DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
As you read this first annual report of Dreyfus Premier Emerging Markets Fund,
it is appropriate, I think, that I introduce the co-managers of the Fund, Ronald
Chapman and Daniel Beneat.
Ron Chapman has been head of international equities for us since he joined The
Dreyfus Corporation in 1996. In that capacity he manages a total of five of our
international and global equity funds.
A veteran of the financial services industry for 21 years, Ron was previously
with the Northern Trust Company in Chicago for 12 years, much of that time in
charge of global strategy and management. He began his career as an investment
analyst at Continental Illinois Bank. Ron is a graduate of John Carroll
University and the Netherlands School of International Business, and received
his M.B.A. from the University of Wisconsin.
Daniel Beneat is a co-portfolio manager of Dreyfus Premier Emerging Markets
Fund, as well as a senior emerging markets analyst for our International
Investment Team.
Before joining Dreyfus in 1996, Daniel was a vice president of UBS Asset
Management (NY) Inc., where he managed portfolios in the Latin American and U.S.
markets. Previously, he was a vice president at Alpha Investment Management Inc.
and financial analyst at Worms & Co. Inc. He earned his undergraduate degree and
M.B.A. at New York University.
We have great confidence in the ability of Ron Chapman and Daniel Beneat to
manage your assets invested in emerging markets securities.
Sincerely
[Stephen E. Canter signature logo]
Stephen E. Canter
Chief Investment Officer
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
Dreyfus Premier Emerging Markets Fund, which began operations March 31, 1998,
completed its first six months September 30, 1998, which also marks the close of
the Fund's first annual reporting period.
During that time, the Fund' s total return declined roughly as much as its
benchmark index, the Morgan Stanley Capital International Emerging Markets Free
Index (MSCI/EMF). Growth stock in the Emerging Markets class have suffered from
large earnings downgrades generally due to much lower than expected economic
growth and much higher interest expenses.
The performance figures for the Fund's various classes of shares, and for the
benchmark, were as follows:
Total Return, March 31, 1998 to September 30, 1998*
Dreyfus Premier Emerging Markets Fund
________________________________________________
Class A Shares -42.08%
Class B Shares -42.32%
Class C Shares -42.32%
Class R Shares -42.00%
Morgan Stanley Capital International
Emerging Markets Free Index (MSCI/EMF)** -40.41%
ECONOMIC OVERVIEW
The world' s emerging markets have been mired in an economic crisis for the
past 15 months. Some emerging economies had made a large number of unproductive
investments over the last decade or so, and their banking systems were weakened
as a result. Geographically, the trigger of the crisis was Thailand which
devalued its currency in July, 1997. This in turn led to speculative attacks on
a number of other currencies in Asia. The South Korean Won, Philippines Peso,
Indonesian Rupiah and Malaysian Ringgit all devalued by year-end 1997. The
drastic economic recession in Asia following very high economic growth in the
late 1980s and early 1990s affected world trade flows, commodity prices, the
balance sheet of local and international banks, investment patterns of
governments and multinational corporations, and finally consumer purchasing
habits. As a result, inflation forecasts have been lowered substantially in the
past year and financial markets have begun to worry about whether we are facing
an environment that could become deflationary. There is some evidence of
deflation. The Asian recession has led to historically low commodity price
levels for oil, copper, paper and gold. These contribute a large part of the
exports of some emerging nations. Commodity price falls have in turn led to
further currency pressures and the devaluation of the Chilean Peso, the South
African Rand, the Mexican Peso, the Colombian Peso and finally the Russian
Ruble.
Against this difficult backdrop, dedicated emerging markets funds had almost
nowhere to hide except in cash. The Dreyfus Premier Emerging Markets Fund has
held significant amounts of cash and equivalents since inception. However, many
of the growth-oriented stocks your Fund tends to own given its investment
approach (see below) were especially hard hit during the period under review.
Among these was NICE--Systems, ADR, an Israeli telecommunications equipment
company, which fell 61%. Antofagasta Holdings, one of the most exciting mining
investments in Latin America, declined by 48%. Finally, Koor Industries, ADS,
Israel' s largest holding company with interests in telecommunications,
electronics and agrochemicals, fell by 31%. On the other hand, some companies
have performed relatively well during this period. STET Hellas
Telecommunications, ADS, a Greek cellular operator, was up 15% and Telefonos de
Mexico, Cl. L, ADS, the country's largest telecommunications operator, was up
0.2%.
INVESTMENT APPROACH
The Fund seeks to achieve long-term capital growth by investing in a
diversified and structured portfolio of growth companies in emerging markets.
The investment process is driven by a macroeconomic top-down process and a
bottom-up company and sector analysis focusing on companies exhibiting growth
and reasonable value. The top-down country allocation evaluates macroeconomic
and geopolitical trends by identifying countries undergoing both market-oriented
economic reforms and political reforms that we believe will foster their passage
to developed country status over time. We also assess sovereign and
market-specific risk by evaluating political stability, judicial independence
and fiscal, monetary and foreign exchange policies. Traditional analysis of
market earnings growth, interest rate trends and other pertinent variables also
serves us. Markets exhibiting positive trends in these areas and reasonable
valuation relative to other emerging markets are considered for purchase. The
Fund' s investments in a market are reduced or liquidated when a substantial
number of the variables mentioned above turn neutral-to-negative or when
valuation of that market ceases to be attractive relative to other emerging
markets.
In the bottom-up process, growth and valuation factors are evaluated to
determine the company' s attractiveness relative to its sector, local market,
region and/or emerging market universe. The bottom-up approach evaluates growth
factors for each company such as revenue prospects, operating cash flow, ability
to achieve consistent earnings and management' s ability to achieve higher
operating margins. The valuation factors for each company consist of
price-to-earnings, price-to-book value, price-to-cash flow, enterprise
value-to-earnings before tax, depreciation and amortization ratios and dividend
yield. Regulatory changes, industry-specific trends, competitive strengths and
technological advances are also closely assessed when evaluating various
investment alternatives. Company visits play an important role in the stock
picking process. Generally, a company will be sold from the Fund if the
company' s growth falls below expectations, the valuation target is reached or
the weighting in that market is reduced as a result of an asset allocation
decision.
Foreign currencies are very difficult to hedge in emerging markets; we believe
that the most efficient way to limit losses from currency devaluation is by
selling the assets in a specific country when probabilities of a currency
devaluation increase due to worsening of economic fundamentals.
CURRENT APPROACH
Emerging markets have not suffered such a serious decline since Latin American
nations defaulted in the early 1980s. The collapse of the Mexican currency in
late 1994 created a difficult six-month period for the asset class but the
global economic impact was much more limited and global economic growth was
still accelerating. The passage of the NAFTA treaty in January of 1994 also
encouraged the United States Treasury to act very quickly when the Mexican
government asked for financial assistance. Fortunately, the contagion effect was
limited to several Latin American nations only at that time.
Global investors are at historically low allocations to the emerging markets
asset class at this point in time. As a result, the volume traded of large
capitalization companies in local stock markets has also been at historically
low levels. A lesson from the collapse in the Mexican economy of 1995 may be
that growth can eventually come back and companies taking advantage of such
difficult periods to deleverage themselves and streamline their operations may
come out of recessions more profitable and efficient. Of course, we will have to
see what, if anything, develops in this regard.
We believe many attractive investment opportunities can arise from this
retreat in emerging markets equities, but we continue to hold high cash levels
in the near term. However, our research leads us to conclude that 1999 will be
another year of economic difficulties in global emerging markets. Comments on
individual regions appear below.
ASIA
The Thai and South Korean economies have fallen into a serious recession after
the devaluation of their currencies in 1997. We currently forecast economic
growth of -6.0% for both economies in 1998. Fortunately, these economies are
currently showing signs of accelerating export growth, an increase in
international reserves, an aggressive restructuring of their banking system, and
reforms in labor laws to accommodate the restructuring of large enterprises. At
this time, many economists believe South Korea and Thailand should experience a
very strong rebound in economic growth in 1999. We believe growth will take
longer to recover because the world economic environment has started showing
signs of slower growth. On the other hand, companies in both markets are
starting to look attractive since both their markets are trading at below book
value.
China, Taiwan and India are the only major economies in Asia registering
economic growth in 1998 and we believe they should continue to have good
relative growth in 1999, albeit slower than historical averages. Year-to-date,
the Chinese economy has continued to deteriorate. The main factors are slower
exports, weak consumption and devastating floods. The government has decided to
stimulate its economy with a $24 billion package to be spent on infrastructure
projects in the telecommunications, agriculture and electricity industries. This
should help China achieve a 7.0% growth in 1998 and similar growth in 1999. The
Chinese authorities are also reforming state-owned enterprises, restructuring
the banking system and encouraging the construction of private housing. At this
time, we have no exposure to Chinese companies because economic figures still
show signs of a slowing economy. Taiwan has suffered less from the regional
crisis and should still experience strong growth in 1998. Exports are expected
to continue to slow down due to a heavy reliance on electronics, textiles,
plastics and steel. The Taiwanese market is currently trading at 15 times 1999
earnings compared to an average of 11 times for the region, implying that
investors have stronger confidence in Taiwan than in its regional counterparts.
At this time, your Fund holds Taiwan Semiconductor Manufacturing, ADS and
Siliconware Precision Industries, GDR in Taiwan, two globally competitive
technology companies.
Hong Kong has been severely impacted by slower regional growth and slower than
expected economic growth in China. Hong Kong's property market, one of the keys
to growth, has corrected at least 50% from its high last year and continues to
face a difficult environment due to high real interest rates. The banking system
has been affected by the devaluations in neighboring nations. The Fund did not
hold any Hong Kong securities at the end of the reporting period but valuations
are starting to appear attractive. Singapore has also been affected by similar
symptoms in its property market and banking system. The resignation of President
Suharto in Indonesia and capital controls implemented by Prime Minister Mahathir
in Malaysia have surprised financial markets but should lower the risk of a
shorter term collapse in their economies. Your Fund has no investments in
Indonesia or Malaysia as of September 30, 1998 and is not contemplating any
unless significant policy changes take place.
LATIN AMERICA
After having been affected by the sharp decrease in commodity prices, all
Latin economies have been severely impacted by lower export revenues. This has
further increased current account deficits across the region. The Russian
financial collapse has increased awareness of Brazil's fiscal deficit (7.0% of
Gross Domestic Product in 1998) and has forced the Central Bank to increase
local interest rates to unsustainably high levels in order to limit the outflow
of capital. This obviously threatens the survival of the government's economic
blueprint (the Real Plan). Brazilian equities are currently the cheapest assets
in the emerging markets asset class, trading at 0.6 times book value. Before
taking advantage of current prices, investors are waiting for the outcome of
presidential elections to see if the government implements new policies to lower
the fiscal deficit to sustainable levels. While Brazil has struggled to maintain
the value of its currency, Mexico has opted for a floating exchange rate. This
policy has led to a 27% devaluation year-to-date in the Mexican peso and an
expected slowdown in economic growth to 4.0% in 1998. Corporate earnings are
being impacted by higher interest rate expenses and lower revenue expectations.
At this time, the Mexican market is trading at only 8 times 1999 earnings
projections, reflecting good value. However, many investors seem to be waiting
for the situation to stabilize before stepping in. The other economies have
equally felt the impact of slower Asian growth and much lower export revenue
leading to devaluations in Chile, Colombia and Ecuador.
Your Fund's holdings in Latin America include: Compania de Telecomunicaciones
de Chile, ADS, Chile's largest telecommunications company, Santa Isabel, ADS, a
Chilean supermarket company, Grupo Carso, Ser Al, a Mexican holding company and
Telefonos de Mexico, Cl. L, ADS, the largest telecommunications company in
Mexico.
EUROPE, MIDDLE EAST AND AFRICA
The Eastern European markets have also faced a difficult environment due to
the increase in interest rates across emerging markets and the collapse of the
Russian economy. Although the economies of Hungary, Poland and the Czech
Republic are not heavily reliant on Russian exports, their banking systems have
had some exposure. Eastern European countries continue to benefit from
sustainable economic growth and should benefit from the restructuring process
currently taking place in developed Europe. Israel has performed well in this
environment year-to-date and continues to benefit from declining interest rates.
Finally, South Africa has also suffered a devaluation in its currency due to
much lower commodity prices.
Holdings in this region include MOL Magyar Olaj-es Gazipari, GDR, a Hungarian
oil and gas company, Bank Hapoalim, an Israeli financial institution, and Real
Africa Holdings, a South African conglomerate.
As managers of Dreyfus Premier Emerging Markets Fund, we look forward to
communicating our updated view on emerging markets in our next correspondence
with you.
Sincerely yours,
[Ronald Chapman logo signature] [Daniel Beneat signature logo]
Ronald Chapman Daniel Beneat
Co-Portfolio Manager Co-Portfolio Manager
October 23, 1998
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares, or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B and Class C shares.
**Source: LIPPER ANALYTICAL SERVICES, INC.--The Morgan Stanley Capital
International Emerging Markets Free Index (MSCI/EMF), which is the property of
Morgan Stanley & Co. Incorporated, is a market capitalization weighted index
composed of companies representative of the market structure of 26 Emerging
Market countries in Europe, Latin America, and the Pacific Basin and includes
gross dividends reinvested. The MSCI/EMF Index excludes closed markets and those
shares in otherwise free markets which are not purchasable by foreigners.
<TABLE>
DREYFUS PREMIER EMERGING MARKETS FUND SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER EMERGING
MARKETS FUND CLASS A SHARES, CLASS B SHARES, CLASS C SHARES AND CLASS R SHARES
AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX
Dollars
$5,959
Morgan Stanley Capital International Emerging Markets Free Index*
$5,800
Dreyfus Premier Emerging Markets Fund (Class R Shares)
$5,710
Dreyfus Premier Emerging Markets Fund (Class C Shares)
$5,537
Dreyfus Premier Emerging Markets Fund (Class B Shares)
$5,460
Dreyfus Premier Emerging Markets Fund (Class A Shares)
*Source: Lipper Analytical Services, Inc.
Actual Aggregate Total Returns
- -----------------------------------------------------------------------------
Class A Shares Class B Shares
_______________________________________________________ _________________________________________________________
<S> <C> <C> <C> <C> <C>
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
Period Ended 9/30/98 Sales Charge Sales Charge (5.75%) Period Ended 9/30/98 Redemption Redemption*
___________________ ____________ ________________ ________________ __________ _________________
From Inception (3/31/98) (42.08)% (45.40)% From Inception (3/31/98) (42.32)% (44.63)%
Class C Shares Class R Shares
_______________________________________________________ _________________________________________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
Period Ended 9/30/98 No Redemption Redemption** Period Ended 9/30/98
___________________ ____________ __________________ ________________
From Inception (3/31/98) (42.32)% (42.90)% From Inception (3/31/98) (42.00)%
- ------------------------
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class
B, Class C and Class R shares of Dreyfus Premier Emerging Markets Fund on
3/31/98 (Inception Date) to a $10,000 investment made in the Morgan Stanley
Capital International Emerging Markets Free Index on that date. All dividends
and capital gain distributions are reinvested.
The Fund' s performance shown in the line graph takes into account the maximum
initial sales charge on Class A shares, the maximum contingent deferred sales
charge on Class B and Class C shares and all other applicable fees and expenses
on all classes. The Morgan Stanley Capital International Emerging Markets Free
Index, which is the property of Morgan Stanley & Co. Incorporated, is a market
capitalization weighted index composed of companies representative of the market
structure of 26 Emerging Market countries in Europe, Latin America, and the
Pacific Basin. The MSCI/EMF Index excludes closed markets and those shares in
otherwise free markets which are not purchasable by foreigners. The Index does
not take into account charges, fees and other expenses and includes gross
dividends reinvested. Further information relating to Fund performance,
including expense reimbursements, if applicable, is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
*The maximum contingent deferred sales charge for Class B shares is 4% and is
reduced to 0% after six years.
**The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of the date of purchase.
<TABLE>
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1998
Common Stocks--45.5% Shares Value
- ------------------------------------------------------- ___________ ___________
<S> <C> <C>
Chile--4.9% Compania de Telecomunicaciones de Chile, ADS . . . . . 1,500 $ 28,688
Santa Isabel, ADS . . . . . . . . . . . . . . . . . . 5,000 28,437
___________
57,125
___________
Greece--9.8% Hellenic Telecommunication Organization . . . . . . . 2,000 48,043
National Bank of Greece . . . . . . . . . . . . . . . 300 40,524
STET Hellas Telecommunications, ADS . . . . . . . . . 850 (a) 26,350
___________
114,917
___________
Hungary--4.3% MOL Magyar Olaj-es Gazipari, GDR . . . . . . . . . . . 1,500 28,875
Magyar Tavkozlesi, ADS . . . . . . . . . . . . . . . . 1,000 21,688
___________
50,563
___________
Israel--3.6% Bank Hapoalim . . . . . . . . . . . . . . . . . . . . 6,000 (a) 14,650
Koor Industries, ADS . . . . . . . . . . . . . . . . . 800 13,100
NICE-Systems, ADR . . . . . . . . . . . . . . . . . . 1,000 (a) 14,750
___________
42,500
___________
Mexico--5.4% Corporacion GEO, Ser. B . . . . . . . . . . . . . . . 7,000 (a) 13,753
Grupo Carso, Ser. A1 . . . . . . . . . . . . . . . . . 10,000 28,094
Telefonos de Mexico, Cl. L, ADS . . . . . . . . . . . 500 22,125
___________
63,972
___________
Portugal--3.6% Banco Portugues do Atlantico . . . . . . . . . . . . . 400 (a) 6,818
Portugal Telecom, ADS . . . . . . . . . . . . . . . . 1,000 36,000
___________
42,818
___________
South Africa--7.4% Carson Holdings . . . . . . . . . . . . . . . . . . . 14,000 17,958
Real Africa Holdings . . . . . . . . . . . . . . . . . 19,291 (a) 68,373
___________
86,331
___________
Taiwan--4.5% Siliconware Precision Industries, GDR . . . . . . . . 3,500 (a) 28,875
Taiwan Semiconductor Manufacturing, ADS . . . . . . . 2,000 (a) 24,500
___________
53,375
___________
United Kingdom--2.0% Antofagasta Holdings . . . . . . . . . . . . . . . . . 8,000 22,970
___________
TOTAL COMMON STOCKS
(cost $715,195) . . . . . . . . . . . . . . . . . $ 534,571
___________
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Short-Term Investments--53.4% Amount Value
- ------------------------------------------------------- ___________ __________
U.S. Treasury Bills: 4.94%, 10/22/98 . . . . . . . . . . . . . . . . . . . $ 16,000 $ 15,970
4.85%, 10/29/98 . . . . . . . . . . . . . . . . . . . 84,000 83,718
4.63%, 12/17/98 . . . . . . . . . . . . . . . . . . . 532,000 527,254
___________
TOTAL SHORT-TERM INVESTMENTS
(cost $626,365) . . . . . . . . . . . . . . . . . $ 626,942
___________
TOTAL INVESTMENTS (cost $1,341,560). . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.9% $1,161,513
_______ ___________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1% $ 12,575
_______ ___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $1,174,088
_______ ___________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1998
Cost Value
___________ __________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $1,341,560 $1,161,513
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 48,678
Dividends receivable . . . . . . . . . . . . . . . . . . 2,989
Due from The Dreyfus Corporation . . . . . . . . . . . . 2,730
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 7,585
___________
1,223,495
___________
LIABILITIES: Due to Distributor . . . . . . . . . . . . . . . . . . . 359
Payable for investment securities purchased . . . . . . . 29,575
Accrued expenses . . . . . . . . . . . . . . . . . . . . 19,473
___________
49,407
___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,174,088
___________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $2,027,994
Accumulated undistributed investment income--net . . . . 4,760
Accumulated net realized gain (loss) on investments
and foreign currency transactions . . . . . . . . . . . (678,619)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency
transactions--Note 3 . . . . . . . . . . . . . . . . . (180,047)
___________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,174,088
___________
NET ASSET VALUE PER SHARE
_____________________________
Class A Class B Class C Class R
_________ _________ _________ _________
Net Assets . . . . . . . . . . . . . . . . . . . . . . $822,408 $120,405 $115,344 $115,931
Shares Outstanding . . . . . . . . . . . . . . . . . . 113,621 16,700 16,000 16,000
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . $7.24 $7.21 $7.21 $7.25
______ ______ ______ ______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM MARCH 31, 1998 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1998
INVESTMENT INCOME
INCOME: Cash dividends (net of $822 foreign taxes
<S> <C> <C>
withheld at source) . . . . . . . . . . . . . . . . . $ 12,788
Interest . . . . . . . . . . . . . . . . . . . . . . . . 12,392
__________
Total Income . . . . . . . . . . . . . . . . . . . $ 25,180
EXPENSES: Management fee--Note 2(a) . . . . . . . . . . . . . . . . 10,583
Legal fees . . . . . . . . . . . . . . . . . . . . . . . 18,078
Custodian fees . . . . . . . . . . . . . . . . . . . . . 10,497
Auditing fees . . . . . . . . . . . . . . . . . . . . . . 10,000
Registration fees . . . . . . . . . . . . . . . . . . . . 3,309
Shareholder servicing costs--Note 2(c) . . . . . . . . . 3,100
Prospectus and shareholders' reports . . . . . . . . . . 2,019
Distribution fees--Note 2(b) . . . . . . . . . . . . . . 1,268
Directors' fees and expenses--Note 2(d) . . . . . . . . . 244
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 3,298
__________
Total Expenses . . . . . . . . . . . . . . . . . . 61,415
Less--expense reimbursement from Dreyfus
due to undertaking--Note 2(a) . . . . . . . . . . . . (40,995)
__________
Net Expenses . . . . . . . . . . . . . . . . . . . 20,420
__________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,760
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments and
foreign currency transactions . . . . . . . . . . . . $(678,619)
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions . . . . . . . . . . (180,047)
__________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . (858,666)
__________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $(853,906)
__________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM MARCH 31, 1998 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1998
OPERATIONS:
<S> <C> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,760
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (678,619)
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . . . . . . . . . . . (180,047)
___________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . . (853,906)
___________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,420,000
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,994
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Class R shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
___________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . . . . . . . . . . . . . . 2,027,994
___________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,174,088
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ----
___________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,174,088
___________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,760
___________
CAPITAL SHARE TRANSACTIONS:
Class A
_______
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,621
________
Class B
_______
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,700
________
Class C
_______
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
________
Class R
_______
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of Common
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for the period from March 31, 1998 (commencement of
operations) to September 30, 1998. This information has been derived from the
Fund's financial statements.
Class A Class B Class C Class R
________ ________ ________ ________
PER SHARE DATA:
<S> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . $ 12.50 $ 12.50 $ 12.50 $ 12.50
________ ________ ________ ________
Investment Operations:
Investment income (loss)--net . . . . . . . . . . . . . . . . . .04 .00(1) .00(1) .05
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . (5.30) (5.29) (5.29) (5.30)
________ ________ ________ ________
Total from Investment Operations . . . . . . . . . . . . . . . (5.26) (5.29) (5.29) (5.25)
________ ________ ________ ________
Net asset value, end of period . . . . . . . . . . . . . . . . $ 7.24 $ 7.21 $ 7.21 $ 7.25
________ ________ ________ ________
TOTAL INVESTMENT RETURN (2). . . . . . . . . . . . . . . . . . . . (42.08%)(3) (42.32%)(3) (42.32%)(3) (42.00%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (2) . . . . . . . . . . 1.15% 1.54% 1.53% 1.03%
Ratio of net investment income (loss)
to average net assets (2) . . . . . . . . . . . . . . . . . .35% (.04%) (.03%) .47%
Decrease reflected in above expense ratios
due to undertaking by the Manager (2) . . . . . . . . . . . 2.44% 2.48% 2.43% 2.44%
Portfolio Turnover Rate (2) . . . . . . . . . . . . . . . . . . 234.00% 234.00% 234.00% 234.00%
Net Assets, end of period (000's Omitted) . . . . . . . . . . . $822 $120 $115 $116
- -----------------------------
(1) Amount represents less than $.01 per share.
(2) Not annualized.
(3) Exclusive of sales load.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier Emerging Markets Fund (the "Fund" ) is a separate
non-diversified series of Dreyfus Premier Equity Funds, Inc., (the "Company")
which is registered under the Investment Company Act of 1940, as amended (the
" Act" ) as an open-end management investment company and operates as a series
company currently offering four series, including the Fund which commenced
operations on March 31, 1998. The Fund's investment objective is long-term
capital growth. The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund' s shares. The Fund is authorized to issue 50 million shares of $1.00
par value Common Stock in each of the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions
made within six years of purchase, Class C shares are subject to a CDSC imposed
on Class C shares redeemed 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 classes include the services offered to and the expenses
borne by each class and certain voting rights.
As of September 30, 1998, MBIC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held the following shares:
Class A . .. . . .112,000. Class C . . . . 16,000
Class B . .. . . . 16,000. Class R . . . . 16,000
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 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 and 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.
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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. Under the terms of the custody agreement, the Fund received net
earnings credits of $170 during the period ended September 30, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, if any, 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 of 1986, as amended (the "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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of 1.25% of the value of the
Fund' s average daily net assets and is payable monthly. The Manager had
undertaken from March 31, 1998 through September 30, 1998 to reduce the
management fee paid by or reimburse such excess expenses of the Fund, to the
extent that the Fund's aggregate expenses, excluding 12b-1 distribution fees,
taxes, brokerage, interest on borrowings (which, in the view of Stroock &
Stroock & Lavan LLP, counsel to the Fund, also contemplates commitment fees) and
extraordinary expenses exceeded an annual rate of 2.25% of the value of the
Fund' s average daily net assets. The expense reimbursement, pursuant to the
undertaking, amounted to $40,995 during the period ended September 30, 1998.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $86 during the period ended September 30, 1998 from commissions earned
on sales of the Fund's shares.
(B) Under the Distribution Plan, adopted pursuant to Rule 12b-1 under the Act,
Class B and Class C shares pay the Distributor for distributing their shares at
an annual rate of .75 of 1% of the value of their average daily net assets.
During the period ended September 30, 1998, Class B and Class C shares were
charged $642 and $626, respectively, pursuant to the Distribution Plan.
(C) Under the Shareholder Services Plan, Class A, Class B and Class C shares
pay the Distributor a fee at the annual rate of .25 of 1% of the value of their
average daily net assets for the provision of certain services. 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 (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 period ended September 30, 1998, Class A, Class B and Class C
shares were charged $1,484, $214 and $209, 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. During the period
ended September 30, 1998, the Fund was charged $51 pursuant to the transfer
agency agreement.
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended September 30, 1998,
amounted to $3,623,858 and $2,229,692, respectively.
At September 30, 1998, accumulated net unrealized depreciation on investments
was $180,047, consisting of $5,844 gross unrealized appreciation and $185,891
gross unrealized depreciation.
At September 30, 1998, 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).
DREYFUS PREMIER EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS PREMIER EMERGING MARKETS FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier Emerging Markets Fund
(one of the Series constituting Dreyfus Premier Equity Funds, Inc.) as of
September 30, 1998, and the related statements of operations and changes in net
assets and financial highlights for the period from March 31, 1998 (commencement
of operations) to September 30, 1998. 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 and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1998 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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
Dreyfus Premier Emerging Markets Fund at September 30, 1998, and the results of
its operations, the changes in its net assets and the financial highlights for
the period from March 31, 1998 to September 30, 1998, in conformity with
generally accepted accounting principles.
New York, New York
November 11, 1998
DREYFUS PREMIER EMERGING
MARKETS FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 329AR989
ANNUAL REPORT
- -------------------------------------------------------------------------------
DREYFUS PREMIER
EMERGING MARKETS
FUND
- -------------------------------------------------------------------------------
SEPTEMBER 30, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
PREMIER EMERGING MARKETS FUND CLASS A SHARES, CLASS B SHARES,
CLASS C SHARES AND CLASS R SHARES AND THE MORGAN STANLEY
CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX
EXHIBIT A:
MORGAN
STANLEY DREYFUS DREYFUS DREYFUS DREYFUS
CAPITAL PREMIER PREMIER PREMIER PREMIER
INTERNATIONAL EMERGING EMERGING EMERGING EMERGING
EMERGING MARKETS MARKETS MARKETS MARKETS
MARKETS FUND FUND FUND FUND
FREE (CLASS A (CLASS B (CLASS C (CLASS R
PERIOD INDEX * SHARES) SHARES) SHARES) SHARES)
3/31/98 10,000 9,427 10,000 10,000 10,000
4/30/98 9,891 9,449 10,024 10,024 10,032
5/31/98 8,536 8,439 8,944 8,936 8,952
6/30/98 7,641 7,858 8,320 8,320 8,336
7/31/98 7,883 8,062 8,528 8,528 8,552
8/31/98 5,604 5,498 5,808 5,808 5,832
9/30/98 5,959 5,460 5,537 5,710 5,800
* Source: Lipper Analytical Services, Inc.
