PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
LETTER TO SHAREHOLDERS
Dear Shareholder:
In early August, Michael L. Schonberg became the portfolio manager of
Premier Capital Growth Fund, Inc. I selected Mr. Schonberg to become a
Dreyfus portfolio manager, based on his broad and successful experience in a
number of key positions in the securities industry. Before coming to Dreyfus,
Mr. Schonberg was responsible for managing growth-oriented portfolios at the
DuPont Pension Fund and UBS Asset Management New York (a $30 billion money
management firm), where he served as Chief Investment Officer and Vice
Chairman of its Investment Policy Committee. He has also held posts as
portfolio manager for Cambridge Capital Corporation and Alliance Capital
Management Corporation. Most recently, he was associated with Omega Advisors
as a general partner. He is a graduate of the Massachusetts Institute of
Technology.
Mr. Schonberg's annual report on the activities of Premier Capital Growth
Fund follows.
Sincerely,
[Stephen Canter signature logo]
Stephen Canter
Chief Investment Officer
The Dreyfus Corporation
October 11, 1995
New York, N.Y.
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
LETTER TO SHAREHOLDERS
Dear Shareholder:
The following is our report to you on Premier Capital Growth Fund, Inc.,
formerly Dreyfus Capital Growth Fund (A Premier Fund), for the fiscal year
ended September 30, 1995. The name was changed to more closely identify the
Fund with Dreyfus' Premier family of funds, which are available for purchase
through banks and brokers as well as directly from Dreyfus. We appreciate
your investment in the Fund and your confidence in Dreyfus.
ECONOMIC ENVIRONMENT
For most of the past 12 months, the U.S. economy expanded, in spite of a
restrictive monetary policy pursued by the Federal Reserve Board until early
last summer. In July of this year the Fed switched gears and lowered its
short-term interest rates by a minimal amount. This action was taken because
the American economy had started to slow down and the central bank wanted to
make sure that the slowdown would not turn into a full-fledged recession.
The most recent economic statistics do indeed indicate that the Fed has
successfully reduced the rate of economic expansion, which in turn has warded
off threats of a recurrence of price or wage inflation.
Thanks to low interest rates, the construction industry continues to look
vigorous. However, retail sales and industrial production have cooled off.
Gross Domestic Product continues to grow, but at a reduced rate. Unemployment
remains steady at somewhat below six percent. However, job growth according
to the latest statistics has diminished its pace.
Economists now are wondering whether this pause in economic growth is a
prelude to something more serious, or is simply a pause before faster growth
is resumed.
On the global scene, economic growth is slowing due to the long-lagged
effects of the dynamic interest rate rise in 1994. Our analysis is that,
while short bursts of faster growth may temporarily occur, current monetary
and fiscal trends portend more below-average growth in 1996, with 1997 likely
to see a more sustained economic and earnings growth phase if the liquidity
background improves further. European economic activity is slowing, and Japan
remains in need of a major stimulus program to accelerate growth in 1996.
MARKET ENVIRONMENT
As we see it, the financial markets have a continued positive background
since increased monetary liquidity and lower interest rates should occur in
the current slow-growth, low-inflation environment. The corollary of this for
equity investments is that the risk of some 1996 earnings disappointments has
increased. Therefore, industry exposure and company focus must be very
carefully chosen.
A case in point is the sell-off in late September and early October of
high technology stocks, after they had reached unprecedented high prices and
record price/earnings ratios. To be sure, this has uncovered a number of
situations where these stocks are now much more attractively priced. However,
the lesson has been underscored that earnings and prospects for future
earnings are decisive in stock price fluctuations.
PORTFOLIO OVERVIEW
My approach to growth investing can be summarized as follows:
1. Stock selection is based primarily on forecast of future (12 to 18
months) relative earnings growth, by company, as relative stock performance
is strongly correlated to relative earnings performance. Top-down sector
earnings forecasts supplement company-specific fundamentals in final portfolio
construction.
2. This selection approach leads to a growth-style portfolio core of
above-average, long-term growth companies supplemented when appropriate by
large cyclical positions, if justified by a strong cyclical earnings recovery.
Large and medium capitalization stocks will dominate the portfolio, with
selected small cap stocks included when sufficient trading liquidity exists.
Selling stocks short is a tactic that may be used in a bearish stock market
environment or in anticipation of a fundamental problem leading to a serious
company-specific earnings problem.
3. Foreign stocks can be used as an extension of a strong domestic
concept, as an opportunity to take advantage of a cyclical regional earnings
recovery, and as an alternative to U.S. stocks when U.S. shares are relatively
unattractive.
4. Index futures and options offer the opportunity to hedge market risk
in a bearish cyclical market phase and for some hedging in major corrections
in a bull market. On occasion, when we consider market conditions to be
favorable, the Fund will also employ leverage techniques to enhance the
potential for profits from an investment position.
REFOCUSING THE PORTFOLIO
Basically, we began changing the Fund's portfolio in mid-August, though
the previous portfolio manager had made some sales before that date in
anticipation of the new emphasis we had planned.
When we assumed management, the portfolio was in a very conservative
stance - 42% of the portfolio was in stocks, and 58% in cash, in defense
against a possible stock market decline.
The large cash holdings were a drag on performance in a rising market,
but greatly simplified our task of redesigning the portfolio. By the end of
September, the Fund's portfolio had been substantially changed to reflect the
new investment style.
When the Fund's latest fiscal year ended September 30, 1995, its assets
were almost fully invested in equities. About 22% was in Technology stocks,
15% in Health Care issues, 14% in Financial stocks, 10% in the Energy
industry, and the remainder in a variety of industry groups (see Statement of
Investments on the following page).
The Fund's largest position still is Philip Morris Cos. which we have
retained from the previous holdings. Other major investments reflect our
approach. These include TEVA Pharmaceutical Industries, A.D.R. (an
Israeli-based company), Ford Motor, Xerox, cisco Systems, First Interstate
Bancorp and Triton Energy.
In the present market atmosphere we are concentrating on the following
principal themes:
Continued earnings growth in 1996. This includes computer networking
(cisco Systems, Informix); office equipment (Xerox); semi-conductors (Micron
Technology, Applied Materials); insurance (CNA Financial, Ace Limited, USF&G,
20th Century Industries); industrial growth (Grace (W.R.), Crown Cork &
Seal).
New products and production growth. Examples: Biotechnology (Biogen);
steel (AK Steel Holding); computer hardware (Storage Technology).
We intend to avoid most industrial and commodity cyclical areas where
stock prices and earnings expectations are vulnerable to reduced future
expectations because of overly optimistic 1996 earnings forecasts.
International areas of interest include selected European growth
opportunities, Japan as an eventually recovering major economy, and Hong Kong
with a strong earnings outlook and depressed marketing valuation due to the
"China factor" and excessive fear of rising interest rates. Generally
speaking, however, investment opportunities being equal, we prefer U.S.
stocks, due to accessibility of financial information.
FISCAL YEAR RESULTS
Obviously, the past 12 months' performance does not as yet fully reflect
the changes we made in the portfolio in August and September. With more than
half of its assets in cash until early August, the effect of rising stock
prices could not benefit the entire portfolio. For the 12 months ended
September 30, 1995, Premier Capital Growth Fund had a total return of 11.21%,
based on net asset value per share.* This compares with 28.01% for the Dow
Jones Industrial Average and 29.71% for the Standard & Poor's 500 Index.**
In managing the Fund, we intend to meet frequently with the management of
companies where we already have an investment or are considering one. We are
greatly assisted in gathering information about growth company candidates by
a strong Dreyfus staff of research analysts and economists.
With their help, we look forward to serving your investment needs.
Sincerely,
Michael L. Schonberg
Portfolio Manager
October 11, 1995
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
**Source: Lipper Analytical Services, Inc. Unlike the Fund, the Standard &
Poor's 500 Composite Stock Price Index and the Dow Jones Industrial Average
are unmanaged indices of stock market performance.
PREMIER CAPITAL GROWTH FUND, INC. SEPTEMBER 30, 1995
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER CAPITAL GROWTH
FUND, INC. AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
[Exhibit A
Dollars
$167,963
Standard & Poor's 500
Composite Stock
Price Index*
$161,247
Premier Capital
Growth Fund
6/23/69
(years shown above are as of September 30th)
*Source: Lipper Analytical Services, Inc. ]
AVERAGE ANNUAL TOTAL RETURNS
% RETURN REFLECTING
% RETURN WITHOUT MAXIMUM INITIAL
PERIOD ENDED 9/30/95 SALES CHARGE SALES CHARGE (3.0%)
- ----------------------- ------------------ -------------------
1 Year 11.21% 7.90%
5 Years 12.59 11.91
10 Years 11.72 11.38
From Inception (6/23/69) 11.29 11.16
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Premier Capital Growth
Fund, Inc. on 6/23/69 (Inception Date) to a $10,000 investment made in the
Standard and Poor's 500 Composite Stock Price Index on that date. For
comparative purposes the value of the Index on 6/30/69 is used as the
beginning value on 6/23/69. All dividends and capital gain distributions are
reinvested.
The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Standard and Poor's 500 Composite Stock
Price Index is a widely accepted, unmanaged index of overall stock market
performance which does not take into account charges, fees and other
expenses. Further information relating to Fund performance, including expense
reimbursements, if applicable, is contained in the Condensed Financial
Information section of the Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
COMMON STOCKS-99.7% SHARES VALUE
-------------- --------------
<S> <C> <C>
CONSUMER DURABLES-4.1%........... Ford Motor............................ 750,000 $ 23,343,750
------------
CONSUMER Philip Morris Cos..................... 320,000 26,720,000
NON-DURABLES-6.3%................. ThermoLase............................ 450,000 (a) 9,168,750
------------
35,888,750
------------
CONSUMER SERVICES-2.0%............ TCA Cable TV........................... 400,000 11,500,000
------------
ENERGY-9.8%....................... Anadarko Petroleum..................... 300,000 14,212,500
Baker Hughes........................... 400,000 8,150,000
Burlington Resources................... 300,000 11,625,000
Global Marine.......................... 579,500 (a) 4,128,938
Triton Energy.......................... 375,000 18,140,625
------------
56,257,063
------------
FINANCE-13.5%..................... ACE Limited............................ 370,000 12,718,750
CNA Financial.......................... 127,000 (a) 13,462,000
First Interstate Bancorp............... 170,000 (b) 17,127,500
MGIC Investment........................ 100,000 5,725,000
Reliance Group Holdings................ 550,000 4,193,750
St. Paul Cos........................... 150,000 8,756,250
20th Century Industries................ 350,000 (a) 5,381,250
USF&G.................................. 500,000 9,687,500
------------
77,052,000
------------
HEALTH CARE-14.3%................. Biogen................................. 250,000 (a) 15,000,000
Forest Labs............................ 260,000 (a) 11,570,000
Guidant................................ 175,986 5,147,590
IVAX................................... 400,000 12,050,000
Lilly (Eli)............................ 99,574 8,949,213
Northstar Health Services.............. 200,000 (a) 1,475,000
ONCOR.................................. 532,500 (a) 3,960,469
Teva Pharmaceutical Industries, A.D.R.. 650,000 23,481,250
------------
81,633,522
------------
NON-ENERGY MINERALS-3.7%.......... AK Steel Holding....................... 400,000 (a) 11,800,000
Inland Steel Industries................ 400,000 9,100,000
------------
20,900,000
------------
PROCESS INDUSTRIES-6.5%........... Crown Cork & Seal...................... 325,000 (a) 12,593,750
Grace (W.R.)........................... 150,000 10,012,500
Raychem................................ 325,000 14,625,000
------------
37,231,250
------------
PRODUCER Advanced Photonix, Cl. A............... 425,000 (a) 1,062,500
MANUFACTURING-5.6%................ American Standard...................... 375,000 11,062,500
Xerox.................................. 150,000 20,156,250
------------
32,281,250
------------
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
RETAIL TRADE-2.3% Federated Department Stores.............. 325,000 (a) $ 9,221,875
Sears, Roebuck........................... 100,000 3,687,500
------------
12,909,375
------------
TECHNOLOGY-21.8%............ Applied Materials........................ 60,000 (a) 6,135,000
Cisco Systems............................ 300,000 (a) 20,700,000
Compaq Computer.......................... 75,000 (a) 3,628,125
Computer Associates International........ 170,000 7,182,500
Cree Research............................ 485,000 (a) 12,003,750
Digital Equipment........................ 300,000 (a) 13,687,500
Informix................................. 325,000 (a) 10,562,500
LSI Logic................................ 250,000 (a) 14,437,500
MEMC Electronic Materials................ 200,000 5,425,000
Micron Technology........................ 250,000 19,875,000
Storage Technology....................... 450,000 (a) 11,025,000
------------
124,661,875
------------
TRANSPORTATION-2.9%......... Alaska Air Group........................ 400,000 (a) 6,250,000
Kansas City So. Ind..................... 225,000 10,237,500
------------
16,487,500
------------
UTILITIES-2.9%.............. AMNEX................................... 635,000 (a) 3,214,687
AT&T.................................... 210,000 13,807,500
------------
17,022,187
------------
FOREIGN-4.0%.................
Abitibi-Price........................... 305,000 5,299,375
News Corp, A.D.R........................ 307,000 6,754,000
Roche Holding A.G....................... 750 5,289,541
Trafalgar House PLC..................... 12,800,000 5,693,400
------------
23,036,316
------------
TOTAL COMMON STOCKS
(cost $536,141,292).................. $570,204,838
==============
PRINCIPAL
SHORT-TERM INVESTMENTS-.4% AMOUNT
--------------
U.S. TREASURY BILLS:......... 5.90%,10/5/1995 $ 830,000 $ 829,411
5.72%,10/19/1995....................... 112,000 111,690
5.75%,10/26/1995....................... 10,000 9,963
5.84%,11/2/1995........................ 21,000 20,899
6.15%,11/16/1995....................... 1,372,000 1,362,492
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,334,787).................... $ 2,334,455
=============
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1995
TOTAL INVESTMENTS (cost $538,476,079) .................................... 100.1% $572,539,293
======== ============
LIABILITIES, LESS CASH AND RECEIVABLES..................................... (.1%) $ (461,824)
======== ============
NET ASSETS................................................................. 100.0% $572,077,469
======== ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Security subject to call option written.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF COVERED CALL OPTIONS WRITTEN SEPTEMBER 30, 1995
SHARES
SUBJECT CALL
TO CALL SECURITY EXPIRATION PRICE VALUE
- ------- --------- ---------- ------ ---------
<S> <C> <C> <C> <C>
85,000 First Interstate Bancorp October 95 100 $255,000
85,000 First Interstate Bancorp October 95 105 95,625
----------
$350,625
=========
</TABLE>
NOTE TO STATEMENT OF COVERED CALL OPTIONS WRITTEN;
(a) The above options were written against portfolio securities of the
Fund. As of September 30,1995, these securities had an aggregate market
value of $17,127,500.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $538,476,079)-see statement..................................... $572,539,293
Cash.................................................................... 685,519
Receivable for investment securities sold............................... 9,193,443
Dividends and interest receivable....................................... 1,140,886
Prepaid expenses........................................................ 46,502
-----------
583,605,643
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 363,360
Payable for investment securities purchased............................. 9,152,147
Payable for Common Stock redeemed....................................... 919,799
Outstanding call options written, at value
(premiums received $462,384)-see statement............................ 350,625
Net unrealized depreciation on forward currency exchange
contracts-Note 4(a)................................................... 287,765
Accrued expenses........................................................ 454,478 11,528,174
----------- -----------
NET ASSETS ................................................................ $572,077,469
============
REPRESENTED BY:
Paid-in capital......................................................... $490,413,061
Accumulated undistributed investment income-net......................... 1,801,170
Accumulated undistributed net realized gain on investments.............. 45,976,205
Accumulated net unrealized appreciation on investments, call
options written and foreign currency transactions..................... 33,887,033
-----------
NET ASSETS at value applicable to 35,078,761 outstanding shares of
Common Stock, equivalent to $16.31 per share (100 million shares
of $1 par value authorized)............................................. $572,077,469
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 12,006,227
Cash dividends (net of $53,732 foreign taxes withheld at source)...... 8,921,322
-----------
TOTAL INCOME...................................................... $20,927,549
EXPENSES:
Management fee-Note 3(a).............................................. 4,287,150
Shareholder servicing costs-Note 3(b)................................. 1,300,803
Interest-Note 2....................................................... 288,421
Loan commitment fees-Note 2........................................... 162,353
Custodian fees........................................................ 139,588
Directors' fees and expenses-Note 3(c)................................ 70,306
Professional fees..................................................... 55,092
Prospectus and shareholders' reports.................................. 37,666
Dividends on securities sold short.................................... 3,000
Miscellaneous......................................................... 3,832
----------
TOTAL EXPENSES.................................................... 6,348,211
-----------
INVESTMENT INCOME-NET............................................. 14,579,338
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (loss) on investments-Note 4(a):
Long transactions (including options transactions).................... $ 58,593,573
Short sale transactions............................................... (452,115)
Net realized gain on foreign currency transactions...................... 116,125
Net realized (loss) on forward currency exchange contracts-Note 4(a);
Short transactions.................................................... (4,525,904)
Net realized (loss) on financial futures-Note 4(a):
Long transactions..................................................... 1,115,194
Short transactions.................................................... (15,432,180)
------------
NET REALIZED GAIN..................................................... 39,414,693
Net unrealized appreciation:
Investments and forward currency exchange contracts [including
($85,750) net unrealized (depreciation) on financial futures]......... 6,873,986
Translation of assets and liabilities in foreign currencies........... (175)
----------
NET UNREALIZED APPRECIATION........................................... 6,873,811
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 46,288,504
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $60,867,842
===========
See notes to financial statements.
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
-----------------------------------
1994 1995
--------------- ---------------
OPERATIONS:
Investment income-net................................................... $ 12,639,315 $ 14,579,338
Net realized gain on investments........................................ 20,591,445 39,414,693
Net unrealized appreciation (depreciation) on investments for the year.. (41,885,909) 6,873,811
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... (8,655,149) 60,867,842
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (26,079,930) (16,111,729)
Net realized gain on investments........................................ (72,371,864) (8,422,040)
--------------- ---------------
TOTAL DIVIDENDS....................................................... (98,451,794) (24,533,769)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 250,776,376 82,126,165
Dividends reinvested.................................................... 88,813,669 21,932,842
Cost of shares redeemed................................................. (258,491,934) (138,675,507)
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 81,098,111 (34,616,500)
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (26,008,832) 1,717,573
NET ASSETS:
Beginning of year....................................................... 596,368,728 570,359,896
--------------- ---------------
End of year [including undistributed investment income-net:
$3,333,561 in 1994 and $1,801,170 in 1995]............................ $ 570,359,896 $ 572,077,469
============= ==============
SHARES SHARES
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 14,069,123 5,218,666
Shares issued for dividends reinvested.................................. 5,561,247 1,526,294
Shares redeemed......................................................... (14,647,204) (8,826,816)
--------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 4,983,166 (2,081,856)
============= ==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $14.31 $17.72 $18.11 $18.53 $15.35
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net........................ .37 .32 .21 .40 .40
Net realized and unrealized gain (loss) on investments 3.80 1.83 1.82 (.56) 1.23
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS........... 4.17 2.15 2.03 (.16) 1.63
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net......... (.76) (.39) (.24) (.80) (.44)
Dividends from net realized gain on investments -- (1.37) (1.37) (2.22) (.23)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS........................ (.76) (1.76) (1.61) (3.02) (.67)
------- ------- ------- ------- -------
Net asset value, end of year................. $17.72 $18.11 $18.53 $15.35 $16.31
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN*......................... 30.27% 13.28% 12.04% (1.50%) 11.21%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets .97% .97% 1.02% 1.03% 1.03%
Ratio of interest expense, loan commitment fees and
dividends on securities sold short to average
net assets................................. .17% .10% .04% .09% .08%
Ratio of net investment income to average net assets 2.13% 1.74% 1.24% 2.10% 2.55%
Portfolio Turnover Rate...................... 81.02% 141.67% 102.23% 158.05% 298.60%
Net Assets, end of year (000's Omitted)...... $494,342 $520,895 $596,369 $570,360 $572,077
*Exclusive of sales charge.
See notes to financial statements.
</TABLE>
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
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. Premier Mutual Fund
Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares. The Distributor, located at One Exchange Place, Boston, Massachusetts
02109, is a wholly-owned subsidiary of FDI Distribution Services, Inc., a
provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is
Boston Institutional Group, Inc. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
On April 5, 1995, the Fund's directors approved a change of the Fund's
name, effective June 16, 1995, from "Dreyfus Leverage Fund, Inc.," which was
operating under the name "Dreyfus Capital Growth Fund, Inc.", to "Premier
Capital Growth Fund, Inc."
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
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.
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) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, the
difference between the amounts of dividends, interest and foreign withholding
taxes recorded on the Fund's books, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in
exchange rates. Such gains and losses are included with net realized and
unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discounts on investments, is recognized on
the accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and 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.
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(E) 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-BANK LINES OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up to
$76 million under a short-term unsecured line of credit. In connection
therewith, the Fund has agreed to pay commitment fees at an annual rate of
.375 of 1% on the unused portion of the first $46 million of the line of
credit. No commitment fee is charged on the additional $30 million. Interest
on borrowings is charged at rates which are related to Federal Funds rates in
effect. There were no outstanding borrowings as of September 30, 1995.
The average daily amount of short-term debt outstanding during the year
ended September 30, 1995 was approximately $4,274,000, with a related
weighted average annualized interest rate of 6.75% (based upon actual
interest expense, not including commitment fees, for the year). The maximum
amount of such debt outstanding at any time during the year ended September
30, 1995, was $76 million.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings (which, in the
view of Stroock & Stroock & Lavan, counsel to the Fund, also contemplates
loan commitment fees and dividends on securities sold short), brokerage
commissions and extraordinary expenses, exceed 1 1/2% of the average value of
the Fund's net assets for any full fiscal year. No expense reimbursement was
required for the year ended September 30, 1995.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $58,571 during the year ended September 30, 1995 from commissions
earned on sales of Fund shares.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for certain allocated
expenses of providing personal services and/or maintaining shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts. During the year ended September 30,
1995, the Fund was charged an aggregate of $647,159 pursuant to the
Shareholder Services Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $4,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities
and securities sold short, excluding short-term securities, forward currency
exchange contracts and options transactions, during the year ended September
30, 1995 is summarized as follows:
PURCHASES SALES
------------------- ----------------
Long transactions............. $1,303,960,488 $1,271,973,806
Short sale transactions....... 6,508,333 6,056,218
------------------- ----------------
TOTAL....................... $1,310,468,821 $1,278,030,024
================== ===============
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at current market value. The
Fund would incur a loss if the price of the security increases between the
date of the short sale and the date on which the Fund replaces the borrowed
security. The Fund would realize a gain if the price of the security declines
between those dates. Until the Fund replaces the borrowed security, the Fund
will maintain daily, a segregated account with a broker and custodian, of
cash and/or U.S. Government securities sufficient to cover its short
position. There were no securities sold short outstanding as of September 30,
1995.
In addition, the following summarizes open forward currency exchange
contracts at September 30, 1995:
<TABLE>
<CAPTION>
U.S. DOLLAR
VALUE AT UNREALIZED
FORWARD CURRENCY SALE CONTRACTS PROCEEDS 9/30/95 (DEPRECIATION)
- -------------------------------- --------- ----------- ----------------
<S> <C> <C> <C>
Swiss Francs, expiring 11/29/95................ $ 4,718,712 $ 4,927,233 $ (208,521)
British Pounds, expiring 12/20/95.............. 10,801,300 10,880,544 (79,244)
--------------
$ (287,765)
==============
</TABLE>
The Fund enters into forward currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. 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. The Fund is
also exposed to credit risk associated with counter party nonperformance on
these forward currency exchange contracts which is typically limited to the
unrealized gains on such contracts that are recognized in the statement of
assets and liabilities.
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In addition, the following summarizes the Fund's covered call options
written transactions for the year ended September 30,
1995:
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
OPTIONS WRITTEN:
Contracts outstanding September 30, 1994......... - -
Contracts written................................ 1,700 $462,384
--------- ---------
Contracts outstanding September 30, 1995......... 1,700 $462,384
========= =========
The Fund may write or (sell) options in order to gain exposure to or
protect against changes in the market. As a writer of call options, the Fund
receives a premium at the outset and then bears the market risk of
unfavorable changes in the price of the financial instrument underlying the
option. Generally, the Fund would incur a gain, to the extent of the premium,
if the price of the underlying financial instrument decreases between the
date the option is written and the date on which the option is terminated.
Generally, the Fund would realize a loss, if the price of the financial
instrument increases between those dates.
The Fund may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Fund is exposed to
market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the Fund to "mark to
market" on a daily basis, which reflects the change in the market value of
the contract at the close of each day's trading. Accordingly, variation
margin payments are made or received to reflect daily unrealized gains or
losses. When the contracts are closed, the Fund recognizes a realized gain or
loss. These investments require initial margin deposits with a custodian,
which consist of cash or cash equivalents, up to approximately 10% of the
contract amount. The amount of these deposits is determined by the exchange
or Board of Trade on which the contract is traded and is subject to change.
At September 30, 1995, there were no financial futures contracts outstanding.
(B) At September 30, 1995, accumulated net unrealized appreciation on
investments was $33,887,208, consisting of $61,623,792 gross unrealized
appreciation and $27,736,584 gross unrealized depreciation, excluding foreign
currency translations.
At September 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER CAPITAL GROWTH FUND, INC.
[FORMERLY DREYFUS CAPITAL GROWTH FUND (A PREMIER FUND)]-SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
PREMIER CAPITAL GROWTH FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Premier Capital Growth Fund, Inc., including the statements of investments
and covered call options written as of September 30, 1995, 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 September 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our 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 Premier Capital Growth Fund, Inc. at September 30, 1995, 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 and Young LLP signature logo]
New York, New York
November 7, 1995
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.22 per share as a
long-term capital gain distribution of the $.67 per share paid on December
12, 1994.
[Dreyfus lion "d" logo]
PREMIER CAPITAL GROWTH FUND, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 009AR959
[Dreyfus logo]
Annual Report
Premier Capital
Growth Fund, Inc.
September 30, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER CAPITAL GROWTH FUND, INC. AND THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
_________________________________________________
| | STANDARD | PREMIER |
| | & POOR'S 500 | CAPITAL |
| PERIOD |COMPOSITE STOCK | GROWTH |
| | PRICE INDEX * | FUND |
|-----------|---------------- | --------------|
| 6/23/69 | 10,000 | 9,697 |
| 9/30/69 | 9,609 | 9,760 |
| 9/30/70 | 9,023 | 9,232 |
| 9/30/71 | 10,882 | 12,070 |
| 9/30/72 | 12,598 | 14,108 |
| 9/30/73 | 12,729 | 12,821 |
| 9/30/74 | 7,772 | 8,154 |
| 9/30/75 | 10,736 | 11,073 |
| 9/30/76 | 14,004 | 13,557 |
| 9/30/77 | 13,436 | 14,800 |
| 9/30/78 | 15,044 | 18,432 |
| 9/30/79 | 16,938 | 22,428 |
| 9/30/80 | 20,527 | 30,493 |
| 9/30/81 | 19,983 | 26,784 |
| 9/30/82 | 21,964 | 31,112 |
| 9/30/83 | 31,703 | 41,049 |
| 9/30/84 | 33,202 | 44,055 |
| 9/30/85 | 38,016 | 53,180 |
| 9/30/86 | 50,083 | 67,685 |
| 9/30/87 | 71,829 | 97,453 |
| 9/30/88 | 62,929 | 80,259 |
| 9/30/89 | 83,664 | 95,631 |
| 9/30/90 | 75,934 | 89,028 |
| 9/30/91 | 99,541 | 115,978 |
| 9/30/92 | 110,531 | 131,384 |
| 9/30/93 | 124,867 | 147,198 |
| 9/30/94 | 129,493 | 144,996 |
| 9/30/95 | 167,963 | 161,247 |
|------------------------------------------------|
*Source: Lipper Analytical Services, Inc.
