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UNITED STATES OF AMERICA
before the
SECURITIES AND = EXCHANGE=20 COMMISSION

INVESTMENT ADVISERS ACT OF 1940
RELEASE NO. 1870 / May 10, = 2000

INVESTMENT COMPANY ACT OF 1940
RELEASE NO. 24450 / May 10, = 2000

SECURITIES ACT OF 1933
RELEASE NO. 7857 / May 10, 2000

ADMINISTRATIVE PROCEEDING
FILE NO. 3-10201

In the Matter of=20

The Dreyfus Corporation
and Michael L.=20 Schonberg,
Respondents.

ORDER INSTITUTING PROCEEDINGS,
MAKING = FINDINGS,=20 IMPOSING
REMEDIAL SANCTIONS AND
ORDERING RESPONDENTS = TO=20 CEASE
AND DESIST PURSUANT TO SECTIONS
203(e), 203(f), = AND=20 203(k) OF THE
INVESTMENT ADVISERS ACT OF 1940, =
SECTIONS 9(b)=20 AND 9(f) OF THE
INVESTMENT COMPANY ACT OF 1940,
AND = SECTION 8A=20 OF THE SECURITIES
ACT OF 1933

The Securities and Exchange Commission ("Commission") deems it=20 appropriate and in the public interest that public administrative=20 proceedings be instituted against The Dreyfus Corporation = ("Dreyfus") and=20 Michael L. Schonberg (collectively "Respondents") pursuant to = Sections=20 203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940=20 ("Advisers Act"), Sections 9(b) and 9(f) of the Investment Company = Act of=20 1940 ("Investment Company Act"), and Section 8A of the Securities = Act of=20 1933 ("Securities Act").

In anticipation of the institution of these administrative = proceedings,=20 Respondents have submitted Offers of Settlement ("Offers") which = the=20 Commission has determined to accept. Solely for the purpose of = these=20 proceedings and any other proceedings brought by or on behalf of = the=20 Commission, or to which the Commission is a party, Respondents, by = their=20 Offers, admit the jurisdiction of the Commission over them and the = subject=20 matter of these administrative proceedings and consent to the = entry of=20 this Order Instituting Proceedings, Making Findings, Imposing = Remedial=20 Sanctions and Ordering Respondents to Cease and Desist pursuant to = Sections 203(e), 203(f), and 203(k) of the Advisers Act, Sections = 9(b) and=20 9(f) of the Investment Company Act, and Section 8A of the = Securities Act=20 ("Order"), without admitting or denying the Commission's findings=20 contained in this Order, except those contained in Part III = under the=20 headings "Respondents" and "Related Entities," which are = admitted.

II.

Accordingly, IT IS HEREBY ORDERED that proceedings pursuant to = Sections=20 203(e), 203(f), and 203(k) of the Advisers Act, Sections 9(b) and = 9(f) of=20 the Investment Company Act, and Section 8A of the Securities Act = are=20 instituted.

III.

On the basis of this Order and Respondents' Offers, the = Commission=20 makes the following findings:

Respondents

The Dreyfus Corporation was formed in 1947 and was at = all=20 relevant times registered with the Commission as an investment = adviser.=20 Dreyfus serves as investment adviser for the Dreyfus Aggressive = Growth=20 Fund ("DAG") and other investment companies ("Dreyfus Funds").

Michael L. Schonberg, 49, was at all relevant times = employed by=20 Dreyfus and an associated person of Dreyfus. He served as = portfolio=20 manager for five of the Dreyfus Funds, including DAG, at intervals = between=20 July 1995 and June 1998.

Related Entities

Dreyfus Growth and Value Funds, Inc. ("the Company") is = an open=20 end, management investment company within the meaning of the = Investment=20 Company Act, comprising separate series, each of which is treated = as a=20 separate fund.

Dreyfus Aggressive Growth Fund, a mutual fund, is a = separate=20 diversified series of the Company. DAG's inception date was = September 29,=20 1995. DAG's first semi-annual report was dated February 29, 1996. = Its=20 first fiscal year ended on August 30, 1996. In April 1997, DAG was = merged=20 with Dreyfus Special Growth Fund.

Summary

Over the course of DAG's first fiscal year, Schonberg's = allocations of=20 securities purchased in initial public offerings -- especially = "hot" IPOs=20 -- had the overall effect of favoring DAG over three other funds = Schonberg=20 managed. Neither Dreyfus nor Schonberg disclosed this practice,=20 notwithstanding DAG's prospectus disclosure that investment = opportunities=20 would be allocated equitably among Dreyfus funds. Dreyfus also did = not=20 review Schonberg's IPO allocations to assess whether their overall = effect=20 was to favor DAG over the other funds.

DAG achieved exceptional returns during its first fiscal year = in large=20 part because of the investments in IPOs. During the same time, = DAG's net=20 asset size increased from $2 million at its inception to more = than=20 $154 million eight months later. Nevertheless, Dreyfus did = not=20 disclose the large impact of the IPO investments, though it was=20 questionable whether DAG could replicate its prior performance = through=20 continuing to invest in IPOs as the fund grew larger. In fact, = DAG's=20 performance began to decline in June 1996. Notwithstanding this = downturn=20 and the fund's increased asset size, during the last quarter of = 1996=20 Dreyfus continued to advertise DAG's excellent total return since = its=20 inception in advertisements without disclosing the large impact of = the=20 IPOs on the fund's performance.

In addition, Dreyfus did not take appropriate steps and did not = institute adequate procedures reasonably necessary to determine = whether=20 fund transactions in securities Schonberg held personally gave = rise to a=20 potential conflict of interest.

Facts

Dreyfus

During 1995 and 1996, Dreyfus broadened its managed investments = product=20 line to include additional equity funds. During that time, Dreyfus = introduced 13 new equity funds and hired additional investment=20 professionals, including Schonberg.

In July 1995, Schonberg was appointed portfolio manager of two=20 preexisting funds: the Dreyfus Strategic Growth Fund ("Strategic = Growth"),=20 which then had net assets of $100 million,¹ and the Dreyfus Premier Capital Growth = Fund=20 ("Capital Growth"), which then had net assets of $500 = million.² On September 29, 1995, DAG was offered = to the=20 public and Schonberg was appointed DAG's portfolio manager. In = February=20 1996, Schonberg assumed responsibility for another preexisting = fund, the=20 Dreyfus Special Growth Fund ("Special Growth"), which then had net = assets=20 of $68.7 million. Although the net asset sizes of these four funds = (the=20 "Funds") differed significantly from each other during DAG's first = fiscal=20 year, the Funds had the same stated investment objective, capital=20 appreciation, and all four could and did invest in IPOs.

Initial Public Offerings

The price of IPO securities often increases from the offering = price=20 during the first day of trading. IPOs characterized as "hot" prior = to the=20 offering are those for which demand is particularly strong and = trading is=20 expected to occur at a significant premium in the immediate = aftermarket.=20 Therefore, IPOs in general, and hot IPOs in particular, represent = valuable=20 investment opportunities because they tend to increase in price = during the=20 first trading day.

Schonberg's IPO Allocations During DAG's = First Fiscal=20 Year

DAG's prospectus during its first fiscal year stated that:

If . . . other investment = companies=20 [advised by Dreyfus] desire to invest in, or dispose of, the = same=20 securities as [DAG], available investments or opportunities for = sales=20 will be allocated equitably to each investment = company.

Schonberg exercised investment discretion when allocating IPOs = and=20 could consider a variety of factors in doing so. Throughout DAG's = first=20 fiscal year ending August 30, 1996, however, IPO shares were = not=20 allocated equitably among the Funds. Instead, Schonberg's IPO = allocations=20 over the course of DAG's first fiscal year had the effect of = favoring DAG=20 over the other Funds in the allocation of IPOs in general and hot = IPOs in=20 particular.

During DAG's first fiscal year, Schonberg caused the Funds to = invest in=20 109 IPOs. Each of the Funds was eligible to participate in these=20 IPOs.³ Of the 109 IPOs, DAG was allocated = shares in 89=20 percent⁴ (97 IPOs), Strategic Growth received = shares in=20 25 percent (27 IPOs), Capital Growth received shares in 12 percent = (13=20 IPOs) and Special Growth received shares in 5 percent (5 = IPOs).⁵

Shares of the 32 most oversubscribed IPOs⁶ during DAG's first fiscal year also = were=20 allocated favorably to DAG. Of these 32 IPOs, DAG was allocated = shares in=20 88 percent (28 IPOs), Strategic Growth received shares in 9 = percent (3=20 IPOs), Capital Growth received shares in 6 percent (2 IPOs) and = Special=20 Growth received no shares.⁷

During DAG's first fiscal year, Schonberg allocated IPOs=20 disproportionately to DAG in view of its net asset size compared = to the=20 net asset sizes of the other Funds. In an average month the three = Funds=20 other than DAG, taken together, received IPO shares whose value at = the=20 offer price was $0.38 per $100 of their average daily net assets, = while=20 DAG received IPO shares whose value at the offer price was $14.14 = per $100=20 of DAG's average daily net assets. Thus, relative to the Funds' = average=20 daily net asset sizes, Schonberg allocated to DAG during its first = fiscal=20 year IPO shares whose value at the offer price was on average=20 approximately 37 times larger than the IPOs allocated to the other = Funds=20 combined.

The IPOs allocated to DAG also had average first day = returns⁸ of approximately 26 percent, while = the IPOs=20 allocated to the other Funds had average first day returns of=20 approximately 14 percent.⁹

DAG's Total Return and Asset Growth

According to Morningstar Mutual Funds, DAG was the top = performing fund=20 in its class for the first quarter of 1996. The first day returns = from the=20 IPOs that Schonberg allocated to DAG during its first fiscal year = had a=20 large impact on DAG's total return.¹⁰ By February 29, 1996, the date = of DAG's=20 first Semi-Annual Report, when DAG's total return since inception = was=20 67.44 percent, the first day returns from the IPOs that Schonberg=20 allocated to DAG contributed about 51.5 percentage points or = approximately=20 76 percent of DAG's total return as of that date. By May 31, = 1996,=20 when the fund had reached its peak performance and net asset size, = first=20 day returns from the IPOs contributed about 83 percentage points = or=20 approximately 70 percent of the fund's total return of 118.96 = percent as=20 of that date.

This outstanding performance coincided with extraordinary asset = growth=20 that lasted until approximately May 1996. Between = September 29, 1995=20 and May 31, 1996, DAG's net assets grew every month until, by = May 31, 1996, its net assets had grown from $2 million = to a peak=20 of $154,401,000.

Beginning in June 1996, DAG's performance began to decline=20 substantially, such that, by the end of DAG's first fiscal year on = August 30, 1996, the fund's return for the three month period = ending=20 on that date was negative 17.03 percent.¹¹ As of August 30, 1996, DAG's = net assets=20 were $121,495,000, still more than twice its size at the end of = April,=20 before the May peak.¹² Although Schonberg caused DAG to = invest in=20 additional IPOs after May 31, 1996, these IPOs did not have a = significant impact on the fund's return because of the fund's = increased=20 net asset size.

Nevertheless, DAG finished its first fiscal year ranking first = among=20 175 funds in Lipper, Inc.'s capital appreciation category. Its = total=20 return since inception, buoyed by the fund's high performance = during its=20 early months, was 81.68 percent as of August 30, 1996. The first = day=20 returns from IPOs that Schonberg allocated to DAG throughout the = fiscal=20 year contributed 70.3 percentage points, or approximately 86 = percent of=20 DAG's total return as of that date, with the greater component = contributed=20 by the IPOs purchased during the fund's early months, when DAG's = net asset=20 size was smaller.

Dreyfus's Disclosure

During DAG's first fiscal year, neither Dreyfus nor Schonberg = disclosed=20 to the Funds' boards of directors or to the Funds' = shareholders and=20 prospective shareholders the effect of Schonberg's allocation of = IPO=20 shares.

Dreyfus and Schonberg also did not disclose to the Company's = board of=20 directors or to DAG's shareholders and prospective shareholders = the large=20 impact that IPOs had on DAG's total return during DAG's first = fiscal=20 year.

DAG's Semi-Annual Report dated February 29, 1996 reported = DAG's=20 total return since inception of 67.44 percent, and stated that DAG = had=20 invested in "a number of initial public offerings." The = Semi-Annual Report=20 also stated that DAG's return since inception "should not be = regarded as=20 routine." However, it did not disclose the large impact IPOs had = on DAG's=20 performance as of February 29, 1996, by which time first day = returns=20 from IPOs had contributed approximately 76 percent of DAG's total = return=20 since inception.

Dreyfus published DAG's performance in various advertisements, = the=20 first of which appeared in The Wall Street Journal on = May 23,=20 1996 (the "May Ad"). The May Ad included DAG's return since = inception as=20 of March 31, 1996 (84.16 percent), as well as DAG's return = for the=20 first calendar quarter of 1996 (40.97 percent). The May Ad also = stated=20 that DAG's "relatively small asset size combined with a period of = high=20 stock market performance may have contributed to the Fund's = success and=20 may not be replicated over the long term." However, the May Ad did = not=20 mention the large impact that IPOs had on DAG's performance as of=20 March 31, 1996, by which time first day returns from IPOs had = contributed approximately 77 percent of DAG's total return since=20 inception.

Beginning in October 1996 and continuing until = December 1996,=20 Dreyfus publicized DAG's total return of 81.92 percent as of=20 September 30, 1996 in advertisements in ten different = newspapers and=20 periodicals (the "Autumn Ads"). One of these advertisements cited = DAG's=20 Number 1 ranking among 175 funds in Lipper, Inc.'s capital = appreciation=20 category. The Autumn Ads, however, did not disclose the large = impact that=20 IPOs had on DAG's performance, although as of the end of DAG's = first=20 fiscal year on August 30, 1996 first day returns from IPOs = throughout=20 the fiscal year contributed approximately 86 percent of DAG's = total return=20 since inception of 81.68 percent.

Dreyfus's Supervision

During DAG's first fiscal year, Dreyfus did not measure the = impact of=20 IPOs on DAG's performance and did not review the effect of = Schonberg's=20 allocation practices to ensure that, over time, the result was=20 equitable.

Dreyfus's Code of Ethics

Dreyfus's code of ethics prohibited a portfolio manager from=20 participating "in any activity that causes a conflict of interest = or gives=20 the appearance of a conflict of interest." The code of ethics also = required portfolio managers periodically to report to Dreyfus = their=20 securities holdings and transactions. When he joined Dreyfus, = Schonberg=20 held certain securities personally.¹³ During the relevant time period, = Schonberg=20 reported his securities holdings and transactions in compliance = with the=20 code. After joining Dreyfus, Schonberg engaged in transactions on = behalf=20 of his funds involving the securities of seven companies in which = he=20 continued to hold a position acquired before his employment by = Dreyfus. In=20 addition, twice while at Dreyfus, Schonberg purchased securities = for his=20 personal account after preclearing those purchases in compliance = with=20 Dreyfus's code of ethics,¹⁴ and at some time thereafter engaged = in=20 transactions in those securities on behalf of certain funds under = his=20 management. These circumstances created a potential conflict of = interest=20 between Schonberg and the funds he managed. Dreyfus, however, did = not take=20 appropriate steps, and had not instituted adequate procedures = reasonably=20 necessary, to prevent violations of its code of ethics relating to = such=20 potential conflicts of interest.¹⁵

Violations

An investment adviser such as Dreyfus has a fiduciary duty to = act in=20 the utmost good faith with respect to its clients, to provide full = and=20 fair disclosure of all material facts, and affirmatively to employ = reasonable care to avoid misleading clients. SEC v. = Capital Gains=20 Research Bureau, Inc., 375 U.S. 180, 194 (1963). A fact = is=20 material if there is a "substantial likelihood that the disclosure = of the=20 omitted fact would have been viewed by the reasonable investor as = having=20 significantly altered the `total mix' of information available." = Basic,=20 Inc. v. Levinson, 485 U.S. 224, 231-32 (1988), = quoting=20 TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 = (1976).

Reasonable investors would consider allocation practices that = had the=20 overall effect of favoring DAG over the other Funds as = significantly=20 altering the total mix of information available. See Account = Management=20 Corp., Advisers Act Release No. 1529 (Sept. 29, 1995) and = McKenzie=20 Walker Investment Management, Inc., Advisers Act Release = No. 1571=20 (July 16, 1996). Thus the failure to disclose this practice = of=20 preferentially allocating IPOs was a material omission. Moreover, = DAG's=20 prospectus disclosure regarding equitable allocation of investment = opportunities became materially false and misleading as a result = of the=20 IPO allocation favoritism.

Under the facts and circumstances of this case, disclosure that = a large=20 portion of DAG's total return during its first fiscal year was=20 attributable to investments in IPOs also would have been material = to an=20 investor's decision whether to invest in DAG where, given the = growth in=20 DAG's total assets, it was questionable whether DAG could continue = to=20 experience, by investing in IPOs, substantially similar = performance as DAG=20 had previously experienced. See Van Kampen Investment Advisory = Corp.,=20 Advisers Act Release No. 1819 (September 8, 1999).

Under the facts and circumstances of this case, the failure to = disclose=20 in the Autumn Ads the large impact of the IPOs on DAG's = performance during=20 DAG's first fiscal year made those advertisements materially false = and=20 misleading where: (1) DAG's net asset size had increased to = the point=20 that DAG was no longer experiencing, by investing in additional = IPOs,=20 substantially similar performance as DAG had previously = experienced;=20 (2) DAG's return for the final three months of DAG's first = fiscal=20 year was negative 17.03 percent; and (3) while the Autumn Ads = were=20 being published, DAG's return for each of the three month periods = ending=20 September 30, 1996, October 31, 1996 and = November 29, 1996=20 remained negative.¹⁶

Based on the foregoing, Dreyfus, by use of the mails or other = means or=20 instrumentalities of interstate commerce, engaged in transactions, = practices or courses of business that operated as a fraud or = deceit upon=20 the Company and upon DAG's shareholders and prospective = shareholders. Thus=20 Dreyfus willfully¹⁷ violated, and Schonberg caused and = willfully=20 aided and abetted Dreyfus's violation of, Section 206(2) of the = Advisers=20 Act.¹⁸

Based on the foregoing, Dreyfus and Schonberg, in the offer and = sale of=20 securities by the use of means or instruments of transportation or = communication in interstate commerce or by the use of the mails, = engaged=20 in transactions, practices or courses of business that operated as = a fraud=20 or deceit upon DAG's shareholders and prospective shareholders. = Thus=20 Dreyfus willfully violated, and Schonberg willfully violated and = caused=20 and willfully aided and abetted Dreyfus's violation of, Section = 17(a)(3)=20 of the Securities Act.¹⁹

Based on the foregoing, Dreyfus failed reasonably to supervise=20 Schonberg in connection with his IPO allocations, with a view to=20 preventing Schonberg's violations of the federal securities laws, = and=20 Dreyfus did not establish procedures, and a system for applying = such=20 procedures, which would reasonably be expected to prevent and = detect,=20 insofar as practicable, any such violation by Schonberg.

Former Rule 17j-1(b)(1)²⁰ promulgated under = Section 17(j) of the=20 Investment Company Act required Dreyfus to adopt a written code of = ethics=20 and to "use reasonable diligence, and institute procedures = reasonably=20 necessary, to prevent violations of such code." Although Dreyfus = had=20 adopted a written code of ethics that prohibited actual or = apparent=20 conflicts of interest, for the reasons stated above Dreyfus = willfully=20 violated Section 17(j) of the Investment Company Act and = former Rule=20 17j-1(b)(1).²¹

IV.

In view of the foregoing, the Commission deems it appropriate = and in=20 the public interest to impose the sanctions that are set forth in = the=20 Offers submitted by Dreyfus and Schonberg.

Accordingly, IT IS ORDERED THAT:

A. Dreyfus and Schonberg are censured.

B. Pursuant to Section 203(k) of the Advisers Act and Section = 8A of the=20 Securities Act, Dreyfus and Schonberg cease and desist from = committing or=20 causing any violation and any future violation of Section 206(2) = of the=20 Advisers Act and Section 17(a)(3) of the Securities Act.

C. Pursuant to Section 9(f) of the Investment Company Act, = Dreyfus=20 cease and desist from committing or causing any violation and any = future=20 violation of Section 17(j) of the Investment Company Act and=20 Rule 17j-1(c) thereunder.

D. Pursuant to Section 203(i) of the Advisers Act, Dreyfus = shall,=20 within ten days of the entry of this Order, pay a civil penalty in = the=20 amount of $950,000 to the United States Treasury. Such payment = shall be:=20 (a) made by United States postal money order, certified = check, bank=20 cashier's check or bank money order; (b) made payable to the = Securities=20 and Exchange Commission; (c) hand delivered or mailed to the = Comptroller,=20 Securities and Exchange Commission, Operations Center, 6432 = General Green=20 Way, Suite B, Mail Stop 0-3, Alexandria, Virginia 22312; and=20 (d) submitted under cover letter which identifies Dreyfus as = a=20 Respondent in these proceedings, the file number of these = proceedings, a=20 copy of which cover letter and money order or check shall be sent = to=20 Richard C. Sauer, Assistant Director, Securities and Exchange = Commission, 450 Fifth Street, N.W., Room 8411, Washington, DC=20 20549-0803.

E. Pursuant to Section 203(i) of the Advisers Act and Section = 9(d) of=20 the Investment Company Act, Schonberg shall, within ten days of = the entry=20 of this Order, pay a civil penalty in the amount of $50,000 to the = United=20 States Treasury. Such payment shall be: (a) made by United = States=20 postal money order, certified check, bank cashier's check or bank = money=20 order; (b) made payable to the Securities and Exchange Commission; = (c)=20 hand delivered or mailed to the Comptroller, Securities and = Exchange=20 Commission, Operations Center, 6432 General Green Way, = Suite B, Mail=20 Stop 0-3, Alexandria, Virginia 22312; and (d) submitted under = cover=20 letter which identifies Schonberg as a Respondent in these = proceedings,=20 the file number of these proceedings, a copy of which cover letter = and=20 money order or check shall be sent to Richard C. Sauer, Assistant=20 Director, Securities and Exchange Commission, 450 Fifth Street, = N.W., Room=20 8411, Washington, DC 20549-0803.

F. Pursuant to Section 203(f) of the Advisers Act, Schonberg is = suspended from association with any investment adviser, and = pursuant to=20 Section 9(b) of the Investment Company Act, Schonberg is = prohibited from=20 serving or acting as an employee, officer, director, member of an = advisory=20 board, investment adviser or depositor of, or principal = underwriter for, a=20 registered investment company or affiliated person of such = investment=20 adviser, depositor, or principal underwriter, for a period of nine = months,=20 effective on the second Monday following the entry of this = Order.

G. Dreyfus, at its own expense, shall comply with its = undertakings=20 to:

retain an independent consultant ("Consultant") not = unacceptable to=20 the staff of the Divisions of Enforcement and Investment = Management (the=20 "Staff"), within 30 days of the date of this Order to, among = other=20 things, conduct a comprehensive review of:=20 (a) Dreyfus's policies, procedures, and practices relating = to its=20 allocation of shares of IPOs among the Dreyfus Funds and the = Dreyfus=20 Fund managers; (b) Dreyfus's policies, procedures and = practices=20 relating to Dreyfus's performance advertising; = (c) Dreyfus's=20 disclosure of its policies and practices relating to the = allocation of=20 shares of IPOs; (d) Dreyfus's code of ethics concerning its = portfolio managers' personal securities holdings and = transactions, and=20 Dreyfus's implementation of procedures reasonably necessary to = prevent=20 and detect actual or apparent conflicts of interest in = connection with=20 its portfolio managers' personal securities holdings and = transactions;=20 and (e) Dreyfus's supervision of such activities. Such = review will=20 be for the purpose of determining compliance with the terms of = this=20 Order and federal securities laws and to recommend policies and=20 procedures reasonably designed to ensure compliance with the = federal=20 securities laws. Such recommended policies and procedures shall = include,=20 but not be limited to, as appropriate, training programs, = manuals, and=20 other measures reasonably designed to ensure that Dreyfus = employees,=20 officers, and agents understand and are capable of performing = their=20 obligations and responsibilities with respect to the allocation = of=20 investment opportunities and performance advertising;
arrange for the Consultant to make conclusions and = recommendations=20 within 90 days from the date of engagement in the form of a = report (the=20 "Report") which shall set forth in detail the nature and scope = of the=20 review conducted, as well as the conclusions and recommendations = of the=20 Consultant. Dreyfus may apply to the Staff for an extension of = whatever=20 time period it deems appropriate, but in no event shall the = review be=20 completed and the Report submitted to Dreyfus more than 120 days = from=20 the date of the Order. Dreyfus undertakes to cooperate fully = with the=20 Consultant and undertakes to provide such person with access to = its=20 files, books, records, and personnel as reasonably requested for = such=20 person's review;
adopt and implement, with the approval of the board of = directors of=20 each Dreyfus Fund, by no later than 90 days after receipt of the = Report,=20 such policies and procedures and practices recommended by the = Consultant=20 which Dreyfus reasonably determines do not constitute an undue = burden on=20 Dreyfus, provided, however, that as to any of the = Consultant's=20 recommendations that Dreyfus determines are unduly burdensome or = impractical, Dreyfus may suggest an alternative procedure = designed to=20 obtain the same objective, submitted in writing to the = Consultant and to=20 the Staff. The Consultant shall reasonably evaluate Dreyfus's=20 alternative procedure and approve the alternative if it is not=20 unreasonable. Dreyfus, with the approval of each board of = directors of=20 the Dreyfus Funds, shall abide by the Consultant's determination = with=20 regard thereto and adopt those recommendations. Dreyfus shall = set forth=20 in an affidavit submitted to the Staff a certification that such = alternative procedure(s) has been approved by each board of = directors of=20 the Dreyfus Funds;
authorize and direct the Consultant to provide a copy of the = Report=20 to the Staff within 10 days after its submission to Dreyfus. = Dreyfus=20 shall, within 60 days of delivery of the Report to the Staff, = submit to=20 the Staff an affidavit setting forth the details of its = implementation=20 of the recommendations contained in the Report;
require the Consultant to enter into an agreement, providing = that:=20 (a) for the period of engagement and for a period of two = years from=20 the completion of the engagement, the Consultant shall not enter = into=20 any employment, consultant, attorney-client, auditing, or other=20 professional relationship with Schonberg or Dreyfus or any of = Dreyfus's=20 present or former affiliates, directors, officers, employees, or = agents=20 acting in their capacity as such; and (b) any firm with = which the=20 Consultant is affiliated or of which either is a member, and any = person=20 engaged to assist the Consultant in performance of their duties = under=20 this Order shall not, without prior written consent of the = Staff, enter=20 into any employment, consultant, attorney-client, auditing, or = other=20 professional relationship with Schonberg or Dreyfus, or any of = Dreyfus's=20 present or former affiliates, directors, officers, employees, or = agents=20 in their capacity as such for the period of the engagement and = for a=20 period of two years after the engagement; and
disclose to each member of each board of directors of the = Dreyfus=20 Funds the terms of this Order by delivering to each such member = a copy=20 of this Order within 30 days of entry of this Order.

By the Commission.

Jonathan G. Katz
Secretary

Footnote=20

¹	All net asset figures in this Order are = approximate.
²	Starting in August 1995, Schonberg also managed another=20 preexisting fund, the Dreyfus Large Company Growth Fund, = which then=20 had $10 million in net assets. This fund focused on = investments=20 in companies with greater than $900 million in market=20 capitalization, which made it ineligible to participate in = many=20 IPOs. Because of this difference from the other funds = Schonberg=20 managed, it is not included within the meaning of "Funds" as = defined=20 in this Order.
³	Dreyfus's records from 1996 show that, in anticipation of = IPOs,=20 Schonberg often initially indicated to the Dreyfus trading = desk that=20 he was interested in purchasing IPO shares for other Funds = as well=20 as DAG.
⁴	This and similar percentages in this Order are = approximate, due=20 to rounding.
⁵	Of the 97 IPOs in which DAG participated, Schonberg = allocated=20 IPO shares only to DAG, and not to any of the other Funds, = in 72=20 IPOs, or 66 percent of the 109 IPOs.
⁶	These 32 IPOs, a subset of the total 109 IPOs, were those = in=20 which the actual overall Dreyfus allotment of shares from = the=20 underwriting syndicate was, at most, 10 percent of the total = number=20 of shares Dreyfus requested. Schonberg usually knew at the = time of=20 his allocations whether the underwriters had allotted to = Dreyfus a=20 small number of IPO shares relative to the total number of = shares=20 Dreyfus had requested. Schonberg also often learned about an = IPO's=20 oversubscription from information supplied by the = underwriters to=20 the Dreyfus trading desk before the offering date, which the = trading=20 desk frequently noted in writing and made available to = interested=20 portfolio managers, including Schonberg.
⁷	Of the 28 very oversubscribed or "hot" IPOs in which DAG=20 participated, Schonberg allocated IPO shares only to DAG, = and not to=20 any of the other Funds, in 27 IPOs, or 84 percent of the 32 = hot=20 IPOs.
⁸	The "first day return" from an IPO is the change, = expressed as a=20 percentage, between the offering price and the closing price = on the=20 first trading day or between the offering price and the = sales price=20 if the security is sold during the first trading day. During = DAG's=20 first fiscal year, Schonberg did not sell during the first = trading=20 day any of the securities he purchased in IPOs.
⁹	Empirical research indicates that, on average, first day = returns=20 for IPOs historically have approximated 13 percent. = See=20 Smith, Investment Banking and the Capital Acquisition=20 Process, 15 J. Fin. Econ. 3 (1986)(over 15 percent = during period=20 reviewed); Ritter, The Long-Run Performance of Initial = Public=20 Offerings, 46 J. Fin. 3 (Mar. 1991)(14.3 percent); = Kirgman,=20 et al., The Persistence of IPO Mispricing and the = Predictive=20 Power of Flipping, 54 J. Fin. 1015 (June 1999)(12.3 = percent); Aggarwal, Stabilization Activities by = Underwriters=20 after Initial Public Offerings, J. Fin. = (forthcoming)(16.2=20 percent).
¹⁰	The daily return for a fund equals the weighted average of = the=20 returns from all the assets in the fund, and includes the = first day=20 return from an IPO on the day when the fund invested in an = IPO,=20 whether or not the securities purchased in the IPO are held = or=20 promptly sold. Total return as of any particular date equals = the=20 daily returns cumulated through that date. Thus, the first = day=20 returns from IPOs are a component of the total return of a = fund that=20 invests in IPOs, and they can be the predominant component,=20 especially when a fund's net asset size is small.
¹¹	DAG's return remained negative for every three month = period=20 concluding at the end of each of the remaining months of = 1996, as=20 follows: September 30, 1996 (negative 7.71 percent);=20 October 31, 1996 (negative 7.79 percent); = November 29,=20 1996 (negative 16.25 percent); December 31, 1996 (negative = 13.37=20 percent).
¹²	DAG's net assets as of June 30, 1996, were = $128,940,000,=20 and as of July 31, 1996, they were = $106,454,000.
¹³	Schonberg had purchased five of these securities in = private=20 placements between November 1991 and February 1995. He = purchased two=20 of these securities in open market transactions between = October 1992=20 and December 1994. These purchases did not involve = IPOs.
¹⁴	Schonberg purchased one of these securities in a private=20 placement in December 1995, and the other in an open market=20 transaction in February 1998. These purchases did not = involve=20 IPOs.
¹⁵	Information that a Dreyfus portfolio manager was = personally=20 holding securities while engaging in transactions in the = same=20 securities on behalf of funds he managed did not normally = come to=20 the attention of Dreyfus's chief compliance officer in = connection=20 with either Dreyfus's preclearance procedures or its = requirement=20 that portfolio managers submit an annual report of = securities=20 holdings.
¹⁶	Although the Autumn Ads complied with Rule 482 of = Regulation C=20 (17 C.F.R. =A7 230.482), such advertisements are = subject to the=20 general antifraud provisions of the federal securities laws = and must=20 not be false and misleading.
¹⁷	In applying the term "willful" in Commission = administrative=20 proceedings instituted pursuant to Sections 15(b), 15B, = 15C,=20 17A and 19(h) of the Exchange Act, Section 9(b) of the=20 Investment Company Act, and Sections 203(e) and (f) of the = Advisers=20 Act, the Commission evaluates on a case-by-case basis = whether the=20 respondent knew or reasonably should have known under the = particular=20 facts and circumstances that his conduct was improper. In = this case,=20 as in all Commission administrative proceedings charging a = willful=20 violation under these statutory provisions, the Commission = applies=20 this standard to persons -- specifically, securities = industry=20 professionals -- who are directly subject to Commission = jurisdiction=20 and who have a responsibility to understand their duties to = the=20 investing public and to comply with the applicable rules and = regulations which govern their behavior.
¹⁸	Section 206(2) of the Advisers Act does not require a = showing=20 of scienter. Capital Gains Research Bureau,=20 375 U.S. at 192.
¹⁹	Section 17(a)(3) of the Securities Act does not require a=20 showing of scienter. Aaron v. SEC, = 446 U.S.=20 680, 697 (1980).
²⁰	The Commission's recent amendments to Rule 17j-1 = redesignated=20 former Rule 17j-1(b) as Rule 17j-1(c) without changing = the=20 substance of this provision. See Investment = Company Act=20 Release No. 23958 (Aug. 20, 1999).
²¹	See footnote 17 above.

http://www.sec.gov/litigation/admin/33-7857.htm

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Modified:01/10/2000

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UNITED STATES OF AMERICAbefore theSECURITIES AND = EXCHANGE=20 COMMISSION

Modified:01/10/2000

UNITED STATES OF AMERICA
before the
SECURITIES AND = EXCHANGE=20 COMMISSION