-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, rOIEEyiDHwfnd6KjSsea+G+Zw/04ql2QK8nEZdwW9uDvjP8iwNpUcnL0CjY8WGd5 jlNgzZlcVrmpYr6AH+ZYZw== 0000030146-95-000007.txt : 19950502 0000030146-95-000007.hdr.sgml : 19950502 ACCESSION NUMBER: 0000030146-95-000007 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950501 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS FUND INC CENTRAL INDEX KEY: 0000030146 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136021175 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-09455 FILM NUMBER: 95533508 BUSINESS ADDRESS: STREET 1: 144 GLENN CURTISS BLVD CITY: UNIONDALE STATE: NY ZIP: 11556 BUSINESS PHONE: 2129226788 MAIL ADDRESS: STREET 1: C/O DREYFUS CORP STREET 2: 200 PARK AVENUE, 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10166 FORMER COMPANY: FORMER CONFORMED NAME: NESBETT FUND INC DATE OF NAME CHANGE: 19680607 497 1 STICKER, FINALIZED PROSPECTUS AND SAI FOR USE BY BANKS ONLY May 1, 1995 THE DREYFUS FUND INCORPORATED Supplement to Prospectus Dated May 1, 1995 All mutual fund shares involve certain investment risks, including the possible loss of principal. 026/s050195IST - ------------------------------------------------------------------------------- PROSPECTUS MAY 1, 1995 THE DREYFUS FUND INCORPORATED - ------------------------------------------------------------------------------- THE DREYFUS FUND INCORPORATED (THE "FUND") IS AN OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND. ITS GOAL IS TO PROVIDE YOU WITH LONG-TERM CAPITAL GROWTH CONSISTENT WITH THE PRESERVATION OF CAPITAL. CURRENT INCOME IS A SECONDARY BUT IMPORTANT GOAL. THE FUND IS THE FLAGSHIP FUND OF THE DREYFUS FAMILY OF FUNDS. IT IS ONE OF THE LARGEST, OLDEST AND BEST KNOWN MUTUAL FUNDS AND INVESTS PRIMARILY IN COMMON STOCKS. THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO. YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS TELETRANSFER. --------------- THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1995, WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144. --------------- MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME. - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page ANNUAL FUND OPERATING EXPENSES........................................... 3 CONDENSED FINANCIAL INFORMATION.......................................... 4 DESCRIPTION OF THE FUND.................................................. 4 MANAGEMENT OF THE FUND................................................... 8 HOW TO BUY FUND SHARES................................................... 9 SHAREHOLDER SERVICES..................................................... 11 HOW TO REDEEM FUND SHARES................................................ 14 DIVIDENDS, DISTRIBUTIONS AND TAXES....................................... 16 PERFORMANCE INFORMATION.................................................. 18 GENERAL INFORMATION...................................................... 18 - ------------------------------------------------------------------------------- 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. - ------------------------------------------------------------------------------- [This Page Intentionally Left Blank] Page 2
ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets) Management Fees.............................................................................63% Other Expenses .............................................................................11% Total Fund Operating Expenses...............................................................74% EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period: $8 $24 $41 $92
- ------------------------------------------------------------------------------- THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%. - ------------------------------------------------------------------------------- The purpose of the foregoing table is to assist you in understanding the various costs and expenses borne by the Fund, and therefore indirectly by investors, the payment of which will reduce investors' return on an annual basis. You can purchase Fund shares without charge directly from the Fund's distributor; you may be charged a nominal fee if you effect transactions in Fund shares through a securities dealer, bank or other financial institution. See "Management of the Fund." Page 3 CONDENSED FINANCIAL INFORMATION The information in the following table has been audited by Ernst & Young LLP, the Fund's independent auditors, whose report thereon appears in the Statement of Additional Information. Further financial data and related notes are included in the Statement of Additional Information, available upon request. FINANCIAL HIGHLIGHTS Contained below is per share operating performance data for a share of Capital Stock outstanding, total investment return, ratios to average net assets and other supplemental data for each year indicated. This information has been derived from the Fund's financial statements.
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------------------------------- 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ PER SHARE DATA: Net asset value, beginning of year $12.45 $13.86 $12.55 $10.28 $10.55 $12.07 $10.80 $13.14 $13.27 $13.10 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ INVESTMENT OPERATIONS: Investment income-net .55 .49 .47 .51 .58 .50 .34 .27 .24 .21 Net realized and unrealized gain (loss) on investments 2.33 1.49 .60 .38 1.89 (.89) 2.63 .44 .58 (.76) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 2.88 1.98 1.07 .89 2.47 (.39) 2.97 .71 .82 (.55) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ DISTRIBUTIONS: Dividends from investment income-net (.49) (.59) (.77) (.46) (.59) (.51) (.35) (.24) (.30) (.22) Dividends in excess of investment income-net......... --- --- --- --- --- --- --- --- (.03) --- Dividends from net realized gain on investments (.98) (2.70) (2.57) (.16) (.36) (.37) (.28) (.34) (.66) (.40) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.47) (3.29) (3.34) (.62) (.95) (.88) (.63) (.58) (.99) (.62) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Net asset value, end of year $13.86 $12.55 $10.28 $10.55 $12.07 $10.80 $13.14 $13.27 $13.10 $11.93 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== TOTAL INVESTMENT RETURN 25.07%* 16.32%* 8.62%* 8.74%* 23.64%* (3.33%) 28.02% 5.53% 6.36% (4.26%) RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets......... .75% .74% .71% .77% .75% .77% .78% .74% .74% .74% Ratio of net investment income to average net assets 4.24% 3.77% 3.51% 4.62% 4.73% 4.20% 2.65% 2.08% 1.67% 1.63% Portfolio Turnover Rate 83.17% 149.07% 110.09% 179.38% 104.28% 98.58% 79.70% 55.42% 39.29% 27.70% Net Assets, end of year (000's omitted).... $2,166,028$2,308,564$2,369,023$2,262,433$2,536,151$2,525,321$2,996,663$3,148,858$2,850,523$2,445,300 - -------------------------- *Exclusive of sales charge.
Further information about the Fund's performance is contained in the Fund's annual report, which may be obtained without charge by writing to the address or calling the number set forth on the cover page of this Prospectus. DESCRIPTION OF THE FUND INVESTMENT OBJECTIVES -- The Fund's primary goal is to provide you with long-term capital growth consistent with the preservation of capital. Current income is a secondary but important goal. The Fund's investment objectives cannot be changed without approval by the holders of a majority (as defined in the Investment Company Act of 1940) of the Fund's outstanding voting shares. There can be no assurance that the Fund's investment objectives will be achieved. Page 4 MANAGEMENT POLICIES -- Depending on market conditions, the Fund attempts to be fully invested in common stocks. If market conditions warrant, the Fund may purchase fixed income securities such as preferred stocks, bonds and debentures. For defensive purposes, the Fund may invest in investment grade corporate bonds, securities issued or guaranteed as to principal and interest by the U.S. Government or its agencies or instrumentalities, high grade commercial paper, repurchase agreements, bankers' acceptances, bank certificates of deposit or time deposits, without limitation. The Fund may invest up to 20% of the value of its assets in foreign securities which are not publicly traded in the United States. By investing in foreign securities, the Fund seeks to further its goal of capital growth. The Fund will invest primarily in the securities of seasoned companies. Although the Fund may invest up to 5% of its assets in new enterprises, very few companies with an operating record of less than three years would be considered appropriate for the Fund's portfolio. The Fund also may purchase put and call options; however, in order to qualify the sale of its shares in certain states, the Fund has undertaken that the aggregate premiums paid for all such options held will not exceed 2% of the Fund's net assets. Securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities include U.S. Treasury securities, which differ in their interest rates, maturities and times of issuance. 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 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 since it is not so obligated by law. The Fund will invest in such securities only when the Fund is satisfied that the credit risk with respect to the issuer is minimal. Repurchase agreements involve the acquisition by the Fund of an underlying debt instrument, subject to an obligation of the seller to repurchase, and the Fund to resell, the instrument at a fixed price usually not more than one week after its purchase. Certain costs may be incurred by the Fund in connection with the sale of the securities if the seller does not repurchase them in accordance with the repurchase agreement. In addition, if bankruptcy proceedings are commenced with respect to the seller of the securities, realization on the securities by the Fund may be delayed or limited. Commercial paper consists of short-term, unsecured promissory notes issued to finance short-term credit needs. The Fund may purchase certificates of deposit, time deposits, bankers' acceptances and other short-term obligations issued by domestic banks, foreign subsidiaries of domestic banks, foreign branches of domestic banks, and domestic and foreign branches of foreign banks and other banking institutions. Certificates of deposit are negotiable certificates evidencing the obligation of a bank to repay funds deposited with it for a specified period of time. Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. Time deposits which may be held by the Fund will not benefit from insurance from the Bank Insurance Fund or the Savings Association Insurance Fund administered by the Federal Deposit Insurance Corporation. 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. Other short-term obligations may include uninsured, direct obligations bearing fixed, floating or variable rates of interest. Page 5 ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of its net assets in securities as to which a liquid trading market does not exist, provided such investments are consistent with the Fund's investment objectives. Such securities may include securities that are not readily marketable, such as certain securities that are subject to legal or contractual restrictions or resale, and repurchase agreements providing for settlement in more than seven days after notice. As to these securities, the Fund is subject to a risk that should the Fund desire to sell them when a ready buyer is not available at a price the Fund deems representative of their value, the value of the Fund's net assets could be adversely affected. FOREIGN CURRENCY TRANSACTIONS -- The Fund may engage in 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 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. These contracts are entered into in the interbank market conducted directly between currency traders (typically commercial banks or other financial institutions) and their customers. LENDING PORTFOLIO SECURITIES -- From time to time, the Fund may lend securities from its portfolio to brokers, dealers and other institutional investors needing to borrow securities to complete certain transactions. Such loans may not exceed 10% of the value of the Fund's total assets. In connection with such loans, the Fund will receive collateral consisting of cash, U.S. Government securities or irrevocable letters of credit issued by domestic financial institutions, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The Fund can increase its income through the investment of such collateral. The Fund continues to be entitled to payments in amounts equal to the interest, dividends or other distributions payable on the loaned securities and receives interest on the amount of the loan. Such loans will be terminable at any time upon specified notice. The Fund might experience risk of loss if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund. BORROWING MONEY -- As a fundamental policy, the Fund is permitted to borrow to the extent permitted under the Investment Company Act of 1940. However, the Fund currently intends to borrow money only for temporary or emergency (not leveraging) purposes, in an amount up to 15% of the value of the Fund's total assets (including the amount borrowed) valued at the lesser of cost or market, less liabilities (not including the amount borrowed) at the time the borrowing is made. While borrowings exceed 5% of the Fund's total assets, the Fund will not make any additional investments. CERTAIN FUNDAMENTAL POLICIES -- The Fund may: (i) borrow money to the extent permitted under the Investment Company Act of 1940, which currently limits borrowing to no more than 33 1/3 of the value of the Fund's total assets; (ii) invest up to 5% of its total assets in the obligations of any one issuer, except that up to 25% of the value of the Fund's total assets may be invested, and obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities may be purchased, without regard to any such limitation; (iii) lend portfolio securities to brokers, dealers or other institutional investors, provided the aggregate value of the securities loaned does not exceed 10% of the value of the Fund's total assets; and (iv) invest up to 25% of the value of its assets in any single industry. This paragraph describes fundamental policies that cannot be changed without approval by the holders of a majority (as defined in the Investment Company Act of 1940) of the Fund's outstanding voting shares. See "Investment Objectives and Management Policies_Investment Restrictions" in the Statement of Additional Information. CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Fund may (i) pledge, hypothecate, mortgage or otherwise encumber its assets, but only to secure permitted borrowings; and (ii) invest up to 15% of the value of its net assets in repurchase agreements providing for settlement in more than seven Page 6 days after notice and in other illiquid securities. See "Investment Objectives and Management Policies --Investment Restrictions"in the Statement of Additional Information. RISK FACTORS INVESTING IN FOREIGN SECURITIES -- In making foreign investments, the Fund will give appropriate consideration to the following factors, among others. 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. In addition, there may be less publicly available information about a non-U.S. issuer, and non-U.S. issuers generally are not subject to uniform accounting and financial reporting standards, practices and requirements comparable to those applicable to U.S. issuers. Because stock certificates and other evidences of ownership of such securities usually are held outside the United States, the Fund will be subject to additional risks which include possible adverse political and economic developments, possible seizure or nationalization of foreign deposits and possible adoption of governmental restrictions which might adversely affect the payment of principal and interest on the foreign securities or might restrict the payment of principal and interest to investors located outside the country of the issuer, whether from currency blockage or otherwise. Custodial expenses for a portfolio of non-U.S. securities generally are higher than for a portfolio of U.S. securities. Since foreign securities often are purchased with and payable in currencies of foreign countries, the value of these assets as measured in U.S. dollars may be affected favorably or unfavorably by changes in currency rates and exchange control regulations. Some currency exchange costs may be incurred when the Fund changes investments from one country to another. Furthermore, some of these securities may be subject to brokerage taxes levied by foreign governments, which have the effect of increasing the cost of such investment and reducing the realized gain or increasing the realized loss on such securities at the time of sale. Income received by the Fund from sources within foreign countries may be reduced by withholding and other taxes imposed by such countries. Tax conventions between certain countries and the United States, however, may reduce or eliminate such taxes. All such taxes paid by the Fund will reduce its net income available for distribution to shareholders. FOREIGN CURRENCY EXCHANGE -- Currency exchange rates may fluctuate significantly over short periods of time. They generally are determined by the forces of supply and demand in the foreign exchange markets and the relative merits of investments in different countries, actual or perceived changes in interest rates and other complex factors, as seen from an international perspective. Currency exchange rates also can be affected unpredictably by intervention by U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the U.S. or abroad. The foreign currency market offers less protection against defaults in the forward trading of currencies than is available when trading in currencies occurs on an exchange. Since a forward currency contract is not guaranteed by an exchange or clearinghouse, a default on the contract would deprive the Fund of unrealized profits or force the Fund to cover its commitments for purchase or resale, if any, at the current market price. OTHER INVESTMENT CONSIDERATIONS -- Although the Fund invests for long-term growth rather than short-term profits, a limited amount of short-term trading can be expected in order to maintain a flexible portfolio strategy. In addition, the possible need to realize cash for redemption of Fund shares may make it necessary to sell securities even though such sales would not otherwise be desirable from an investment standpoint. Consequently, portfolio turnover may vary from year to year, as well as within the year. Moreover, when extraordinary market conditions prevail, investment strategy may shift rapidly, Page 7 in which case high turnover rates can be expected. Higher portfolio turnover rates are likely to result in comparatively greater brokerage commissions or transaction costs. Short-term gains realized from portfolio transactions are taxable to shareholders as ordinary income. See "Portfolio Transactions" in the Statement of Additional Information. Investment decisions for the Fund are made independently from those of the other investment companies advised by The Dreyfus Corporation. However, if such other investment companies are prepared to invest in, or desire to dispose of, securities of the type in which the Fund invests at the same time as the Fund, available investments or opportunities for sales will be allocated equitably to each investment company. In some cases, this procedure may adversely affect the size of the position obtained for or disposed of by the Fund or the price paid or received by the Fund. MANAGEMENT OF THE FUND 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 March 31, 1995, The Dreyfus Corporation managed or administered approximately $72 billion in assets for approximately 1.9 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 Fund's primary portfolio manager is Ernest G. Wiggins, Jr. Mr. Wiggins joined The Dreyfus Corporation in January 1994. Prior thereto, he was President of Gabelli International from 1992 to 1993; and from 1980 to 1992, he was employed by Fidelity Management and Research Company, serving as Director of Training and Development from 1990 to 1992 and as manager of Fidelity Value Fund from 1982 to 1990. The Fund's other portfolio managers are identified under "Management of the Fund" in the Fund's Statement of Additional Information. The Dreyfus Corporation also provides research services for the Fund as well as for other funds advised by The Dreyfus Corporation through a professional staff of portfolio managers and securities analysts. Mellon is a publicly owned multibank holding company incorporated under Pennsylvania law in 1971 and registered under the Federal Bank Holding Company Act of 1956, as amended. Mellon provides a comprehensive range of financial products and services in domestic and selected international markets. Mellon is among the twenty-five largest bank holding companies in the United States based on total assets. Mellon's principal wholly-owned subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a number of companies known as Mellon Financial Services Corporations. Through its subsidiaries, including The Dreyfus Corporation, Mellon managed more than $193 billion in assets as of December 31, 1994, including approximately $70 billion in mutual fund assets. As of December 31, 1994, various subsidiaries of Mellon provided non-investment services, such as custodial or administration services, for approximately $654 billion in assets, including approximately $74 billion in mutual fund assets. The Fund paid The Dreyfus Corporation a monthly management fee at the annual rate of .63 of 1% of the value of the Fund's average daily net assets for the fiscal year ended December 31, 1994. From time to time, The Dreyfus Corporation may waive receipt of its fees and/or voluntarily assume certain expenses of the Fund, which would have the effect of lowering the overall expense ratio of the Fund and increasing yield to investors 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. Page 8 The Fund's distributor may use part or all of such payments to pay securities dealers or others in respect of these services. 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 FDI Distribution Services, Inc., a provider of mutual fund administration services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is Boston Institutional Group, Inc. 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"). The Bank of New York, 110 Washington Street, New York, New York 10286, is the Fund's Custodian. HOW TO BUY FUND SHARES Fund shares are sold without a sales charge. You may be charged a nominal fee if you effect transactions in Fund shares through a securities dealer, bank or other financial institution. Share certificates are issued only upon your written request. No certificates are issued for fractional shares. The Fund reserves the right to reject any purchase order. The minimum initial investment is $2,500; subsequent investments must be at least $100. The initial investment must be accompanied by the Fund's Account Application. For full-time or part-time employees of 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. In addition, the Fund reserves the right to offer Fund shares without regard to minimum purchase requirements to employees participating in certain qualified and 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. Fund shares also are offered without regard to the minimum initial investment requirements through the Dreyfus Step Program described under "Shareholder Services." The Fund reserves the right to vary further the initial and subsequent minimum investment requirements at any time. You may purchase Fund shares by check or wire, or through the Dreyfus TELETRANSFER Privilege described below. Checks should be made payable to "The Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts, to "The Dreyfus Trust Company, Custodian." Payments to open new accounts which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence, Rhode Island 02940-9387, together with your Account Application. For subsequent investments, your Fund account number should appear on the check and an investment slip should be enclosed and sent to The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement plan accounts, both initial and subsequent investments should be sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427. Neither initial nor subsequent investments should be made by third party check. Purchase orders may be delivered in person only to a Dreyfus Financial Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the nearest Dreyfus Financial Center, please call one of the telephone numbers listed under "General Information." Wire payments may be made if your bank account is in a commercial bank that is a member of the Federal Reserve System or any other bank having a correspondent bank in New York City. Immediately available funds may be transmitted by wire to The Bank of New York, DDA #8900051779/The Dreyfus Fund Incorporated, for purchase of Fund shares in your name. The wire must include your Fund Page 9 account number (for new accounts, your Taxpayer Identification Number ("TIN") should be included instead), account registration and dealer number, if applicable. If your initial purchase of Fund shares is by wire, please call 1-800-645-6561 after completing your wire payment to obtain your Fund account number. Please include your Fund account number on the Fund's Account Application and promptly mail the Account Application to the Fund, as no redemptions will be permitted until the Account Application is received. You may obtain further information about remitting funds in this manner from your bank. All payments should be made in U.S. dollars and, to avoid fees and delays, should be drawn only on U.S. banks. A charge will be imposed if any check used for investment in your account does not clear. The Fund makes available to certain large institutions the ability to issue purchase instructions through compatible computer facilities. Subsequent investments also may be made by electronic transfer of funds from an account maintained in a bank or other domestic financial institution that is an Automated Clearing House member. You must direct the institution to transmit immediately available funds through the Automated Clearing House system to The Bank of New York with instructions to credit your Fund account. The instructions must specify your Fund account registration and your Fund account number PRECEDED BY THE DIGITS "1111." 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 and 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. All present holdings of shares of funds in the Dreyfus Family of Funds by such employee benefit plans or programs will be aggregated to determine the fee payable with respect to each such 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. Fund shares are sold on a continuous basis at the net asset value per share next determined after an order in proper form is received by the Transfer Agent or other agent. Net asset value per share is determined as of the close of trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New York time), on each day the New York Stock Exchange is open for business. Net asset value per share is computed by dividing the value of the Fund's net assets (i.e., the value of its assets less liabilities) by the total number of shares outstanding. The Fund's investments are valued based on market value or, where market quotations are not readily available, based on fair value as determined in good faith by the Board of Directors. For further information regarding the methods employed in valuing Fund investments, see "Determination of Net Asset Value" in the Fund's Statement of Additional Information. If an order is received by the Transfer Agent or other agent by the close of trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New York time) on a business day, Fund shares will be purchased at the net asset value determined as of such close of trading on that day. Otherwise, Fund shares will be purchased at the net asset value determined as of such close of trading on the floor of the New York Stock Exchange on the next business day, except where shares are purchased through a dealer as provided below. Orders for the purchase of Fund shares received by dealers by the close of trading on the floor of the New York Stock Exchange on a business day and transmitted to the Distributor or its designee by the close of its business day (normally 5:15 p.m., New York time) will be based on the net asset value determined as of such close of trading on the New York Stock Exchange on that day. Otherwise, the orders will be based on the next determined net asset value. It is the responsibility of dealers to transmit orders to the Distributor or its designee on a timely basis. Page 10 Federal regulations require that you provide a certified TIN upon opening or reopening an account. See "Dividends, Distributions and Taxes" and the Fund's Account Application for further information concerning this requirement. Failure to furnish a certified TIN to the Fund could subject you to a $50 penalty imposed by the Internal Revenue Service (the "IRS"). DREYFUS TELETRANSFER PRIVILEGE -- You may purchase Fund shares (minimum $500, maximum $150,000 per day) by telephone if you have checked the appropriate box and supplied the necessary information on the Fund's Account Application or have filed a Shareholder Services Form with the Transfer Agent. The proceeds will be transferred between the bank account designated in one of these documents and your Fund account. Only a bank account maintained in a domestic financial institution which is an Automated Clearing House member may be so designated. The Fund may modify or terminate this Privilege at any time or charge a service fee upon notice to shareholders. No such fee currently is contemplated. If you have selected the Dreyfus TELETRANSFER Privilege, you may request a Dreyfus TELETRANSFER purchase of Fund shares by calling 1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. SHAREHOLDER SERVICES FUND EXCHANGES -- You may purchase, in exchange for shares of the Fund, shares of certain other funds managed or administered by The Dreyfus Corporation, to the extent such shares are offered for sale in your state of residence. These funds have different investment objectives which may be of interest to you. If you desire to use this service, please call 1-800-645-6561 to determine if it is available and whether any conditions are imposed on its use. To request an exchange, you must give exchange instructions to the Transfer Agent in writing or by telephone. Before any exchange, you must obtain and should review a copy of the current prospectus of the fund into which the exchange is being made. Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of Personal Retirement Plans, the shares exchanged must have a current value of at least $500; furthermore, when establishing a new account by exchange, the shares being exchanged must have a value of at least the minimum initial investment required for the fund into which the exchange is being made. The ability to issue exchange instructions by telephone is given to all Fund shareholders automatically, unless you check the applicable "NO" box on the Account Application, indicating that you specifically refuse this privilege. The Telephone Exchange Privilege may be established for an existing account by written request, signed by all shareholders on the account, or by a separate signed Shareholder Services Form, also available by calling 1-800-645-6561. If you have established the Telephone Exchange Privilege, you may telephone exchange instructions by telephoning 1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. See "How to Redeem Fund Shares_Procedures." Upon an exchange into a new account, the following shareholder services and privileges, as applicable and where available, will automatically be carried over to the fund in which the exchange is made: Telephone Exchange Privilege, Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege and the dividend/capital gain distribution option (except for Dreyfus Dividend Sweep) selected by the investor. Shares will be exchanged at the next determined net asset value; however, a sales load may be charged with respect to exchanges into funds sold with a sales load. If you are exchanging into a fund that charges a sales load, you may qualify for share prices which do not include the sales load or which reflect a reduced sales load, if the shares of the fund from which you are exchanging were: (a) purchased with a sales load, (b) acquired by a previous exchange from shares of the fund purchased with a sales load, or (c) acquired through reinvestment of dividends or distributions paid with respect to the foregoing categories of shares. To qualify, at the time of your exchange you must notify the Transfer Agent. Any such qualification is subject to confirmation of your holdings through a check of appropriate Page 11 records. See "Shareholder Services" in the Statement of Additional Information. No fees currently are charged shareholders directly in connection with exchanges, although the Fund reserves the right, upon not less than 60 days' written notice, to charge shareholders a nominal fee in accordance with rules promulgated by the Securities and Exchange Commission. The Fund reserves the right to reject any exchange request in whole or in part. The availability of Fund Exchanges may be modified or terminated at any time upon notice to shareholders. The exchange of shares of one fund for shares of another is treated for Federal income tax purposes as a sale of the shares given in exchange by the shareholder and, therefore, an exchanging shareholder may realize a taxable gain or loss. DREYFUS AUTO-EXCHANGE PRIVILEGE -- Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a semi-monthly, monthly, quarterly or annual basis), in exchange for shares of the Fund, in shares of other funds in the Dreyfus Family of Funds of which you are currently an investor. The amount you designate, which can be expressed either in terms of a specific dollar or share amount ($100 minimum), will be exchanged automatically on the first and/or fifteenth of the month according to the schedule you have selected. Shares will be exchanged at the then-current net asset value; however, a sales load may be charged with respect to exchanges into funds sold with a sales load. See "Shareholder Services" in the Statement of Additional Information. The right to exercise this Privilege may be modified or cancelled by the Fund or the Transfer Agent. You may modify or cancel your exercise of this Privilege at any time by writing to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. The Fund may charge a service fee for the use of this Privilege. No such fee currently is contemplated. The exchange of shares of one fund for shares of another is treated for Federal income tax purposes as a sale of the shares given in exchange by the shareholder and, therefore, an exchanging shareholder may realize a taxable gain or loss. For more information concerning this Privilege and the funds in the Dreyfus Family of Funds eligible to participate in this Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form, please call toll free 1-800-645-6561. DREYFUS-AUTOMATIC ASSET BUILDER(Registration Mark) -- Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares (minimum of $100 and maximum of $150,000 per transaction) at regular intervals selected by you. Fund shares are purchased by transferring funds from the bank account designated by you. At your option, the bank account designated by you will be debited in the specified amount, and Fund shares will be purchased, once a month, on either the first or fifteenth day, or twice a month, on both days. Only an account maintained at a domestic financial institution which is an Automated Clearing House member may be so designated. To establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an authorization form with the Transfer Agent. You may obtain the necessary authorization form by calling 1-800-645-6561. You may cancel your participation in this Privilege or change the amount of purchase at any time by mailing written notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427, and the notification will be effective three business days following receipt. The Fund may modify or terminate this Privilege at any time or charge a service fee. No such fee currently is contemplated. DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE -- Dreyfus Government Direct Deposit Privilege enables you to purchase Fund shares (minimum of $100 and maximum of $50,000 per transaction) by having Federal salary, Social Security, or certain veterans', military or other payments from the Federal government automatically deposited into your Fund account. You may deposit as much of such payments as you elect. To enroll in Dreyfus Government Direct Deposit, you must file with the Transfer Agent a completed Direct Deposit Sign-Up Form for each type of payment that you desire to include in the Privilege. The appropriate form may be obtained by calling 1-800-645-6561. Death or legal incapacity will terminate your participation in the Privilege. You may elect at any time to terminate your Page 12 participation by notifying in writing the appropriate Federal agency. Further, the Fund may terminate your participation upon 30 days' notice to you. DREYFUS PAYROLL SAVINGS PLAN -- Dreyfus Payroll Savings Plan permits you to purchase Fund shares (minimum of $100 per transaction) automatically on a regular basis. Depending upon your employer's direct deposit program, you may have part or all of your paycheck transferred to your existing Dreyfus account electronically through the Automated Clearing House system at each pay period. To establish a Dreyfus Payroll Savings Plan account, you must file an authorization form with your employer's payroll department. Your employer must complete the reverse side of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. You may obtain the necessary authorization form by calling 1-800-645-6561. You may change the amount of purchase or cancel the authorization only by written notification to your employer. It is the sole responsibility of your employer, not the Distributor, The Dreyfus Corporation, the Fund, the Transfer Agent or any other person to arrange for transactions under the Dreyfus Payroll Savings Plan. The Fund may modify or terminate this Privilege at any time or charge a service fee. No such fee currently is contemplated. Shares held under Keogh Plans, IRAs or other retirement plans are not eligible for this Privilege. DREYFUS STEP PROGRAM -- Dreyfus Step Program enables you to purchase Fund shares without regard to the Fund's minimum initial investment requirements through Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program account, you must supply the necessary information on the Fund's Account Application and file the required authorization form(s) with the Transfer Agent. For more information concerning this Program, or to request the necessary authorization form(s), please call toll free 1-800-782-6620. You may terminate your participation in this Program at any time by discontinuing your participation in Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be, as provided under the terms of such Privilege(s). The Fund may modify or terminate this Program at any time. Investors who wish to purchase Fund shares through the Dreyfus Step Program in conjunction with a Dreyfus-sponsored retirement plan may do so only for IRAs, SEP-IRAs and IRA "Rollover Accounts." You should consider your financial condition and the possibility of having to redeem your Fund shares in times of rising prices or declining Fund share prices. AUTOMATIC WITHDRAWAL PLAN -- The Automatic Withdrawal Plan permits you to request withdrawal of a specified dollar amount (minimum of $20) on either a monthly or quarterly basis if you have a $5,000 minimum account. An application for the Automatic Withdrawal Plan can be obtained by calling 1-800-645-6561. There is a service charge of 50cents for each withdrawal check. The Automatic Withdrawal Plan may be ended at any time by you, the Fund or the Transfer Agent. Shares for which certificates have been issued may not be redeemed through the Plan. DREYFUS DIVIDEND OPTIONS -- Dreyfus Dividend Sweep enables you to invest automatically dividends or dividends and capital gain distributions, if any, paid by the Fund in shares of another fund in the Dreyfus Family of Funds of which you are a shareholder. Shares of the other fund will be purchased at the then-current net asset value; however, a sales load may be charged with respect to investments in shares of a fund sold with a sales load. If you are investing in a fund that charges a sales load, you may qualify for share prices which do not include the sales load or which reflect a reduced sales load. If you are investing in a fund that charges a contingent deferred sales charge, the shares purchased will be subject on redemption to the contingent deferred sales charge, if any, applicable to the purchased shares. See "Shareholder Services" in the Statement of Additional Information. Dreyfus Dividend ACH permits you to transfer electronically 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. Page 13 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 6527, Providence, Rhode Island 02940-6527. Enrollment in or cancellation of these privileges is effective three business days following receipt. These privileges are available only for existing accounts and may not be used to open new accounts. Minimum subsequent investments do not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these privileges at any time or charge a service fee. No such fee currently is contemplated. Shares held under Keogh Plans, IRAs or other retirement plans are not eligible for Dreyfus Dividend Sweep. RETIREMENT PLANS -- The Fund offers a variety of pension and profit-sharing plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are available. You can obtain details on the various plans by calling the following numbers: for Keogh Plans, please call 1-800-358-5566; for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; and for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880. HOW TO REDEEM FUND SHARES GENERAL -- You may request redemption of your shares at any time. Redemption requests should be transmitted to the Transfer Agent as described below. When a request is received in proper form, the Fund will redeem the shares at the next determined net asset value. The Fund imposes no charges when shares are redeemed. Securities dealers, banks and other financial institutions may charge a nominal fee for effecting redemptions of Fund shares. Any certificates representing Fund shares being redeemed must be submitted with the redemption request. The value of the shares redeemed may be more or less than their original cost, depending on the Fund's then-current net asset value. The Fund ordinarily will make payment for all shares redeemed within seven days after receipt by the Transfer Agent of a redemption request in proper form, except as provided by the rules of the Securities and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer Agent has received your Account Application. PROCEDURES -- You may redeem shares by using the regular redemption procedure through the Transfer Agent, the Wire Redemption Privilege, the Telephone Redemption Privilege or the Dreyfus TELETRANSFER Privilege, or through certain securities dealers. The Fund makes available to certain large institutions the ability to issue redemption instructions through compatible computer facilities. You may redeem Fund shares by telephone if you have checked the appropriate box on the Fund's Account Application or have filed a Shareholder Services Form with the Transfer Agent. If you select a Page 14 telephone redemption privilege or telephone exchange privilege (which is automatically granted unless you refuse it), you authorize the Transfer Agent to act on telephone instructions from any person representing himself or herself to be you and reasonably believed by the Transfer Agent to be genuine. The Fund will require the Transfer Agent to employ reasonable procedures, such as requiring a form of personal identification, to confirm that instructions are genuine and, if it does not follow such procedures, the Fund or the Transfer Agent may be liable for any losses due to unauthorized or fraudulent instructions. Neither the Fund nor the Transfer Agent will be liable for following telephone instructions reasonably believed to be genuine. During times of drastic economic or market conditions, you may experience difficulty in contacting the Transfer Agent by telephone to request a redemption or exchange of Fund shares. In such cases, you should consider using the other redemption procedures described herein. Use of these other redemption procedures may result in your redemption request being processed at a later time than it would have been if telephone redemption had been used. During the delay the Fund's net asset value may fluctuate. REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem your shares by written request mailed to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may be delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the nearest Dreyfus Financial Center, please call one of the telephone numbers listed under "General Information." Redemption requests must be signed by each shareholder, including each owner of a joint account, and each signature must be guaranteed. The Transfer Agent has adopted standards and procedures pursuant to which signature-guarantees in proper form generally will be accepted from domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations, as well as from participants in the New York Stock Exchange Medallion Signature Program, the Securities Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion Program. If you have any questions with respect to signature-guarantees, please call one of the telephone numbers listed under "General Information." Redemption proceeds of at least $1,000 will be wired to any member bank of the Federal Reserve System in accordance with a written signature-guaranteed request. WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that redemption proceeds (minimum $1,000) be wired to your account at a bank which is a member of the Federal Reserve System, or a correspondent bank if your bank is not a member. To establish the Wire Redemption Privilege, you must check the appropriate box and supply the necessary information on the Fund's Account Application or file a Shareholder Services Form with the Transfer Agent. You may direct that redemption proceeds be paid by check (maximum $150,000 per day)made out to the owners of record and mailed to your address. Redemption proceeds of less than $1,000 will be paid automatically by check. Holders of jointly registered Fund or bank accounts may have redemption proceeds of not more than $250,000 wired within any 30-day period. You may telephone redemption requests by calling 1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The Fund reserves the right to refuse any redemption request, including requests made shortly after a 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 -- You may redeem Fund shares (maximum $150,000 per day) by telephone if you have checked the appropriate box on the Fund's Account Application or have filed a Page 15 Shareholder Services Form with the Transfer Agent. The redemption proceeds will be paid by check and mailed to your address. You may telephone redemption instructions by calling 1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The Fund reserves the right to refuse any request made by telephone, including requests made shortly after a change of address, and may limit the amount involved or the number of telephone redemption requests. This Privilege may be modified or terminated at any time by the Transfer Agent or the Fund. Shares held under Keogh Plans, IRAs or other retirement plans, and shares for which the certificates have been issued, are not eligible for this Privilege. DREYFUS TELETRANSFER PRIVILEGE -- You may redeem Fund shares (minimum $500 per day) by telephone if you have checked the appropriate box and supplied the necessary information on the Fund's Account Application or have filed a Shareholder Services Form with the Transfer Agent. The proceeds will be transferred between your Fund account and the bank account designated in one of these documents. Only such an account maintained in a domestic financial institution which is an Automated Clearing House member may be so designated. Redemption proceeds will be on deposit in your account at an Automated Clearing House member bank ordinarily two days after receipt of the redemption request or, at your request, paid by check (maximum $150,000 per day) and mailed to your address. Holders of jointly registered Fund or bank accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer to their bank account not more than $250,000 within any 30-day period. The Fund reserves the right to refuse any request made by telephone, including requests made shortly after a change of address, and may limit the amount involved or the number of such requests. The Fund may modify or terminate this Privilege at any time or charge a service fee upon notice to shareholders. No such fee currently is contemplated. If you have selected the Dreyfus TELETRANSFER Privilege, you may request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning 1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. Shares held under Keogh Plans, IRAs or other retirement plans, and shares issued in certificate form, are not eligible for this Privilege. REDEMPTION THROUGH DEALERS -- The Distributor or its designee will accept orders from dealers with which it has sales agreements for the repurchase of shares held by shareholders. Repurchase orders received by the dealer prior to the close of trading on the floor of the New York Stock Exchange on any business day and transmitted to the Distributor or its designee prior to the close of its business day (normally 5:15 p.m., New York time) are effected at the price determined as of the close of trading on the floor of the New York Stock Exchange on that day. Otherwise, the shares will be redeemed at the next determined net asset value. It is the responsibility of the dealer to transmit orders on a timely basis. The dealer may charge the shareholder a fee for executing the order. This repurchase arrangement is discretionary and may be withdrawn at any time. DIVIDENDS, DISTRIBUTIONS AND TAXES The Fund ordinarily pays dividends from net investment income quarterly and distributes net realized securities gains, if any, once a year, but it may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the "Code"), in all events in a manner consistent with the provisions of the Investment Company Act of 1940. The Fund will not make distributions from net realized securities gains unless capital loss carryovers, if any, have been utilized or have expired. You may choose whether to receive dividends and distributions of securities gains in cash or to reinvest such amounts in additional shares at net asset value. You also may elect to receive only dividends and distributions of short-term securities gains in cash and automatically reinvest all distributions of long-term securities gains at net asset value. You may make these elections by sending a written request to the Transfer Agent or, if you have purchased shares through a securities dealer, by notifying your dealer at the time the shares are purchased. All expenses are accrued daily and deducted before declaration of dividends to investors. Page 16 Dividends derived from net investment income, together with distributions from net realized short-term securities gains and all or a portion of any gain realized from the sale or other disposition of certain market discount bonds, paid by the Fund will be taxable to U.S. shareholders as ordinary income whether received in cash or reinvested in additional Fund shares. Depending upon the composition of the Fund's income, a portion of the dividends from net investment income may qualify for the dividends received deduction allowable to certain U.S. corporations. Distributions from net realized long-term securities gains of the Fund will be taxable to U.S. shareholders as long-term capital gains, regardless of how long shareholders have held their Fund shares and whether such distributions are received in cash or reinvested in additional Fund shares. The Code provides that the net capital gains of an individual generally will not be taxed 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 gain realized from the sale or other disposition of certain market discount bonds, paid by the Fund to a foreign investor generally are subject to U.S. nonresident withholding taxes at the rate of 30%, unless the foreign investor claims the benefit of a lower rate specified in a tax treaty. Distributions from net realized long-term securities gains paid by the Fund to a foreign investor as well as the proceeds of any redemptions from a foreign investor's account, regardless of the extent to which gain or loss may be realized, generally will not be subject to U.S. nonresident withholding tax. However, such distributions may be subject to backup withholding, as described below, unless the foreign investor certifies his non-U.S. residency status. Notice as to the tax status of your dividends and distributions will be mailed to you annually. You also will receive periodic summaries of your account which will include information as to dividends and distributions from securities gains, if any, paid during the year. Federal regulations generally require the Fund to withhold ("backup withholding") and remit to the U.S. Treasury 31% of dividends, distributions from net realized securities gains of the Fund and the proceeds of any redemption, regardless of the extent to which gain or loss may be realized, paid to a shareholder if such shareholder fails to certify either that the TIN furnished in connection with opening an account is correct, or that such shareholder has not received notice from the IRS of being subject to backup withholding as a result of a failure to properly report taxable dividend or interest income on a Federal income tax return. Furthermore, the IRS may notify the Fund to institute backup withholding if the IRS determines a shareholder's TIN is incorrect or if a shareholder has failed to properly report taxable dividend and interest income on a Federal income tax return. A TIN is either the Social Security number or employer identification number of the record owner of the account. Any tax withheld as a result of backup withholding does not constitute an additional tax imposed on the record owner of the account, and may be claimed as a credit on the record owner's Federal income tax return. Management of the Fund believes that the Fund has qualified for the fiscal year ended December 31, 1994 as a "regulated investment company" under the Code. The Fund intends to continue to so qualify if such qualification is in the best interests of its shareholders. Such qualification relieves the Fund of any liability for Federal income tax to the extent its net investment income and realized capital gains are distributed in accordance with applicable provisions of the Code. The Fund is subject to a non-deductible 4% excise tax, measured with respect to certain undistributed amounts of taxable investment income and capital gains. You should consult your tax adviser regarding specific questions as to Federal, state or local taxes, if any. Page 17 PERFORMANCE INFORMATION For purposes of advertising, performance will be calculated on the basis of average annual total return. Advertisements may also include performance calculated on the basis of total return. Average annual total return is calculated pursuant to a standardized formula which assumes that an investment in the Fund was purchased with an initial payment of $1,000 and that the investment was redeemed at the end of a stated period of time, after giving effect to the reinvestment of dividends and distributions during the period. The return is expressed as a percentage rate which, if applied on a compounded annual basis, would result in the redeemable value of the investment at the end of the period. Advertisements of the Fund's performance will include the Fund's average annual total return for one, five and ten year periods. Total return is computed on a per share basis and assumes the reinvestment of dividends and distributions. Total return generally is expressed as a percentage rate which is calculated by combining the income and principal changes for a specified period and dividing by the net asset value per share at the beginning of the period. Advertisements may include the percentage rate of total return or may include the value of a hypothetical investment at the end of the period which assumes the application of the percentage rate of total return. Performance will vary from time to time and past results are not necessarily representative of future results. You should remember that performance is a function of portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses. Performance information, such as that described above, may not provide a basis for comparison with other investments or other investment companies using a different method of calculating performance. Comparative performance information may be used from time to time in advertising or marketing the Fund's shares, including data from Lipper Analytical Services, Inc., the Dow Jones Industrial Average, Morningstar, Inc., Standard & Poor's 500 Composite Stock Price Index and other industry publications. GENERAL INFORMATION The Fund, a Maryland corporation incorporated on January 2, 1947, began operations under its present name on May 24, 1951. The Fund is authorized to issue 300 million shares of Capital Stock, par value $1 per share. Each share has one vote. Unless otherwise required by the Investment Company Act of 1940, ordinarily it will not be necessary for the Fund to hold annual meetings of shareholders. As a result, Fund shareholders may not consider each year the election of Directors or the appointment of auditors. However, pursuant to the Fund's By-Laws, the holders of at least 10% of the shares outstanding and entitled to vote may require the Fund to hold a special meeting of shareholders for the purpose of removing a Director from office and the holders of at least 25% of such shares may require the Fund to hold a special meeting of shareholders for any other purpose. Fund shareholders may remove a Director by the affirmative vote of a majority of the Fund's outstanding voting shares. In addition, the Board of Directors will call a meeting of shareholders for the purpose of electing Directors if, at any time, less than a majority of the Directors then holding office have been elected by shareholders. The Transfer Agent maintains a record of your ownership and sends you confirmations and statements of account. Page 18 Shareholder inquiries may be made by writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free 1-800-645-6561. In New York City, call 1-718-895-1206; outside of the U.S. and Canada, call 516-794-5452. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE. Page 19 The Dreyfus Fund Incorporated PROSPECTUS Registration Mark Copy Rights 1995 Dreyfus Service Corporation 026P18050195 THE DREYFUS FUND INCORPORATED PART B (STATEMENT OF ADDITIONAL INFORMATION) MAY 1, 1995 This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the current Prospectus of The Dreyfus Fund Incorporated (the "Fund"), dated May 1, 1995, as it may be revised from time to time. To obtain a copy of the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call the following numbers: Call Toll Free 1-800-645-6561 In New York City -- Call 1-718-895-1206 Outside the U.S. and Canada -- Call 516-794-5452 The Dreyfus Corporation (the "Manager") is the Fund's investment adviser. Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the Fund's shares. TABLE OF CONTENTS Page Investment Objectives and Management Policies . . . . . . . . . . . B-2 Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . B-5 Management Agreement. . . . . . . . . . . . . . . . . . . . . . . . B-9 Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . B-11 Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . B-12 Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . B-13 Determination of Net Asset Value. . . . . . . . . . . . . . . . . . B-16 Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . B-17 Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . B-19 Performance Information . . . . . . . . . . . . . . . . . . . . . . B-19 Information About the Fund. . . . . . . . . . . . . . . . . . . . . B-20 Custodian, Transfer and Dividend Disbursing Agent, Counsel and Independent Auditors. . . . . . . . . . . . . . . . . B-21 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . B-22 Report of Independent Auditors. . . . . . . . . . . . . . . . . . . B-36 INVESTMENT OBJECTIVES 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." Investment Approach. Fund management is chiefly concerned with two factors: 1. Individual Securities Values - These are determined through fundamental studies of the relative worth and position of individual companies. 2. Major Trends - These are evaluated through technical studies which give a broad picture of overall market trends. Management Policies Repurchase Agreements. The Fund's custodian or subcustodian will have custody of, and will hold in a segregated account, securities acquired by the Fund under a repurchase agreement. Repurchase agreements are considered by the staff of the Securities and Exchange Commission to be loans by the Fund. In an attempt to reduce the risk of incurring a loss on a repurchase agreement, the Fund will enter into repurchase agreements only with domestic banks with total assets in excess of one billion dollars or primary government securities dealers reporting to the Federal Reserve Bank of New York, with respect to securities of the type in which the Fund may invest, and will require that additional securities be deposited with it if the value of the securities purchased should decrease below resale price. The Manager will monitor on an ongoing basis the value of the collateral to assure that it always equals or exceeds the repurchase price. The Fund will consider on an ongoing basis the creditworthiness of the institutions with which it enters into repurchase agreements. Illiquid Securities. If a substantial market of qualified institutional buyers develops pursuant to Rule 144A under the Securities Act of 1933, as amended, for certain restricted securities held by the Fund, the Fund intends to treat such securities as liquid securities in accordance with procedures approved by the Fund's Board. Because it is not possible to predict with assurance how the market for restricted securities pursuant to Rule 144A will develop, the Fund's Board has directed the Manager to monitor carefully the Fund's investments in such securities with particular regard to trading activity, availability of reliable price information and other relevant information. To the extent that, for a period of time, qualified institutional buyers cease purchasing restricted securities pursuant to Rule 144A, the Fund's investing in such securities may have the effect of increasing the level of illiquidity in the Fund's portfolio during such period. Lending Portfolio Securities. To a limited extent, the Fund may lend its portfolio securities to brokers, dealers or other institutional investors, provided it receives cash collateral which at all times is maintained in an amount equal to at least 100% of the current market value of the securities loaned. By lending its portfolio securities, the Fund can increase its income through the investment of the cash collateral. For the purposes of this policy, the Fund considers collateral consisting of U.S. Government securities or irrevocable letters of credit issued by banks whose securities meet the standards for investment by the Fund to be the equivalent of cash. Such loans may not exceed 10% of the value of the Fund's total assets. From time to time, the Fund may return to the borrower and/or a third party, which is unaffiliated with the Fund, and which is acting as a "placing broker," a part of the interest earned from the investment of collateral received for securities loaned. The Securities and Exchange Commission currently requires that the following conditions must be met whenever portfolio securities are loaned: (1) the Fund must receive at least 100% cash collateral from the borrower; (2) the borrower must increase such collateral whenever the market value of the securities rises above the level of such collateral; (3) the Fund must be able to terminate the loan at any time; (4) the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions payable on the loaned securities, and any increase in market value; (5) the Fund may pay only reasonable custodian fees in connection with the loan; and (6) while voting rights on the loaned securities may pass to the borrower, the Fund's Board of Directors must terminate the loan and regain the right to vote the securities if a material event adversely affecting the investment occurs. These requirements may be subject to future modification. Investment Restrictions. The Fund has adopted investment restrictions numbered 1 through 15 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 (the "Act")) of the Fund's outstanding voting shares. Investment restrictions numbered 16 and 17 are not fundamental policies and may be changed by vote of a majority of the Fund's Directors at any time. The Fund may not: 1. Borrow money, except to the extent permitted under the Act (which currently limits borrowing to no more than 33% of the value of the Fund's total assets). 2. Purchase any securities on margin. 3. Sell any securities short. 4. Lend any funds or other assets. This shall not prevent the purchase of a portion of an issue of publicly distributed bonds, debentures or other evidences of indebtedness of corporations, or the purchase of bankers' acceptances and commercial paper of corporations listed on the New York Stock Exchange or their subsidiaries. However, the Fund may lend securities to broker-dealers or other institutional investors, but only when the borrower pledges cash collateral to the Fund and agrees to maintain such collateral so that it amounts at all times to at least 100% of the value of the securities loaned. Such loans will not be made if, as a result, the aggregate value of the securities loaned exceeds 10% of the value of the Fund's total assets. 5. Participate in any underwriting or selling group in connection with the public distribution of securities, except for its own capital stock. 6. Invest more than 5% of the market value of its net assets in the securities of any one issuer, except that up to 25% of the value of the Fund'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 such limitation. 7. Hold more than 10% of the voting securities of any one issuer. This restriction applies only with respect to 75% of the Fund's total assets. 8. Purchase from or sell to any of its officers or directors, or firms of which any of them are members, any securities (other than capital stock of the Fund), but such persons or firms may act as brokers for the Fund for customary commissions. 9. Retain securities of any issuer in which those officers or directors of the Fund who beneficially own more than 1/2 of 1% of the securities of the issuer together own more than 5% of the securities of the issuer. 10. Purchase any securities issued by any investment company, except in connection with a merger, consolidation, acquisition or reorganization, if more than 10% of the market value of the Fund's total assets would be invested in securities of other investment companies, more than 5% of the market value of the Fund's total assets would be invested in the securities of any one investment company or the Fund would own more than 3% of the total voting stock of any one investment company. This limitation, however, shall not prevent the Fund from investing in securities issued by a real estate investment trust, provided that such trust is not permitted to invest in real estate or interests in real estate other than mortgages or other security interests. 11. Purchase the securities of any issuer the business of which has been in continuous operation for less than three years if such purchase would cause the Fund's investments in such issuers to exceed 5% of the market value of the Fund's net assets. 12. Lease, acquire or hold real estate, except for office purposes. This limitation, however, shall not prevent the Fund from investing in securities issued by a real estate investment trust, provided that such trust is not permitted to invest in real estate or interests in real estate other than mortgages or other security interests. 13. Purchase and sell commodities or commodity contracts. 14. Invest in the securities of a company for the purpose of management or the exercise of control, but the Fund votes the securities it owns in its portfolio as a shareholder in accordance with its own views. The Manager may make recommendations to portfolio companies on financial and operating matters relevant to the conduct of their business if the Manager believes it desirable to do so, in the best interests of the Fund and for the protection of the value of the Fund's investments. 15. Invest in a particular industry if any such investment would result in the Fund holding more than 25% of the value of its assets in any single industry. 16. Pledge, mortgage, hypothecate or otherwise encumber its assets, except to the extent necessary to secure permitted borrowings. 17. Enter into repurchase agreements providing for settlement in more than seven days after notice or purchase securities which are illiquid if, in the aggregate, more than 15% of the value of the Fund's net assets would be so invested. If a percentage restriction is adhered to at the time of investment, a later increase or decrease in percentage resulting from a change in values or assets will not constitute a violation of that restriction. In addition to the foregoing, while not a fundamental policy, the Fund has undertaken not to invest in oil, gas or mineral programs. The Fund may make commitments more restrictive than the restrictions listed above so as to permit the sale of Fund shares in certain states. Should the Fund determine that a commitment is no longer in the best interest of the Fund and its shareholders, the Fund reserves the right to revoke the commitment by terminating the sale of Fund shares in the state involved. MANAGEMENT OF THE FUND Directors and officers of the Fund, together with information as to their principal business occupations during at least the last five years, are shown below. Each Director who is deemed to be an "interested person" of the Fund (as defined in the Act) is indicated by an asterisk. Directors of the Fund LUCY WILSON BENSON, Director. President of Benson and Associates, consultants to business and government. Mrs. Benson is a director of Communications Satellite Corporation, General RE Corporation and Logistics Management Institute. She is also a trustee of the Alfred P. Sloan Foundation, Vice Chairman of the Board of Trustees of Lafayette College, Vice Chairman of the Citizens Network for Foreign Affairs and a member of the Council on Foreign Relations. Mrs. Benson served as a consultant to the U.S. Department of State and to SRI International from 1980 to 1981. From 1977 to 1980, she was Under Secretary of State for Security Assistance, Science and Technology. She is also a Board member of 13 other funds in the Dreyfus Family of Funds. She is 67 years old and her address is 46 Sunset Avenue, Amherst, Massachusetts 01002. *DAVID W. BURKE, Director. Consultant to the Manager since August 1994. From October 1994 to August 1994, he was Vice President and Chief Administrative Officer of the Manager. From 1977 to 1990, Mr. Burke was involved in the management of national television news, as Vice President and Executive Vice President of ABC News, and subsequently as President of CBS News. He is also a Board member of 51 other funds in the Dreyfus Family of Funds. He is 59 years old and his address is 200 Park Avenue, New York, New York 10166. *JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Mr. DiMartino has served as Chairman of the Board of various funds in the Dreyfus Family of Funds. For more than five years prior thereto, he was President, a director and, until August 1994, Chief Operating Officer of Dreyfus and Executive Vice President and a director of Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus and, until August 1994, the Fund's distributor. From August 1994 to December 31, 1994, he was a director of Mellon Bank Corporation. Mr. DiMartino is a director and former Treasurer of The Muscular Dystrophy Association; a trustee of Bucknell University; Chairman of the Board of Directors of Noel Group, Inc.; director of HealthPlan Corporation; a director of Belding Heminway Company, Inc.; and a director of Curtis Industries, Inc. Mr. DiMartino is also a Board member of 93 other funds inthe Dreyfus Family of Funds. He is 51 years old and his address is 200 Park Avenue, New York, New York 10166. MARTIN D. FIFE, Director. President of Fife Associates, Inc. and other related companies that are engaged in the chemical and plastics industries. He is also a Board member of 11 other funds in the Dreyfus Family of Funds. He is 68 years old and his address is The Chrysler Building, 405 Lexington Avenue, New York, New York 10174. WHITNEY I. GERARD, Director. Partner of the New York City law firm of Chadbourne & Parke. He is also a Board member of 11 other funds in the Dreyfus Family of Funds. He is 60 years old and his address is 30 Rockefeller Plaza, New York, New York 10112. ROBERT R. GLAUBER, Director. Research Fellow, Center for Business and Government at the John F. Kennedy School of Government, Harvard University, since January 1992. Mr. Glauber was Under Secretary of the Treasury for Finance at the U.S. Treasury Department from May 1989 to January 1992. For more than 5 years prior thereto, he was a Professor of Finance at the Graduate School of Business Administration of Harvard University and, from 1985 to 1989, Chairman of its Advanced Management Program. He is also a Board member of 20 other funds in the Dreyfus Family of Funds. He is 56 years old and his address is 79 John F. Kennedy Street, Cambridge, Massachusetts 02138. ARTHUR A. HARTMAN, Director. Senior consultant with APCO Associates Inc. From 1981 to 1987, he was United States Ambassador to the former Soviet Union. He is a director of the ITT Hartford Insurance Group, Ford Meter Box Corporation and Lawter International and a member of the advisory councils of several other companies, research institutes and foundations. He is a former President of the Harvard Board of Overseers. He is also a Board member of 11 other funds in the Dreyfus Family of Funds. He is 69 years old and his address is 2738 McKinley Street, N.W., Washington, D.C. 20015. GEORGE L. PERRY, Director. An economist and Senior Fellow at the Brookings Institution since 1969. He is co-director of the Brookings Panel on Economic Activity and editor of its journal, The Brookings Papers. He is also a director of the State Farm Mutual Automobile Association, State Farm Life Insurance Company and Federal Realty Investment Trust. He is also a Board member of 11 other funds in the Dreyfus Family of Funds. He is 60 years old and his address is 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036. PAUL D. WOLFOWITZ, Director. Dean of The Paul H. Nitze School of Advanced International Studies at Johns Hopkins University. From 1989 to 1993, he was Under Secretary of Defense for Policy. From 1986 to 1989, he was the U.S. Ambassador to the Republic of Indonesia. From 1982 to 1986, he was Assistant Secretary of State for East Asian and Pacific Affairs of the Department of State. He is also a Board member of 10 other funds in the Dreyfus Family of Funds. He is 50 years old and his address is 1740 Massachusetts Avenue, N.W., Washington, D.C. 20036. The Fund typically pays its directors an annual retainer and a per meeting fee and reimburses them for their expenses. The Chairman of the Board receives an additional 25% of such compensation. The aggregate amount of compensation paid to each director by the Fund for the fiscal year ended December 31, 1994 and by all other funds in the Dreyfus Family of Funds for which such person is a board member for the fiscal year ended December 31, 1994 are as follows:
(3) (5) (2) Pension or (4) Total Compensation (1) Aggregate Retirement Benefits Estimated Annual from Fund and Fund Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to Member Fund Fund's Expenses Retirement Board Members - ------------------ ------------------ ------------------- ---------------- -------------------- Lucy Wilson Benson $8,500 none none $ 64,459 David W. Burke $3,297 none none $ 27,898 Joseph S. DiMartino** $9,902 none none $445,000 Martin D. Fife $8,500 none none $ 51,750 Whitney I. Gerard $8,500 none none $ 52,000 Robert R. Glauber $8,000 none none $ 79,696 Arthur A. Hartman $8,500 none none $ 52,000 George L. Perry $8,500 none none $ 52,000 Paul D. Wolfowitz $7,536 none none $ 32,631 ______________________________ * Amount does not include reimbursed expenses for attending Board meetings, which amount to $708 for all Directors as a group. ** Estimated amounts for current fiscal year ending December 31, 1995. Officers of the Fund MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating Officer of the Distributor and an officer of other investment companies advised or administered by the Manager. From December 1991 to July 1994, she was President and Chief Compliance Officer of Funds Distributor, Inc., a wholly-owned subsidiary of The Boston Company,Inc. Prior to December 1991, she served as Vice President and Controller, and later as Senior Vice President, of The Boston Company Advisors, Inc. She is 37 years old. JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and General Counsel of the Distributor and an officer of other investment companies advised or administered by the Manager. From February 1992 to July 1994, he served as Counsel for The Boston Company Advisors, Inc. From August 1990 to February 1992, he was employed as an Associate at Ropes & Gray, and prior to August 1990, he was employed as an Associate at Sidley & Austin. He is 30 years old. ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate General Counsel of the Distributor and an officer of other investment companies advised or administered by the Manager. From September 1992 to August 1994, he was an attorney with the Board of Governors of the Federal Reserve System. He is 30 years old. FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice President of the Distributor and an officer of other investment companies advised or administered by the Manager. From 1988 to August 1994, he was Manager of the High Performance Fabric Division of Springs Industries Inc. He is 33 years old. JOSEPH F. TOWER,III, Assistant Treasurer. Senior Vice President, Treasurer and Chief Financial Officer of the Distributor and an officer of other investment companies advised or administered by the Manager. From July 1988 to August 1994, he was employed by The Boston Company, Inc. where he held various management positions in the Corporate Finance and Treasury areas. He is 32 years old. JOHN J. PYBURN, Assistant Treasurer, Vice President of the Distributor and an officer of other investment companies advised or administered by the Manager. From 1984 to July 1994, he was Assistant Vice President in the Mutual Fund Accounting Department of the Manager. He is 59 years old. RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the Distributor and an officer of other investment companies advised or administered by the Manager. From March 1992 to July 1994, she was a Compliance Officer for The Managers Funds, a registered investment company. From March 1990 until September 1991, she was Development Director of The Rockland Center for the Arts and, prior thereto, was employed as a Research Assistant for the Bureau of National Affairs. She is 50 years old. PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the Distributor and an officer of other investment companies advised or administered by the Manager. From January 1992 to July 1994, he was a Senior Legal Product Manager, and, from January 1990 to January 1992, he was a mutual fund accountant, for The Boston Company Advisors, Inc. He is 28 years old. The address of each officer of the Fund is 200 Park Avenue, New York, New York 10166. Directors and officers of the Fund, as a group, owned less than 1% of the Fund's shares of Capital Stock outstanding on February 17, 1995. MANAGEMENT AGREEMENT The following information supplements and should be read in conjunction with the section in the Fund's Prospectus entitled "Management of the Fund." The Manager provides management services pursuant to the Management Contract (the "Agreement") dated August 24, 1994 with the Fund, which is subject to annual approval by (i) the Fund's Board of Directors or (ii) vote of a majority (as defined in the Act) of the Fund's outstanding voting securities, provided that in either event the continuance also is approved by a majority of the Directors who are not "interested persons" (as defined in the Act) of the Fund or the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval. The Fund's Board of Directors, including a majority of the Directors who are not "interested persons" (as defined in the Act) of any party to the Agreement, last voted to renew the Agreement at a meeting held on May 4, 1994. Shareholders last approved the Agreement on August 4, 1994. The Agreement is terminable upon 60 days' notice by either party and will terminate automatically in the event of its assignment (as defined in the Act). The following persons are officers and/or directors of Dreyfus: Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief Operating Officer and a director; Lawrence S. Kash, Vice Chairman- Distribution and a director; Philip L. Toia, Vice Chairman-Operations and Administration; Paul H. Snyder, Vice President and Chief Financial Officer; Daniel C. Maclean, Vice President and General Counsel; Barbara E. Casey, Vice President--Retirement Services; Henry D. Gottmann, Vice President- Retail; Elie M. Genadry, Vice President--Wholesale; Jeffrey N. Nachman, Vice President-Mutual Fund Accounting; Diane M. Coffey, Vice President- Corporate Communications; William F. Glavin, Jr., Vice President--Product Management; Andrew Wasser, Vice President--Information Systems; Katherine C. Wickham, Vice President-Human Resources; Elvira Oslapas--Vice President; Maurice Bendrihem, Controller; and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M. Smerling and David B. Truman, directors. The Manager manages the Fund's portfolio of investments in accordance with the stated policies of the Fund, subject to the approval of the Fund's Board of Directors. The Manager is responsible for investment decisions and provides 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 Howard Stein, Ernest G. Wiggins, Jr. and Wolodymyr Wronskyj. The Manager also maintains a research department with a professional staff of portfolio managers and securities analysts who provide research services for the Fund as well as for other funds advised by the Manager. All purchases and sales are reported for the Board of Directors' review at the meeting subsequent to such transactions. The Manager maintains office facilities on behalf of the Fund, and furnishes, among other things, statistical and research data, clerical help, accounting, data processing, bookkeeping, internal auditing services and certain other required services to the Fund. The Manager also may make such advertising and promotional expenditures, using its own resources, as it from time to time deems appropriate. All expenses incurred in the operation of the Fund are borne by the Fund, except to the extent specifically assumed by the Manager. The expenses borne by the Fund include: taxes, interest, 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 Manager, Securities and Exchange Commission fees, advisory fees, state Blue Sky qualification fees, charges of custodians, transfer and dividend disbursing agents' fees, certain insurance premiums, industry association fees, outside auditing and legal expenses, costs of maintaining corporate existence, costs of independent pricing services, costs attributable to investor services (including, without limitation, telephone and personnel expenses), costs of shareholders' reports and corporate meetings, costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders, and any extraordinary expenses. As compensation for its services, the Fund has agreed to pay the Manager an annual fee, payable monthly, as follows: Annual Fee Average Daily Net Assets ---------- ------------------------ .65 of 1% of the first $1.5 billion .625 of 1% between $1.5 billion and $2.0 billion .60 of 1% between $2.0 billion and $2.5 billion .55 of 1% over $2.5 billion The Agreement also provides that if the aggregate expenses of the Fund, exclusive of taxes and brokerage commissions but including the management fee, exceed 1% of the value of the Fund's average daily net assets for any full fiscal year, the Manager will bear such expenses or refund to the Fund the amount of such excess. No expense reimbursement was required for the last three fiscal years. The management fees paid by the Fund to the Manager for the fiscal years ended December 31, 1992, 1993 and 1994 amounted to $17,847,268, $18,514,648 and $16,866,777, respectively. PURCHASE OF FUND SHARES The following information supplements and should be read in conjunction with the section in the Fund's Prospectus entitled "How to Buy Fund Shares." The Distributor. The Distributor serves as the Fund's distributor pursuant to an agreement which is renewable annually. The Distributor also acts as distributor for the other funds in the Dreyfus Family of Funds and for certain other investment companies. Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time, on any business day that The Shareholder Services Group, Inc., the Fund's transfer and dividend disbursing agent (the "Transfer Agent"), and the New York Stock Exchange are open. Such purchases will be credited to the shareholder's Fund account on the next bank business day. To qualify to use the Dreyfus TeleTransfer Privilege, the initial payment for purchase of Fund shares must be drawn on, and redemption proceeds paid to, the same bank and account as are designated on the Account Application or Shareholder Services Form on file. If the proceeds of a particular redemption are to be wired to an account at any other bank, the request must be in writing and signature-guaranteed. See "Redemption of Fund Shares--Dreyfus TeleTransfer Privilege." Sales and Other Charges. There is no sales or service charge by the Fund or the Distributor, although investment dealers, banks and other institutions may make reasonable charges to investors for their services. The services provided and the applicable fees are established by each dealer or other institution acting independently of the Fund. The Fund has been given to understand that fees may be charged for customer services including, but not limited to, same-day investment of client funds; same-day access to client funds; advice to customers about the status of their accounts, yield currently being paid or income earned to date; provision of periodic account statements showing security and money market positions; other services available from the dealer, bank or other institution; and assistance with inquiries related to their investment. Any such fees will be deducted from the investor's account monthly and on smaller accounts could constitute a substantial portion of the distribution. Small, inactive, long-term accounts involving monthly service charges may not be in the best interest of investors. Investors should be aware that they may purchase shares of the Fund directly from the Fund without imposition of any maintenance or service charges, other than those already described herein. In some states, banks or other institutions effecting transactions in Fund shares may be required to register as dealers pursuant to state law. Maintenance expenses of a Fund account are presently borne by the Fund, although the Fund reserves the right, upon not less than 90 days' notice, to charge shareholders a nominal fee for such maintenance expenses. During the 90-day notice period, a shareholder would be able to withdraw shares without charge. Reopening an Account. An investor may reopen an account with a minimum investment of $100 without filing a new Account Application during the calendar year the account is closed or during the following calendar year, provided the information on the old Account Application is still applicable. REDEMPTION OF FUND SHARES The following information supplements and should be read in conjunction with the section in the Fund's Prospectus entitled "How to Redeem Fund Shares." Wire Redemption Privilege. By using this Privilege, the investor authorizes the Transfer Agent to act on wire or telephone redemption instructions from any person representing himself or herself to be the investor, or a representative of the investor's Service Agent, and reasonably believed by the Transfer Agent to be genuine. Ordinarily, the Fund will initiate payment for shares redeemed pursuant to this Privilege on the next business day after receipt if the Transfer Agent receives the redemption request in proper form. Redemption proceeds will be transferred by Federal Reserve wire only to the commercial bank account specified by the investor on the Account Application or Shareholder Services Form. Redemption proceeds, if wired, must be in the amount of $1,000 or more and will be wired to the investor's account at the bank of record designated in the investor's file at the Transfer Agent, if the investor's bank is a member of the Federal Reserve System, or to a correspondent bank if the investor's bank is not a member. Fees ordinarily are imposed by such bank and usually are borne by the investor. Immediate notification by the correspondent bank to the investor's bank is necessary to avoid a delay in crediting the funds to the investor's bank account. Investors with access to telegraphic equipment may wire redemption requests to the Transfer Agent by employing the following transmittal code which may be used for domestic or overseas transmissions: Transfer Agent's Transmittal Code Answer Back Sign ---------------- ----------------- 144295 144295 TSSG PREP Investors who do not have direct access to telegraphic equipment may have the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll free. Investors should advise the operator that the above transmittal code must be used and should inform the operator of the Transfer Agent's answer back sign. To change the commercial bank or account designated to receive wire redemption proceeds, a written request must be sent to the Transfer Agent. This request must be signed by each shareholder, with each signature guaranteed as described below under "Stock Certificates; Signatures." Dreyfus TeleTransfer Privilege. Investors should be aware that if they have also selected the Dreyfus TeleTransfer Privilege, any request for a wire redemption will be effected as a Dreyfus TeleTransfer transaction through the Automated Clearing House ("ACH") system unless more prompt transmittal specifically is requested. Redemption proceeds will be on deposit in the investor's account at an ACH member bank ordinarily two business days after receipt of the redemption request. See "Purchase of Fund Shares--Dreyfus TeleTransfer Privilege." Stock Certificates; Signatures. Any stock certificates representing Fund shares to be redeemed must be submitted with the redemption request. Written redemption requests must be signed by each shareholder, including each holder of a joint account, and each signature must be guaranteed. Signatures on endorsed certificates submitted for redemption also must be guaranteed. The Transfer Agent has adopted standards and procedures pursuant to which signature-guarantees in proper form generally will be accepted from domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations, as well as from participants in the New York Stock Exchange Medallion Signature Program, the Securities Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees must be signed by an authorized signatory of the guarantor and "Signature-Guaranteed" must appear with the signature. The Transfer Agent may request additional documentation from corporations, executors, administrators, trustees or guardians, and may accept other suitable verification arrangements from foreign investors such as consular verification. For more information with respect to signature-guarantees, please call one of the telephone numbers listed on the cover. Redemption Commitment. The Fund has committed itself to pay in cash all redemption requests by any shareholder of record, limited in amount during any 90-day period to the lesser of $250,000 or 1% of the value of the Fund's net assets at the beginning of such period. Such commitment is irrevocable without the prior approval of the Securities and Exchange Commission and is a fundamental policy of the Fund which may not be changed without shareholder approval. 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 of the Fund in case of an emergency or any time a cash distribution would impair the liquidity of the Fund to the detriment of the existing shareholders. In such event, the securities would be valued in the same manner as the Fund's portfolio is valued. If the recipient sold such securities, brokerage charges would be incurred. Suspension of Redemption. The right of redemption may be suspended or the date of payment postponed (a) during any period when the New York Stock Exchange is closed (other than customary weekend and holiday closings), (b) when trading in the markets the Fund ordinarily utilizes is restricted, or when an emergency exists as determined by the Securities and Exchange Commission so that disposal of the Fund's investments or determination of its net asset value is not reasonably practicable, or (c) for such other periods as the Securities and Exchange Commission by order may permit to protect the Fund's shareholders. SHAREHOLDER SERVICES The following information supplements and should be read in conjunction with the section in the Fund's Prospectus entitled "Shareholder Services." Fund Exchanges. Shares of other funds purchased by exchange will be purchased on the basis of relative net asset value per share as follows: A. Exchanges for shares of funds that are offered without a sales load will be made without a sales load. B. Shares of funds purchased without a sales load may be exchanged for shares of other funds sold with a sales load, and the applicable sales load will be deducted. C. Shares of funds purchased with a sales load may be exchanged without a sales load for shares of other funds sold without a sales load. D. Shares of funds purchased with a sales load, shares of funds acquired by a previous exchange from shares purchased with a sales load and additional shares acquired through reinvestment of dividends or distributions of any such funds (collectively referred to herein as "Purchased Shares") may be exchanged for shares of other funds sold with a sales load (referred to herein as "Offered Shares"), provided that, if the sales load applicable to the Offered Shares exceeds the maximum sales load that could have been imposed in connection with the Purchased Shares (at the time the Purchased Shares were acquired), without giving effect to any reduced loads, the difference will be deducted. To accomplish an exchange under item D above, shareholders must notify the Transfer Agent of their prior ownership of fund shares and their account number. To request an exchange, a shareholder must give exchange instructions to the Transfer Agent in writing or by telephone. The ability to issue exchange instructions by telephone is given to all Fund shareholders automatically, unless the investor checks the applicable "NO" box on the Account Application, indicating that the investor specifically refuses this privilege. By using the Telephone Exchange Privilege, the investor authorizes the Transfer Agent to act on telephonic instructions from any person representing himself or herself to be the investor, and reasonably believed by the Transfer Agent to be genuine. Telephone exchanges may be subject to limitations as to the amount involved or the number of telephone exchanges permitted. Shares issued in certificate form are not eligible for telephone exchanges. To establish a Personal Retirement Plan by exchange, shares of the Fund being exchanged must have a value of at least the minimum initial investment required for the fund into which the exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum initial investment is $750. To exchange shares held in Corporate Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum initial investment is $100 if the plan has at least $2,500 invested among the funds in the Dreyfus Family of Funds. To exchange shares held in Personal Retirement Plans, the shares exchanged must have a current value of at least $100. Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits an investor to purchase, in exchange for shares of the Fund, shares of another fund in the Dreyfus Family of Funds. This Privilege is available only for existing accounts. Shares will be exchanged on the basis of relative net asset value as described above under "Fund Exchanges." Enrollment in or modification or cancellation of this Privilege is effective three business days following notification by the investor. An investor will be notified if his account falls below the amount designated to be exchanged under this Privilege. In this case, an investor's account will fall to zero unless additional investments are made in excess of the designated amount prior to the next Auto-Exchange transaction. Shares held under IRA and other retirement plans are eligible for this Privilege. Exchanges of IRA shares may be made between IRA accounts from regular accounts to IRA accounts, but not from IRA accounts to regular accounts. With respect to all other retirement accounts, exchanges may be made only among those accounts. Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available to shareholders resident in any state in which shares of the fund being acquired may legally be sold. Shares may be exchanged only between accounts having identical names and other identifying designations. Shareholder Services Forms and prospectuses of the other funds may be obtained by calling 1-800-645-6561. The Fund reserves the right to reject any exchange request in whole or in part. Fund Exchanges or the Dreyfus Auto-Exchange Privilege may be modified or terminated at any time upon notice to shareholders. Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an investor with a $5,000 minimum account to request withdrawal of a specified dollar amount (minimum of $20) on either a monthly or quarterly basis. Withdrawal payments are the proceeds from sales of Fund shares, not the yield on the shares. If withdrawal payments exceed reinvested dividends and distributions, the investor's shares will be reduced and eventually may be depleted. There is a service charge of $.50 for each withdrawal check. Automatic Withdrawal may be terminated at any time by the investor, the Fund or the Transfer Agent. Shares for which stock certificates have been issued may not be redeemed through the Automatic Withdrawal Plan. Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to invest on the payment date their dividends or dividends and capital gain distributions, if any, from the Fund in shares of another fund in the Dreyfus Family of Funds of which the investor is a shareholder. Shares of other funds purchased pursuant to this privilege will be purchased on the basis of relative net asset value per share as follows: A. Dividends and distributions paid by the 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 the 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 Personal Retirement Plans. The Fund makes available to corporations a variety of prototype pension and profit-sharing plans, including a 401(k) Salary Reduction Plan. In addition, the Fund makes available Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services are also available. Investors who wish to purchase Fund shares in conjunction with a Keogh Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the Distributor forms for adoption of such plans. The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs may charge a fee, payment of which could require the liquidation of shares. All fees charged are described in the appropriate forms. Shares may be purchased in connection with these plans only by direct remittance to the entity acting as custodian. Purchases for these plans may not be made in advance of receipt of funds. The minimum initial investment for corporate plans, salary reduction plans, 403(b)(7) Plans and SEP-IRAs, with more than one participant, is $2,500, with no minimum on subsequent purchases. The minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans, with only one participant, is ordinarily $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 Plans and the form of Custodial Agreement for further details as to 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. Portfolio securities are valued at the last sale price on the securities exchange or national securities market on which such securities are primarily traded. Securities not listed on an exchange or national securities market, or securities in which there were no transactions, are valued at the average of the most recently reported bid and asked prices. Bid price is used when no asked price is available. Options are valued at the last sale price on an exchange. Options for which there were no transactions are valued at the average of the most recently reported bid and asked prices. Market quotations of foreign securities in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange. Any securities or other assets for which market quotations are not readily available are valued at fair value as determined in good faith by the Board of Directors. Expenses and fees, including the management fee, reduced by the expense limitation, if any, are accrued daily and taken into account for the purpose of determining the net asset value of Fund shares. New York Stock Exchange Closings. The holidays (as observed) on which the New York Stock Exchange is closed currently are: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. DIVIDENDS, DISTRIBUTIONS AND TAXES The following information supplements and should be read in conjunction with the section in the Fund's Prospectus entitled "Dividends, Distributions and Taxes." Management believes that the Fund qualified for the fiscal year ended December 31, 1994 as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund intends to continue to so qualify if such qualification is in the best interests of its shareholders. Such qualification relieves the Fund of any liability for Federal income taxes to the extent its net investment income and net realized capital gains are distributed in accordance with the applicable provisions of the Code. The term "regulated investment company" does not imply the supervision of management or investment practices or policies by any government agency. Depending upon the composition of the Fund's income, the entire amount or a portion of the dividends from net investment income may qualify for the dividends received deduction allowable to qualifying U.S. corporate shareholders ("dividends received deduction"). In general, dividend income of the Fund distributed to its qualifying corporate shareholders will be eligible for the dividends received deduction only to the extent that (i) the Fund's income consists of dividends paid by U.S. corporations and (ii) the Fund would have been entitled to the dividends received deduction with respect to such dividend income if the Fund were not a regulated investment company. The dividends received deduction for qualifying corporate shareholders may be further reduced if the shares of the Fund held by them with respect to which dividends are received are treated as debt-financed or deemed to have been held for less than 46 days. In addition, the Code provides other limitations with respect to the ability of a qualifying corporate shareholder to claim the dividends received deduction in connection with holding Fund shares. The Code provides that if a shareholder holds shares of the Fund for six months (or such shorter period as the Internal Revenue Service may prescribe by regulation) and has received a capital gain distribution with respect to such shares, any loss incurred on the sale of such shares will be treated as long-term capital loss to the extent of the capital gain distribution received. In addition, any dividend or distribution paid shortly after an investor's purchase may have the effect of reducing the net asset value of the shares below the cost of the investment. Such a distribution would be a return on investment in an economic sense although taxable as described above. Ordinarily, gains or losses realized from portfolio transactions will be treated as capital gains or losses. However, a portion of the gain or loss realized from the disposition of certain non-U.S. dollar denominated securities (including debt instruments, certain forward and option transactions 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 the gain realized from the disposition of certain market discount bonds will be treated as ordinary income under Section 1276. Finally, all or a portion of the gains 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, gain or loss the Fund realizes from certain foreign currency forward contracts and options transactions, other than those subject to Section 988 of the Code, will be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. Gain or loss will arise upon exercise or lapse of such contracts and options as well as from closing transactions. In addition, any such contracts or options remaining unexercised at the end of the Fund's taxable year will be treated as sold for their then fair market value, resulting in additional gain or loss to the Fund characterized in the manner described above. Offsetting positions held by the Fund involving foreign currency forward contracts or options may be considered, for tax purposes, to constitute "straddles." "Straddles" are defined to include "offsetting positions" in actively traded personal property. The tax treatment of "straddles" is governed by Sections 1092 and 1258 of the Code, which, in certain circumstances, overrides or modifies the provisions of Sections 1256 and 988. As such, all or a portion of any short or long-term capital gain from certain "Straddle" and/or conversion transactions may be recharacterized to ordinary income. If the Fund were treated as entering into "straddles" by reason of its engaging in forward contracts or options transactions, such "straddles" would be characterized as "mixed straddles" if the forward contracts or options transactions comprising a part of such "straddles" were governed by Section 1256 of the Code. The Fund may make one or more elections with respect to "mixed straddles." If no election is made, to the extent the "straddle" rules apply to positions established by the Fund, losses realized by the Fund will be deferred to the extent of unrealized gain in any related offsetting position. Moreover, as a result of the "straddle" and conversion transaction rules, short-term capital loss on "straddle" positions may be recharacterized as long-term capital loss, and long-term capital gain may be treated as short-term capital gain or ordinary income. PORTFOLIO TRANSACTIONS The Manager supervises the placement of orders on behalf of the Fund for the purchase or sale of portfolio securities. Allocation of brokerage transactions, including their frequency, is made according to the best judgment of the Manager and the Fund's portfolio managers and in a manner deemed fair and reasonable to the shareholders. The primary consideration is prompt and effective execution of orders at the most favorable net price. Subject to this consideration, the brokers selected include those that supplement the Manager's research facilities with statistical data, investment information, economic facts and opinions. Information so received is in addition to and not in lieu of services required to be performed by the Manager and the Manager's fee is not reduced as a consequence of the receipt of such supplemental information. Such information may be useful to the Manager in serving both the Fund and other funds which it advises and, conversely, supplemental information obtained by the placement of business of other clients may be useful to the Manager in carrying out its obligation to the Fund. Brokers also will be selected for their ability to handle special executions, such as are involved in large block trades or broad distributions, provided the primary con- sideration is met. Large block trades may, in certain cases, result from two or more funds in the Dreyfus Family of Funds being engaged simultaneously in the purchase or sale of the same security. The overall reasonableness of brokerage commissions paid is evaluated by the Manager based upon its knowledge of available information as to the general level of commissions paid by other institutional investors for comparable services. When transactions are executed in the over-the-counter market, the Fund will deal with the primary market makers unless a more favorable price is otherwise obtainable. In connection with its portfolio securities transactions for 1992, 1993 and 1994 the Fund paid brokerage commissions of $1,980,626, $2,968,900 and $2,564,232, respectively, none of which was paid to Dreyfus Service Corporation, which served as the Fund's distributor until August 24, 1994, or the Distributor. The above figures for brokerage commissions paid do not include gross spreads and concessions on principal transactions, which, where determinable, amounted to $3,084,285, $348,000 and $189,000 in 1992, 1993 and 1994, respectively, none of which was paid to Dreyfus Service Corporation or the Distributor. The Fund's investment policy, which stresses flexibility, may result in more trading of securities than would be the case for a fund with more restricted investment policies, although the Fund's portfolio turnover rate generally should not exceed 100%. Portfolio turnover rates for 1993 and 1994 were 39.29% and 27.70%, respectively. PERFORMANCE INFORMATION The following information supplements and should be read in conjunction with the section in the Fund's Prospectus entitled "Performance Information." The Fund's average annual total return for the 1, 5 and 10 year periods ended December 31, 1994 was -4.26%, 5.87% and 10.94%, respectively. Average annual total return is calculated by determining the ending redeemable value of an investment purchased with a hypothetical $1,000 payment made at the beginning of the period (assuming the reinvestment of dividends and distributions), dividing by the amount of the initial investment, taking the "n"th root of the quotient (where "n" is the number of years in the period) and subtracting 1 from the result. The Fund's total return for the period May 24, 1951 to December 31, 1994 was 13,892.22%. Total return is calculated by subtracting the amount of the Fund's net asset value per share at the beginning of a stated period from the net asset value per share at the end of the period (after giving effect to the reinvestment of dividends and distributions during the period), and dividing the result by the net asset value per share at the beginning of the period. From time to time, advertising materials for the Fund may provide historical information about the Fund or the Manager such as: the aggregate size of the Fund's assets for the number of shareholder accounts in the Fund at various points in time; causes for the Fund's growth in assets during various time periods; portfolio philosophy and practices utilized in managing the Fund's assets; past promotional efforts on behalf of the Fund such as the use of the "Dreyfus Lion" as a logo or the "Dreyfus Lion/Subway" television commercial; biographical information about Jack J. Dreyfus, Jr., the Fund's first President; the public offering of shares of the Manager in 1965; the public awareness of the concept of growth funds at the time of the Fund's inception; or the role played by Jack J. Dreyfus, Jr. and/or the Fund in popularizing the concept of mutual funds as an investment vehicle or the growth of assets in the mutual fund industry since the Fund's inception. From time to time, advertising materials for the Fund may refer to or discuss current or past business, political, economic or financial conditions, such as any U.S. monetary or fiscal policies. In addition, from time to time, advertising materials for the Fund may include information concerning retirement and investing for retirement. INFORMATION ABOUT THE FUND The following information supplements and should be read in conjunction with the section in the Fund's Prospectus entitled "General Information." Each Fund share has one vote, and when issued and paid for in accordance with the terms of the offering, is fully paid and nonassessable. Fund shares are of one class and have equal rights as to dividends and in liquidation. Shares have no preemptive, subscription or conversion rights and are freely transferable. The Fund sends 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, acts as custodian of the Fund's investments. 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 portfolio 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 Capital Stock being sold pursuant to the Fund's Prospectus. Ernst & Young LLP, independent auditors, 787 Seventh Avenue, New York, New York 10019, have been selected as independent auditors of the Fund.
THE DREYFUS FUND INCORPORATED STATEMENT OF INVESTMENTS December 31, 1994 COMMON STOCKS--83.5% SHARES VALUE ------------ -------------- BASIC INDUSTRIES--3.0% Grace (W.R.)......................... 500,000 $ 19,312,500 Mead................................. 500,000 24,312,500 SK Equity Fund, L.P. (Units)......... 15.647(c) 15,902,148 Weyerhaeuser......................... 400,000 15,000,000 -------------- 74,527,148 -------------- CAPITAL GOODS--4.6% Eastman Kodak........................ 750,000 35,812,500 General Electric..................... 1,090,000 55,590,000 Varity............................... 600,000(a) 21,750,000 -------------- 113,152,500 -------------- CHEMICALS--.7% duPont (E.I.) de Nemours............. 300,000 16,875,000 -------------- CONGLOMERATES--2.5% Dial................................. 2,000,000 42,500,000 Tenneco.............................. 400,000 17,000,000 -------------- 59,500,000 -------------- CONSUMER CYCLICAL--14.8% Chrysler............................. 1,500,000 73,500,000 Dayton Hudson........................ 200,000 14,150,000 Echlin............................... 500,000 15,000,000 Ford Motor........................... 1,600,000 44,800,000 Fruit of The Loom, Cl. A............. 700,000(a) 18,900,000 General Motors....................... 500,000 21,125,000 Home Depot........................... 400,000 18,400,000 NIKE, Cl. B.......................... 300,000 22,387,500 Office Depot......................... 500,000(a) 12,000,000 Penney (J.C.)........................ 400,000 17,850,000 Reebok International................. 500,000 19,750,000 Sears, Roebuck....................... 1,000,000 46,000,000 Toys R Us............................ 250,000(a) 7,625,000 Wal-Mart Stores...................... 500,000 10,625,000 Whirlpool............................ 400,000 20,100,000 -------------- 362,212,500 -------------- CONSUMER SERVICES--4.4% Columbia/HCA Healthcare.............. 250,000 9,125,000 Cracker Barrel Old Country........... 500,000 9,250,000 Mattel............................... 1,250,000 31,406,250 McDonald's........................... 2,000,000 58,500,000 -------------- 108,281,250 -------------- CONSUMER STAPLES--10.6% ConAgra.............................. 500,000 15,625,000 Gillette............................. 800,000 59,800,000 PepsiCo.............................. 650,000 23,562,500 Philip Morris Cos.................... 1,000,000 57,500,000 Premark International................ 400,000 17,900,000 Procter & Gamble..................... 1,000,000 62,000,000 Roche Holdings A.D.S................. 275,000(b) 13,182,813 Sara Lee............................. 400,000 10,100,000 -------------- 259,670,313 -------------- THE DREYFUS FUND INCORPORATED STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994 COMMON STOCKS (CONTINUED) SHARES VALUE ------------ -------------- CREDIT CYCLICAL--3.7% Green Tree Financial................. 700,000 $ 21,262,500 Lowe's Cos........................... 2,000,000 69,500,000 -------------- 90,762,500 -------------- ENERGY--5.2% Canadian Gas Gathering Systems, Cl. A.................................... 245,312(a,c) 2,453,123 Chevron.............................. 400,000 17,850,000 GE Investment Private Placement Partners I, L.P. (Units)........... 14.175(c) 14,753,448 Mobil................................ 300,000 25,275,000 Royal Dutch Petroleum................ 300,000 32,250,000 Texaco............................... 300,000 17,962,500 Williams Cos......................... 350,000 8,793,750 Yorktown Energy Partners, L.P. (Units).............................. 7.357(c) 8,262,362 -------------- 127,600,183 -------------- FINANCIAL--11.2% ADVANTA, Cl. A....................... 15,000 393,750 ADVANTA, Cl. B....................... 485,000 12,246,250 Bank of New York..................... 800,000 23,200,000 Chase Manhattan (Warrants)........... 11,772(a) 57,388 First Data........................... 800,000 37,900,000 First Financial Management........... 500,000 30,812,500 First USA............................ 500,000 16,437,500 GFC Financial........................ 650,000 20,637,500 Galen Partners II, L.P. (Units)...... 3.290(c) 2,991,595 MBNA................................. 2,250,000 52,593,750 Mellon Bank.......................... 324,700 9,943,938 NationsBank.......................... 500,000 22,562,500 Travelers............................ 666,666 21,666,645 Western National..................... 1,750,000 22,531,250 -------------- 273,974,566 -------------- TECHNOLOGY--11.6% Advanced Micro Devices............... 500,000(a) 12,437,500 Computer Associates International.... 500,000 24,250,000 Computer Sciences.................... 500,000(a) 25,500,000 Electronic Arts...................... 525,000(a) 10,106,250 Hewlett-Packard...................... 600,000 59,925,000 Intel................................ 500,000 31,937,500 MCI Communications................... 1,025,000 18,834,375 Sprint............................... 950,000 26,243,750 TRW.................................. 400,000 26,400,000 United Technologies.................. 300,000 18,862,500 Xerox................................ 300,000 29,700,000 -------------- 284,196,875 -------------- TRANSPORTATION--9.7% Burlington Northern.................. 700,000 33,687,500 CSX.................................. 600,000 41,775,000 Conrail.............................. 1,140,000 57,570,000 Federal Express...................... 173,800(a) 10,471,450 Illinois Central..................... 1,000,000 30,750,000 Norfolk Southern..................... 500,000 30,312,500 Ryder System......................... 400,000 8,800,000 Union Pacific........................ 500,000 22,812,500 -------------- 236,178,950 -------------- THE DREYFUS FUND INCORPORATED STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994 COMMON STOCKS (CONTINUED) SHARES VALUE ------------ -------------- UTILITIES--1.5% AT&T................................. 700,000 $ 35,175,000 -------------- TOTAL COMMON STOCKS (cost $1,622,238,925).............. $2,042,106,785 -------------- -------------- CONVERTIBLE PREFERRED STOCK--.3% USF&G, Ser. B, Cum., $10.25 (cost $4,925,000).................. 50,000(c) $ 6,515,066 -------------- -------------- PRINCIPAL CORPORATE BONDS--.3% AMOUNT ------------ Canadian Gas Gathering Systems: 14%, 8/29/2005..................... $ 187,500(c) $ 187,500 14%, 10/31/2005.................... 187,500(c) 187,500 14%, 7/24/2006..................... 531,633(c) 531,633 14%, 12/10/2006.................... 2,184,406(c) 2,184,406 14%, 4/8/2007...................... 549,478(c) 549,478 14%, 11/17/2007.................... 1,675,266(c) 1,675,266 14%, 6/30/2008..................... 1,930,747(c) 1,930,747 14%, 12/29/2008.................... 112,831(c) 112,831 -------------- TOTAL CORPORATE BONDS (cost $7,359,361).................. $ 7,359,361 -------------- -------------- SHORT-TERM INVESTMENTS--15.9% TIME DEPOSITS--6.9% Chemical Bank (London), 5%, 1/3/1995....................... $ 85,000,000 $ 85,000,000 Republic National Bank of New York (London), 4%, 1/3/1995....................... 83,000,000 83,000,000 -------------- 168,000,000 -------------- U.S. GOVERNMENT & AGENCIES--9.0% Federal Home Loan Mortgage: 5.90%, 1/4/1995.................... 50,000,000 49,975,417 5.97%, 1/26/1995................... 96,212,000 95,813,121 Federal National Mortgage Association, 5.96%, 1/31/1995................... 75,000,000 74,627,500 -------------- 220,416,038 -------------- TOTAL SHORT-TERM INVESTMENTS (cost $388,416,038)................ $ 388,416,038 -------------- -------------- TOTAL INVESTMENTS (cost $2,022,939,324)................................. 100.0% $2,444,397,250 ------ -------------- ------ -------------- CASH AND RECEIVABLES (NET).............................................. 0.0% $ 903,232 ------ -------------- ------ -------------- NET ASSETS.............................................................. 100.0% $2,445,300,482 ------ -------------- ------ -------------- THE DREYFUS FUND INCORPORATED STATEMENT OF INVESTMENTS (CONTINUED) December 31, 1994 NOTES TO STATEMENT OF INVESTMENTS: (a) Non-income producing. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security amounted to .54% of net assets. (c) Securities restricted as to public resale. Investments in restricted securities with an aggregate market value of $58,237,103 represent approximately 2.38% of net assets: ACQUISITION PURCHASE PERCENTAGE OF ISSUER DATE PRICE* NET ASSETS VALUATION+ ------------------ ------------- ------------- ------------------------- Canadian Gas Gathering Systems, Cl. A 8/29/90-7/1/94 $ 10.00 .10% $ 10.00 per share Canadian Gas Gathering Systems 14%: 8/29/2005-12/29/2008 8/29/90-7/1/94 100.00 .30 par GE Investment Private Placement Partners I, L.P. (Units) 5/28/91-6/22/94 1,040,807.62 .60 1,040,807.62 per unit Galen Partners II, L.P. (Units) 12/8/93-11/29/94 909,299.39 .12 909,299.39 per unit SK Equity Fund, L.P. (Units) 12/16/92-11/7/94 1,016,306.51 .65 1,016,306.51 per unit USF&G, Ser. B, Cum., $10.25 6/3/91 98.50 .27 130.30 per share Yorktown Energy Partners, L.P. (Units) 3/25/91-3/30/94 1,123,061.30 .34 1,123,061.30 per unit * Average cost. + The valuation of these securities has been determined in good faith under the direction of the Board of Directors. - ------------------ Subject to certain limitations, the Fund has commitments to invest in limited partnerships listed below: PORTION OF COMMITTED ISSUER AMOUNTS UNINVESTED - ------ -------------------- GE Investment Private Placement Partners I, L.P. (Units) $ 4,791,314 Galen Partners II, L.P. (Units) 1,710,116 SK Equity Fund, L.P. (Units) 30,383,919 See notes to financial statements.
THE DREYFUS FUND INCORPORATED STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 - --------------------------------------------------------------------------------
ASSETS: Investments in securities, at value (cost $2,022,939,324)--see statement.......................... $2,444,397,250 Cash............................................................ 64,731 Dividends and interest receivable............................... 6,106,820 Receivable for subscriptions to Capital Stock................... 923,822 Prepaid expenses................................................ 56,786 -------------- 2,451,549,409 LIABILITIES: Due to The Dreyfus Corporation.................................. $1,302,463 Payable for Capital Stock redeemed.............................. 4,247,219 Accrued expenses................................................ 699,245 6,248,927 ---------- -------------- NET ASSETS........................................................ $2,445,300,482 -------------- -------------- REPRESENTED BY: Paid-in capital................................................. $1,979,375,418 Accumulated undistributed net realized gain on investments...... 44,467,138 Accumulated net unrealized appreciation on investments--Note 3(b).......................................................... 421,457,926 -------------- NET ASSETS at value applicable to 204,909,040 shares outstanding (300 million shares of $1 par value Capital Stock authorized)... $2,445,300,482 -------------- -------------- NET ASSET VALUE, offering and redemption price per share ($2,445,300,482 divided by 204,909,040 shares).................. $11.93 ------ ------
- -------------------------------------------------------------------------------- See notes to financial statements. THE DREYFUS FUND INCORPORATED STATEMENT OF OPERATIONS Year ended December 31, 1994 - --------------------------------------------------------------------------------
INVESTMENT INCOME: INCOME: Cash dividends (net of $81,474 foreign taxes withheld at source).................................................... $ 48,229,678 Interest..................................................... 15,424,350 ------------ TOTAL INCOME............................................ $ 63,654,028 EXPENSES: Management fee--Note 2(a).................................... 16,866,777 Shareholder servicing costs.................................. 2,427,619 Custodian fees............................................... 191,739 Prospectus and shareholders' reports......................... 144,311 Professional fees............................................ 108,237 Directors' fees and expenses--Note 2(b)...................... 62,350 Registration fees............................................ 57,369 Miscellaneous................................................ 32,262 ------------ TOTAL EXPENSES.......................................... 19,890,664 ------------- INVESTMENT INCOME--NET.................................. 43,763,364 ------------- REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS: Net realized gain on investments (including options transactions)--Note 3(a).................. $116,754,284 Net realized (loss) on forward currency exchange contracts--Note 3(a); Short transactions..................... (775,318) ------------ NET REALIZED GAIN....................................... 115,978,966 Net unrealized (depreciation) on investments and forward currency exchange contracts.................................. (270,620,589) ------------- NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS........................................... (154,641,623) ------------- NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................................................... $(110,878,259) ------------- -------------
- -------------------------------------------------------------------------------- See notes to financial statements. THE DREYFUS FUND INCORPORATED STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, ----------------------------------- 1993 1994 --------------- --------------- OPERATIONS: Investment income--net.................................... $ 49,842,001 $ 43,763,364 Net realized gain on investments.......................... 134,240,029 115,978,966 Net unrealized appreciation (depreciation) on investments for the year............................................ 12,667,571 (270,620,589) --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................ 196,749,601 (110,878,259) --------------- --------------- DIVIDENDS TO SHAREHOLDERS: From investment income--net............................... (63,624,901) (43,763,364) In excess of investment income--net....................... (6,130,584) -- From net realized gain on investments..................... (140,044,515) (79,518,304) --------------- --------------- TOTAL DIVIDENDS......................................... (209,800,000) (123,281,668) --------------- --------------- CAPITAL STOCK TRANSACTIONS: Net proceeds from shares sold............................. 12,798,442,290 6,662,064,854 Dividends reinvested...................................... 181,237,341 105,591,624 Cost of shares redeemed................................... (13,264,963,957) (6,938,719,174) --------------- --------------- (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.......................................... (285,284,326) (171,062,696) --------------- --------------- TOTAL (DECREASE) IN NET ASSETS........................ (298,334,725) (405,222,623) NET ASSETS: Beginning of year......................................... 3,148,857,830 2,850,523,105 --------------- --------------- End of year............................................... $ 2,850,523,105 $ 2,445,300,482 --------------- --------------- --------------- --------------- SHARES SHARES --------------- --------------- CAPITAL SHARE TRANSACTIONS: Shares sold............................................... 965,802,077 517,021,740 Shares issued for dividends reinvested.................... 13,953,428 8,762,943 Shares redeemed........................................... (999,357,279) (538,493,724) --------------- --------------- NET (DECREASE) IN SHARES OUTSTANDING.................... (19,601,774) (12,709,041) --------------- --------------- --------------- ---------------
- -------------------------------------------------------------------------------- See notes to financial statements. THE DREYFUS FUND INCORPORATED FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Reference is made to page 4 of the Fund's prospectus dated May 1, 1995. NOTES TO FINANCIAL STATEMENTS NOTE 1-- SIGNIFICANT ACCOUNTING POLICIES: The Fund is registered under the Investment Company Act of 1940 ("Act") as a diversified open-end management investment company. Dreyfus Service Corporation, until August 24, 1994, acted as the exclusive distributor of the Fund's shares, which are sold to the public without a sales charge. Dreyfus Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A. On August 24, 1994, Premier Mutual Fund Services, Inc. (the "Distributor") was engaged as the Fund's distributor. The Distributor, located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of Institutional Administration Services, Inc., a provider of mutual fund administration services, the parent company of which is Boston Institutional Group, Inc. (A) PORTFOLIO VALUATION: Investments in securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. Securities for which there are no such valuations are valued at fair value as determined in good faith under the direction of the Board of Directors. Short-term investments are carried at amortized cost, which approximates value. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange. Forward currency exchange contracts are valued at the offsetting rate. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, amortization of discount on investments, is recognized on the accrual basis. (C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date. Dividends from investment income-net are declared and paid on a quarterly basis. Dividends from net realized capital gain are normally declared and paid annually, but the Fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the Fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES: (A) Pursuant to a management agreement ("Agreement") with the Manager, the management fee is payable monthly, based on the following annual percentages of the average daily value of the Fund's net assets: .65 of 1% of the first $1.5 billion; .625 of 1% of the next $500 million; .60 of 1% of the next $500 million; and .55 of 1% over $2.5 billion. The Agreement provides for an expense reimbursement from the Manager should the Fund's aggregate expenses, exclusive of taxes and brokerage commissions, exceed 1% of the average daily value of the Fund's net assets for any full year. No expense reimbursement was required pursuant to the Agreement for the year ended December 31, 1994. (B) Prior to August 24, 1994, certain officers and directors of the Fund were "affiliated persons," as defined in the Act, of the Manager and/or Dreyfus Service Corporation. Each director who is not an "affiliated person" receives an annual fee of $6,500 and an attendance fee of $500 per meeting. NOTE 3--SECURITIES TRANSACTIONS: (A) The aggregate amount of purchases and sales of investment securities, excluding short-term securities, options transactions and forward currency exchange contracts, during the year ended December 31, 1994, amounted to $646,736,881 and $918,369,071, respectively. When executing forward currency exchange contracts, the Fund is obligated to buy or sell a foreign currency at a specified rate on a certain date in the future. With respect to sales of forward currency exchange contracts, the Fund would incur a loss if the value of the contract increases between the date the forward contract is opened and the date the forward contract is closed. The Fund realizes a gain if the value of the contract decreases between those dates. With respect to purchases of forward currency exchange contracts, the Fund would incur a loss if the value of the contract decreases between the date the forward contract is opened and the date the forward contract is closed. The Fund realizes a gain if the value of the contract increases between those dates. At December 31, 1994, there were no forward currency exchange contracts outstanding. (B) At December 31, 1994, accumulated net unrealized appreciation on investments was $421,457,926, consisting of $491,341,068 gross unrealized appreciation and $69,883,142 gross unrealized depreciation. At December 31, 1994, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS SHAREHOLDERS AND BOARD OF DIRECTORS THE DREYFUS FUND INCORPORATED We have audited the accompanying statement of assets and liabilities of The Dreyfus Fund Incorporated, including the statement of investments, as of December 31, 1994, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the years indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1994, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Dreyfus Fund Incorporated at December 31, 1994, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated years, in conformity with generally accepted accounting principles. Ernst & Young LLP New York, New York January 30, 1995 -----END PRIVACY-ENHANCED MESSAGE-----