent of the capital gain distribution
received.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain and loss. However,
a portion of the gain or loss from the disposition of non-U.S.
dollar denominated securities (including debt instruments,
certain financial forward futures and option contracts and
certain preferred stock) 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 1276. 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
realized by a Portfolio from certain futures and 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 Portfolio's taxable year will be treated as sold
for their then fair market value, resulting in additional gain
or loss to such Portfolio characterized in the manner described
above.
Offsetting positions held by a Portfolio involving
certain 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 Section 1256 and 988. As such, all or a portion
of any short-term or long-term capital gain from certain
"straddle" transactions may be recharacterized to ordinary
income. If a Portfolio 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. A Portfolio may make one
or more elections with respect to "mixed straddles." Depending
on which election is made, if any, the results to the Portfolio
may differ. If no election is made to the extent the "straddle"
and conversion transactions rules apply to positions established
by the Portfolio, losses realized by the Portfolio will be
deferred to the extent of unrealized gain in the offsetting
position. Moreover, as a result of the "straddle" 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.
Investment by a Portfolio in securities issued or
acquired at a discount, or providing for deferred interest or
for payment of interest in the form of additional obligations
could under special tax rules affect the amount, timing and
character of distributions to shareholders by causing a
Portfolio to recognize income prior to the receipt of cash
payments. For example, a Portfolio could be required to accrue
a portion of the discount (or deemed discount) at which the
securities were issued and to distribute such income in order to
maintain its qualification as a regulated investment company.
In such case, a Portfolio may have to dispose of securities
which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
If the Portfolio invests 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 Portfolio. In
addition, gain realized from the sale or other disposition of
PFIC securities may be treated as ordinary income under Section
1291 of the Code.
PORTFOLIO TRANSACTIONS
Dreyfus assumes general supervision over placing orders
on behalf of each Portfolio for the purchase or sale of
investment securities. Allocation of brokerage transactions,
including their frequency, is made in Dreyfus' 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 each of
Mellon Equity Associates and TBC Asset Management 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. Sales of Fund
shares by a broker may be taken into consideration, and brokers
also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large
block trades 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 institu-
tions 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 for a Portfolio;
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 Dreyfus based upon its
knowledge of available information as to the general level of
commissions paid by other institutional investors for comparable
services.
PERFORMANCE INFORMATION
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "Performance Information."
Average annual total return is calculated by
determining the ending redeemable value of an investment
purchased at net asset value per share with a hypothetical
$1,000 payment made at the beginning of the period (assuming the
reinvestment of dividends and distributions), dividing by the
amount of the initial investment, taking the "n"th root of the
quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
Total return is calculated by subtracting the amount of
a Portfolio'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.
<PAGE>
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 Portfolio share has one vote and, when issued and
paid for in accordance with the terms of the offering, is fully
paid and non-assessable. Portfolio 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.
<PAGE>
DREYFUS EQUITY FUNDS, INC.
WILSHIRE 4500 PORTFOLIO
Statement of Assets and Liabilities
August , 1994
ASSETS
Cash $ .00
Deferred organization initial offering expenses .00
Total Assets $ .00
_________
LIABILITIES
Accrued organization initial offering expenses .00
NET ASSETS applicable to 2,000 Investor
Class shares of common stock and
2,000 Class R shares of common
stock ($.001 par value) issued and
outstanding (50,000,000 shares of each
Class authorized). . . . . . . . . . . . . $ 50,000.00
__________
Investor Class Shares
NET ASSET VALUE and redemption price per
share ($25,000/2,000 shares of common
stock issued and outstanding). . . . . . $ 12.50
Class R Shares
NET ASSET VALUE and redemption price per
share ($25,000/2,000 shares of common
stock issued and outstanding). . . . . . $ 12.50
NOTE - Dreyfus Equity Funds, Inc. (the "Fund") was incorporated
under the laws of the State of Maryland on July 27, 1994 and has
had no operations since that date other than matters relating to
its organization and registration as an open-end investment
company under the Investment Company Act of 1940 and the
Securities Act of 1933 and the sale and issuance of 2,000
Investor Class shares and 2,000 Class R shares of common stock
of Wilshire 4500 Portfolio to The Dreyfus Corporation ("Initial
Shares"). Any 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.
<PAGE>
DREYFUS EQUITY FUNDS, INC.
MIDCAP VALUE PORTFOLIO
Statement of Assets and Liabilities
August , 1994
ASSETS
Cash $ .00
Deferred organization initial offering expenses .00
Total Assets $ .00
__________
LIABILITIES
Accrued organization initial offering expenses .00
NET ASSETS applicable to 2,000 Investor Class
shares of common stock and 2,000 Class R
shares of common stock ($.001 par value)
issued and outstanding (50,000,000 shares
of each Class authorized). . . . . . . . . $ 50,000.00
__________
Investor Class Shares
NET ASSET VALUE and redemption price per
share ($25,000/2,000 shares of common
stock issued and outstanding). . . . . . $ 12.50
Class R Shares
NET ASSET VALUE and redemption price per
share ($25,000/2,000 shares of common
stock issued and outstanding). . . . . . $ 12.50
NOTE - Dreyfus Equity Funds, Inc. (the "Fund") was incorporated
under the laws of the State of Maryland on July 27, 1994 and has
had no operations since that date other than matters relating to
its organization and registration as an open-end investment
company under the Investment Company Act of 1940 and the
Securities Act of 1933 and the sale and issuance of 2,000
Investor Class shares and 2,000 Class R shares of common stock
of Midcap Value Portfolio to The Dreyfus Corporation ("Initial
Shares"). Any 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.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Directors
Dreyfus Equity Funds, Inc.
We have audited the accompanying statements of assets and
liabilities of Dreyfus Equity Funds, Inc. (comprising,
respectively, the Wilshire 4500 and Midcap Value Portfolios) as
of August , 1994. These statements of assets and liabilities
are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these statements of
assets and liabilities based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
these statements of assets and liabilities are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in each
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 statements of assets and liabilities
referred to above presents fairly, in all material respects, the
financial position of each of the respective portfolios
constituting Dreyfus Equity Funds, Inc. at August , 1994, in
conformity with generally accepted accounting principles.
New York, New York
, 1994
Ernst & Young LLP
<PAGE>
DREYFUS EQUITY FUNDS, INC.
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements included in the Statement of
Additional Information:
(1) Statement of Assets and Liabilities as of
__________, 1994*
(2) Report of Ernst & Young LLP, Independent
Auditors, dated __________, 1994*
(b) Exhibits:
(1) Articles of Incorporation*
(2) By-Laws*
(5) Form of Management Agreement*
(6) Form of Distribution Agreement*
(8) Form of Custody Agreement*
(9) Shareholder Services Plan*
(10) Opinion, including consent, of Stroock &
Stroock & Lavan*
(11) Consent of Independent Auditors*
(14) Model Retirement Plan and related documents*
(15) (a) Service Plan*
(15) (b) Distribution Plan*
Other Exhibit: Assistant Secretary's Certificate*
*To be filed by amendment.
<PAGE>
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
Common Stock, par value
$.001 per share
Wilshire 4500 Portfolio
Investor Class __
Trust Class __
Midcap Value Portfolio
Investor Class __
Trust Class __
ITEM 27. INDEMNIFICATION
Reference is made to Article SEVENTH of the Registrant's
Articles of Incorporation to be filed as Exhibit 1 hereto and to
Section 2-418 of the Maryland General Corporation Law. The
application of these provisions is limited by Article VIII of
the Registrant's By-Laws to be filed as Exhibit 2 hereto and by
the following undertaking set forth in the rules promulgated by
the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Reference also is made to the Distribution Agreement to be
filed as Exhibit 6 hereto.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
(a) INVESTMENT ADVISER - THE DREYFUS CORPORATION
[TO BE PROVIDED]
(b) Sub-Investment Adviser--Mellon Equity Associates,
Inc.
[TO BE PROVIDED]
(c) Sub-Investment Adviser--The Boston Company Asset
Management, Inc.
[TO BE PROVIDED]
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as
principal underwriter or exclusive distributor:
[TO BE PROVIDED]
(b) [TO BE PROVIDED]
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
Registrant hereby undertakes
(1) to file a post-effective amendment, using financial
statements which need not be certified, within four to
six months from the effective date of Registrant's 1933
Act Registration Statement.
(2) 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.
(3) to furnish each person to whom a prospectus is
delivered with a copy of its latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant has
duly caused this 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 8th day of
September, 1994.
DREYFUS EQUITY FUNDS, INC.
(Registrant)
By: /s/ Eric B. Fischman
Eric B. Fischman, Principal
Executive Officer
Pursuant to the requirements of the Securities Act of
1933, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.
/s/ Eric B. Fischman Principal Executive September 8, 1994
Eric B. Fischman Officer and
Director
/s/ John F. Tower, III Chief Financial September 8, 1994
John F. Tower, III and Accounting
Officer
