Registration Nos. 33-
811-
=================================================================
========= SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment
No.
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940
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>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF
1933
=================================================================
============
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate
Amount of Securities Being Price Per
Offering Registration Being Registered Registered
Unit Price Fee
Shares of Common Stock * * *
$500.00 par value $.001
per share
=================================================================
===========
* Pursuant to Regulation 270.24f-2 under the Investment
Company Act of 1940, the Registrant hereby elects to
register an indefinite number of shares of its Common Stock.
=================================================================
===========
The Registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further
amendment which specifically states that this registration
statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
=================================================================
===========
<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 three separate diversified
portfolios (each a "Portfolio"):
The WILSHIRE 4500 PORTFOLIO'S goal is to provide
investment results that correspond to the price and yield
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 price and yield 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.
The SMALLCAP VALUE PORTFOLIO'S goal is to provide
investment results that exceed the price and yield performance of
publicly traded common stocks in the aggregate, as represented by
the Russell Small 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 Trust Class shares. Investor Class shares and
Trust Class 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. Trust Class 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.
Investor Class shares of the Smallcap Value Portfolio
are
sold with a sales load. Trust Class shares of each Portfolio and
Investor Class shares of the Wilshire 4500 Portfolio and Midcap
Value 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 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 and Smallcap Value Portfolios' sub-investment
adviser. Mellon Associates and TBC Asset Management will provide
day-to-day management of the relevant Portfolio's investments.
The
Dreyfus Corporation, Mellon 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 _____________________________,
or call 1-800-______. 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
Fee Table . . . . . . . . . . . . . . . . . .
Description of the Fund . . . . . . . . . . .
Management of the Fund. . . . . . . . . . . .
How to Buy Fund Shares. . . . . . . . . . . .
How to Redeem Fund Shares . . . . . . . . . .
Shareholder Services. . . . . . . . . . . . .
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>
<TABLE>
<CAPTION>
FEE TABLE
<S> <C> <C> <C> <C>
<C> <C>
Wilshire Midcap
Value Smallcap Value
4500 Portfolio Portfolio
Portfolio
Trust Investor Trust
Investor Trust Investor
Class Class Class
Class Class Class
Shares Shares Shares
Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price) . . . . . . . . None None None None
None 4.5%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
daily net assets)
Management Fees . . . . . . . . . ___% ___% ___% ___%
___% ___%
12b-1 Fees . . . . . . . . . . . . None .25% None .50%
None .25%
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
Trust Class shares (each such class being referred to as a
"Class"). The Classes are identical, except that Investor Class
shares are subject to an 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 the Trust Class.
Trust Class shares may not be purchased directly by
individuals, although institutions may purchase Trust Class
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 Trust Class shares,
to
the extent required by law. The Fund treats the institution
investing in Trust Class 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 among 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 price and yield 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 price and yield performance of publicly
traded common stocks in the aggregate, as represented by the
Russell Mid Cap Index.
The SMALLCAP VALUE PORTFOLIO'S goal is to provide investment
results that exceed the price and yield performance of publicly
traded common stocks in the aggregate, as represented by the
Russell Small 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 5% 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,
each Portfolio expects to have less than 20% (5% in the case of
the
Wilshire 4500 Portfolio) of its assets invested in money market
instruments. However, when the Advisers to the Midcap Value and
Smallcap Value Portfolios determine that adverse market
conditions
exist, each such Portfolio may adopt a temporary defensive
posture
and invest all of its assets in money market instruments.
Each Portfolio also may engage in various investment
techniques, such as options and futures transactions and lending
portfolio securities, and the Midcap Value and Smallcap Value
Portfolios 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. None of the
Portfolios 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 5,000
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 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 select approximately [1,100] 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 fundamental 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 a company's historic earnings growth and stock
price 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.
SMALLCAP VALUE PORTFOLIO--This Portfolio will invest,
under normal market conditions, at least 85% of the value of its
total assets in common stocks of domestic and foreign issuers
with
market capitalizations of under $750 million 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 select approximately [600] 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 Small Cap Index. In all other
respects, the Smallcap Value Portfolio's management policies are
identical to those of the Midcap Value Portfolio.
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 and Smallcap Value
Portfolios) Each of these Portfolios may borrow for investment
purposes. This borrowing, which is known as leveraging,
generally
will be unsecured, except to the extent a Portfolio enters into
reverse repurchase agreements described below. The Investment
Company Act of 1940 requires a 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, a 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 a 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. A
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 these Portfolios
may engage is the entry into reverse repurchase agreements with
banks, brokers or dealers. These transactions involve the
transfer
by a 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, such
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. Each of these
Portfolios 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 a
Portfolio. These agreements, which are treated as if
reestablished
each day, are expected to provide these Portfolios with a
flexible borrowing tool.
SHORT-SELLING--(Midcap Value and Smallcap Value Portfolios) Each
of these Portfolios 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 a 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.
A 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. A 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 a Portfolio may be
required to pay in connection with a short sale.
Each of these Portfolios may purchase call options to
provide a hedge against an increase in the price of a security
sold
short by the Portfolio. When a 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 such 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 these Portfolios will vary substantially under
different
market conditions, and it does not intend that any specified
portion of a 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 such Portfolio's net assets.
START HERE
In addition to the short sales discussed above, each of
these Portfolios 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. None of
these
Portfolios at any time will 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--(All 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--(All 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--(All Portfolios) None of the
Portfolios 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.
Each of the Midcap Value and Smallcap Value Portfolios
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 or interest rates. 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--(All
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--(All 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, this 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 Portfolio's total assets, the
Portfolio
will not make any additional investments.
FOREIGN CURRENCY TRANSACTIONS--(Midcap Value and Smallcap Value
Portfolios) Each of these Portfolios 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. Each of these Portfolios also may combine forward
currency exchange contracts with investments in securities
denominated in other currencies.
Each of these Portfolios 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 such 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 and Smallcap Value
Portfolios) Each of these Portfolios 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. Each of these Portfolios 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
and
Smallcap Value Portfolios) Each of these Portfolios 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 a 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
each of these Portfolios, 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--(All 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--(All 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--(All 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 such
Fund
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 and Smallcap Value Portfolios) Each of
these Portfolios 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 such 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 and Smallcap Value
Portfolios) Each of these Portfolios 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--(All 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--(All Portfolios) Each Portfolio may invest
up
to 5% 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 and Smallcap Value Portfolios) Each of these 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.
Each
of these Portfolios 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 5% 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--(All 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 each Portfolio
generally will not exceed 150%. See "Portfolio Transactions" in
the Fund's Statement of Additional Information.
EQUITY SECURITIES--(All 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 smallcap and
midcap
companies may be subject to more abrupt or erratic market
movements
than larger, more established 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 and Smallcap Value
Portfolios) 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, each of these Portfolios 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 a
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 a 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 a Portfolio will reduce its
net
income available for distribution to investors.
FOREIGN CURRENCY EXCHANGE--(Midcap Value and Smallcap Value
Portfolios) 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 and Smallcap Value
Portfolios) 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 Associates,
located at , to serve
as
the Wilshire 4500 Portfolio's sub-investment adviser. Mellon
Associates, a registered investment adviser formed in 19__, is an
indirect wholly-owned subsidiary of Mellon. As of , 1994,
Mellon Associates managed approximately $ in assets and
serves as the investment adviser of other investment
companies.
Mellon Associates, subject to the supervision and
approval of Dreyfus, 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 . He
has been employed by Mellon Associates since . 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 __________________________________________, to serve
as
the Midcap Value and Smallcap Value Portfolios' sub-investment
adviser. TBC Asset Management, a registered investment adviser
formed in 19__, 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 each of the Midcap
Value and Smallcap Value Portfolios' 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
investment officer will be Wayne J. Archambo. He has been
employed
by TBC Asset Management or its predecessor since 1989. The
Smallcap Value Portfolio's primary portfolio manager will be
David
L. Diamond. He has been employed by TBC Asset Management or its
predecessor since 1991 and for more than five years prior thereto
he was _________________. The Midcap Value and Smallcap Value
Portfolios' 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: (i) a monthly fee at the annual rate
of .__ of 1% of the value of the Wilshire 4500 Portfolio's
average
daily net assets, (ii) a monthly fee at the annual rate of .__ of
1% of the value of the Midcap Value Portfolio's average daily net
assets and (iii) a monthly fee at the annual rate of .__ of 1% of
the Smallcap Value Portfolio's average daily net assets.
Under the Sub-Investment Advisory Agreement for the
Wilshire 4500 Portfolio, The Dreyfus Corporation has agreed to
pay
Mellon 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 and Smallcap Value Portfolios, The Dreyfus
Corporation
has agreed to pay TBC Asset Management: (i) a monthly fee at the
annual rate of .__ of 1% of the value of the Midcap Value
Portfolio's average daily net assets and (ii) a monthly fee at
the
annual rate of .__ of 1% of the Smallcap 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 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.
Trust Class 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"). Trust Class 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 Trust Class 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
initial and subsequent minimum investment requirements for
Dreyfus-sponsored Keogh Plans, IRAs, and SEP-IRAs and 403(b)(7)
Plans with only one participant is $750. 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 # Dreyfus Equity Funds, Inc./Wilshire 4500
Portfolio--Trust Class;
DDA # Dreyfus Equity Funds, Inc./Wilshire 4500
Portfolio--Investor Class;
DDA # Dreyfus Equity Funds, Inc./Midcap Value
Portfolio--Trust Class;
DDA # Dreyfus Equity Funds, Inc./Midcap Value
Portfolio--Investor Class;
DDA # Dreyfus Equity Funds, Inc./Smallcap
Value Portfolio--Trust Class; or
DDA # Dreyfus Equity Funds, Inc./Smallcap
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 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.
Trust Class shares may not be purchased by any
Retirement Plan for which The Dreyfus Corporation, the
Distributor or any of their affiliates is a fiduciary (within the
meaning of Section 3(21) of the Employee Retirement Income
Security Act of 1974 ("ERISA") or Section 4975(e)(3) of the Code)
or a service provider (within the meaning of Section 3(14)(B) of
ERISA or Section 4975(e)(2)(B) of the Code) in the absence of an
applicable exemption from the prohibited transactions provisions
of ERISA and the Code.
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 (public offering price in the case of Investor
Class shares of the Smallcap Value Portfolio) 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 each business day generally by using available market
quotations or at fair value which may be determined by one or
more pricing services approved by the Board of Directors. Each
pricing service's procedures are reviewed under the general
supervision of the Board of Directors. For further information
regarding the methods employed in valuing Portfolio investments,
see "Determination of Net Asset Value" in the Fund's Statement of
Additional Information.
The public offering price of Investor Class shares of the
Smallcap Value Portfolio is the net asset value per share of that
Class plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
<S> <C> <C>
<C>
Amount of Transaction As a % of As a % of
offering net asset
Dealers' Reallowance
price value
as a % of
per share per share
offering price
Less than $50,000 4.50 4.70
4.25
$50,000 to less than $100,000 4.00 4.20
3.75
$100,000 to less than $250,000 3.00 3.10
2.75
$250,000 to less than $500,000 2.50 2.60
2.25
$500,000 to less than $1,000,000 2.00 2.00
1.75
$1,000,000 to less than $3,000,000 1.00 1.00
1.00
$3,000,000 to less than $5,000,000 .50 .50
.50
$5,000,000 and over .25 .25
.25
</TABLE>
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into
an agreement with the Distributor pertaining to the sale of the
Smallcap Value Portfolio's Investor Class shares (or which
otherwise have a brokerage related or clearing arrangement with
an NASD member firm or financial institution with respect to the
sale of such shares) may purchase the Smallcap Value Portfolio's
Investor Class shares for themselves directly or pursuant to an
employee benefit plan or other program, or for their spouses or
minor children, at net asset value, provided that they have
furnished the Distributor with such information as it may request
from time to time in order to verify eligibility for this
privilege. This privilege also applies to full-time employees of
financial institutions affiliated with NASD member firms whose
full-time employees are eligible to purchase the Smallcap Value
Portfolio's Investor Class shares at net asset value. In
addition, the Smallcap Value Portfolio's Investor Class shares
are offered at net asset value to 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 Smallcap Value Portfolio's Investor Class shares
will be offered at net asset value without a sales load to
employees participating in Eligible Benefit Plans.
The Smallcap Value Portfolio's Investor Class shares
also may be purchased (including by exchange) at net asset value
without a sales load for Dreyfus-sponsored IRA "Rollover
Accounts" with the distribution proceeds from a qualified
retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided
that, at the time of such distribution, such qualified retirement
plan or Dreyfus-sponsored 403(b)(7) plan (a) satisfied the
requirements set forth under either clause (i) or clause (ii) in
the preceding paragraph and all or a portion of such plan's
assets were invested in funds in the Dreyfus Family of Funds or
certain other products made available by the Distributor to such
plans, or (b) invested all of its assets in certain funds in the
Dreyfus Family of Funds or certain other products made available
by the Distributor to such plans.
The dealer reallowance may be changed from time to time
but will remain the same for all dealers. The Distributor, at
its expense, may provide additional promotional incentives to
dealers that sell shares of funds advised by The Dreyfus
Corporation which are sold with a sales load, such as the
Smallcap Value Portfolio. In some instances, those incentives
may be offered only to certain dealers who have sold or may sell
significant amounts of shares. Dealers receive a larger
percentage of the sales load from the Distributor than they
receive for selling most other funds.
Orders for the purchase of Investor Class shares of the
Smallcap Value Portfolio received by dealers by the close of
trading on the floor of the New York Stock Exchange on any
business day and transmitted to the Distributor by the close of
its business day (normally 5:15 p.m., New York time) will be
based on the public offering price per share determined as of the
close of trading on the floor of the New York Stock Exchange on
that day. Otherwise, the orders will be based on the next
determined public offering price. It is the dealer's
responsibility to transmit orders so that they will be received
by the Distributor before the close of its business day.
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").
RIGHT OF ACCUMULATION--SMALLCAP VALUE PORTFOLIO--INVESTOR CLASS
SHARES--Reduced sales loads apply to any purchase of the Smallcap
Value Portfolio's Investor Class shares, shares of certain other
funds advised by The Dreyfus Corporation which are sold with a
sales load and shares acquired by a previous exchange of such
shares (hereinafter referred to as "Eligible Funds"), by an
investor and any related "purchaser" as defined in the Statement
of Additional Information, where the aggregate investment,
including such purchase, is $50,000 or more. If, for example, an
investor previously purchased and still holds Investor Class
shares of the Smallcap Value Portfolio, or shares of any other
Eligible Fund or combination thereof, with an aggregate current
market value of $40,000 and subsequently purchases Investor Class
shares of the Smallcap Value Portfolio or shares of an Eligible
Fund having a current value of $20,000, the sales load applicable
to the subsequent purchase would be reduced to 4% of the offering
price. All present holdings of Eligible Funds may be combined to
determine the current offering price of the aggregate investment
in ascertaining the sales load applicable to each subsequent
purchase.
To qualify for reduced sales loads, at the time of
purchase the investor or his Service Agent must notify the
Distributor if orders are made by wire, or the Transfer Agent if
orders are made by mail. The reduced sales load is subject to
confirmation of the investor's holdings through a check of
appropriate records.
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 Trust Class shares of a
Portfolio, shares of the same class of one of the other
Portfolios 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 TRUST CLASS 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 one of the other Portfolios or shares of other funds in the
Dreyfus Family of Funds of which such shareholder is currently an
investor. WITH RESPECT TO TRUST CLASS 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
The 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 another
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 cents 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.
LETTER OF INTENT--SMALLCAP VALUE PORTFOLIO-INVESTOR CLASS SHARES
By signing a Letter of Intent form, available from the
Distributor, an investor becomes eligible for the reduced sales
load applicable to the total number of Eligible Fund shares
purchased in a 13-month period pursuant to the terms and
conditions set forth in the Letter of Intent. A minimum initial
purchase of $5,000 is required. To compute the applicable sales
load, the offering price of shares an investor holds (on the date
of submission of the Letter of Intent) in any Eligible Fund that
may be used toward "Right of Accumulation" benefits described
above may be used as a credit toward completion of the Letter of
Intent. However, the reduced sales load will be applied only to
new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales
load if an investor does not purchase the full amount indicated
in the Letter of Intent. The escrow will be released when the
investor fulfills the terms of the Letter of Intent by purchasing
the specified amount. If an investor's purchases qualify for a
further sales load reduction, the sales load will be adjusted to
reflect the investor's total purchase at the end of 13 months.
If total purchases are less than the amount specified, the
investor will be requested to remit an amount equal to the
difference between the sales load actually paid and the sales
load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer
Agent, as attorney-in-fact pursuant to the terms of the Letter of
Intent, will redeem an appropriate number of Investor Class
shares of the Smallcap Value Portfolio held in escrow to realize
the difference. Signing a Letter of Intent does not bind an
investor to purchase, or the Fund to sell, the full amount
indicated at the sales load in effect at the time of signing, but
the investor must complete the intended purchase to obtain the
reduced sales load. At the time an investor purchases Investor
Class shares of the Smallcap Value Portfolio, the investor must
indicate the investor's intention to do so under a Letter of
Intent.
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 REDEMP-
TION 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. 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 each of the Wilshire 4500 and
Smallcap Value Portfolios 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 and Smallcap Value Portfolios) Each
of these Portfolios' 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, each of these
Portfolios (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 each 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.
Each 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, each 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) This 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
Investors 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 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 of the Fund 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. None of the Portfolios 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
Portfolios 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.
The Code provides for the "carryover" of some or all of
the sales load imposed on the Smallcap Value Portfolio's Investor
Class shares if an investor exchanges his Investor Class shares
for shares of another fund advised or administered by The Dreyfus
Corporation within 91 days of purchase and such other fund
reduces or eliminates its otherwise applicable sales load for the
purpose of the exchange. In this case, the amount of the sales
load charged the investor for Investor Class shares of the
Smallcap Value Portfolio, up to the amount of the reduction of
the sales load charge on the exchange, is not included in the
basis of the investor's Investor Class shares for purposes of
computing gain or loss on the exchange, and instead is added to
the basis of the fund shares received on the exchange.
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 (or maximum
public offering price in the case of the Smallcap Value
Portfolio) 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. Total return for the Smallcap Value Portfolio's
Investor Class also may be calculated by using the net asset
value per share at the beginning of the period instead of the
maximum offering price per share at the beginning of the period.
Calculations based on the net asset value per share do not
reflect the deduction of the sales load on the Smallcap Value
Portfolio's Investor Class shares, which, if reflected, would
reduce the performance quoted.
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, Russell Small 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 100 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 three 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 _________________________________, 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 CONNEC-
TION 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.
INVESTOR CLASS AND TRUST CLASS
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 Dreyfus Equity Funds, Inc. (the
"Fund"), dated __________ __, 1994, as it may be revised from
time to time. To obtain a copy of the Fund's Prospectus, please
write to the Fund at ______________________________________, 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 (the "Dreyfus") serves as the
Fund's investment adviser. Dreyfus has engaged Mellon Equity
Associates, Inc. ("Mellon 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 and Smallcap Value Portfolios' 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 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-18
Redemption of Fund Shares. . . . . . . . . . . . . . . B-19
Shareholder Services . . . . . . . . . . . . . . . . . B-21
Determination of Net Asset Value . . . . . . . . . . . B-25
Dividends, Distributions and Taxes . . . . . . . . . . B-26
Portfolio Transactions . . . . . . . . . . . . . . . . B-28
Performance Information. . . . . . . . . . . . . . . . B-29
Information About the Fund . . . . . . . . . . . . . . B-29
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . B-30
Financial Statements . . . . . . . . . . . . . . . . . B-31
Report of Independent Auditors . . . . . . . . . . . . B-32
<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. (All 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. (All 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 the 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. The 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. (All 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. (All 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
portfolio during such period.
Management Policies
Each Portfolio engages, except as noted, in the
following practices in furtherance of its objective.
Options Transactions. (All 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. (All 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.
(All 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 and
Smallcap Value Portfolios) If one of these Portfolios enter
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 such 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 a 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. (All 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. No
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
5% 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. Each Director who
is deemed to be an "interested person" of the Fund, as defined
in the Act, is indicated by an asterisk.
Directors and Officers 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 Not Listed Above
[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 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 Associates and Dreyfus. TBC Asset Management
provides investment advisory assistance and day-to-day
management of each of the Midcap Value and Smallcap Value
Portfolio's investments pursuant to a separate 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 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 Associates: ______________, Chairman of the Board and
Chief Executive Officer; ____________ Vice Chairman of the Board
and Chief Operating Officer; and _____________ Vice President,
Treasurer and Chief Financial 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
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 and Smallcap Value Portfolios, TBC Asset Management
provides day-to-day management of each of these Portfolios'
investments, subject to the supervision of the Manager and 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: _______________ and
_______________, with respect to the Wilshire 4500 Portfolio,
Wayne J. Archambo and ___________, with respect to the Midcap
Value Portfolio, and David L. Diamond and ___________, with
respect to the Smallcap 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
shareholders' reports and meetings, costs of preparing and
printing certain prospectuses and statements of additional
information, 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.
Sales Loads--Smallcap Value Portfolio--Investor Class.
The scale of sales loads applies to purchases of the Smallcap
Value Portfolio's Investor Class shares made by any "purchaser,"
which term includes an individual and/or spouse purchasing
securities for his, her or their own account or for the account
of any minor children, or a trustee or other fiduciary
purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other
employee benefit trust created pursuant to a plan qualified
under Section 401 of the Code) although more than one
beneficiary is involved; or a group of accounts established by
or on behalf of the employees of an employer or affiliated
employers pursuant to an employee benefit plan or other program
(including accounts established pursuant to Sections 403(b),
408(k), and 457 of the Code); or an organized group which has
been in existence for more than six months, provided that it is
not organized for the purpose of buying redeemable securities of
a registered investment company and provided that the purchases
are made through a central administration or a single dealer, or
by other means which result in economy of sales effort or
expense.
Set forth below is an example of the method of
computing the offering price of the Smallcap Value Portfolio's
Investor Class shares. The example assumes a purchase of
Investor Class shares aggregating less than $50,000 subject to
the schedule of sales charges set forth in the Prospectus at a
price based upon the net asset value of the Smallcap Value
Portfolio's Investor Class shares.
Net Asset Value per Share $12.50
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $ 0.59
Per Share Offering Price to
the Public $13.09
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 and Smallcap
Value Portfolios are subject to a Service Plan and Investor
Class shares of the Midcap Value Portfolio are subject to a
Distribution Plan and to 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 each 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, each Plan provides that it may not be amended to
increase materially the cost which holders of Investor Class
shares of the relevant Portfolio may bear pursuant to the Plan
without the approval of the holders of such 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 relevant 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, a Portfolio 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 of other Portfolios of the
Fund or other funds purchased by exchange between funds or fund
accounts 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 or transfers 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 or transfer.
Exchanges of Trust Class 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. Auto-Exchange permits
an investor to purchase, in exchange for shares of a Portfolio,
shares of one of the other Portfolios of the Fund or shares of
another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. With respect to Trust
Class 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 another Portfolio of the Fund or shares
of another fund in the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of other funds purchased
pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in
shares of other funds that are offered without a
sales load.
B. Dividends and distributions paid by a fund which
does not charge a sales load may be invested in
shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which
charges a sales load may be invested in shares of
other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares
exceeds the maximum sales load charged by the fund
from which dividends or distributions are being
swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a
contingent deferred sales charge ("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 or subsequent
purchases. The minimum initial investment for Dreyfus-sponsored
Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one
participant, is normally $750, with no minimum on subsequent
purchases. Individuals who open an IRA may also open a non-
working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan
and the appropriate form of Custodial Agreement for further
details on eligibility, service fees and tax implications, and
should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "How to Buy Fund Shares."
Valuation of Portfolio Securities. 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.
Under Proposed Treasury Regulation Section 1.1291-8(a), the Fund
can elect to mark-to-market gains (but not losses) from PFIC
securities in lieu of paying taxes on gain or distributions
therefrom. Such gains will be treated as ordinary income under
Proposed Treasury Regulation Section 1.1291-8(b)(2).
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 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.
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, 277 Park Avenue, New York, New York
10172, independent auditors, have been selected as auditors of
the Fund.
<PAGE>
FINANCIAL STATEMENTS
[To be filed by Amendment]
<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, 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: 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 __
Smallcap Value 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 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
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, unenforce-
able. 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 27th day of July,
1994.
DREYFUS EQUITY FUNDS, INC.
(Registrant)
By: /s/ Mark N. Jacobs
Mark N. Jacobs, 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/ Mark N. Jacobs Principal Executive July 27,
1994 Mark N. Jacobs Officer and
Director
/s/ Jeffrey N. Nachman Chief Financial July 27,
1994 Jeffrey N. Nachman and Accounting Officer
