PREMIER EQUITY FUNDS, INC.
PREMIER AGGRESSIVE GROWTH FUND
PREMIER GROWTH AND INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FEBRUARY 1, 1997
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier Aggressive Growth Fund and Premier Growth and Income Fund (each,
a "Fund") of Premier Equity Funds, Inc. (the "Company"), dated February 1,
1997, as each may be revised from time to time. To obtain a copy of the
relevant Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of each Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . B-2
Management of the Company . . . . . . . . . . . . . . . . . B-14
Management Agreement. . . . . . . . . . . . . . . . . . . . B-18
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . B-20
Distribution Plan and
Shareholder Services Plan . . . . . . . . . . . . . . . . B-22
Redemption of Shares. . . . . . . . . . . . . . . . . . . . B-24
Shareholder Services. . . . . . . . . . . . . . . . . . . . B-25
Determination of Net Asset Value. . . . . . . . . . . . . . B-29
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-30
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-32
Performance Information . . . . . . . . . . . . . . . . . . B-33
Information About the Funds . . . . . . . . . . . . . . . . B-35
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . . . B-35
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . B-37
Financial Statements. . . . . . . . . . . . . . . . . . . . B-44
Report of Independent Auditors. . . . . . . . . . . . . . . B-57
and B-68
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in each Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
American, European and Continental Depositary Receipts. (All Funds)
These securities may be purchased through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of
the underlying security and a depositary, whereas a depositary may
establish an unsponsored facility without participation by the issuer of
the deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary of an
unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts
in respect of the deposited securities.
Repurchase Agreements. (All Funds) The Funds' custodian or sub-
custodian will have custody of, and will hold in a segregated account,
securities acquired by a 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, each Fund will enter into
repurchase agreements only with domestic banks with total assets in excess
of $1 billion, 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 the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. (All
Funds) These instruments include variable amount master demand notes,
which are obligations that permit a Fund to invest fluctuating amounts at
varying rates of interest pursuant to direct arrangements between the Fund,
as lender, and the borrower. These notes permit daily changes in the
amounts borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest, at any time. Accordingly,
where these obligations are not secured by letters of credit or other
credit support arrangements, the Fund's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies, and a Fund
may invest in them only if at the time of an investment the borrower meets
the criteria set forth in the Fund's Prospectus for other commercial paper
issuers.
Convertible Securities. (All Funds) Convertible securities may be
converted at either a stated price or stated rate into underlying shares of
common stock and, therefore, are deemed to be equity securities for
purposes of the Funds' management policies. Convertible securities have
characteristics similar to both fixed-income and equity securities.
Convertible securities generally are subordinated to other similar but non-
convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior to common
stock, of the same issuer. Because of the subordination feature, however,
convertible securities typically have lower ratings than similar non-
convertible securities.
Although to a lesser extent than with fixed-income securities, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion feature, the market value of
convertible securities tends to vary with fluctuations in the market value
of the underlying common stock. A unique feature of convertible securities
is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and so
may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no
securities investments are without risk, investments in convertible
securities generally entail less risk than investments in common stock of
the same issuer.
Convertible securities are investments that provide for a stable
stream of income with generally higher yields than common stocks. There
can be no assurance of current income because the issuers of the
convertible securities may default on their obligations. A convertible
security, in addition to providing fixed income, offers the potential for
capital appreciation through the conversion feature, which enables the
holder to benefit from increases in the market price of the underlying
common stock. There can be no assurance of capital appreciation, however,
because securities prices fluctuate. Convertible securities, however,
generally offer lower interest or dividend yields than non-convertible
securities of similar quality because of the potential for capital
appreciation.
Closed-End Investment Companies. Premier Aggressive Growth Fund may
invest in securities issued by open-end and closed-end investment companies
and Premier Growth and Income Fund may invest in securities issued by
closed-end investment companies. Under the Investment Company Act of 1940,
as amended (the "1940 Act"), a Fund's investment in such securities,
subject to certain exceptions, currently is limited to (i) 3% of the total
voting stock of any one investment company, (ii) 5% of the Fund's total
assets with respect to any one investment company and (iii) 10% of the
Fund's total assets in the aggregate. Investments in the securities of
other investment companies may involve duplication of advisory fees and
certain other expenses.
Foreign Government Obligations; Securities of Supranational Entities.
(All Funds) A Fund may invest in obligations issued or guaranteed by one
or more foreign governments or any of their political subdivisions,
agencies or instrumentalities that are determined by the Manager to be of
comparable quality to the other obligations in which the Fund may invest.
Such securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the
Asian Development Bank and the InterAmerican Development Bank.
Illiquid Securities. (All Funds) When purchasing securities that
have not been registered under the Securities Act of 1933, as amended, and
are not readily marketable, each Fund will endeavor, to the extent
practicable, to obtain the right to registration at the expense of the
issuer. Generally, there will be a lapse of time between the Fund's
decision to sell any such security and the registration of the security
permitting sale. During any such period, the price of the securities will
be subject to market fluctuations. However, where a substantial market of
qualified institutional buyers has developed for certain unregistered
securities purchased by the Fund pursuant to Rule 144A under the Securities
Act of 1933, as amended, the Fund intends to treat such securities as
liquid securities in accordance with procedures approved by the Company's
Board. Because it is not possible to predict with assurance how the market
for specific restricted securities sold pursuant to Rule 144A will develop,
the Company's Board has directed the Manager to monitor carefully the
relevant 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, a Fund's investing in such securities may have the effect of
increasing the level of illiquidity in its investment portfolio during such
period.
Management Policies
Leverage. (All Funds) For borrowings for investment purposes, the
1940 Act requires the Fund to maintain continuous asset coverage (that is,
total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the required coverage
should decline as a result of market fluctuations or other reasons, a Fund
may be required to sell some of its portfolio securities within three days
to reduce the amount of its borrowings and restore the 300% asset coverage,
even though it may be disadvantageous from an investment standpoint to sell
securities at that time. Each Fund also may be required to maintain
minimum average balances in connection with such borrowing or pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest
rate. To the extent a Fund enters into a reverse repurchase agreement, the
Fund will maintain in a segregated custodial account permissible liquid
assets at least equal to the aggregate amount of its reverse repurchase
obligations, plus accrued interest, in certain cases, in accordance with
releases promulgated by the Securities and Exchange Commission. The
Securities and Exchange Commission views reverse repurchase transactions as
collateralized borrowings by a Fund.
Short-Selling. (All Funds) In these transactions, a Fund sells a
security it does not own in anticipation of a decline in the market value
of the security. To complete the transaction, the Fund must borrow the
security to make delivery to the buyer. The Fund is obligated to replace
the security borrowed by purchasing it subsequently at the market price at
the time of replacement. The price at such time may be more or less than
the price at which the security was sold by the Fund, which would result in
a loss or gain, respectively.
Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of a Fund's net assets. A Fund may not sell short
the securities of any single issuer listed on a national securities
exchange to the extent of more than 5% of the value of the Fund's net
assets. A Fund may not make a short sale which results in the Fund having
sold short in the aggregate more than 5% of the outstanding securities of
any class of an issuer.
A Fund also may make short sales "against the box," in which the Fund
enters into a short sale of a security it owns in order to hedge an
unrealized gain on the security. At no time will more than 15% of the
value of the Fund's net assets be in deposits on short sales against the
box.
Until a Fund closes its short position or replaces the borrowed
security, it will: (a) maintain a segregated account, containing
permissible liquid assets, at such a level that the amount deposited in the
account plus the amount deposited with the broker as collateral always
equals the current value of the security sold short; or (b) otherwise cover
its short position.
Lending Portfolio Securities. (Premier Aggressive Growth Fund only)
In connection with its securities lending transactions, Premier Aggressive
Growth Fund may return to the borrower or a third party which is
unaffiliated with the Fund, and which is acting as a "placing broker," a
part of the interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the 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 Company's Board must terminate the
loan and regain the right to vote the securities if a material event
adversely affecting the investment occurs.
Derivatives. (All Funds) A Fund may invest in Derivatives (as
defined in the Fund's Prospectus) for a variety of reasons, including to
hedge certain market risks, to provide a substitute for purchasing or
selling particular securities or to increase potential income gain.
Derivatives may provide a cheaper, quicker or more specifically focused way
for the Fund to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit a Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on a Fund's performance.
If a Fund invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. A Fund also could experience losses if its
Derivatives were poorly correlated with its other investments, or if the
Fund were unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can become,
illiquid. Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices for Derivatives.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by a Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. (All Funds) A Fund may enter into
futures contracts in U.S. domestic markets, such as the Chicago Board of
Trade and the International Monetary Market of the Chicago Mercantile
Exchange, or, if permitted in its Prospectus, on exchanges located outside
the United States, such as the London International Financial Futures
Exchange and the Sydney Futures Exchange Limited. Foreign markets may
offer advantages such as trading opportunities or arbitrage possibilities
not available in the United States. Foreign markets, however, may have
greater risk potential than domestic markets. For example, some foreign
exchanges are principal markets so that no common clearing facility exists
and an investor may look only to the broker for performance of the
contract. In addition, any profits that a Fund might realize in trading
could be eliminated by adverse changes in the exchange rate, or the Fund
could incur losses as a result of those changes. Transactions on foreign
exchanges may include both commodities which are traded on domestic
exchanges and those which are not. Unlike trading on domestic commodity
exchanges, trading on foreign commodity exchanges is not regulated by the
Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to a Fund which
could adversely affect the value of the Fund's net assets. Although each
Fund intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by a Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant
market and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract. For example,
if a Fund uses futures to hedge against the possibility of a decline in the
market value of securities held in its portfolio and the prices of such
securities instead increase, the Fund will lose part or all of the benefit
of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. A Fund may have to
sell such securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Fund may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting a Fund's ability otherwise
to invest those assets.
Specific Futures Transactions. A Fund may purchase and sell stock index
futures contracts. A stock index future obligates a Fund to pay or receive
an amount of cash equal to a fixed dollar amount specified in the futures
contract multiplied by the difference between the settlement price of the
contract on the contract's last trading day and the value of the index
based on the stock prices of the securities that comprise it at the opening
of trading in such securities on the next business day.
A Fund may purchase and sell currency futures. A foreign currency
future obligates the Fund to purchase or sell an amount of a specific
currency at a future date at a specific price.
Premier Growth and Income Fund may purchase and sell interest rate
futures contracts. An interest rate future obligates the Fund to purchase
or sell an amount of a specific debt security at a future date at a
specific price.
Options--In General. (All Funds) A Fund may purchase and write (i.e.,
sell) call or put options with respect to specific securities. A call
option gives the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying security or securities at the exercise
price at any time during the option period, or at a specific date.
Conversely, a put option gives the purchaser of the option the right to
sell, and obligates the writer to buy, the underlying security or
securities at the exercise price at any time during the option period.
A covered call option written by a Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. A put option written
by a Fund is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option
are placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken. The principal reason for writing covered call and
put options is to realize, through the receipt of premiums, a greater
return than would be realized on the underlying securities alone. A Fund
receives a premium from writing covered call or put options which it
retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts
or suspensions in one or more options. There can be no assurance that
similar events, or events that may otherwise interfere with the timely
execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If,
as a covered call option writer, the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position.
Specific Options Transactions. A Fund may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of
specific securities) or stock indices listed on national securities
exchanges or traded in the over-the-counter market. An option on a stock
index is similar to an option in respect of specific securities, except
that settlement does not occur by delivery of the securities comprising the
index. Instead, the option holder receives an amount of cash if the
closing level of the stock index upon which the option is based is greater
than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. Thus, the effectiveness of purchasing or
writing stock index options will depend upon price movements in the level
of the index rather than the price of a particular stock.
A Fund may purchase and sell call and put options on foreign currency.
These options convey the right to buy or sell the underlying currency at a
price which is expected to be lower or higher than the spot price of the
currency at the time the option is exercised or expires.
A Fund may purchase cash-settled options on equity index swaps in
pursuit of its investment objective. Equity index swaps involve the
exchange by the Fund with another party of cash flows based upon the
performance of an index or a portion of an index of securities which
usually includes dividends. A cash-settled option on a swap gives the
purchaser the right, but not the obligation, in return for the premium
paid, to receive an amount of cash equal to the value of the underlying
swap as of the exercise date. These options typically are purchased in
privately negotiated transactions from financial institutions, including
securities brokerage firms.
Successful use by a Fund of options will be subject to the ability of
the Manager to predict correctly movements in the prices of individual
stocks, the stock market generally, foreign currencies or interest rates.
To the extent such predictions are incorrect, a Fund may incur losses.
Future Developments. A Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by
the Fund or which are not currently available but which may be developed,
to the extent such opportunities are both consistent with the Fund's
investment objective and legally permissible for the Fund. Before entering
into such transactions or making any such investment, the Fund will provide
appropriate disclosure in its Prospectus or Statement of Additional
Information.
Forward Commitments. (All Funds) A Fund may purchase securities on a
forward commitment or when-issued basis, which means that delivery and
payment take place a number of days after the date of the commitment to
purchase. The payment obligation and the interest rate receivable on a
forward commitment or when-issued security are fixed when the Fund enters
into the commitment but the Fund does not make a payment until it receives
delivery from the counterparty. A Fund will commit to purchase such
securities only with the intention of actually acquiring the securities,
but the Fund may sell these securities before the settlement date if it is
deemed advisable. A segregated account of the Fund consisting of
permissible liquid assets at least equal at all times to the amount of the
commitments will be established and maintained at the Funds' custodian
bank.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest
rates rise) based upon the public's perception of the creditworthiness of
the issuer and changes, real or anticipated, in the level of interest
rates. Securities purchased on a forward commitment or when-issued basis
may expose a Fund to risks because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued
basis can involve the additional risk that the yield available in the
market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when a Fund is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Fund's net assets and its net asset value per share.
Investment Considerations and Risks
Lower Rated Convertible Debt Securities. (Premier Growth and Income
Fund only) The Fund is permitted to invest in convertible debt securities
rated Ba by Moody's Investors Service, Inc. ("Moody's") and BB by Standard
& Poor's Ratings Group ("S&P"), Fitch Investors Service, L.P. ("Fitch") and
Duff & Phelps Credit Rating Co. ("Duff," and with the other rating
agencies, the "Rating Agencies") and as low as Caa by Moody's or CCC by
S&P, Fitch or Duff. Such securities, though higher yielding, are
characterized by risk. See "Description of the Fund--Investment
Considerations and Risks--Lower Rated Convertible Debt Securities" in
Premier Growth and Income Fund's Prospectus for a discussion of certain
risks and the "Appendix" for a general description of the Rating Agencies'
ratings. Although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk
of these securities. The Fund will rely on the Manager's judgment,
analysis and experience in evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by the Rating
Agencies to be, on balance, predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms
of the obligation and generally will involve more credit risk than
securities in the higher rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with the higher rated
securities. For example, during an economic downturn or a sustained period
of rising interest rates, highly leveraged issuers of these securities may
not have sufficient revenues to meet their interest payment obligations.
The issuer's ability to service its debt obligations also may be affected
adversely by specific corporate developments, forecasts, or the
unavailability of additional financing. The risk of loss because of
default by the issuer is significantly greater for the holders of these
securities because such securities generally are unsecured and often are
subordinated to other creditors of the issuer.
These securities may be particularly susceptible to economic
downturns. It is likely that an economic recession could disrupt severely
the market for such securities and may have an adverse impact on the value
of such securities. In addition, it is likely that any such economic
downturn could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon and increase the
incidence of default for such securities.
The Fund may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues. The
Fund has no arrangement with any persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
Investment Restrictions
Premier Growth and Income Fund only. The Fund has adopted investment
restrictions numbered 1 through 8 as fundamental policies, which cannot be
changed without approval by the holders of a majority (as defined in the
1940 Act) of the Fund's outstanding voting shares. Investment restrictions
numbered 9 through 14 are not fundamental policies and may be changed by
vote of a majority of the Company's Board members at any time. The Fund
may not:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
2. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
3. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but the Fund may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate or real estate investment
trusts.
4. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Company's Board.
6. Act as an underwriter of securities of other issuers, except to
the extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
7. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 2, 4, 11 and 12 may be deemed to give rise to a
senior security.
8. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
9. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessor) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.
10. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices.
12. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of Additional
Information.
13. 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.
14. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
* * *
Premier Aggressive Growth Fund only. The Fund has adopted investment
restrictions numbered 1 through 12 as fundamental policies, which cannot be
changed without approval by the holders of a majority (as defined in the
1940 Act) of the Fund's outstanding voting shares. Investment restriction
number 13 is not a fundamental policy and may be changed by vote of a
majority of the Company's Board members at any time. The Fund may not:
1. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its total assets to be invested in
securities of any one issuer (except securities of the United States
Government or any instrumentality thereof) nor purchase more than 10% of
the voting securities of any one issuer.
2. Purchase securities of any company having less than three years'
continuous operation (including operations of any predecessors) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its assets.
3. Purchase securities of other investment companies, except as they
may be acquired by purchase in the open market involving no commissions or
profits to a sponsor or dealer (other than the customary broker's
commission) or except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
4. Purchase or retain the securities of any issuer if those officers
or directors of the Company or the Manager owning individually more than
1/2 of 1% of the securities of such issuer together own more than 5% of the
securities of such issuer.
5. Purchase, hold or deal in commodities or commodity contracts,
except as set forth in the Fund's Prospectus and Statement of Additional
Information, or in real estate (except for corporate office purposes), but
this shall not prohibit the Fund from investing in marketable securities of
companies engaged in real estate activities or investments.
6. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
7. Lend any funds or other assets, except through the purchase of a
portion of an issue of publicly distributed bonds, debentures or other debt
securities or the purchase of bankers' acceptances and commercial paper of
corporations. However, the Company's Board may, on the request of broker-
dealers or other institutional investors which it deems qualified,
authorize the Fund to lend securities, 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.
Such security loans will not be made if, as a result, the aggregate of such
loans exceeds 10% of the value of the Fund's total assets.
8. Act as an underwriter of securities of other issuers.
9. Purchase from or sell to any of the Company's officers or
directors or firms of which any of them are members any securities (other
than capital stock of the Company).
10. Invest in the securities of a company for the purpose of
management or the exercise of control, but the Fund will vote the
securities it owns in its portfolio as a shareholder in accordance with its
own views.
11. Engage in the purchase and sale of put and call options or in
writing such options, except as set forth in the Fund's Prospectus and
Statement of Additional Information.
12. Concentrate its investments in any particular industry or
industries, except that the Fund may invest as much as 25% of the value of
its total assets in a single industry.
13. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related
to the purchase of securities on a when-issued or forward commitment basis
and the deposit of assets in escrow in connection with writing covered put
and call options and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices.
Premier Aggressive Growth Fund also has undertaken not to purchase
warrants which, valued at the lower of cost or market, would exceed 5% of
the value of the Fund's net assets. Included within this amount, but not
to exceed 2% of the value of the Fund's net assets, may be warrants which
are not listed on the New York or American Stock Exchange. Warrants
acquired by the Fund in units or attached to securities shall not be
subject to such percentage restriction.
* * *
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
The Company may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Fund shares in
certain states. Should the Company determine that a commitment is no
longer in the best interest of the Fund and its shareholders, the Company
reserves the right to revoke the commitment by terminating the sale of such
Fund's shares in the state involved.
MANAGEMENT OF THE COMPANY
Board members and officers of the Company, together with information
as to their principal business occupations during at least the last five
years, are shown below. Each Board member who is deemed to be an
"interested person" of the Company, as defined in the 1940 Act, is
indicated by an asterisk.
Board Members of the Company
* JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. He is
also Chairman of the Board of Directors of Noel Group, Inc., a venture
capital company; and a director of The Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads, specialty yarns, home
furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals and automotive and other
hardware, and Staffing Resources, Inc. For more than five years prior
to January 1995, he was President, a director and, until August 1994,
Chief Operating Officer of the Manager and Executive Vice President
and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager and, until August 24, 1994, the Company's
distributor. From August 1994 until December 31, 1994, he was a
director of Mellon Bank Corporation. He is 52 years old and his
address is 200 Park Avenue, New York, New York 10166.
*DAVID P. FELDMAN, Board Member. Chairman and Chief Executive Officer of
AT&T Investment Management Corporation. He is also a trustee of
Corporate Property Investors, a real estate investment company. He is
56 years old and his address is One Oak Way, Berkeley Heights, New
Jersey 07922.
JOHN M. FRASER, JR., Board Member. President of Fraser Associates, a
service company for planning and arranging corporate meetings and
other events. From September 1975 to June 1978, he was Executive Vice
President of Flagship Cruises, Ltd. Prior thereto, he was Senior Vice
President and Resident Board Member of the Swedish-American Line for
the United States and Canada. He is 75 years old and his address is
133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Board Member. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University, since January 1992. He was Under Secretary of the
Treasury for Finance at the U.S. Treasury Department, from May 1989 to
January 1992. For more than five 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 director of Mid Ocean Reinsurance
Co. Ltd. and Cooke & Bieler, Inc., investment counselors, NASD
Regulation, Inc. and the Federal Reserve Bank of Boston. He is 57
years old and his address is 79 John F. Kennedy Street, Cambridge,
Massachusetts 02138.
JAMES F. HENRY, Board Member. President of the CPR Institute for Dispute
Resolution, a non-profit organization principally engaged in the
development of alternatives to business litigation. He was of counsel
to the law firm of Lovejoy, Wasson & Ashton from October 1975 to
December 1976 and from October 1979 to June 1983, and was a partner of
the firm from January 1977 to September 1979. He was President and a
director of the Edna McConnell Clark Foundation, a philanthropic
organization, from September 1971 to December 1976. Mr. Henry is 65
years old and his address is c/o CPR Institute for Dispute Resolution,
366 Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Board Member. Director of Merchandise and
Marketing for Corporate Property Investors, a real estate investment
company. From 1974 to 1976, she was owner and manager of a
merchandise and marketing consulting firm. Prior to 1974, she was a
Vice President of Macy's, New York. Mrs. Jacobs is 71 years old and
her address is c/o Corporate Property Investors, 305 East 47th Street,
New York, New York 10017.
IRVING KRISTOL, Board Member. John M. Olin Distinguished Fellow of the
American Enterprise Institute for Public Policy Research, co-editor of
The Public Interest magazine, and an author or co-editor of several
books. From May 1981 to December 1994, he was a consultant to the
Manager on economic matters; from 1969 to 1988, he was Professor of
Social Thought at the Graduate School of Business Administration, New
York University; and from September 1969 to August 1979, he was Henry
R. Luce Professor of Urban Values at New York University. Mr. Kristol
is 76 years old and his address is c/o The Public Interest, 1112 16th
Street, N.W., Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Board Member. President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center. He was Vice President for
Health Sciences and Director of the Cancer Center at Columbia
University from 1973 to 1980, and Professor of Medicine and of Human
Genetics and Development at Columbia University from 1968 to 1982. He
is also a director of Pfizer, Inc., a pharmaceutical company, Life
Technologies, Inc., a life science company producing products for cell
and molecular biology and microbiology, and Tularik, Inc., a
biotechnology company, and a general partner of LINC Venture Lease
Partners II, L.P., a limited partnership engaged in leasing. Dr.
Marks is 69 years old and his address is c/o Memorial Sloan-Kettering
Cancer Center, 1275 York Avenue, New York, New York 10021.
DR. MARTIN PERETZ, Board Member. Editor-in-Chief of The New Republic
magazine and a lecturer in Social Studies at Harvard University, where
he has been a member of the faculty since 1965. He is a trustee of
The Center for Blood Research at the Harvard Medical School and a
director of LeukoSite Inc., a biopharmaceutical company. Dr. Peretz
is 56 years old and his address is c/o The New Republic, 1220 19th
Street, N.W., Washington, D.C. 20036.
BERT W. WASSERMAN, Board Member. Financial Consultant. From January 1990
to March 1995, Executive Vice President and Chief Financial Officer,
and, from January 1990 to March 1993, a director of Time Warner Inc.;
from 1981 to 1990, he was a member of the office of the President and
a director of Warner Communications, Inc. He is also a member of the
Chemical Bank National Advisory Board and a director of The New
Germany Fund, Mountasia Entertainment International, Inc. and the
Lillian Vernon Corporation. Mr. Wasserman is 63 years old and his
address is 126 East 56th Street, Suite 12 North, New York, New York
10022-3613.
For so long as the Company's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Board members who are not "interested persons" of the Company, as defined
in the 1940 Act, will be selected and nominated by the Board members who
are not "interested persons" of the Company.
The Company typically pays its Board members 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. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Company for the fiscal year
ended September 30, 1996, and by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Board member's total compensation) for
the year ended December 31, 1995, were as follows:
Total Compensation
From Company and
Aggregate Fund Complex
Name of Board Compensation Paid to Board
Member From Company* Member
Joseph S. DiMartino $8,750 $448,618 (94)
David P. Feldman $7,000 $113,783 (37)
John M. Fraser, Jr. $7,000 $58,606 (12)
Robert R. Glauber $7,000 $97,503 (20)
James F. Henry $7,000 $53,500 (10)
Rosalind Gersten Jacobs $6,500 $92,500 (20)
Irving Kristol $7,000 $53,500 (10)
Dr. Paul A. Marks $7,000 $49,427 (10)
Dr. Martin Peretz $7,000 $53,500 (10)
Bert W. Wasserman $7,000 $54,739 (10)
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $572 for all Board members as a group.
Officers of the Company
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director 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., the ultimate parent of which is
Boston Institutional Group, Inc. She is 38 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. He is 32 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of the Distributor and an officer
of other investment companies advised or administered by the Manager.
He is also Supervisor of Treasury Services and Administration of Funds
Distributor, Inc. From April 1993 to January 1995, he was a Senior
Fund Accountant for Investors Bank & Trust Company. From December
1991 to March 1993, he was employed as a Fund Accountant at The Boston
Company, Inc. He is 27 years old.
MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor and officer of other investment companies advised or
administered by the Manager. Prior to August 1993, he was employed as
an Associate Examiner at the National Association of Securities
Dealers. He is 27 years old.
ELIZABETH KEELEY, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years old.
RICHARD INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and Director of Client Services and Treasury Operations of
the Distributor and an officer of other investment companies advised
or administered by the Manager. He is also Senior Vice President and
Director of Client Services and Treasury Operations of Funds
Distributor, Inc. From March 1994 to November 1995, he was Vice
President and Division Manager for First Data Investor Services Group.
From 1989 to 1994, he was Vice President, Assistant Treasurer and Tax
Director - Mutual Funds of The Boston Company, Inc. He is 41 years
old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and an officer of other investment companies advised
or administered by the Manager. She is also Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. From September 1989 to July 1994, she was an Assistant Vice
President and Client Manager for The Boston Company, Inc. She is 32
years old.
JOSEPH F. TOWER, III, Vice President and 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 34 years old.
The address of each officer of the Company is 200 Park Avenue, New
York, New York 10166.
The Company's Board members and officers, as a group, owned less than
1% of each Fund's voting securities outstanding on January 10, 1997.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "Management
of the Company."
Management Agreement. The Manager provides management services
pursuant to the Management Agreement (the "Agreement") dated August 24,
1994, as amended December 11, 1995, with the Company. As to each Fund, the
Agreement is subject to annual approval by (i) the Company's Board or (ii)
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of such Fund, provided that in either event the continuance also
is approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Company or the Manager, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The Agreement was approved by shareholders on August 2, 1994 in
respect of Premier Aggressive Growth Fund, and was last approved by the
Company's Board, including a majority of the Board members who are not
"interested persons" of any party to the Agreement, at a meeting held on
May 29, 1996. As to each Fund, the Agreement is terminable without
penalty, on 60 days' notice, by the Company's Board or by vote of the
holders of a majority of such Fund's shares, or, on not less than 90 days'
notice, by the Manager. The Agreement will terminate automatically, as to
the relevant Fund, in the event of its assignment (as defined in the 1940
Act).
The following persons are officers and/or directors of the Manager:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman--Distribution and a director; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; William F. Glavin, Jr.,
Vice President--Corporate Development; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Patrice M. Kozlowski, Vice President--
Corporate Communications; Mary Beth Leibig, Vice President--Human
Resources; Jeffrey N. Nachman, Vice President--Mutual Fund Accounting;
Andrew S. Wasser, Vice President--Information Systems; Elvira Oslapas,
Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt and Frank V.
Cahouet, directors.
The Manager manages each Fund's investments in accordance with the
stated policies of such Fund, subject to the approval of the Company's
Board. The Manager is responsible for investment decisions, and provides
the Funds with portfolio managers who are authorized by the Board to
execute purchases and sales of securities. The Funds' portfolio managers
are Richard B. Hoey (with respect to Premier Aggressive Growth Fund and
Premier Growth and Income Fund), Donald C. Geogerian (with respect to
Premier Aggressive Growth Fund) and Michael L. Schonberg (with respect to
Premier Aggressive Growth Fund). The Manager also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for the Funds as well as for other
funds advised by the Manager. All purchases and sales are reported for the
Board's review at the meeting subsequent to such transactions.
The Manager maintains office facilities on behalf of the Funds, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Funds. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
Expenses. All expenses incurred in the operation of the Company are
borne by the Company, except to the extent specifically assumed by the
Manager. The expenses borne by the Company include: organizational costs,
taxes, interest, brokerage fees and commissions, if any, fees of Board
members who are not officers, directors, employees or holders of 5% or more
of the outstanding voting securities of the Manager or any of its
affiliates, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of registrars and custodians,
transfer and dividend disbursing agents' fees, outside auditing and legal
expenses, costs of maintaining the Company's existence, costs attributable
to investor services, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses. In addition, Class B and Class C
shares are subject to an annual distribution fee and Class A, Class B and
Class C shares are subject to an annual service fee. See "Distribution
Plan and Shareholder Services Plan." Expenses attributable to a particular
Fund are charged against the assets of that Fund; other expenses of the
Company are allocated among the Funds on the basis determined by the Board,
including, but not limited to, proportionately in relation to the net
assets of each Fund.
As compensation for the Manager's services to the Company, the Company
has agreed to pay the Manager a monthly management fee at the annual rate
of .75 of 1% of the value of Premier Aggressive Growth Fund's and Premier
Growth and Income Fund's average daily net assets. For the fiscal years
ended September 30, 1994, 1995 and 1996, the management fees paid by the
Company for Premier Aggressive Growth Fund amounted to $4,509,012,
$4,287,150 and $3,965,630, respectively. For the period December 29, 1995
(commencement of operations) to September 30, 1996, the management fee
payable by the Company for Premier Growth and Income Fund amounted to
$174,196 which was reduced by $93,014 pursuant to an undertaking by the
Manager, resulting in a net management fee of $81,172.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed, with respect to Class A of Premier Aggressive Growth Fund,
1-1/2% of the average value of such Fund's net assets attributable to its
Class A shares or, with respect to each other Class of Premier Aggressive
Growth Fund and with respect to each other Fund, the expense limitation of
any state having jurisdiction over the Fund, the Fund may deduct from the
payment to be made to the Manager under the Agreement, or the Manager will
bear, such excess expense. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as each Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Premier
Family of Funds, for funds in the Dreyfus Family of Funds and for certain
other investment companies. In some states, certain financial institutions
effecting transactions in Fund shares may be required to register as
dealers pursuant to state law.
For the period from August 24, 1994 through September 30, 1994, the
Distributor retained $191 from sales loads on Premier Aggressive Growth
Fund shares. For the fiscal years ended September 30, 1995 and 1996, no
amount was retained by the Distributor from sales loads on Premier
Aggressive Growth Fund shares. For the period from October 1, 1993 through
August 23, 1994, Dreyfus Service Corporation, as the Company's distributor
during such period, retained $934,357 from sales loads on Premier
Aggressive Growth Fund Shares. For the period from December 29, 1995
through September 30, 1996, no amount was retained by the Distributor from
sales loads on Class A shares of Premier Growth and Income Fund. For that
same period the Distributor retained $23,871 and $5,484 from contingent
deferred sales charges on Class B and Class C shares of Premier Growth and
Income Fund.
Sales Loads--Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code")) although more than
one beneficiary is involved; or a group of accounts established by or on
behalf of the employees of an employer or affiliated employers pursuant to
an employee benefit plan or other program (including accounts established
pursuant to Sections 403(b), 408(k), and 457 of the Code); or an organized
group which has been in existence for more than six months, provided that
it is not organized for the purpose of buying redeemable securities of a
registered investment company and provided that the purchases are made
through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Class A shares of each Fund. The example assumes a purchase
of Class A shares of the Fund aggregating less than $50,000 subject to the
schedule of sales charges set forth in the Fund's Prospectus at a price
based upon the net asset value of a Class A share on September 30, 1996 for
Premier Aggressive Growth Fund and for Premier Growth and Income Fund:
Premier Aggressive Premier Growth
Growth Fund* and Income Fund
Net Asset Value per Share. . $14.81 $18.45
Per Share Sales Charge - 5.75%
of offering price (6.10% of
net asset value per share). $ .90 $ 1.13
Per Share Offering Price to
the Public. . . . . . . . $15.71 $19.58
_____________________
* Class A shares of Premier Aggressive Growth Fund purchased by shareholders
beneficially owning Fund shares on December 31, 1995 or November 30, 1996,
are subject to a different sales load schedule, as described under "How to
Buy Shares--Class A Shares" in the Fund's Prospectus.
TeleTransfer Privilege. A TeleTransfer purchase order may be made at
any time. Purchase orders received by 4:00 p.m., New York time, on any
business day that Dreyfus Transfer, Inc., the Funds' transfer and dividend
disbursing agent (the "Transfer Agent"), and the New York Stock Exchange
are open for business will be credited to the shareholder's Fund account on
the next bank business day following such purchase order. Purchase orders
made after 4:00 p.m., New York time, on any business day the Transfer Agent
and the New York Stock Exchange are open for business, or orders made on
Saturday, Sunday or any Fund holiday (e.g., when the New York Stock
Exchange is not open for business), will be credited to the shareholder's
Fund account on the second bank business day following such purchase order.
To qualify to use the TeleTransfer Privilege, the initial payment for
purchase of 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
Shares--TeleTransfer Privilege."
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.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."
Class B and Class C shares are subject to a Distribution Plan and
Class A, Class B and Class C shares are subject to a Shareholder Services
Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the 1940 Act provides, among other things,
that an investment company may bear expenses of distributing its shares
only pursuant to a plan adopted in accordance with the Rule. The Company's
Board has adopted such a plan with respect to Class B and Class C shares
(the "Plan") of each Fund pursuant to which the Company pays the
Distributor for distributing the relevant Class of shares. The Company's
Board believes that there is a reasonable likelihood that Plan will benefit
each Fund and the holders of Class B and Class C shares.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Board for its review. In addition, the Plan provides that it may not be
amended to increase materially the cost which holders of Class B or Class C
shares may bear pursuant to the Plan without the approval of the holders of
such shares and that other material amendments of the Plan must be approved
by the Company's Board, and by the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Company and have no direct or
indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan, by vote cast in person
at a meeting called for the purpose of considering such amendments. The
Plan is subject to annual approval by such vote cast in person at a meeting
called for the purpose of voting on the Plan. The Plan was last so
approved by the Board at a meeting held on May 29, 1996. As to each Fund,
the Plan may be terminated at any time by vote of a majority of the Board
members who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan or by vote of the holders of a
majority of Class B and Class C shares of such Fund.
For the period from January 3, 1996 (commencement of initial offering
of Class B and Class C) through September 30, 1996 the amounts payable
under the Distribution Plan for Class B and Class C shares of Premier
Aggressive Growth Fund were $35 and $40, respectively. For the period from
December 29, 1995 (commencement of operations) through September 30, 1996,
the amounts payable under the Distribution Plan for Class B and Class C
shares of Premier Growth and Income Fund were $86,590 and $8,834,
respectively.
Shareholder Services Plan. The Company has adopted a Shareholder
Services Plan with respect to each Fund, pursuant to which the Company pays
the Distributor for the provision of certain services to the holders of
Class A, Class B and Class C shares. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Company and providing reports and other
information, and services related to the maintenance of such shareholder
accounts. Under the Shareholder Services Plan, the Distributor may make
payments to certain securities dealers, financial institutions and other
financial industry professionals (collectively, "Service Agents") in
respect of these services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Board for its review. In addition, the Shareholder
Services Plan provides that material amendments must be approved by the
Company's Board, and by the Board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Shareholder Services Plan is subject to
annual approval by such vote cast in person at a meeting called for the
purpose of voting on the Shareholder Services Plan. The Shareholder
Services Plan was last so approved by the Board at a meeting held on May
29, 1996. As to each Fund, the Shareholder Services Plan is terminable at
any time by vote of a majority of the Board members who are not "interested
persons" and who have no direct or indirect financial interest in the
operation of the Shareholder Services Plan or in any agreements entered
into in connection with the Shareholder Services Plan.
With respect to Class A shares of Premier Aggressive Growth Fund, for
the period January 2, 1996 (effective date of the Shareholder Services
Plan) through September 30 1996, the Company was charged $975,463. With
respect to Class B and Class C shares of the Premier Aggressive Growth
Fund, for the period January 3, 1996 (commencement of initial offering)
through September 30, 1996, the Company was charged $12 and $13,
respectively. With respect to Class A, Class B and Class C shares of
Premier Growth and Income Fund, for the period December 29, 1995
(commencement of operations of the Fund) through September 30, 1996, the
Company was charged $25,466, $28,863 and $2,945, respectively.
Prior Shareholder Services Plan. As of January 1, 1996, the Company
terminated its then-existing Shareholder Services Plan pursuant to which
the Premier Aggressive Growth Fund reimbursed Dreyfus Service Corporation
certain allocated expenses of providing personal services and/or
maintaining shareholder accounts at an annual rate of up to .25 of 1% of
the value of the Premier Aggressive Growth Fund's total assets. For the
period from October 1, 1995 through January 1, 1996, Premier Aggressive
Growth Fund paid Dreyfus Service Corporation $190,772 pursuant to such
plan.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "How to
Redeem 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
Company will initiate payment for shares redeemed pursuant to this
Privilege on the next business day after receipt by the Transfer Agent of
the redemption request in proper form. Redemption proceeds ($1,000
minimum) 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, or to a correspondent bank if the investor's
bank is not a member of the Federal Reserve System. Fees ordinarily are
imposed by such bank and borne by the investor. Immediate notification by
the correspondent bank to the investor's bank is necessary to avoid a delay
in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a wire redemption will
be effected as a 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 Shares--TeleTransfer Privilege."
Stock Certificates; Signatures. Any 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.
Redemption Commitment. The Company has committed to pay in cash all
redemption requests by any shareholder of record of a Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the
value of such Fund's net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in excess of
such amount, the Board reserves the right to make payments in whole or in
part in securities (which may include non-marketable securities) or other
assets 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 securities are valued. If the recipient sold such securities,
brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the relevant 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 each Fund's Prospectus entitled
"Shareholder Services."
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by the Manager. Shares of the same Class of such 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.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds, and for
purposes of calculating CDSC rates and conversion periods, if
any, will be deemed to have been held since the date the shares
being exchanged were initially purchased.
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, the investor's Service Agent acting on the
investor's behalf 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 (including over The Dreyfus
TouchRegistration Mark automated telephone system) from any person
representing himself or herself to be the investor or a representative of
the investor's Service Agent, and reasonably believed by the Transfer
Agent to be genuine. Telephone exchanges may be subject to limitations
as to the amount involved or the number of telephone exchanges permitted.
Shares issued in certificate form are not eligible for telephone exchange.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a 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 $1,000 invested among
the funds in the Premier Family of Funds or the Dreyfus Family of Funds.
To exchange shares held in a personal retirement plan account, the shares
exchanged must have a current value of at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of the Fund, shares of the
same Class of another fund in the Premier Family of Funds or the Dreyfus
Family of Funds. This Privilege is available only for existing accounts.
With respect to Class R shares held by a Retirement Plan, exchanges may be
made only between the investor's Retirement Plan account in one fund and
such investor's Retirement Plan account in another fund. Shares will be
exchanged on the basis of relative net asset value as described above under
"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 the investor's account falls
below the amount designated to be exchanged under this Privilege. In this
case, an investor's account will fall to zero unless additional investments
are made in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the 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 Company reserves the right to
reject any exchange request in whole or in part. The Fund Exchanges
service or the 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 $50) 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. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dividend Sweep. Dividend Sweep allows investors to invest
automatically their dividends or dividends and capital gain distributions,
if any, from the Fund in shares of the same Class of another fund in the
Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a CDSC and the applicable CDSC,
if any, will be imposed upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Company
makes available to corporations a variety of prototype pension and profit-
sharing plans including a 401(k) Salary Reduction Plan. In addition, the
Company makes available Keogh Plans, IRAs, including SEP-IRAs and IRA
"Rollover Accounts," and 403(b)(7) Plans. Plan support services also are
available.
Investors who wish to purchase 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 form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$1,000 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.
Each investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "How to Buy
Shares."
Valuation of Portfolio Securities. Each Fund's securities, including
covered call options written by a Fund, are valued at the last sale price
on the securities exchange or national securities market on which such
securities primarily are 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 recent bid and asked
prices, except in the case of open short positions where the asked price is
used for valuation purposes. Bid price is used when no asked price is
available. Any assets or liabilities initially expressed in terms of
foreign currency will be translated into U.S. dollars at the midpoint of
the New York interbank market spot exchange rate as quoted on the day of
such translation or, if no such rate is quoted on such date, such other
quoted market exchange rate as may be determined to be appropriate by the
Manager. Forward currency contracts will be valued at the current cost of
offsetting the contract. If a Fund has to obtain prices as of the close of
trading on various exchanges throughout the world, the calculation of net
asset value may not take place contemporaneously with the determination of
prices of certain of the Funds' securities. Short-term investments are
carried at amortized cost, which approximates value. Expenses and fees,
including the management fee and fees pursuant to the Distribution Plan and
Shareholder Services Plan, are accrued daily and taken into account for the
purpose of determining the net asset value of a Fund's shares. Because
of the difference in operating expenses incurred by each Class, the per share
net asset value of each Class will differ.
Restricted securities, as well as securities or other assets for which
recent market quotations are not readily available, or are not valued by a
pricing service approved by the Board, are valued at fair value as
determined in good faith by the Board. The Board will review the method of
valuation on a current basis. In making their good faith valuation of
restricted securities, the Board members generally will take the following
factors into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a
public market exists usually will be valued at market value less the same
percentage discount at which purchased. This discount will be revised
periodically by the Board if the Board members believe that it no longer
reflects the value of the restricted securities. Restricted securities not
of the same class as securities for which a public market exists usually
will be valued initially at cost. Any subsequent adjustment from cost will
be based upon considerations deemed relevant by the Board.
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 each Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management of the Company believes that Premier Aggressive Growth Fund
and Premier Growth and Income Fund each have qualified for the fiscal year
ended September 30, 1996 as a "regulated investment company" under the Code.
Each of these Funds intends to continue to so qualify if such qualification
is in the best interests of its shareholders. As a regulated investment
company, each Fund will pay no Federal income tax on net investment income
and net realized securities gains to the extent that such income and gains
are distributed to shareholders in accordance with applicable provisions of
the Code. To qualify as a regulated investment company, the Fund must
distribute at least 90% of its net income (consisting of net investment
income and net short-term capital gain) to its shareholders, derive less
than 30% of its annual gross income from gain on the sale of securities
held for less than three months, and meet certain asset diversification and
other requirements. The term "regulated investment company" does not imply
the supervision of management or investment practices or policies by any
government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of the shares below the
cost of the investment. Such a dividend or distribution would be a return
of investment in an economic sense, although taxable as stated above. In
addition, the Code provides that if a shareholder holds shares of a Fund
for six months or less and has received a capital gain distribution with
respect to such shares, any loss incurred on the sale of such shares will
be treated as long-term capital loss to the extent of the capital gain
distribution received.
Depending upon the composition of a Fund's income, the entire amount
or a portion of the dividends paid by such Fund 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 a Fund distributed to qualifying corporate shareholders
will be eligible for the dividends received deduction only to the extent
that such Fund's income consists of dividends paid by U.S. corporations.
However, Section 246(c) of the Code provides that if a qualifying corporate
shareholder has disposed of Fund shares not held for 46 days or more and
has received a dividend from net investment income with respect to such
shares, the portion designated by the Fund as qualifying for the dividends
received deduction will not be eligible for such shareholder's dividends
received deduction. 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.
A Fund may qualify for and may make an election permitted under
Section 853 of the Code so that shareholders may be eligible to claim a
credit or deduction on their Federal income tax returns for, and will be
required to treat as part of the amounts distributed to them, their pro
rata portion of qualified taxes paid or incurred by the Fund to foreign
countries (which taxes relate primarily to investment income). A Fund may
make an election under Section 853 of the Code, provided that more than 50%
of the value of the Fund's total assets at the close of the taxable year
consists of securities in foreign corporations, and the Fund satisfies the
applicable distribution provisions of the Code. The foreign tax credit
available to shareholders is subject to certain limitations imposed by the
Code.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, a portion of the gain or
loss realized from the disposition of foreign currencies (including foreign
currency denominated bank deposits) and non-U.S. dollar denominated
securities (including debt instruments and certain forward contracts and
options) may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds will be treated as
ordinary income under Section 1276 of the Code. Finally, all or a portion
of the gain realized from engaging in "conversion transactions" may be
treated as ordinary income under Section 1258 of the Code. "Conversion
transactions" are defined to include certain forward, futures, option and
straddle transactions, transactions marketed or sold to produce capital
gains, or transactions described in Treasury regulations to be issued in
the future.
Under Section 1256 of the Code, any gain or loss realized by a Fund
from certain forward contracts and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such contracts and
options as well as from closing transactions. In addition, any such
contracts or options remaining unexercised at the end of the Fund's taxable
year will be treated as sold for their then fair market value, resulting in
additional gain or loss to such Fund characterized in the manner described
above.
Offsetting positions held by a Fund involving certain foreign currency
forward contracts or options may constitute "straddles." "Straddles" are
defined to include "offsetting positions" in actively traded personal
property. The tax treatment of "straddles" is governed by Sections 1092
and 1258 of the Code, which, in certain circumstances, overrides or
modifies the provisions of Sections 1256 and 988 of the Code. As such, all
or a portion of any short or long-term capital gain from certain "straddle"
transactions may be recharacterized to ordinary income.
If a Fund were treated as entering into "straddles" by reason of its
engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles"
were governed by Section 1256 of the Code. A Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to the Fund may differ. If no election is
made, to the extent the "straddle" and conversion transaction rules apply
to positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the 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 gains may be treated as
short-term capital gains or ordinary income.
If a Fund invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Fund. In
addition, gain realized from the sale or other disposition of PFIC
securities may be treated as ordinary income under Section 1291 of the
Code.
PORTFOLIO TRANSACTIONS
The Manager assumes general supervision over placing orders on behalf
of the Company for the purchase or sale of portfolio securities.
Allocation of brokerage transactions, including their frequency, is made in
the best judgment of the Manager and in a manner deemed fair and reasonable
to shareholders. The primary consideration is prompt execution of orders
at the most favorable net price. Subject to this consideration, the
brokers selected will include those that supplement the 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 fees are
not reduced as a consequence of the receipt of such supplemental
information. Such information may be useful to the Manager in serving both
the Company 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 obligations to the Company.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block
trades may, in certain cases, result from two or more funds advised or
administered by the Manager being engaged simultaneously in the purchase or
sale of the same security. Certain of the Funds' transactions in
securities of foreign issuers may not benefit from the negotiated
commission rates available to the Funds for transactions in securities of
domestic issuers. When transactions are executed in the over-the-counter
market, each Fund will deal with the primary market makers unless a more
favorable price or execution otherwise is obtainable. Foreign exchange
transactions are made with banks or institutions in the interbank market at
prices reflecting a mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year as well as within a
year. It is anticipated that in any fiscal year the turnover rate of
Premier Aggressive Growth Fund and Premier Growth and Income Fund generally
should not exceed 150% and 250%, respectively. In periods in which
extraordinary market conditions prevail, the Manager will not be deterred
from changing a Fund's investment strategy as rapidly as needed, in which
case higher turnover rates can be anticipated which would result in greater
brokerage expenses. The overall reasonableness of brokerage commissions
paid is evaluated by the Manager based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
In connection with its portfolio securities transactions for the
fiscal years ended September 30, 1994, 1995 and 1996, Premier Aggressive
Growth Fund paid total brokerage commissions of $1,406,201, $2,535,450 and
$2,061,365, respectively. The increase in brokerage commissions in fiscal
1995 resulted from an increase in trading activity to take advantage of
favorable market conditions. For the period December 29, 1995
(commencement of operations) to September 30, 1996, Premier Growth and
Income Fund paid total brokerage commissions of $204,850. These amounts do
not include gross spreads and concessions in connection with principal
transactions which, with respect to Premier Aggressive Growth Fund, where
determinable, totalled $609,493, $365,417 and $2,894,060 for the fiscal
years ended September 30, 1994, 1995 and 1996, respectively. With respect
to Premier Growth and Income Fund, the amount of gross spreads and
concessions in connection with principal transactions, were determinable,
totalled $798,333. None of the aforementioned amounts were paid to the
Distributor.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Performance Information."
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) per share with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result. A Class'
average annual total return figures calculated in accordance with such
formula assume that in the case of Class A the maximum sales load has been
deducted from the hypothetical initial investment at the time of purchase
or in the case of Class B or Class C the maximum applicable CDSC has been
paid upon redemption at the end of the period.
For the 1, 5 and 10 year periods ended September 30, 1996, the average
annual total return for the Class A shares of Premier Aggressive Growth
Fund was -5.19%, 5.69% and 8.49%, respectively.
Total return is calculated by subtracting the amount of the Fund's net
asset value (maximum offering price in the case of Class A) per share at
the beginning of a stated period from the net asset value (maximum offering
price in the case of Class A) per share at the end of the period (after
giving effect to the reinvestment of dividends and distributions during the
period and any applicable CDSC), and dividing the result by the net asset
value (maximum offering price in the case of Class A) per share at the
beginning of the period. Total return also may be calculated based on the
net asset value per share at the beginning of the period instead of the
maximum offering price per share at the beginning of the period for Class A
shares or without giving effect to any applicable CDSC at the end of the
period for Class B or Class C shares. In such cases, the calculation would
not reflect the deduction of the sales load with respect to Class A shares
or any applicable CDSC with respect to Class B or Class C shares, which, if
reflected, would reduce the performance quoted.
The total return for each Fund for the indicated period ended
September 30, 1996 was as follows:
Aggregate Total Aggregate Total Average
Return Since Return Since Annual
Inception Based on Inception Based on Total Return
Net Asset Value Maximum Offering Price Since Inception*
Premier Aggressive
Growth Fund
Class A (1) 1,550.91% 1,476.50% -
Class B (2) - 0.74 - 4.71 - 6.30%
Class C (2) - 0.07 - 1.07 - 1.44
Class R (2) 0.0 N/A -
Premier Growth
and Income Fund (3)
Class A 48.24% 41.56% 59.14%
Class B 47.14 43.14 61.52
Class C 47.27 46.27 66.26
Class R 48.38 N/A 69.48
_____________________________________
* Computations of average annual total return for periods of less than one
year represent an annualization of the actual total return of the class for
the applicable period.
(1) Commencement of operations: June 23, 1969
(2) Commencement of operations: January 3, 1996
(3) Commencement of operations for each Class: December 29, 1995
From time to time, advertising material for a Fund may include
biographical information relating to one or more of its portfolio managers
and may refer to, or include commentary by a portfolio manager relating to
investment strategy, asset growth, current or past business, political,
economic or financial conditions and other matters of general interest to
investors. In addition, from time to time, the Company may compare a
Fund's performance against inflation with the performance of other
instruments against inflation, such as short-term Treasury Bills (which are
direct obligations of the U.S. Government) and FDIC-insured bank money
market accounts. Advertising materials for a Fund also may refer to
Morningstar ratings and related analyses supporting the ratings.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "General
Information."
Premier Aggressive Growth Fund is the oldest Dreyfus fund managed for
growth of capital which has the ability to use investment techniques such
as leverage, short-selling and options transactions.
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Fund shares have no preemptive or subscription rights and
are freely transferable.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
However, the Rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the
Rule.
Each Fund will send annual and semi-annual financial statements to all
its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Company's transfer
and dividend disbursing agent. Under a transfer agency agreement with the
Company, the Transfer Agent arranges for the maintenance of shareholder
account records for each Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for each Fund during the month, and is reimbursed for
certain out-of-pocket expenses. For the period December 1, 1995 (effective
date of transfer agency agreement) through September 30, 1996, the Company
paid the Transfer Agent $296,204. Mellon Bank, N.A. (the "Custodian"), the
Manager's parent, One Mellon Bank Center, Pittsburgh, Pennsylvania 15258,
acts as custodian for the investments of each Fund. Under a custody
agreement with the Company, the Custodian holds the Fund's securities and
keeps all necessary accounts and records. For its custody services, the
Custodian receives a monthly fee based on the market value of each Fund's
assets held in custody and receives certain securities transactions
charges. For the period May 10, 1996 (effective date of custody agreement)
through September 30, 1996, the Company paid the Custodian $20,084.
Stroock & Stroock & Lavan, 180 Maiden Lane, New York, New York 10038-
4982, as counsel for the Company, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to each Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Company.
APPENDIX
Description of S&P, Moody's, Fitch and Duff ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default
and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, they
are not likely to have the capacity to pay interest and repay principal.
S&P's letter ratings may be modified by the addition of a plus (+) or
a minus (-) sign designation, which is used to show relative standing
within the major rating categories, except in the AAA (Prime Grade)
category.
Commercial Paper Rating
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and, therefore, not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36
months.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because
of economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection
factors but still considered sufficient for prudent investment. There may
be considerable variability in risk for bonds in this category during
economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within the
category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating
within this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such
bonds may be in default or have considerable uncertainty as to timely
payment of interest, preferred dividends and/or principal. Protection
factors are narrow and risk can be substantial with unfavorable economic or
industry conditions and/or with unfavorable company developments.
Plus (+) and minus (-) signs are used with a rating symbol (except
AAA) to indicate the relative position of a credit within the rating
category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by
ample asset protection. Risk factors are minor. Paper rated Duff-2 is
regarded as having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals. Risk factors
are small.
<TABLE>
<CAPTION>
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1996
COMMON STOCKS-109.5% SHARES VALUE
___________ _____________
<S> <C> <C>
COMMERCIAL SERVICES-4.7% Correctional Services Corp.................. 275,000 (a,b) $ 3,884,375
Corrections Corporation of America.......... 400,000 (a) 12,500,000
NuCo2....................................... 130,000 (a) 2,697,500
Quintel Entertainment....................... 450,000 (a) 3,487,500
_____________
22,569,375
_____________
CONSUMER DURABLES-2.2% Sunbeam..................................... 450,000 10,406,250
_____________
CONSUMER
NON-DURABLES-12.6% Philip Morris Cos........................... 250,000 22,437,500
Quiksilver.................................. 250,000 (a) 6,250,000
Tommy Hilfiger.............................. 320,000 (a) 18,960,000
Ultrafem.................................... 110,000 (a) 2,543,750
Vista 2000.................................. 550,000 (a,b) 275,000
Warnaco Group, Cl. A........................ 425,000 10,093,750
_____________
60,560,000
_____________
CONSUMER SERVICES-16.8% American Radio Systems, Cl. A............... 150,000 (a) 5,587,500
Black Rock Golf............................. 100,000 (a) 475,000
Casino Data Systems......................... 810,000 (a) 15,390,000
Checkfree................................... 500,000 (a) 10,000,000
Cinar Films, Cl. B.......................... 508,181 (a,b) 13,244,467
Film Roman.................................. 85,000 (a) 850,000
Metromedia International Group.............. 1,700,000 (a) 18,062,500
Sun International Hotels.................... 330,000 (a) 16,912,500
_____________
80,521,967
_____________
ELECTRONIC
TECHNOLOGY-16.1% Advanced Photonix, Cl. A.................... 515,000 (a) 1,705,938
Cisco Systems............................... 300,000 (a) 18,618,750
Cree Research............................... 220,000 (a) 2,695,000
Gilat Satellite Networks.................... 350,000 (a) 6,168,750
Gray Communications Systems, Cl. B.......... 300,000 5,437,500
Intel....................................... 250,000 23,859,375
MRV Communications.......................... 475,000 (a) 12,231,250
Personal Computer Products.................. 975,000 (a) 1,696,500
Storage Technology.......................... 135,000 (a) 5,113,125
_____________
77,526,188
_____________
ENERGY MINERALS-2.7% Rutherford-Moran Oil........................ 435,000 (a) 13,050,000
_____________
FINANCE-5.2% ASTA Funding................................ 150,000 (a) 881,250
American States Financial................... 500,000 11,625,000
National Auto Credit........................ 209,000 (a) 2,403,500
Titan Holdings.............................. 262,500 3,904,688
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
FINANCE (CONTINUED) 20th Century Industries..................... 350,000 (a) $ 6,168,750
_____________
24,983,188
_____________
HEALTH SERVICES-5.2% Complete Management......................... 450,000 (a,b) 7,087,500
Core........................................ 180,000 (a) 2,115,000
EP MedSystems............................... 230,000 (a) 1,265,000
Fresenius Medical AG, A.D.S. ............... 157,048 (a) 3,651,366
HBO & Co.................................... 100,000 6,675,000
Northstar Health Services................... 235,000 (a,b) 411,250
OMEGA Health Systems........................ 269,500 (a,b) 1,667,531
OnGard Systems.............................. 280,000 (a) 980,000
OncorMed.................................... 364,000 (a,b) 1,387,750
_____________
25,240,397
_____________
HEALTH TECHNOLOGY-20.2% Atlantic Pharmaceuticals.................... 30,000 (a) 266,250
Avigen...................................... 245,000 (a) 1,255,625
BioCryst Pharmaceuticals.................... 60,000 (a) 765,000
Fuisz Technologies.......................... 1,260,000 (a,b) 16,380,000
Guidant..................................... 200,000 11,050,000
Guilford Pharmaceuticals.................... 105,000 (a) 2,887,500
Interneuron Pharmaceuticals................. 590,000 (a) 16,667,500
MacroChem/Delaware.......................... 662,500 (a) 2,484,375
Microvision................................. 100,000 (a) 556,250
NeoPharm.................................... 200,000 (a) 1,500,000
ONCOR....................................... 800,000 (a) 4,150,000
Sepraco..................................... 300,000 (a) 4,237,500
Teva Pharmaceutical Industries, A.D.R....... 640,000 29,680,000
VIMRx Pharmaceuticals....................... 1,300,000 (a) 5,037,500
_____________
96,917,500
_____________
INDUSTRIAL SERVICES-2.9% Commodore Applied Technologies.............. 700,000 (a) 4,637,500
Global Marine............................... 579,500 (a) 9,127,125
_____________
13,764,625
_____________
NON-ENERGY MINERALS-.5% TVX Gold.................................... 350,000 (a) 2,362,500
_____________
PROCESS INDUSTRIES-4.8% Chromatics Color Science.................... 155,000 (a) 775,000
Crompton & Knowles.......................... 900,000 14,737,500
Grace (W.R) & Co............................ 149,700 (a) 7,784,400
_____________
23,296,900
_____________
PRODUCER
MANUFACTURING-6.3% Motorcar Parts & Accessories................. 250,000 (a) 3,312,500
Olin......................................... 100,000 8,400,000
Raychem...................................... 245,000 18,375,000
_____________
30,087,500
_____________
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
RETAIL TRADE-1.4% Federated Department Stores.................. 200,000 (a) $ 6,700,000
_____________
TECHNOLOGY SERVICES-5.1% IMNET Systems................................ 440,000 (a) 8,580,000
Mercury Interactive.......................... 795,000 (a) 11,030,625
TriTeal...................................... 350,000 (a) 5,075,000
_____________
24,685,625
_____________
UTILITIES-2.8% Amnex........................................ 800,000 (a) 2,700,000
NorAm Energy................................. 730,000 10,858,750
_____________
13,558,750
_____________
TOTAL COMMON STOCKS
(cost $481,731,714) $526,230,765
==============
TOTAL INVESTMENTS (cost $481,731,714)..................................... 109.5% $526,230,765
======= ==============
LIABILITIES, LESS CASH AND RECEIVABLES.................................... (9.5%) $(45,573,233)
======= ==============
NET ASSETS................................................................ 100.0% $480,657,532
======= ==============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Investment in non-controlled affiliates (cost $42,208,902)-see Note
1(d).
See notes to financial statements.
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1996
ASSETS:
Investments in securities, at value
(cost $481,731,714)-see statement..................................... $526,230,765
Cash.................................................................... 51,461
Receivable for investment securities sold............................... 2,860,273
Dividends receivable.................................................... 343,488
Receivable for subscriptions to Common Stock subscribed................. 4,917
Prepaid expenses........................................................ 16,037
______________
529,506,941
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 297,764
Due to Distributor...................................................... 99,262
Bank loans payable-Note 2............................................... 40,100,000
Payable for investment securities purchased............................. 7,360,464
Payable for Common Stock redeemed....................................... 557,388
Loan commitment fees and interest payable............................... 253,902
Accrued expenses........................................................ 180,629 48,849,409
_____________ ______________
NET ASSETS.................................................................. $480,657,532
==============
REPRESENTED BY:
Paid-in capital......................................................... $445,577,889
Accumulated net realized (loss) on investments.......................... (9,419,408)
Accumulated net unrealized appreciation on investments-Note 4 (b)....... 44,499,051
______________
NET ASSETS at value......................................................... $480,657,532
==============
NET ASSET VALUE, per share:
Class A Shares
200 million shares of $1.00 par value authorized
($480,638,245 / 32,443,473 shares of Common Stock outstanding)........ $14.81
=======
Class B Shares
200 million shares of $1.00 par value authorized
($12,639 / 858 shares of Common Stock outstanding).................... $14.73
=======
Class C Shares
200 million shares of $1.00 par value authorized
($1,453 / 98 shares of Common Stock outstanding)...................... $14.83
=======
Class R Shares
200 million shares of $1.00 par value authorized
($5,195 / 350 shares of Common Stock outstanding)..................... $14.84
=======
See notes to financial statements.
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1996
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $36,683 foreign taxes withheld at source)...... $ 4,164,039
Interest.............................................................. 304,729
____________
TOTAL INCOME.................................................... $ 4,468,768
EXPENSES:
Management fee-Note 3(a).............................................. 3,965,630
Interest-Note 2....................................................... 2,009,924
Shareholder servicing costs-Note 3(c)................................. 1,620,699
Professional fees..................................................... 99,728
Directors' fees and expenses-Note 3(d)................................ 70,654
Custodian fees-Note 3(c).............................................. 70,018
Loan commitment fees-Note 2........................................... 67,814
Prospectus and shareholders' reports.................................. 48,846
Distribution fees-Note 3 (b).......................................... 75
Miscellaneous......................................................... 4,032
____________
TOTAL EXPENSES.................................................. 7,957,420
____________
INVESTMENT (LOSS)-NET........................................... (3,488,652)
____________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 4:
Net realized (loss) on investments and foreign currency transactions (including
options transactions)................................................. $(9,469,961)
Net realized (loss) on forward currency exchange contracts;
Short transactions.................................................... (157,429)
____________
NET REALIZED (LOSS)................................................... (9,627,390)
Net unrealized appreciation on investments and
foreign currency transactions:
Unaffiliated issuers.................................................. $ 8,483,047
Affiliated issuers.................................................... 2,128,971 10,612,018
____________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 984,628
____________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (2,504,024)
==============
See notes to financial statements.
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
_________________________________________
1995 1996
________________ ________________
OPERATIONS:
Investment income (loss)-net............................................ $ 14,579,338 $ (3,488,652)
Net realized gain (loss) on investments................................. 39,414,693 (9,627,390)
Net unrealized appreciation on investments for the year................. 6,873,811 10,612,018
________________ ________________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 60,867,842 (2,504,024)
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net;
Class A shares........................................................ (16,111,729) (9,496,919)
Net realized gain on investments;
Class A shares........................................................ (8,422,040) (38,124,274)
________________ ________________
TOTAL DIVIDENDS................................................... (24,533,769) (47,621,193)
________________ ________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 82,126,165 119,742,311
Class B shares........................................................ - 13,886
Class C shares........................................................ - 2,731
Class R shares........................................................ - 5,239
Dividends reinvested;
Class A shares........................................................ 21,932,842 42,442,019
Cost of shares redeemed;
Class A shares........................................................ (138,675,507) (203,500,906)
________________ ________________
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.......... (34,616,500) (41,294,720)
________________ ________________
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 1,717,573 (91,419,937)
NET ASSETS:
Beginning of year....................................................... 570,359,896 572,077,469
________________ ________________
End of year (including undistributed investment income-net;
$1,801,170 in 1995)................................................... $ 572,077,469 $ 480,657,532
================= =================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
_____________________________________________________________
CLASS A CLASS B
____________________________________ __________________
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
____________________________________
1995 1996 1996*
____________ ___________ __________
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................... 5,218,666 7,915,922 858
Shares issued for dividends reinvested............... 1,526,294 2,844,638 -
Shares redeemed.......................................... (8,826,816) (13,395,848) -
____________ ___________ __________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING.......... (2,081,856) (2,635,288) 858
============= ============= =============
SHARES
__________________________________________
CLASS C CLASS R
_________________ __________________
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996* 1996*
_________________ __________________
CAPITAL SHARE TRANSACTIONS:
Shares sold.............................................. 98 350
Shares issued for dividends reinvested................... - -
Shares redeemed.......................................... - -
_________________ __________________
NET INCREASE IN SHARES OUTSTANDING..................... 98 350
================== ====================
*From January 3, 1996 (commencement of initial offering) to September 30,
1996.
See notes to financial statements.
</TABLE>
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
FINANCIAL HIGHLIGHTS
Reference is made to pages 4 and 5 of the Fund's Prospectus
dated February 1, 1997.
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)_SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Equity Funds, Inc., (the "Company") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company and operates as a series company currently offering two
series, including Premier Aggressive Growth Fund (the "Fund"). The Fund's
investment objective is capital growth. The Dreyfus Corporation ("Manager")
serves as the Fund's investment adviser. The Manager is a direct subsidiary
of Mellon Bank, N.A. ("Mellon").
On September 9, 1996, the Board of Directors of the Fund approved an
Agreement and Plan of Reorganization providing for the transfer of all or
substantially all of the assets and liabilities of Premier Strategic Growth
Fund to the Fund, in a tax free exchange for shares of Common Stock of the
Fund at net asset value and the assumption of stated liabilities (the
"Exchange"). The Exchange is expected to be approved by Premier Strategic
Growth Fund shareholders on December 16, 1996 and to become effective on or
after December 31, 1996.
On January 2, 1996, the Company's Board of Directors approved a change of
the Company's name, from "Premier Capital Growth Fund, Inc." to "Premier
Equity Fund's, Inc." and to rename the existing Fund "Premier Capital Growth
Fund". On September 9, 1996, the Company's Board of Directors approved a
change of the Fund's name from "Premier Capital Growth Fund" to "Premier
Aggressive Growth Fund" which became effective on September 23, 1996.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund offers Class A, Class B, Class C
and Class R shares. Class A shares are subject to a sales charge imposed at
the time of purchase, Class B shares are subject to a contingent deferred
sales charge imposed at the time of redemption made within six years of
purchase, Class C shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within one year of
purchase and Class R shares are sold at net asset value per share only to
institutional investors. Other differences between the four Classes include
the services offered to and the expenses borne by each Class and certain
voting rights.
The Company accounts separately for the assets, liabilities and
operations of each Fund. Expenses directly attributable to each fund are
charged to that fund's operations; expenses which are applicable to all funds
are allocated among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(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
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)_SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 forward 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, currency
gains or losses realized on securities transactions, 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, 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 discount on investments, is recognized on
the accrual basis.
(D) AFFILIATED ISSUERS: Issuers in which the Fund held 5% or more of the
outstanding voting securities are defined as "affiliated" in the Act.
(E) 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, it is the policy of
the Fund not to distribute such gain.
(F) 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.
In accordance with Statement of Position 93-2, the Fund reclassed
$3,540,452 from paid in capital and $7,643,949 from undistributed realized
gains to undistributed income.
The Fund has an unused capital loss carryover of approximately $9,419,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1996. If not
applied, the carryover expires in fiscal 2004.
NOTE 2-BANK LINES OF CREDIT:
The Fund may borrow up to $76 million for leveraging purposes under a
short-term unsecured line of credit and participates with other
Dreyfus-managed Funds in a $100 million unsecured line of credit
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)_SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
primarily to be utilized for temporary or emergency purposes, including the
financing of redemptions. Interest is charged to the Fund at rates which are
related to the Federal Funds rate in effect at the time of borrowings and an
additional commitment fee is paid on the unused portion of the first $46
million on the line of credit utilized for leveraging. Outstanding borrowings
under both arrangements on September 30, 1996 amounted to $40.1 million.
The average daily amount of borrowings outstanding under both agreements
during the year ended September 30, 1996 was approximately $31.5 million,
with a related weighted average annualized interest rate of 6.39%. The
maximum amount borrowed at any time during the year ended September 30, 1996,
was $68.8 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 value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
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, with respect to Class A 1 1/2% of the average
value of the Fund's net assets and with respect to each other Class the
expense limitation of any state having jurisdiction over the Fund, the Fund
may deduct from payments to be made to the Manager, or the Manager will bear
such excess expense. The most stringent state expense limitation applicable
to the Fund presently requires reimbursement of expenses in any full fiscal
year that such expenses (exclusive of distribution expenses and certain
expenses as described above) exceed 2 1/2% of the first $30 million, 2% of the
next $70 million and 1 1/2% of the excess over $100 million of the average
value of the Fund's net assets in accordance with California "blue sky"
regulations. There was no expense reimbursement for the year ended September
30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $67,637 during the year ended September 30, 1996 from commissions
earned on sales of the Fund's shares.
(B) Effective January 3, 1996, the Fund adopted a Distribution Plan,
pursuant to Rule 12b-1 under the Act, to which it pays the Distributor for
distributing the Fund's Class B and Class C shares at an annual rate of .75
of 1% of the value of the average daily net assets of Class B and Class C.
During the period ended September 30, 1996, $35 was charged to the Fund for
the Class B shares and $40 was charged to the Fund for the Class C shares.
(C) Effective January 2, 1996, the Fund adopted a Shareholder Services
Plan, pursuant to which it pays the Distributor, for the provision of certain
services to Fund shareholders at the annual rate of .25 of 1% of the value of
the average daily net assets of Class A, Class B and Class C shares,
respectively. 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
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)_SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
related to the maintenance of shareholder accounts. The Distributor may make
payments to Service Agents (a securities dealer, financial institution or
other industry professional) in respect of these services. The Distributor
determines the amounts to be paid to Service Agents. During the year ended
September 30, 1996, $975,463 was charged to Class A shares and during the
period January 3, 1996 through September 30, 1996, $12 and $13 were charged
to Class B and Class C shares, respectively, by the Distributor pursuant to
the Shareholder Services Plan.
Prior to January 2, 1996, the Fund's Shareholder Services Plan provided
for the Fund to reimburse 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
period October 1, 1995 through January 1, 1996, the Fund was charged an
aggregate of $190,772 pursuant to the Shareholder Services Plan.
Effective December 1, 1995, The Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $288,258 during the period from
December 1, 1995 through September 30, 1996.
Effective May 10, 1996, the Fund entered into a custody agreement with
Mellon to provide custodial services for the Fund. During the period from May
10, 1996 through September 30, 1996, $17,565 was paid to Mellon pursuant to
the custody agreement.
(D) Each director who is not an "affiliated person" as defined in the Act
receives from the Company 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.
NOTE 4-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, forward currency exchange contracts and
options transactions, during the year ended September 30, 1996, amounted to
$739,421,393 and $789,081,236, respectively.
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 counterparty nonperformance on
PREMIER AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)_SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. At September 30, 1996, there were no forward currency
exchange contracts outstanding.
In addition, the following summarizes the Fund's covered call options
written transactions during the year ended September 30, 1996:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
________________________
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST (LOSS)
____________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding
September 30, 1995..................... 1,700 $ 462,384
Contracts written........................ 1,700 $ 1,099,863
____________ _____________
3,400 1,562,247
____________ _____________
Contracts Terminated;
Closed................................. 3,400 $ 1,562,247 $ 6,199,326 $(4,637,079)
____________ _____________ ============= =============
Contracts outstanding
September 30, 1996..................... 0 $ 0
============ ==============
</TABLE>
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.
(B) At September 30, 1996, accumulated net unrealized appreciation on
investments was $44,499,051, consisting of $91,882,939 gross unrealized
appreciation and $47,383,888 gross unrealized depreciation.
At September 30, 1996, 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 AGGRESSIVE GROWTH FUND
(FORMERLY PREMIER CAPITAL GROWTH FUND)-SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
PREMIER AGGRESSIVE GROWTH FUND
We have audited the accompanying statement of assets and liabilities of
Premier Aggressive Growth Fund, including the statement of investments, as of
September 30, 1996, 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 verification by
examination of securities held by the custodian as of September 30, 1996 and
confirmation of securities not held by the custodian by correspondence with
others. 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 Aggressive Growth Fund at September 30, 1996, 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 signature logo]
New York, New York
November 8, 1996
<TABLE>
<CAPTION>
PREMIER GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1996
COMMON STOCKS-77.5% SHARES VALUE
_______ ______
<S> <C> <C> <C>
BANKING-2.9% Bank of Boston............................. 35,000 $ 2,025,625
______
BASIC AND
PROCESS INDUSTRIES-4.0% Crompton & Knowles......................... 100,000 1,637,500
Thermo Ecotek.............................. 25,000 (a) 571,875
Thermo Fibergen (Units).................... 50,000 (a) 631,250
______
2,840,625
______
CAPITAL GOODS-12.0% Deere & Co................................. 40,000 1,680,000
Potash Corp. Saskatchewan.................. 20,000 1,462,500
Sundstrand................................. 50,000 1,950,000
Thiokol.................................... 15,000 703,125
Titan Wheel International.................. 50,000 750,000
York International......................... 40,000 1,935,000
______
8,480,625
______
CONSUMER-11.3% Gargoyles.................................. 19,000 (a) 403,750
General Nutrition.......................... 75,000 (a) 1,317,188
Loehmann's................................. 30,000 (a) 804,375
Nabisco Holdings, Cl. A.................... 40,000 1,265,000
Oakley..................................... 50,000 (a) 2,125,000
OfficeMax.................................. 150,000 (a) 2,100,000
______
8,015,313
______
ENERGY-6.3% Amerada Hess............................... 25,000 1,321,875
Louisiana Land & Exploration............... 15,000 789,375
UGI........................................ 100,000 2,350,000
______
4,461,250
______
HEALTH CARE-4.3% Baxter International....................... 65,000 3,038,750
______
MEDIA/ENTERTAINMENT-7.0% Tele-Comm Liberty Media Group, Cl. A ...... 50,000 1,431,250
Time Warner................................ 50,000 1,931,250
Viacom, Cl. B.............................. 45,000 (a) 1,597,500
______
4,960,000
______
MINING AND METALS-1.3% Brascan, Cl. A............................. 50,000 925,000
______
REAL ESTATE-1.4% Merry Land & Investment.................... 45,000 961,875
______
TECHNOLOGY-14.6% Advanced Fibre Communications.............. 40,200 (a) 1,005,000
Atmel...................................... 50,000 (a) 1,543,750
Cadence Design System...................... 9,800 (a) 350,350
Checkfree.................................. 80,000 (a) 1,600,000
GT Interactive Software.................... 30,000 (a) 682,500
Informix................................... 70,000 (a) 1,951,250
LSI Logic.................................. 50,000 (a) 1,162,500
Mercury Interactive........................ 50,000 (a) 693,750
National Semiconductor..................... 25,000 (a) 503,125
PREMIER GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ ______
TECHNOLOGY (CONTINUED) Structural Dynamics Research............... 35,000 (a) $ 835,625
______
10,327,850
______
TELECOMMUNICATIONS-6.0% GTE........................................ 60,000 2,310,000
SBC Communications......................... 40,000 1,925,000
______
4,235,000
______
TRANSPORTATION-3.7% Canadian Pacific........................... 50,000 1,156,250
Union Pacific.............................. 20,000 1,465,000
______
2,621,250
______
UTILITIES-2.7% Entergy.................................... 70,000 1,890,000
______
TOTAL COMMON STOCKS
(cost $51,813,588)....................... $54,783,163
======
CONVERTIBLE PREFERRED STOCKS-4.5%
MEDIA/ENTERTAINMENT-1.1% TCI Communications, Ser. A, $2.125......... 20,000 $ 797,500
______
TELECOMMUNICATIONS-3.4% AirTouch Communications, Ser. C, 4.25%..... 50,000 2,375,000
______
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $3,355,070)........................ $ 3,172,500
======
PRINCIPAL
CONVERTIBLE CORPORATE NOTES AND BONDS-6.9% AMOUNT
_______
CONSUMER-5.7% Home Depot, Sub. Notes,
3.25%, 10/01/2001........................ $..2,000,000 $ 2,042,500
Pep Boys, Sub. Notes,
Zero Coupon, 9/20/2011................... 3,500,000 1,964,375
______
4,006,875
______
HEALTH CARE-1.2% Complete Management, Sub. Deb.,
8%, 8/15/2003............................ 700,000 856,625
______
TOTAL CONVERTIBLE CORPORATE NOTES
AND BONDS
(cost $4,634,360)........................ $ 4,863,500
======
PREMIER GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
PRINCIPAL
SHORT-TERM INVESTMENTS-11.8% AMOUNT VALUE
_______ ______
U.S. TREASURY BILLS: 5.06%, 10/3/1996........................... $ 14,000 $ 13,996
5.02%, 10/10/1996.......................... 170,000 169,796
5.30%, 10/17/1996.......................... 145,000 144,685
5.14%, 11/7/1996........................... 500,000 497,470
5.15%, 11/14/1996.......................... 802,000 797,172
5.07%, 11/29/1996.......................... 1,802,000 1,787,440
5.19%, 12/5/1996........................... 909,000 900,837
5.06%, 12/12/1996.......................... 4,050,000 4,009,824
______
TOTAL SHORT-TERM INVESTMENTS
(cost $8,319,675)........................ $ 8,321,220
======
TOTAL INVESTMENTS (cost $68,122,693)............................................ 100.7% $71,140,383
==== ======
LIABILITIES, LESS CASH AND RECEIVABLES.......................................... (.7%) $ (460,154)
==== ======
NET ASSETS...................................................................... 100.0% $70,680,229
==== ======
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
PREMIER GROWTH AND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1996
ASSETS:
Investments in securities, at value
(cost $68,122,693)-see statement...................................... $71,140,383
Cash.................................................................... 454,398
Receivable for investment securities sold............................... 5,631,676
Receivable for subscriptions to Common Stock............................ 654,888
Dividends and interest receivable....................................... 115,830
Prepaid expenses........................................................ 64,386
Due from The Dreyfus Corporation and affiliates......................... 15,847
______
78,077,408
LIABILITIES:
Due to Distributor...................................................... $ 36,808
Payable for investment securities purchased............................. 7,234,360
Payable for Common Stock redeemed....................................... 80,575
Accrued expenses........................................................ 45,436 7,397,179
_____ ______
NET ASSETS ................................................................ $70,680,229
======
REPRESENTED BY:
Paid-in capital......................................................... $66,072,731
Accumulated undistributed investment income-net......................... 22,947
Accumulated undistributed net realized gain on investments.............. 1,566,861
Accumulated net unrealized appreciation on investments-Note 4........... 3,017,690
______
NET ASSETS at value......................................................... $70,680,229
======
NET ASSET VALUE per share:
Class A Shares
200 million shares of Common Stock authorized
($30,329,919 / 1,644,316 shares of Common Stock outstanding).......... $18.45
======
Class B Shares
200 million shares of Common Stock authorized
($37,534,132 / 2,043,282 shares of Common Stock outstanding).......... $18.37
======
Class C Shares
200 million shares of Common Stock authorized
($2,642,316 / 143,570 shares of Common Stock outstanding)............. $18.40
======
Class R Shares
200 million shares of Common Stock authorized
($173,862 / 9,437 shares of Common Stock outstanding)................. $18.42
======
See notes to financial statements.
PREMIER GROWTH AND INCOME FUND
STATEMENT OF OPERATIONS
FROM DECEMBER 29, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1996
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $1,656 foreign taxes withheld at source)....... $ 308,009
Interest.............................................................. 262,852
_____
TOTAL INCOME...................................................... $ 570,861
EXPENSES:
Management fee-Note 3(a).............................................. 174,186
Distribution fees-Note 3 (b).......................................... 95,424
Shareholder servicing costs-Note 3(c)................................. 87,232
Registration fees..................................................... 48,789
Legal fees............................................................ 47,490
Audit fees............................................................ 9,000
Prospectus and shareholders' reports.................................. 8,728
Custodian fees-Note 3(c).............................................. 3,632
Directors' fees and expenses-Note 3(d)................................ 2,509
Miscellaneous......................................................... 1,757
_____
TOTAL EXPENSES.................................................... 478,747
Less-reduction in management fee due to undertaking-Note 3(a)......... 93,014
_____
NET EXPENSES...................................................... 385,733
_____
INVESTMENT INCOME-NET............................................. 185,128
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 4:
Net realized gain on investments........................................ $1,566,861
Net unrealized appreciation on investments.............................. 3,017,690
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 4,584,551
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $4,769,679
=====
See notes to financial statements.
PREMIER GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM DECEMBER 29, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1996
OPERATIONS:
Investment income-net................................................................... $ 185,128
Net realized gain on investments........................................................ 1,566,861
Net unrealized appreciation on investments for the period............................... 3,017,690
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. 4,769,679
______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................................ (109,766)
Class B shares........................................................................ (49,896)
Class C shares........................................................................ (1,244)
Class R shares........................................................................ (1,275)
______
TOTAL DIVIDENDS................................................................... (162,181)
______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................................ 34,427,601
Class B shares........................................................................ 38,453,822
Class C shares........................................................................ 3,604,147
Class R shares........................................................................ 664,097
Dividends reinvested:
Class A shares........................................................................ 100,028
Class B shares........................................................................ 41,499
Class C shares........................................................................ 829
Class R shares........................................................................ 1,275
Cost of shares redeemed:
Class A shares........................................................................ (6,181,710)
Class B shares........................................................................ (2,996,279)
Class C shares........................................................................ (1,311,627)
Class R shares........................................................................ (730,951)
______
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............................ 66,072,731
______
TOTAL INCREASE IN NET ASSETS.................................................... 70,680,229
NET ASSETS:
Beginning of period..................................................................... -
______
End of period (including undistributed investment
income-net of $22,947 on September 30, 1996).......................................... $70,680,229
======
</TABLE>
<TABLE>
<CAPTION>
SHARES
____________________________________________________________________
CLASS A CLASS B CLASS C CLASS R
______ _______ _______ ______
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 1,979,771 2,212,839 216,822 49,451
Shares issued for dividends reinvested. 5,502 2,293 46 74
Shares redeemed........................ (340,957) (171,850) (73,298) (40,088)
______ _______ _______ ______
NET INCREASE IN SHARES OUTSTANDING 1,644,316 2,043,282 143,570 9,437
====== ======= ======= ======
See notes to financial statements.
</TABLE>
PREMIER GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus
dated February 1, 1997.
PREMIER GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Equity Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company and operates as a series company currently offering two
series, including the Premier Growth and Income Fund (the "Fund") which
commenced operations on December 29, 1995. The Fund's investment objective is
long-term capital growth, current income and growth of income, consistent
with reasonable investment risk. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A. ("Mellon").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund offers Class A, Class B, Class C
and Class R shares. Class A shares are subject to a sales charge imposed at
the time of purchase, Class B shares are subject to a contingent deferred
sales charge imposed at the time of redemption made within six years of
purchase, Class C shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within one year of
purchase and Class R shares are sold at net asset value per share only to
institutional investors. Other differences between the four classes include
the services offered to and the expenses borne by each Class and certain
voting rights.
The Company accounts separately for the assets, liabilities and
operations of each fund. Expenses directly attributable to each fund are
charged to that fund's operations; expenses which are applicable to all funds
are allocated among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: The Fund's 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.
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 forward 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, currency
gains or losses realized on securities transactions, 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 or losses arise from
changes in the value of assets and liabilities other than investments in
PREMIER GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
securities, 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 discount 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 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.
(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-LINE OF CREDIT:
The Fund participates with other Dreyfus-managed Funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended September 30, 1996, the Fund did not
borrow under the line of credit.
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 value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings (which, in the view of
Stroock & Stroock & Lavan, counsel to the Fund, also contemplates dividends
and interest accrued on securities sold short) and extraordinary expenses,
exceed the expense limitation of any state having jurisdiction over the Fund,
the Fund may deduct from payments to be made to the Manager, or the Manager
will bear the amount of such excess to the extent required by state law. The
most stringent state expense limitation applicable to the Fund presently
requires reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2 1/2% of the first $30 million, 2% of the next $70 million and 1 1/2%
of the excess over $100 million of the average value of the Fund's net assets
in accordance with California "blue sky" regulations. The Manager has
currently undertaken from December 29, 1995 through December 31, 1996 to
reduce the management fee paid by or reimburse such excess expenses of the
Fund, to the extent that the Fund's aggregate annual expenses (excluding
distribution expenses and certain expenses as described above) exceed an
annual rate of 1.25% of the value of the Fund's average daily net assets. The
reduction in management fee, pursuant to the undertaking, amounted to $93,014
during the period ended September 30, 1996.
PREMIER GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement
would not be less than the amount required pursuant to the Agreement.
(B) Under a Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Fund pays the Distributor for distributing the Fund's
Class B and Class C shares at an annual rate of .75 of 1% of the value of the
average daily net assets of Class B and Class C shares, respectively. During
the period ended September 30, 1996, $86,590 was charged to the Fund for the
Class B shares and $8,834 was charged to the Fund for the Class C shares.
(C) The Fund has adopted a Shareholder Services Plan, pursuant to which
it pays a fee to the Distributor, for the provision of certain services to
Fund shareholders at the annual rate of .25 of 1% of the value of the average
daily net assets of Class A, Class B and Class C shares, respectively. 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. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended September 30,
1996, $25,466, $28,863 and $2,945 were charged to Class A, Class B and Class
C shares, respectively, pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $7,946 during the period ended September 30, 1996.
Effective May 10, 1996, the Fund entered into a custody agreement with
Mellon to provide custodial services for the Fund. During the period from May
10, 1996 through September 30, 1996, $2,519 was paid to Mellon pursuant to
the custody agreement.
(D) Each director who is not an "affiliated person" as defined in the Act
receives from the Company 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.
NOTE 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended September 30, 1996,
amounted to $110,048,974 and $51,813,704, respectively.
At September 30, 1996, accumulated net unrealized appreciation on
investments was $3,017,690, consisting of $3,796,522 gross unrealized
appreciation and $778,832 gross unrealized depreciation.
At September 30, 1996, 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 GROWTH AND INCOME FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
PREMIER GROWTH AND INCOME FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Growth and Income Fund
(one of the Funds constituting Premier Equity Funds, Inc.) as of September
30, 1996, and the related statements of operations and changes in net assets
and financial highlights for the period from December 29, 1995 (commencement
of operations) to September 30, 1996. 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 audit.
We conducted our audit 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 verification by
examination of securities held by the custodian as of September 30, 1996 and
confirmation of securities not held by the custodian by correspondence with
others. 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 audit provides 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 Growth and Income Fund at September 30, 1996, and the
results of its operations, the changes in its net assets and the financial
highlights for the period from December 29, 1995 to September 30, 1996, in
conformity with generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
November 5, 1996
