PREMIER GROWTH FUND, INC.
(Lion Logo)
PROSPECTUS FEBRUARY 28, 1995
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Premier Growth Fund, Inc. (the "Fund") is an open-end, diversified,
management investment company, known as a mutual fund. Its primary goal is
to provide you with long-term capital growth consistent with the preservation
of capital. Current income is a secondary goal. The Fund invests principally
in equity securities issued by foreign and domestic issuers located throughout
the world.
By this Prospectus, Class A and Class B shares of the Fund are being
offered. Class A shares are subject to a sales charge imposed at the time of
purchase and Class B shares are subject to a contingent deferred sales charge
imposed on redemptions made within six years of purchase.Other differences
between the two Classes include the services offered to and the expenses
borne by each Class and certain voting rights, as described herein. The Fund
offers these alternatives to permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares and other
circumstances.
You can purchase or redeem Fund shares by telephone using the
TELETRANSFER Privilege.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser. Dreyfus has engaged Fayez Sarofim &Co. ("Sarofim") to serve as the
Fund's sub-investment adviser and provide day-to-day management of the Fund's
investments. Dreyfus and Sarofim are referred to collectively as "Advisers."
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated February 28, 1995,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For a free copy, write to
the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or
call 1-800-554-4611. When telephoning, ask for Operator 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
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These securities have not been approved or disapproved by the securities and
exchange commission or any state securities commission nor has
the securities and exchange commission or any state securities commission
passed upon the accuracy or adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
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TABLE OF CONTENTS
Fee Table.......................................... 3
Condensed Financial Information.................... 4
Alternative Purchase Methods....................... 4
Description of the Fund....................... 5
Management of the Fund............................. 12
How to Buy Fund Shares............................. 14
Shareholder Services............................... 17
How to Redeem Fund Shares.......................... 21
Distribution Plan and Shareholder Services Plan.... 25
Dividends, Distributions and Taxes................. 25
Performance Information............................ 26
General Information................................ 27
Page 2
<TABLE>
FEE TABLE
Class A Class B
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................ 4.50% None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)........... None* 4.00%
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees.................................. .75% .75%
12b-1 Fees....................................... None .75%
Other Expenses.................................... 1.33% 1.32%
Total Fund Operating Expenses.................... 2.08% 2.82%
Example
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) except where noted, redemption
at the end of each time period: Class A Class B Class B**
1 Year........................... $ 65 $ 69 $ 29
3 Years.......................... $107 $117 $ 87
5 Years.......................... $152 $169 $ 149
10 Years........................... $275 $281 $ 281
*A contingent deferred sales charge of 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
**Assuming no redemption of Class B shares.
</TABLE>
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The amounts listed in the example should not be considered as
representative of past or future expenses and actual expenses may be
greater or less than those indicated. Moreover, while the example assumes
a 5% annual return, the Fund's actual performance will vary and may
result in an actual return greater or less than 5%.
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The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will bear,
directly or indirectly, the payment of which will reduce investors'
return on an annual basis. Total Fund Operating Expenses are limited to
the expense limitation provisions of the Management Agreement. Long-term
investors in Class B shares could pay more in 12b-1 fees than the
economic equivalent of paying a front-end sales charge. The information
in the foregoing table does not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Certain Service Agents
(as defined below) may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the foregoing
table. See "Management of the Fund," "How to Buy Fund Shares" and
"Distribution Plan and Shareholder Services Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
share of Common Stock outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicated.
This information has been derived from the Fund's financial statements.
<TABLE>
Class A Shares Class B Shares
______________________ _____________________
Year Ended October 31, Year Ended October 31,
______________________ ______________________
PER SHARE DATA 1993(1) 1994 1993(1) 1994
_______ ______ ------- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of year...... $12.50 $13.21 $12.50 $13.17
------ ------ -------- -------
Investment Operations:
Investment income (loss)-net............ (.01) .16 (.03) .09
Net realized and unrealized gain on investments.... .72 .66 .70 .63
------ ------ -------- -------
Total from Investment Operations................ .71 .82 .67 .72
------ ------ -------- -------
Net asset value, end of year............ $13.21 $14.03 $13.17 $13.89
======= ====== ====== =======
TOTAL INVESTMENT RETURN(2)............... 5.68%(3) 6.21% 5.36%(3) 5.47%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .77%(3) 1.33% 1.14%(3) 2.07%
Ratio of net investment income (loss)
to average net assets..................... (.12%)(3) 1.49% (.53%)(3) .71%
Decrease reflected in above expense ratios due to
undertakings by Dreyfus................... .88%(3) .75% 1.01%(3) .75%
Portfolio Turnover Rate...................... - .71% - .71%
Net Assets, end of year (000's omitted)...... $3,338 $8,075 $2,554 $10,867
- ------------------------------
(1) From July 15, 1993 (commencement of operations) to October 31, 1993.
(2) Exclusive of sales load.
(3) Not annualized.
</TABLE>
Further information about the Fund's performance is contained
in its annual report, which may be obtained without charge by writing to
the address or calling the number set forth on the cover page of this
Prospectus.
ALTERNATIVE PURCHASE METHODS
The Fund offers you two methods of purchasing Fund shares;
you may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your
shares and any other relevant circumstances. Each Class A and Class B
share represents an identical pro rata interest in the Fund's investment
portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 4.50% of the public offering price
imposed at the time of purchase. The initial sales charge may be reduced
or waived for certain purchases. See "How to Buy Fund Shares-Class A
Shares." These shares are subject to an annual service fee at the rate of
.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan and Shareholder Services Plan-Shareholder Services
Plan."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within six years of
purchase. See "How to Buy Fund Shares-Class B Shares" and "How to Redeem
Fund Shares-Contingent Deferred Sales
Page 4
Charge-Class B Shares." These shares also are subject to an annual service
fee at the rate of .25 of 1% of the value of the average daily net assets of
Class B. In addition, Class B shares are subject to an annual distribution
fee at the rate of .75 of 1% of the value of the average daily net assets of
Class B. See "Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class B will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A. Approximately six
years after the date of purchase, Class B shares automatically will convert
to Class A shares, based on the relative net asset values for shares of each
Class, and will no longer be subject to the distribution fee. Class B shares
that have been acquired through the reinvestment of dividends and
distribu tions will be converted on a pro rata basis together with other
Class B shares, in the proportion that a shareholder's Class B shares
converting to Class A shares bears to the total Class B shares not acquired
through the reinvestment of dividends and distributions.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC on
Class B shares prior to conversion would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the higher return of Class
A. In this regard, investors qualifying for reduced initial sales charges
who expect to maintain their investment for an extended period of time
might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B shares may exceed the initial
sales charge on Class A shares during the life of the investment.
Generally, Class A shares may be more appropriate for investors who
invest $100,000 or more in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVES
The Fund's primary goal is to provide you with long-term
capital growth consistent with the preservation of capital. Current
income is a secondary goal. The Fund's investment objectives cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting shares.
There can be no assurance that the Fund's investment objectives will be
achieved.
MANAGEMENT POLICIES
The Fund invests principally in equity securities issued by
foreign and domestic issuers located throughout the world. Equity
securities include common stock, convertible securities and preferred
stocks. The Fund may invest in debt securities that management believes
offer opportunities for capital growth. At any one time, the Fund may
invest substantial portions of its assets in issuers in one or more
countries, although the Fund ordinarily will seek to invest its assets in
the securities of issuers located in at least three countries. Under
normal circumstances, the Fund will invest at least 25% of its net assets
in the securities of non-U.S. issuers and 25% of its net assets in the
securities of U.S. issuers. The Fund may invest up to 25% of its total
assets in the securities of issuers having their principal business
activities in the same industry, regardless of country.
There are no limitations on the type, size, operating history
or dividend paying record of companies or industries in which the Fund
may invest, the principal criteria for investment being that the
securities provide opportunities for capital growth. The Fund's policy is
to purchase marketable securities which are not restricted as to public
sale, subject to the limited exception set forth below under "Certain
Portfolio Securities-Illiquid Securities."
The debt securities in which the Fund may invest must be
rated at least Caa by Moody's Investors Service, Inc. ("Moody's") or at
least CCC by Standard & Poor's Corporation ("S&P"), Fitch Investors
Service, Inc. ("Fitch") or Duff & Phelps Credit Rating Co. ("Duff") or,
if unrated, deemed to be of comparable quality by the Advisers.
Securities rated Caa by Moody's or CCC by S&P, Fitch or Duff are of poor
standing and may be in default. The Fund
Page 5
intends to invest less than 35% of its net assets in debt securities
rated lower than investment grade by Moody's, S&P, Fitch and Duff or, if
unrated, deemed to be of comparable quality by the Advisers. See
"Risk Factors-Lower Rated Securities" below.
The Fund may invest, in anticipation of investing cash
positions or for temporary defensive purposes, in money market
instruments consisting of U.S. Government securities, certificates of
deposit, time deposits, bankers' acceptances, short-term investment grade
corporate bonds and other short-term debt instruments, and repurchase
agreements, as set forth under "Certain Portfolio Securities" below.
Under normal market conditions, the Fund does not expect to have a
substantial portion of its assets invested in money market instruments.
However, when the Advisers determine that adverse market conditions
exist, the Fund may adopt a temporary defensive posture and invest its
entire portfolio in money market instruments.
INVESTMENT TECHNIQUES
The Fund may engage in various investment techniques, such as
foreign exchange transactions, each of which may involve risk. See "Risk
Factors" below.
FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in currency exchange transactions to the
extent consistent with its investment objectives or to hedge its
portfolio. The Fund will conduct its currency exchange transactions
either on a spot (i.e., cash) basis at the rate prevailing in the
currency exchange market, or through entering into forward contracts to
purchase or sell currencies. A forward currency exchange contract
involves an obligation to purchase or sell a specific currency at a
future date, which must be more than two days from the date of the
contract, at a price set at the time of the contract. Forward currency
exchange contracts are entered into in the interbank market conducted
directly between currency traders (typically commercial banks or other
financial institutions) and their customers. The Fund also may combine
forward currency exchange contracts with investments in securities
denominated in other currencies.
BORROWING MONEY
As a fundamental policy, the Fund is permitted to borrow
to the extent permitted under the Investment Company Act of 1940.
However, the Fund currently intends to borrow money only for temporary or
emergency (not leveraging) purposes in an amount up to 15% of the value
of the Fund's total assets (including the amount borrowed) valued at the
lesser of cost or market, less liabilities (not including the amount
borrowed) at the time the borrowing is made. While borrowings exceed 5%
of the Fund's total assets, the Fund will not make any additional
investments.
FORWARD COMMITMENTS
The Fund may purchase debt securities on a when-issued or
forward commitment basis, which means that the price is fixed at the time
of commitment, but delivery and payment ordinarily take place a number of
days after the date of the commitment to purchase. The Fund will make
commitments 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. The Fund will not
accrue income in respect of a security purchased on a when-issued or
forward commitment basis prior to its stated delivery date.
Securities purchased on a when-issued or forward commitment
basis and certain other securities held by the Fund are subject to
changes in value (both 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 when-issued or forward commitment basis
may expose the Fund to risk because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued or
forward commitment 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. A segregated
Page 6
account of the Fund consisting of cash, cash equivalents or U.S. Government
securities or other high quality liquid debt securities at least equal at
all times to the amount of the when-issued or forward commitments will be
established and maintained at the Fund's custodian bank. Purchasing
securities on a when-issued or forward commitment basis when the 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.
CERTAIN PORTFOLIO SECURITIES
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS
The Fund's assets may be invested in the securities of
foreign issuers in the form of American Depositary Receipts ("ADRs") and
European Depositary Receipts ("EDRs"). These securities may not
necessarily be denominated in the same currency as the securities into
which they may be converted. ADRs are receipts typically issued by a
United States bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depositary Receipts ("CDRs"), are
receipts issued in Europe typically by non-United States banks and trust
companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in
the United States securities markets and EDRs and CDRs in bearer form are
designed for use in Europe.
CONVERTIBLE SECURITIES
The Fund may purchase convertible securities, which are
fixed-income securities, such as bonds or preferred stock, that may be
converted at either a stated price or stated rate into underlying shares
of common stock. Convertible securities have general characteristics
similar to both fixed-income and equity securities. Although to a lesser
extent than with fixed-income securities generally, 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, and, therefore, also will react to variations in
the general market for equity securities. 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.
As fixed-income securities, convertible securities are
investments that provide for a stable stream of income with generally
higher yields than common stocks. Of course, like all fixed-income
securities, there can be no assurance of current income because the
issuers of the convertible securities may default on their obligations.
Convertible securities, however, generally offer lower interest or
dividend yields than non-convertible securities of similar quality
because of the potential for capital appreciation. 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 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.
Page 7
MONEY MARKET INSTRUMENTS - The Fund may invest in the circumstances
described under "Management Policies," in the following types of money
market instruments.
U.S. GOVERNMENT SECURITIES. The Fund may purchase securities issued
or guaranteed by the U.S. Government or its agencies or
instrumentalities, which include U.S. Treasury securities. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks,
by the right of the issuer to borrow from the U.S. Treasury; others, such
as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S.
Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so, because the U.S. Government is not
obligated to do so by law. The Fund will invest in such securities only
when it is satisfied that the credit risk with respect to the issuer is
minimal.
ZERO COUPON SECURITIES. The Fund may invest in zero coupon U.S.
Treasury securities, which are Treasury Notes and Bonds that have been
stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. The Fund also may invest in zero coupon
securities issued by corporations and financial institutions which
constitute a proportionate ownership of the issuer's pool of underlying
U.S. Treasury securities. A zero coupon security pays no interest to its
holder during its life and is sold at a discount to its face value at
maturity. The amount of the discount fluctuates with the market price of
the security. The market prices of zero coupon securities generally are
more volatile than the market prices of securities that pay interest
periodically and are likely to respond to a greater degree to changes in
interest rates than non-zero coupon securities having similar maturities
and credit qualities.
BANK OBLIGATIONS. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations of
domestic banks, foreign subsidiaries of domestic banks, foreign branches
of domestic banks, and domestic and foreign branches of foreign banks,
domestic savings and loan associations and other banking institutions.
With respect to such securities issued by foreign branches of domestic
banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks, the Fund may be subject to additional
investment risks that are different in some respects from those incurred
by a fund which invests only in debt obligations of U.S. domestic
issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on
interest income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and
interest on these securities and the possible seizure or nationalization
of foreign deposits.
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited with it for
a specified period of time.
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time at a stated interest
rate. Time deposits which may be held by the Fund will not benefit from
insurance from the Bank Insurance Fund or the Savings Association
Insurance Fund administered by the Federal Deposit Insurance Corporation.
The Fund will not invest more than 15% of the value of its net assets in
time deposits that are illiquid and in other illiquid securities.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and of
Page 8
the drawer to pay the full amount of the instrument upon maturity. The
other short-term obligations may include uninsured, direct obligations
bearing fixed, floating or variable interest rates.
REPURCHASE AGREEMENTS. Repurchase agreements involve the acquisition
by the Fund of an underlying debt instrument, subject to an obligation of
the seller to repurchase, and the Fund to resell, the instrument at a
fixed price usually not more than one week after its purchase. Certain
costs may be incurred by the Fund in connection with the sale of
securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the securities, realization on
the securities by the Fund may be delayed or limited.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs. The commercial paper purchased
by the Fund will consist only of direct obligations which, at the time of
their purchase, are (a) rated not lower than Prime-1 by Moody's, A-1 by
S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated not lower than Aa3 by
Moody's or AA- by S&P, Fitch or Duff, or (c) if unrated, determined by
the Advisers to be of comparable quality to those rated obligations which
may be purchased by the Fund. The Fund may purchase floating and variable
rate demand notes and bonds, which are obligations ordinarily having
stated maturities in excess of one year, but which permit the holder to
demand payment of principal at any time or at specified intervals.
WARRANTS
The Fund may invest up to 5% of its net assets in warrants,
except that this limitation does not apply to warrants acquired in units
or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified
amount of the corporation's capital stock at a set price for a specified
period of time.
ILLIQUID SECURITIES
The Fund may invest up to 15% of the value of its net assets
in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objectives. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale and repurchase agreements providing
for settlement in more than seven days after notice. As to these
securities, the Fund is subject to a risk that should the Fund desire to
sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Fund's net assets could
be adversely affected.
RATINGS
The ratings of the various rating agencies represent their
opinions as to the quality of the obligations which they undertake to
rate. It should be emphasized, however, that ratings are relative and
subjective and, although ratings may be useful in evaluating the safety
of interest and principal payments, they do not evaluate the market value
risk of such obligations. Therefore, although these ratings may be an
initial criterion for selection of the Fund's investments, the Advisers
also will evaluate such obligations and the ability of their issuers to
pay interest and principal. The Fund will rely on the Advisers' judgment,
analysis and experience in evaluating the creditworthiness of an issuer.
In this evaluation, the Advisers will take into consideration, among
other things, the issuer's financial resources, its sensitivity to
economic conditions and trends, the quality of the issuer's management
and regulatory matters. It also is possible that a rating agency might
not timely change the rating on a particular issue to reflect subsequent
events. Once the rating of a security owned by the Fund has been changed,
the Advisers will consider all circumstances deemed relevant in
determining whether the Fund should continue to hold the security.
CERTAIN FUNDAMENTAL POLICIES
The Fund may (i) borrow money to the extent permitted under
the Investment Company
Page 9
Act of 1940, which currently limits borrowing to no more than 331/3% of
the value of the Fund's total assets; (ii) invest up to 5% of its total
assets in the obligations of any issuer, except that up to 25% of the
value of its total assets may be invested, and securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities may
be purchased, without regard to any such limitation; and (iii) invest up
to 25% of its total assets in the securities of issuers in a single
industry, provided that there is no such limitation on investments in
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. This paragraph describes fundamental policies of the
Fund that cannot be changed without approval by the holders of a majority
(as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting shares. See "Investment Objectives and Management
Policies-Investment Restrictions" in the Fund's Statement of Additional
Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
The Fund may (i) purchase securities of any company having
less than three years' continuous operation (including operations of any
predecessors) if such purchase does not cause the value of its
investments in all such companies to exceed 5% of the value of its total
assets; (ii) pledge, hypothecate, mortgage or otherwise encumber its
assets, but only to secure permitted borrowings; and (iii) invest up to
15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days after notice and in other illiquid
securities. See "Investment Objectives and Management Policies-Investment
Restrictions" in the Fund's Statement of Additional Information.
RISK FACTORS
INVESTING IN FOREIGN SECURITIES
Foreign securities markets generally are not as developed or
efficient as those in the United States. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable
U.S. issuers. Similarly, volume and liquidity in most foreign securities
markets are less than in the United States and, at times, volatility of
price can be greater than in the United States. The issuers of some of
these securities, such as foreign bank obligations, may be subject to
less stringent or different regulations than are U.S. issuers. In
addition, there may be less publicly available information about a
non-U.S. issuer, and non-U.S. issuers generally are not subject to
uniform accounting and financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers.
Because stock certificates and other evidences of ownership
of such securities usually are held outside the United States, the Fund
will be subject to additional risks which include possible adverse
political and economic developments, possible seizure or nationalization
of foreign deposits and possible adoption of governmental restrictions
that might adversely affect the payment of principal, interest and
dividends on the foreign securities or might restrict the payment of
principal, interest and dividends to investors located outside the
country of the issuers, whether from currency blockage or otherwise.
Custodial expenses for a portfolio of non-U.S. securities generally are
higher than for a portfolio of U.S. securities.
Since foreign securities often are purchased with and payable
in currencies of foreign countries, the value of these assets as measured
in U.S. dollars may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. Some currency exchange
costs may be incurred when the Fund changes investments from one country
to another.
Furthermore, some of these securities may be subject to
brokerage taxes levied by foreign governments, which have the effect of
increasing the cost of such investment and reducing the realized gain or
increasing the realized loss on such securities at the time of sale.
Income received by the Fund from sources within foreign countries may be
reduced by withholding or other taxes imposed by such countries. Tax
conventions between certain countries and the United States, however, may
reduce or eliminate such taxes. All such taxes paid by the Fund will
reduce its net income available for distribution to shareholders.
Page 10
FOREIGN CURRENCY EXCHANGE
Currency exchange rates may fluctuate significantly over
short periods of time. They generally are determined by the forces of
supply and demand in the foreign exchange markets and the relative merits
of investments in different countries, actual or perceived changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably
by intervention by U.S. or foreign governments or central banks, or the
failure to intervene, or by currency controls or political developments
in the United States or abroad.
The foreign currency market offers less protection against
defaults in the forward trading of currencies than is available when
trading in currencies occurs on an exchange. Since a forward currency
contract is not guaranteed by an exchange or clearinghouse, a default on
the contract would deprive the Fund of unrealized profits or force the
Fund to cover its commitments for purchase or resale, if any, at the
current market price.
LOWER RATED SECURITIES
Investors should carefully consider the relative risks of
investing in the higher yielding (and, therefore, higher risk) debt
securities (commonly known as junk bonds) in which the Fund may invest.
These are securities such as those rated Ba by Moody's or BB by S&P,
Fitch or Duff or as low as Caa by Moody's or CCC by S&P, Fitch or Duff.
They generally are not meant for short-term investing and may be subject
to certain risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Securities rated BB by S&P, Fitch or Duff are regarded as having
predominantly speculative characteristics and, while such obligations
have less near-term vulnerability to default than other speculative grade
debt, 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. Securities rated
Caa by Moody's or CCC by S&P, Fitch or Duff are of poor standing and may
be in default or have current identifiable vulnerability to default. Such
obligations, though high yielding, are characterized by great risk. See
"Appendix" in the Fund's Statement of Additional Information for a
general description of Moody's, S&P, Fitch and Duff securities ratings.
Although these ratings may be an initial criterion for selection of
portfolio investments, the Advisers also will evaluate these securities
and the ability of the issuers of such securities to pay interest and
principal. The Fund's ability to achieve its investment objectives may be
more dependent on the Advisers' credit analysis than might be the case
for a fund that invested in higher rated securities. See "Certain
Portfolio Securities-Ratings" above.
The market price and yield of securities rated Ba or lower by
Moody's and BB or lower by S&P, Fitch or Duff are more volatile than
those of higher rated securities. Factors adversely affecting the market
price and yield of these securities will adversely affect the Fund's net
asset value. In addition, the retail secondary market for these
securities may be less liquid than that of higher rated securities;
adverse conditions could make it difficult at times for the Fund to sell
certain securities or could result in lower prices than those used in
calculating the Fund's net asset value.
The market values of certain lower rated debt securities tend
to reflect individual corporate developments to a greater extent than do
higher rated securities, which react primarily to fluctuations in the
general level of interest rates, and tend to be more sensitive to
economic conditions than are higher rated securities. Companies that
issue such debt 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 higher rated securities. See "Investment
Objectives and Policies-Risk Factors-Lower Rated Securities" in the
Fund's Statement of Additional Information.
Page 11
OTHER INVESTMENT CONSIDERATIONS
The Fund's net asset value is not fixed and should be
expected to fluctuate.
You should be aware that equity securities fluctuate in
value, often based on factors unrelated to the value of the issuer of the
securities, and that fluctuations can be pronounced. Changes in the value
of the Fund's securities, regardless of whether the securities are equity
or debt, will result in changes in the value of a share of the Fund and
thus the Fund's total return to investors.
For the portion of the Fund's assets invested in debt
securities, you should be aware that even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price
fluctuations. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuing
entities.
The Fund invests for long-term growth rather than short-term
profits; however, a limited amount of short-term trading can be expected
in order to maintain a flexible portfolio strategy. In addition, the
possible need to realize cash for redemption of Fund shares may make it
necessary to sell securities even though such sales would not otherwise
be desirable from an investment standpoint. Consequently, portfolio
turnover may vary from year to year, as well as within a year. Higher
portfolio turnover rates are likely to result in comparatively greater
brokerage commissions or transaction costs. Moreover, when extraordinary
market conditions prevail, investment strategy may shift rapidly, in
which case higher turnover rates can be expected. The amount of portfolio
activity will not be a limiting factor when making investment decisions.
Under normal market conditions, the portfolio turnover rate of the Fund
generally will be less than 100%. See "Portfolio Transactions" in the
Statement of Additional Information.
Investment decisions for the Fund are made independently from
those of other investment companies or accounts advised by Dreyfus or
Sarofim. However, if such other investment companies or accounts are
prepared to invest in, or desire to dispose of, securities of the type in
which the Fund invests at the same time as the Fund, available
investments or opportunities for sales will be allocated equitably to
each of them. In some cases, this procedure may adversely affect the size
of the position obtained for or disposed of by the Fund or the price paid
or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
Dreyfus, located at 200 Park Avenue, New York, New York
10166, was formed in 1947 and serves as the Fund's investment adviser.
Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As of
January 31, 1995, Dreyfus managed or administered approximately $70
billion in assets for more than 1.9 million investor accounts nationwide.
Dreyfus supervises and assists in the overall management of
the Fund's affairs under a Management Agreement with the Fund, subject to
the overall authority of the Fund's Board of Directors in accordance with
Maryland law.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
Mellon's principal wholly-owned subsidiaries are Mellon Bank, N.A.,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston
Company, Inc., AFCOCredit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed more than $193 billion in assets as of
December 31, 1994, including approximately $70 billion in mutual fund
assets. As of December 31, 1994, various sub-
Page 12
sidiaries of Mellon provided non-investment services, such as custodial
or administration services, for approximately $654 billion in assets
including $74 billion in mutual fund assets.
Dreyfus has engaged Sarofim, located at Two Houston Center,
Suite 2907, Houston, Texas 77010, to serve as the Fund's sub-investment
adviser. Sarofim, a registered investment adviser was formed in 1958. As
of September 30, 1994, Sarofim managed approximately $30 billion in
assets for two other registered investment companies and numerous
separate discretionary accounts.
Sarofim, subject to the supervision and approval of Dreyfus,
provides investment advisory assistance and the day-to-day management of
the Fund's investments, as well as investment research and statistical
information, under a Sub-Investment Advisory Agreement with Dreyfus,
subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law.
The Fund's primary portfolio manager is Fayez Sarofim. He has
held that position since the Fund's inception. Mr. Sarofim founded Fayez
Sarofim & Co. in 1958. The Fund's other portfolio managers are identified
under "Management of the Fund" in the Fund's Statement of Additional
Information. Dreyfus and Sarofim also provide research services for the
Fund as well as other funds advised by Dreyfus or Sarofim, respectively,
through a professional staff of portfolio managers and securities
analysts.
Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of .75 of 1% of the value of the
Fund's average daily net assets. For the fiscal year ended October 31,
1994, no management fee was paid to Dreyfus pursuant to an undertaking in
effect.
Under the Sub-Investment Advisory Agreement, Dreyfus has
agreed to pay Sarofim an annual fee, payable monthly, as set forth below:
<TABLE>
Annual Fee as a Percentage of
Fund's Average Daily
Total Assets Net Assets
______________ ---------------------------------
<S> <C> <C>
0 to $25 million.......................... .11 of 1%
$25 million to $75 million................ .18 of 1%
$75 million to $200 million............... .22 of 1%
$200 million to $300 million.............. .26 of 1%
$300 million or more...................... .275 of 1%
</TABLE>
For the fiscal year ended October 31, 1994, no sub-advisory
fee was paid by Dreyfus to Sarofim pursuant to an agreement in effect
between Dreyfus and Sarofim.
EXPENSES
The management fee paid by the Fund is higher than that paid
by most other investment companies. From time to time, Dreyfus may waive
receipt of its fees and/or voluntarily assume certain expenses of the
Fund, which would have the effect of lowering the overall expense ratio
of the Fund and increasing yield to investors at the time such amounts
are waived or assumed, as the case may be. The Fund will not pay Dreyfus
at a later time for any amounts it may waive, nor will the Fund reimburse
Dreyfus for any amounts it may assume.
Dreyfus may pay the Fund's distributor for shareholder
services from Dreyfus' own assets, including past profits but not
including the management fee paid by the Fund. The Fund's distributor may
use part or all of such payments to pay Service Agents in respect of
these services.
DISTRIBUTOR
The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
The Bank of New York, 110 Washington Street, New York, New
York 10286, is the Fund's Custodian. The Shareholder Services Group,
Inc., a subsidiary of First Data Corporation, P.O.
Page 13
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent").
HOW TO BUY FUND SHARES
GENERAL
Fund shares may be purchased only by clients of certain
financial institutions (which may include banks), securities dealers
("Selected Dealers") and other industry professionals (collectively,
"Service Agents"), except that full-time or part-time employees of
Dreyfus or any of its affiliates or subsidiaries, directors of Dreyfus,
Board members of a fund advised by Dreyfus, including members of the
Fund's Board, or the spouse or minor child of any of the foregoing may
purchase Class A shares directly through the Distributor. Subsequent
purchases may be sent directly to the Transfer Agent or your Service
Agent. Service Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some
Service Agents may impose certain conditions on their clients which are
different from those described in this Prospectus, and to the extent
permitted by applicable regulatory authority, may charge their clients
direct fees which would be in addition to any amounts which might be
received under the Shareholder Services Plan. Each Service Agent has
agreed to transmit to its clients a schedule of such fees. You should
consult your Service Agent in this regard. See "Distribution Plan and
Shareholder Services Plan."
When purchasing Fund shares, you must specify whether the
purchase is for Class A or Class B shares. Stock certificates are issued
only upon your written request. No certificates are issued for fractional
shares. The Fund reserves the right to reject any purchase order.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. The initial investment must be
accompanied by the Fund's Account Application.
You may purchase Fund shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable to
"Premier Growth Fund, Inc." Payments to open new accounts which are
mailed should be sent to Premier Growth Fund, Inc., P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to Premier
Growth Fund, Inc., P.O. Box 105, Newark, New Jersey 07101-0105. Neither
initial nor subsequent investments should be made by third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York, DDA
#8900117826/Premier Growth Fund, Inc.-Class A shares, or DDA
#8900115262/Premier Growth Fund, Inc. - Class B shares, as the case may
be, for purchase of Fund shares in your name. The wire must include your
Fund account number (for new accounts, your Taxpayer Identification
Number ("TIN") should be included instead), account registration and
dealer number, if applicable. If your initial purchase of Fund shares is
by wire, please call 1-800-645-6561 after completing your wire payment to
obtain your Fund account number. Please include your Fund account number
on the Fund's Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the
Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be drawn only
on U.S. banks. A charge will be imposed if any check used for investment
in your account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through
compatible computer facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing
Page 14
House member. You must direct the institution to transmit immediately
available funds through the Automated Clearing House to The Bank of New
York with instructions to credit your Fund account. The instructions must
specify your Fund account registration and your Fund account number
PRECEDED BY THE DIGITS "1111."
Fund shares are sold on a continuous basis. Net asset value
per share of each Class is determined as of the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), on each day the New York Stock Exchange is open for business. Net
asset value per share of each Class is computed by dividing the value of
the Fund's net assets represented by such Class (i.e., the value of
assets less liabilities) by the total number of shares of such Class
outstanding. The Fund's investments are valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the Fund's Board of Directors. For further
information regarding the methods employed in valuing the Fund's
investments, see "Determination of Net Asset Value" in the Fund's
Statement of Additional Information.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the Fund's Account Application for further information
concerning this requirement. Failure to furnish a certified TIN to the
Fund could subject you to a $50 penalty imposed by the Internal Revenue
Service (the "IRS").
If an order is received in proper form by the Transfer Agent
or other agent by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time) on a business day, Fund
shares will be purchased at the public offering price determined as of
the close of trading on the floor of the New York Stock Exchange on that
day. Otherwise, Fund shares will be purchased at the public offering
price determined as of the close of trading on the floor of the New York
Stock Exchange on the next business day, except where shares are
purchased through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the New York Stock Exchange on any
business day and transmitted to the Distributor or its designee by the
close of its business day (normally 5:15 p.m., New York time) will be
based on the public offering price per share determined as of the close
of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the orders will be based on the next determined public
offering price. It is the dealer's responsibility to transmit orders so
that they will be received by the Distributor or its designee before the
close of its business day.
CLASS A SHARES
The public offering price for Class A shares is the net asset
value per share of that Class plus a sales load as shown below:
<TABLE>
Total Sales Load
-----------------------------------
As a % of As a % of Dealers' Reallowance
offering price net asset value as a % of
Amount of Transaction per share per share offering price
______________________ ________________ ________________ ----------------------
<S> <C> <C> <C>
Less than $50,000 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or
more of Class A shares. However, if you purchase Class A shares without an
initial sales charge as part of an investment of at least $1,000,000 and
redeem those shares within two years after purchase, a CDSC of 1% will be
imposed at the time of redemption. The terms contained in the section of
the Fund's Prospectus entitled "How to Redeem Fund Shares - Contingent
Deferred Sales Charge - Class B" (other than the amount of the CDSC
and its time periods) are applicable to the Class A shares subject to a
CDSC. Letter of Intent and Right of Accumulation apply to such purchases
of Class A shares.
Page 15
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
Fund shares) may purchase Class A shares for themselves directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children, at net asset value, provided that they have
furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This
privilege also applies to full-time employees of financial institutions
affiliated with NASD member firms whose full-time employees are eligible
to purchase Class A shares at net asset value. In addition, Class A
shares are offered at net asset value to full-time or part-time employees
of Dreyfus or any of its affiliates or subsidiaries, directors of
Dreyfus, Board members of a fund advised by Dreyfus, including members of
the Fund's Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at net asset value without a sales
load to employees participating in qualified or non-qualified employee
benefit plans or other programs where (i) the employers or affiliated
employers maintaining such plans or programs have a minimum of 250
employees eligible for participation in such plans or programs, or (ii)
such plan's or program's aggregate investment in the Dreyfus Family of
Funds or certain other products made available by the Distributor to such
plans or programs exceeds one million dollars ("Eligible Benefit Plans").
Plan sponsors, administrators or trustees, as applicable, are responsible
for notifying the Distributor when the relevant requirement is satisfied.
The Distributor may pay dealers a fee of up to .5% of the amount invested
through such dealers in Class A shares at net asset value by employees
participating in Eligible Benefit Plans. All present holdings of shares
of funds in the Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each such
purchase of Fund shares. The Distributor reserves the right to cease
paying these fees at any time. The Distributor will pay such fees from
its own funds, other than amounts received from the Fund, including past
profits or any other source available to it.
Class A shares also may be purchased (including by exchange)
at net asset value without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified
retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided that, at
the time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) satisfied the requirements set forth
under either clause (i) or clause (ii) in the preceding paragraph and all
or a portion of such plan's assets were invested in funds in the Dreyfus
Family of Funds or certain other products made available by the
Distributor to such plans, or (b) invested all of its assets in certain
funds in the Dreyfus Family of Funds or certain other products made
available by the Distributor to such plans.
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by Dreyfus which are sold with a sales load, such as the
Fund. In some instances, those incentives may be offered only to certain
dealers who have sold or may sell significant amounts of shares. Dealers
receive a larger percentage of the sales load from the Distributor than
they receive for selling most other funds. For the period from November
1, 1993 through August 23, 1994, Dreyfus Service Corporation, a
wholly-owned subsidiary of Dreyfus and distributor of the Fund's shares
prior to August 24, 1994, retained $10,171 from sales loads on Class A
shares.
CLASS B SHARES
The public offering price for Class B shares is the net asset
value per share of that Class. No initial sales charge is imposed at the
time of purchase. A CDSC is imposed, however, on certain redemptions of
Class B shares as described under "How to Redeem Fund Shares."
Page 16
The Distributor compensates certain Service Agents for selling Class B
shares at the time of purchase from the Distributor's own assets. The
proceeds of the CDSC and the distribution fee, in part, are used to defray
these expenses. For the period from November 1, 1993 through August 23,
1994, $34,556 was retained by Dreyfus Service Corporation, as former
distributor, from the CDSC on Class B shares.
RIGHT OF ACCUMULATION - CLASS A SHARES
Reduced sales loads apply to any purchase of Class A shares,
shares of other funds in the Premier Family of Funds, shares of certain
other funds purchased through an exchange from any funds in the Premier
Family of Funds, shares of certain other funds advised by Dreyfus which
are sold with a sales load and shares acquired by a previous exchange of
such shares (hereinafter referred to as "Eligible Funds"), by you and any
related "purchaser" as defined in the Statement of Additional
Information, where the aggregate investment, including such purchase, is
$50,000 or more. If, for example, you previously purchased and still hold
Class A shares of the Fund, or of any other Eligible Fund or combination
thereof, with an aggregate current market value of $40,000 and
subsequently purchase Class A shares of the Fund or an Eligible Fund
having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase
you or your Service Agent must notify the Distributor if orders are made
by wire, or the Transfer Agent if orders are made by mail. The reduced
sales load is subject to confirmation of your holdings through a check of
appropriate records.
TELETRANSFER PRIVILEGE
You may purchase Fund shares (minimum $500, maximum $150,000
per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the bank account designated in one
of these documents and your Fund account. Only a bank account maintained
in a domestic financial institution which is an Automated Clearing House
member may be so designated. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES
Clients of certain Service Agents may purchase, in exchange
for Class A or Class B shares of the Fund, shares of the same Class in
certain other funds managed or administered by Dreyfus, to the extent
such shares are offered for sale in your state of residence. These funds
have different investment objectives which may be of interest to you. You
also may exchange your Fund shares that are subject to a CDSC for shares
of Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so
purchased will be held in a special account created solely for this
purpose (the "Exchange Account"). Exchanges of shares from an Exchange
Account only can be made into certain other funds managed or administered
by Dreyfus. No CDSC is charged when an investor exchanges into an
Exchange Account; however, the applicable
Page 17
CDSC will be imposed when shares are redeemed from an Exchange Account
or other applicable Fund account. Upon redemption, the applicable CDSC
will be calculated without regard to the time such shares were held in an
Exchange Account. See "How to Redeem Fund Shares." Redemption proceeds for
Exchange Account shares are paid by Federal wire or check only. Exchange
Account shares also are eligible for Auto-Exchange Privilege, Dividend
Sweep and the Automatic Withdrawal Plan. If you desire to use this
service, you should consult your Service Agent or call 1-800-645-6561 to
determine if it is available and whether any conditions are imposed on
its use.
To request an exchange, you or your Service Agent acting on
your behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. Before any exchange, you must obtain and should
review a copy of the current prospectus of the fund into which the
exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of Personal Retirement Plans, the
shares being exchanged must have a current value of at least $500;
furthermore, when establishing a new account by exchange, the shares
being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
The ability to issue exchange instructions by telephone is given to all
Fund shareholders automatically, unless you check the applicable "No" box
on the Account Application, indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a separate signed Shareholder Services Form, also
available by calling 1-800-645-6561. If you have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. See "How to Redeem Fund Shares-Procedures." Upon an
exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically
carried over to the fund into which the exchange is made: Telephone
Exchange Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, TELETRANSFER Privilege and the dividend/capital gain
distribution option (except for Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B shares at the time of an exchange; however, Class B shares
acquired through an exchange will be subject on redemption to the higher
CDSC applicable to the exchanged or acquired shares. The CDSC applicable
on redemption of the acquired Class B shares will be calculated from the
date of the initial purchase of the Class B shares exchanged. If you are
exchanging Class A shares into a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which
reflect a reduced sales load, if the shares of the fund from which you
are exchanging were: (a) purchased with a sales load, (b) acquired by a
previous exchange from shares purchased with a sales load, or (c)
acquired through reinvestment of dividends or distributions paid with
respect to the foregoing categories of shares. To qualify, at the time of
your exchange you must notify the Transfer Agent or your Service Agent
must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the Statement of Additional Information. No
fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal fee in accordance
with rules promulgated by the Securities and Exchange Commission. The
Fund reserves the right to reject any exchange request in whole or in
part. The availability of Fund Exchanges may be modified or terminated at
any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
Page 18
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for Class
A or Class B shares of the Fund, in shares of the same Class of other
funds in the Premier Family of Funds or certain other funds in the
Dreyfus Family of Funds of which you are currently an investor. The
amount you designate, which can be expressed either in terms of a
specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to
the schedule you have selected. Shares will be exchanged at the
then-current net asset value; however, a sales load may be charged with
respect to exchanges of Class A shares into funds sold with a sales load.
No CDSC will be imposed on Class B shares at the time of an exchange;
however, Class B shares acquired through an exchange will be subject on
redemption to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B shares
will be calculated from the date of the initial purchase of the Class B
shares exchanged. See "Shareholder Services" in the Statement of
Additional Information. The right to exercise this Privilege may be
modified or canceled by the Fund or the Transfer Agent. You may modify or
cancel your exercise of this Privilege at any time by mailing written
notification to Premier Growth Fund, Inc., P.O. Box 6587, Providence,
Rhode Island 02940-6587. The Fund may charge a service fee for the use of
this Privilege. No such fee currently is contemplated. The exchange of
shares of one fund for shares of another is treated for Federal income
tax purposes as a sale of the shares given in exchange by the shareholder
and, therefore, an exchanging shareholder may realize a taxable gain or
loss. For more information concerning this Privilege and the funds in the
Premier Family of Funds or Dreyfus Family of Funds eligible to
participate in this Privilege, or to obtain an Auto-Exchange Authorization
Form, please call toll free 1-800-645-6561.
AUTOMATIC ASSET BUILDER
AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring
funds from the bank account designated by you. At your option, the bank
account designated by you will be debited in the specified amount, and
Fund shares will be purchased, once a month, on either the first or
fifteenth day, or twice a month, on both days. Only an account maintained
at a domestic financial institution which is an Automated Clearing House
member may be so designated. To establish an AUTOMATIC Asset Builder
account, you must file an authorization form with the Transfer Agent. You
may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel your participation in this Privilege or change the amount
of purchase at any time by mailing written notification to Premier Growth
Fund, Inc., P.O. Box 6587, Providence, Rhode Island 02940-6587, or, if
for Dreyfus retirement plan accounts, to The Dreyfus Trust Company,
Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427, and the
notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
To enroll in Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in the Privilege. The appropriate form may be
obtained from your Service Agent or by calling 1-800-645-6561. Death or
legal incapacity will terminate your participation in this Privilege. You
may elect at any time to terminate your participation by notifying in
writing the appropriate Federal agency. Further, the Fund may terminate
your participation upon 30 days' notice to you.
Page 19
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by 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 you are a shareholder. Shares of
the other fund will be purchased at the then-current net asset value;
however, a sales load may be charged with respect to investments in
shares of a fund sold with a sales load. If you are investing in a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load. If you are
investing in a fund that charges a CDSC, the shares purchased will be
subject on redemption to the CDSC, if any, applicable to the purchased
shares. See "Shareholder Services" in the Statement of Additional
Information. Dividend ACH permits you to transfer electronically
dividends or dividends and capital gain distributions, if any, from the
Fund to a designated bank account. Only an account maintained at a
domestic financial institution which is an Automated Clearing House
member may be so designated. Banks may charge a fee for this service.
For more information concerning these privileges, or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier Growth Fund, Inc., P.O. Box 6587, Providence, Rhode Island
02940-6587. To select a new fund after cancellation, you must submit a
new Dividend Options Form. Enrollment in or cancellation of these
privileges is effective three business days following receipt. These
privileges are available only for existing accounts and may not be used
to open new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these privileges at any
time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for these privileges.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. There is a service charge of 50cents for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by you, the
Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Class B shares withdrawn pursuant to the Automatic Withdrawal
Plan will be subject to any applicable CDSC. Purchases of additional
Class A shares where a sales load is imposed concurrently with
withdrawals of Class A shares generally are undesirable.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services
also are available. You can obtain details on the various plans by
calling the following numbers toll free:
For Keogh Plans, please call 1-800-358-5566.
For IRAs and IRA "Rollover Accounts," please call
1-800-645-6561.
For SEP-IRAs, 401(k) Salary Reduction Plans, and 403(b)(7)
Plans, please call 1-800-322-7880.
LETTER OF INTENT - CLASS A SHARES
By signing a Letter of Intent form, available from the
Distributor, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a 13-month period
pursuant to the terms and conditions set forth in the Letter of Intent. A
minimum initial purchase of $5,000 is required. To compute the applicable
sales load, the offering price of shares you hold (on the date of
submission of the Letter of Intent) in any Eligible Fund that may be used
toward "Right of Accumulation" benefits described above may be used as a
credit toward completion of the Letter of Intent. However, the reduced
sales load will be applied only to new purchases.
Page 20
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares held in escrow to realize
the difference. Signing a Letter of Intent does not bind you to purchase,
or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent.
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your Class A or Class B shares
at any time. Redemption requests should be transmitted to the Transfer
Agent as described below. When a request is received in proper form, the
Fund will redeem the shares at the next determined net asset value as
described below. If you hold Fund shares of more than one Class, any
request for redemption must specify the Class of shares being redeemed.
If you fail to specify the Class of shares to be redeemed or if you own
fewer shares of the Class than specified to be redeemed, the redemption
request may be delayed until the Transfer Agent receives further
instructions from you or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed. Service Agents may charge a nominal fee for
effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request. The
value of the shares redeemed may be more or less than their original
cost, depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH AUTOMATIC ASSET BUILDER
AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER
AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON
BANK CLEARANCE OF YOUR PURCHASE CHECK, TELETRANSFER PURCHASE OR AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES PURSUANT TO THE
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT
BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE TELETRANSFER PURCHASE OR
THE AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED
BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE
IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY
REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
Page 21
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES
A CDSC payable to the Distributor is imposed on any
redemption of Class B shares which reduces the current net asset value of
your Class B shares to an amount which is lower than the dollar amount of
all payments by you for the purchase of Class B shares of the Fund held
by you at the time of redemption. No CDSC will be imposed to the extent
that the net asset value of the Class B shares redeemed does not exceed
(i) the current net asset value of Class B shares acquired through
reinvestment of dividends or capital gain distributions, plus (ii)
increases in the net asset value of your Class B shares above the dollar
amount of all your payments for the purchase of Class B shares of the
Fund held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has
declined below their original cost as a result of the Fund's performance,
a CDSC may be applied to the then-current net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
<TABLE>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
___________________ ________________________
<S> <C> <C>
First...................................................... 4.00
Second..................................................... 4.00
Third...................................................... 3.00
Fourth..................................................... 3.00
Fifth...................................................... 2.00
Sixth...................................................... 1.00
</TABLE>
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible
rate. It will be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends
and distributions; then of amounts representing the increases
in net asset value of Class B shares above the total amount of payments
for the purchase of Class B shares made during the preceding six years;
then of amounts representing the cost of shares purchased six years prior
to the redemption; and finally, of amounts representing the cost of
shares held for the longest period of time within the applicable six-year
period.
For example, assume an investor purchased 100 shares at $10 a
share for a cost of $1,000. Subsequently, the shareholder acquired 5
additional shares through dividend reinvestment. During the second year
after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value
had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4%
(the applicable rate in the second year after purchase) for a total CDSC
of $9.60.
WAIVER OF CDSC
The CDSC will be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code"),
of the shareholder, (b) redemptions by employees participating in
Eligible Benefit Plans, (c) redemptions as a result of a combination of
any investment company with the Fund by merger, acquisition of assets or
otherwise, (d) a distribution following retire-
Page 22
ment under a tax-deferred retirement plan or upon attaining age 701/2 in
the case of an IRA or Keogh plan or custodial account pursuant to Section
403(b) of the Code, and (e) redemptions by such shareholders as the
Securities and Exchange Commission or its staff may permit. If the Fund's
Directors determine to discontinue the waiver of the CDSC, the disclosure
in the Fund's prospectus will be revised appropriately. Any Fund shares
subject to a CDSC which were purchased prior to the termination of such
waiver will have the CDSC waived as provided in the Fund's prospectus at
the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES
You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, through the TELETRANSFER Privilege
or, if you are a client of a Selected Dealer, through the Selected
Dealer. If you have given your Service Agent authority to instruct the
Transfer Agent to redeem shares and to credit the proceeds of such
redemptions to a designated account at your Service Agent, you may redeem
shares only in this manner and in accordance with the regular redemption
procedure described below. If you wish to use the other redemption
methods described below, you must arrange with your Service Agent for
delivery of the required application(s) to the Transfer Agent. Other
redemption procedures may be in effect for clients of certain Service
Agents. The Fund makes available to certain large institutions the
ability to issue redemption instructions through compatible computer
facilities.
Your redemption request may direct that the redemption
proceeds be used to purchase shares of other funds advised or
administered by Dreyfus that are not available through the Exchange
Privilege. The applicable CDSC will be charged upon the redemption of
Class B shares. Your redemption proceeds will be invested in shares of
the other fund on the next business day. Before you make such a request,
you must obtain and should review a copy of the current prospectus of the
fund being purchased. Prospectuses may be obtained by calling
1-800-645-6561. The prospectus will contain information concerning
minimum investment requirements and other conditions that may apply to
your purchase.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the
TELETRANSFER Privilege or Telephone Exchange Privilege (which is granted
automatically unless you refuse it), you authorize the Transfer Agent to
act on telephone instructions from any person representing himself or
herself to be you, or a representative of your Service Agent, and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a TELETRANSFER redemption or an exchange of Fund shares. In
such cases, you should consider using the other redemption procedures
described herein. Use of these other redemption procedures may result in
your redemption request being processed at a later time than it would
have been if TELETRANSFER redemption had been used. During the delay, the
Fund's net asset value may fluctuate.
REGULAR REDEMPTION
Under the regular redemption procedure, you may redeem shares
by written request mailed to Premier Growth Fund, Inc., P.O. Box 6587,
Providence, Rhode Island 02940-6587. Written redemption requests must be
signed by each shareholder, including each owner of a
Page 23
joint account, and each signature must be guaranteed. The Transfer Agent
has adopted standards and procedures pursuant to which signature-
guarantees in proper form generally will be accepted from domestic banks,
brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock Exchange
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program.
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
TELETRANSFER PRIVILEGE
You may redeem Fund shares (minimum $500 per day) by
telephone if you have checked the appropriate box and supplied the
necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in
one of these documents. Only such an account maintained in a domestic
financial institution which is an Automated Clearing House member may be
so designated. Redemption proceeds will be on deposit in your account at
an Automated Clearing House member bank ordinarily two days after receipt
of the redemption request or, at your request, paid by check (maximum
$150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the TELETRANSFER
Privilege for transfer to their bank account not more than $250,000
within any 30-day period. The Fund reserves the right to refuse any
request made by telephone, including requests made shortly after a change
of address, and may limit the amount involved or the number of such
requests. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently
is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption by telephoning 1-800-221-4060 or, if
you are calling from overseas, call 1-401-455-3306. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
REDEMPTION THROUGH A SELECTED DEALER
If you are a customer of a Selected Dealer, you may make
redemption requests to your Selected Dealer. If the Selected Dealer
transmits the redemption request so that it is received by the Transfer
Agent prior to the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), the redemption request
will be effective on that day. If a redemption request is received by the
Transfer Agent after the close of trading on the floor of the New York
Stock Exchange, the redemption request will be effective on the next
business day. It is the responsibility of the Selected Dealer to transmit
a request so that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer. See
"How to Buy Fund Shares" for a discussion of additional conditions or
fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected
Dealers with which it has sales agreements for the repurchase of shares
held by shareholders. Repurchase orders received by dealers by the close
of trading on the floor of the New York Stock Exchange on any business
day and transmitted to the Distributor or its designee prior to the close
of its business day (normally 5:15 p.m., New York time) are effected at
the price determined as of the close of trading on the floor of the New
York Stock Exchange on that day. Otherwise, the shares will be redeemed
at the next determined net asset value. It is the responsibility of the
Selected Dealer to transmit orders on a timely basis. The Selected Dealer
may charge the shareholder a fee for executing the order. This repurchase
arrangement is discretionary and may be withdrawn at any time.
Page 24
REINVESTMENT PRIVILEGE - CLASS A
You may reinvest up to the number of Class A shares you have
redeemed, within 30 days of redemption, at the then-prevailing net asset
value without a sales load, or reinstate your account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be
exercised only once. The Reinvestment Privilege applies to only Class A
shares that are not subject to a CDSC.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class A and Class B shares are subject to a Shareholder
Services Plan and Class B shares only are subject to a Distribution Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, the Fund pays the Distributor
for distributing the Fund's Class B shares at an annual rate of .75 of 1%
of the value of the average daily net assets of Class B.
SHAREHOLDER SERVICES PLAN
Under the Shareholder Services Plan, the Fund pays the
Distributor for the provision of certain services to the holders of Class
A and Class B shares a fee at the annual rate of .25 of 1% of the value
of the average daily net assets of Class A and Class B. 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. Under the Shareholder Services Plan, the
Distributor may make payments to Service Agents in respect of these
services. The Distributor determines the amounts to be paid to Service
Agents. Each Service Agent is required to disclose to its clients any
compensation payable to it by the Fund pursuant to the Shareholder
Services Plan and any other compensation payable by their clients in
connection with the investment of their assets in Class A or Class B
shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from its net investment
income and distributes net realized securities gains, if any, once a
year, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Code, in all events in a
manner consistent with the provisions of the Investment Company Act of
1940. The Fund will not make distributions from net realized securities
gains unless capital loss carryovers, if any, have been utilized or have
expired. You may choose whether to receive dividends and distributions in
cash or to reinvest in additional Fund shares of the same Class from
which they were paid at net asset value without a sales load. All
expenses are accrued daily and deducted before declaration of dividends
to investors. Dividends paid by each Class will be calculated at the same
time and in the same manner and will be of the same amount, except that
the expenses attributable solely to Class A or Class B will be borne
exclusively by such Class. Class B shares will receive lower per share
dividends than Class A shares because of the higher expenses borne by
Class B. See "Fee Table."
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund will be taxable to U.S.
shareholders as ordinary income whether received in cash or reinvested in
Fund shares. Distributions from net realized long-term securities gains
of the Fund will be taxable to U.S. shareholders as long-term capital
gains for Federal income tax purposes, regardless of how long
shareholders have held their Fund shares and whether such distributions
are received in cash or reinvested in Fund shares. The Code provides that
the net capital gain of an individual generally will not be subject to
Federal income tax at a rate in excess of 28%. Dividends and
distributions may be subject to state and local taxes.
Page 25
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund to a foreign investor
generally are subject to U.S. nonresident withholding taxes at the rate
of 30%, unless the foreign investor claims the benefit of a lower rate
specified in a tax treaty. Distributions from net realized long-term
securities gains paid by the Fund to a foreign investor as well as the
proceeds of any redemptions from a foreign investor's account, regardless
of the extent to which gain or loss may be realized, generally will not
be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during
the year.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares if an investor exchanges his Class A
shares for shares of another fund advised or administered by The Dreyfus
Corporation within 91 days of purchase and such other fund reduces or
eliminates its otherwise applicable sales load for the purpose of the
exchange. In this case, the amount of the sales load charged the investor
for Class A shares, up to the amount of the reduction of the sales load
charge on the exchange, is not included in the basis of the investor's
Class A shares for purposes of computing gain or loss on the exchange,
and instead is added to the basis of the fund shares received on the
exchange.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify
either that the TIN furnished in connection with opening an account is
correct or that such shareholder has not received notice from the IRS of
being subject to backup withholding as a result of a failure to properly
report taxable dividend or interest income on a Federal income tax
return. Furthermore, the IRS may notify the Fund to institute backup
withholding if the IRS determines a shareholder's TIN is incorrect or if
a shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified
for the fiscal year ended October 31, 1994 as a "regulated investment
company" under the Code. The Fund intends to continue to so qualify if
such qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income tax
to the extent its earnings are distributed in accordance with applicable
provisions of the Code. In addition, the Fund is subject to a
non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of
shares will be calculated on the basis of average annual total return.
Advertisements also may include performance calculated on the basis of
total return. These total return figures reflect changes in the price of
the shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. Class A total return figures
include the maximum initial sales charge and Class B total return figures
include any
Page 26
applicable CDSC. These figures also take into account any applicable
service and distribution fees. As a result, at any given time,
the performance of Class B should be expected to be lower than that of
Class A. Performance for each Class will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the Fund was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to
the reinvestment of dividends and distributions during the period. The
return is expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value of the
investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return of Class
A and Class B for one, five and ten year periods, or for shorter periods
depending upon the length of time during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
maximum offering price per share at the beginning of the period.
Advertisements may include the percentage rate of total return or may
include the value of a hypothetical investment at the end of the period
which assumes the application of the percentage rate of total return.
Total return also may be calculated by using 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 shares. Such calculations do not reflect the deduction of the
applicable sales charge which, if reflected, would reduce the performance
quoted.
Performance will vary from time to time and past results are
not necessarily representative of future results. You should remember
that performance is a function of portfolio management in selecting the
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time to
time in advertising or marketing the Fund's shares, including data from
Lipper Analytical Services, Inc., Morgan Stanley Capital International
World Index, Standard & Poor's 500 Composite Stock Price Index, Standard
& Poor's MidCap 400 Index, the Dow Jones Industrial Average, Morningstar,
Inc. and other industry publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on February 5,
1993, and commenced operations on July 15, 1993. The Fund is authorized
to issue 300 million shares of Common Stock, par value $.001 per share.
The Fund's shares are classified into two classes. Each share has one
vote and shareholders will vote in the aggregate and not by class except
as otherwise required by law. Holders of Class A and Class B shares will
be entitled to vote on matters submitted to shareholders pertaining to
the Shareholder Services Plan and only holders of Class B shares will be
entitled to vote on matters submitted to shareholders pertaining to the
Distribution Plan.
Unless otherwise required by the Investment Company Act of
1940, ordinarily it will not be necessary for the Fund to hold annual
meetings of shareholders. As a result, Fund shareholders may not consider
each year the election of Directors or the appointment of auditors.
However, pursuant to the Fund's By-Laws, the holders of at least 10% of
the shares outstanding and entitled to vote may require the Fund to hold
a special meeting of shareholders for purposes of removing a Director
from office or for any other purpose. Fund shareholders may remove a
Director by the affirmative vote of a majority of the Fund's outstanding
shares. In addition, the Board of Directors
Page 27
will call a meeting of shareholders for the purpose of electing Directors
if, at any time, less than a majority of the Directors then holding
office have been elected by shareholders.
While there is no current intention to do so, the Fund may
invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental
investment objectives, policies and investment restrictions as the Fund.
The Transfer Agent maintains a record of your ownership and
will send you confirmations and statements of account.
Shareholder inquiries may be made to your Service Agent or by
writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
070/628P022895
Page 28
PREMIER GROWTH FUND, INC.
CLASS A AND CLASS B SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FEBRUARY 28, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier Growth Fund, Inc. (the "Fund"), dated February 28, 1995, as it
may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser and administrator. Dreyfus has engaged Fayez Sarofim & Co.
("Sarofim") to serve as the Fund's sub-investment adviser and to provide
day-to-day management of the Fund's investments, subject to the supervision
of Dreyfus. Dreyfus and Sarofim are referred to collectively as the
"Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . B-8
Management Agreement. . . . . . . . . . . . . . . . . . . . B-12
Distribution Plan and Shareholder Services Plan . . . . . . B-14
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-16
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-17
Shareholder Services. . . . . . . . . . . . . . . . . . . . B-18
Determination of Net Asset Value. . . . . . . . . . . . . . B-21
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-22
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-24
Performance Information . . . . . . . . . . . . . . . . . . B-25
Information About the Fund . . . . . . . . . . . . . . . . B-26
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . B-26
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . B-27
Financial Statements. . . . . . . . . . . . . . . . . . . . B-34
Report of Independent Auditors. . . . . . . . . . . . . . . . B-43
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Description of the
Fund."
Bank Obligations. Domestic commercial banks organized under Federal
law are supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to have their
deposits insured by the Federal Deposit Insurance Corporation (the "FDIC").
Domestic banks organized under state law are supervised and examined by
state banking authorities but are members of the Federal Reserve System
only if they elect to join. In addition, state banks whose certificates of
deposit ("CDs") may be purchased by the Fund are insured by the FDIC
(although such insurance may not be of material benefit to the Fund,
depending on the principal amount of the CDs of each bank held by the Fund)
and are subject to Federal examination and to a substantial body of Federal
law and regulation. As a result of Federal or state laws and regulations,
domestic branches of domestic banks whose CDs may be purchased by the Fund
generally are required, among other things, to maintain specified levels of
reserves, are limited in the amounts which they can loan to a single
borrower and are subject to other regulation designed to promote financial
soundness. However, not all of such laws and regulations apply to the
foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries
of domestic banks and domestic and foreign branches of foreign banks, such
as CDs and time deposits ("TDs"), may be general obligations of the parent
banks in addition to the issuing branch, or may be limited by the terms of
a specific obligation and governmental regulation. Such obligations are
subject to different risks than are those of domestic banks. These risks
include foreign economic and political developments, foreign governmental
restrictions that may adversely affect payment of principal and interest on
the obligations, foreign exchange controls and foreign withholding and
other taxes on interest income. These foreign branches and subsidiaries are
not necessarily subject to the same or similar regulatory requirements that
apply to domestic banks, such as mandatory reserve requirements, loan
limitations, and accounting, auditing and financial record keeping
requirements. In addition, less information may be publicly available
about a foreign branch of a domestic bank or about a foreign bank than about
a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by Federal or state
regulation as well as governmental action in the country in which the
foreign bank has its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which the branch
is located if the branch is licensed in that state.
In addition, Federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the regulator, by depositing assets with a
designated bank within the state, a certain percentage of their assets as
fixed from time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the foreign bank
payable at or through all of its agencies or branches within the state.
The deposits of Federal and State Branches generally must be insured by the
FDIC if such branches take deposits of less than $100,000.
Repurchase Agreements. The Fund's custodian or subcustodian will have
custody of, and will hold in a segregated account, securities acquired by
it under a repurchase agreement. Repurchase agreements are considered by
the staff of the Securities and Exchange Commission to be loans by the Fund.
In an attempt to reduce the risk of incurring a loss on a repurchase
agreement, the Fund will enter into repurchase agreements only with domestic
banks with total assets in excess of $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 be decreased below resale price. The Advisers
will monitor on an ongoing basis the value of the collateral to assure that
it always equals or exceeds the repurchase price. The Fund will consider on
an ongoing basis, the creditworthiness of the institutions with which it
enters into repurchase agreements.
Commercial Paper and Other Short-Term Corporate Obligations. Variable
rate demand notes include variable amount master demand notes, which are
obligations that permit the 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. As mutually agreed between the parties, the Fund may increase
the amount under the notes at any time up to the full amount provided by the
note agreement, or decrease the amount, and the borrower may repay up to
the full amount of the note without penalty. Because these obligations are
direct lending arrangements between the lender and the 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. In connection with floating and variable rate demand obligations,
the Advisers will consider, on an ongoing basis, earning power, cash flow
and other liquidity ratios of the borrower, and the borrower's ability to
pay principal and interest on demand. Such obligations frequently are not
rated by credit rating agencies, and the 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.
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not
readily marketable, the Fund will endeavor 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, if
a substantial market of qualified institutional buyers develops pursuant to
Rule 144A under the Securities Act of 1933, as amended, for certain of
these securities held by the Fund, the Fund intends to treat such securities
as liquid securities in accordance with procedures approved by the Fund's
Board of Directors. Because it is not possible to predict with assurance
how the market for restricted securities pursuant to Rule 144A will develop,
the Fund's Board of Directors has directed the Advisers to monitor
carefully the Fund's investments in such securities with particular regard
to trading activity, availability of reliable price information and other
relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to
Rule 144A, the Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's portfolio during such
period.
American, European and Continental Depositary Receipts. The Fund may
invest in ADRs, EDRs and CDRs 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.
Foreign Currency Transactions. If the Fund enters into a currency
transaction, it shall deposit if so required by applicable regulations,
with its custodian cash or readily marketable securities in a segregated
account of the Fund in an amount at least equal to the value of the Fund's
total assets committed to the consummation of the forward contract. If the
value of the securities placed in the segregated account declines,
additional cash or securities will be placed in the account so that the
value of the account will equal the amount of the Fund's commitment with
respect to the contract.
At or before the maturity of a forward contract, the Fund either may
sell a security and make delivery of the currency, or retain the security
and offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency which it is obligated to
deliver. If the Fund retains the security and engages in an offsetting
transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or loss to the extent movement has occurred
in forward contract prices. Should forward prices decline during the
period between the Fund's entering into a forward contract for the sale of a
currency and the date it enters into an offsetting contract for the
purchase of the currency, the Fund will realize a gain to the extent the
price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
Fund will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
The cost to the Fund of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because transactions in currency
exchange usually are conducted on a principal basis, no fees or commissions
are involved. The use of forward currency exchange contracts does not
eliminate fluctuations in the underlying prices of the securities, but it
does establish a rate of exchange that can be achieved in the future. If a
devaluation generally is anticipated, the Fund may not be able to contract
to sell the currency at a price above the devaluation level it anticipates.
Risk Factors--Lower Rated Securities. The Fund is permitted to invest
in securities rated below Baa by Moody's Investors Service, Inc.
("Moody's") and below BBB by Standard & Poor's Corporation ("S&P"), Fitch
Investors Service, Inc. ("Fitch") and Duff & Phelps Credit Rating Co.
("Duff") 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 in the
Prospectus "Description of the Fund--Risk Factors--Lower Rated Securities"
for a discussion of certain risks and the "Appendix" for a general
description of Moody's, S&P, Fitch and Duff 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 Advisers' 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 and will fluctuate over time. These securities are
considered by S&P, Moody's, Fitch and Duff, on balance, as 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.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's securities
and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic downturns.
It is likely that any 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 Advisers will review carefully the credit and other
characteristics pertinent to such new issues.
Lower rated zero coupon securities involve special considerations. The
credit risk factors pertaining to lower rated securities also apply to
lower rated zero coupon securities. Such zero coupon securities carry an
additional risk in that, unlike securities which pay interest throughout
the period to maturity, the Fund will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the issuer
defaults, the Fund may obtain no return at all on its investment. See
"Dividends, Distributions and Taxes."
Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 10 as fundamental policies. These restrictions cannot
be changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "Act")) of the Fund's
outstanding voting shares. Investment restrictions numbered 11 through 17
are not fundamental policies and may be changed by a vote of a majority of
the Fund's Directors at any time. The Fund may not:
1. Invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of the Fund's total assets may
be invested, and securities issued or guaranteed by the U.S. Government, or
its agencies or instrumentalities may be purchased, without regard to any
such limitation.
2. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to
75% of the Fund's total assets.
3. Concentrate its investments in any particular industry or
industries, except that the Fund may invest up to 25% of the value of its
total assets in a single industry, provided that, when the Fund has adopted
a defensive posture, there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
4. 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.
5. 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.
6. Borrow money, except to the extent permitted under the 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. 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 Fund's Board of Directors.
8. 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.
9. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent the activities permitted in
Investment Restriction Nos. 4, 6 and 13 may be deemed to give rise to a
senior security.
10. 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.
11. 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.
12. 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.
13. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and call
options and the purchase of securities on a when-issued or forward
commitment basis 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.
14. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of Additional
Information.
15. 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.
16. Invest in securities of other investment companies, except to the
extent permitted under the Act.
17. Purchase or retain the securities of any issuer if the officers or
Directors of the Fund or the Advisers who own beneficially more than 1/2 of
1% of the securities of such issuer together own beneficially more than 5%
of the securities of such issuers.
As a fundamental policy, the Fund may invest, notwithstanding any other
investment restriction (whether or not fundamental), all of the Fund's
assets in the securities of a single open-end management investment company
with substantially the same fundamental investment objectives, policies and
restrictions as the Fund.
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 Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interest of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
While not a fundamental policy, the Fund has undertaken to comply with
the following limitations for the purpose of registering Fund shares for
sale in certain states: The Fund will not invest in real estate limited
partnerships or in mineral leases, and will not invest more than 2% of its
assets in warrants not listed on the New York Stock Exchange or the
American Stock Exchange.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors of the Fund
CLIFFORD L. ALEXANDER, JR., Director. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander
served as Secretary of the Army and Chairman of the Board of the Panama
Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation, The
Dun & Bradstreet Corporation, MCI Communications Corporation, Mutual of
America Life Insurance Company and Equitable Resources, Inc., a
producer and distributor of natural gas and crude petroleum. Mr.
Alexander is also a Board member of 17 other funds in the Dreyfus
Family of Funds. He is 61 years old and his address is 400 C Street,
N.E., Washington, D.C. 20002.
PEGGY C. DAVIS, Director. Shad Professor of Law, New York University School
of Law. Professor Davis has been a member of the New York University
law faculty since 1983. Prior to that time, she served for three years
as a judge in the courts of New York State; was engaged for eight years
in the practice of law, working in both corporate and non-profit
sectors; and served for two years as a criminal justice administrator
in the government of the City of New York. She writes and teaches in
the fields of evidence, constitutional theory, family law, social
sciences and the law, legal process and professional methodology and
training. Professor Davis is also a Board member of 15 other funds in
the Dreyfus Family of Funds. She is 52 years old and her address is
c/o New York University School of Law, 249 Sullivan Street, New York,
New York 10012.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For more
than five years prior thereto, he was President, a director and, until
August 24, 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 the Fund's distributor until August
1994. From August 24, 1994 to December 31, 1994, he was a director of
Mellon Bank Corporation. He is also a director and former Treasurer of
The Muscular Dystrophy Association; a trustee of Bucknell University;
and a director of the Noel Group, Inc. Mr. DiMartino is also a Board
member of 58 other funds in the Dreyfus Family of Funds. He is 51
years old and his address is 200 Park Avenue, New York, New York 10166.
ERNEST KAFKA, Director. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. For more
than the past five years, Dr. Kafka has held numerous administrative
positions and has published many articles on subjects in the field of
psychoanalysis. Dr. Kafka is also a Board member of 15 other funds in
the Dreyfus Family of Funds. He is 62 years old and his address is 23
East 92nd Street, New York, New York 10021.
SAUL B. KLAMAN, Director. Chairman and Chief Executive Officer of SBK
Associates, Inc., which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985 and Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until 1992. He also served as
an Economist to the Board of Governors of the Federal Reserve System
and on several Presidential Commissions and has held numerous
consulting and advisory positions in the fields of economics and
housing finance. Dr. Klaman is also a Board member of 15 other funds
in the Dreyfus Family of Funds. He is 76 years old and his address is
431-B Dedham Street, The Gables, Newton Center, Massachusetts 02159.
NATHAN LEVENTHAL, Director. President of Lincoln Center for the Performing
Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations of New York
City from September 1979 until March 1984 and Commissioner of the
Department of Housing Preservation and Development of New York City
from February 1978 until September 1979. Mr. Leventhal was an
associate and then a member of the New York law firm of Poletti Freidin
Prashker Feldman and Gartner from 1974 to 1978. He was Commissioner of
Rent and Housing Maintenance for New York City from 1972 to 1973. Mr.
Leventhal serves as Chairman of Citizens Union, an organization which
strives to reform and modernize City and State government. Mr.
Leventhal is also a Board member of 15 other funds in the Dreyfus
Family of Funds. He is 52 years old and his address is 70 Lincoln
Center Plaza, New York, New York 10023-6583.
For so long as the Fund's plans described in the section
captioned "Distribution Plan and Shareholder Services Plan"
remain in effect, the Directors of the Fund who are not
"interested persons" of the Fund, as defined in the Act, will be
selected and nominated by the Directors who are not "interested
persons" of the Fund.
The Fund typically pays its Directors an annual retainer
and a per meeting fee and reimburses them for their expenses.
The Chairman of the Board receives an additional 25% of such
compensation. The aggregate amount of compensation paid to
each Director by the Fund for the fiscal year ended October 31,
1994, and by all other funds in the Dreyfus Family of Funds for
which such person is a Board member for the year ended December
31, 1994 were as follows:
<TABLE>
(3) (5)
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
_____________ ________________ _________________ _________________ ________________
<S> <C> <C> <C> <C>
Clifford Alexander, Jr. $2,750 none none $73,210
Peggy C. Davis $2,750 none none $61,751
Joseph S. DiMartino** $5,625 none none $445,000
Ernest Kafka $2,750 none none $61,001
Saul B. Klaman $2,750 none none $61,751
Nathan Leventhal $2,750 none none $61,751
- ---------------------------
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $156 for all
Directors as a group.
** Estimated amounts for the current fiscal year ending October 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment companies
advised or administered by Dreyfus. From December 1991 to July 1994,
she was President and Chief Compliance Officer of Funds Distributor,
Inc., a wholly-owned subsidiary of The Boston Company, Inc. Prior to
December 1991, she served as Vice President and Controller, and later
as Senior Vice President, of The Boston Company Advisors, Inc. She is
37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From February 1992 to
July 1994, he served as Counsel for The Boston Company Advisors, Inc.
From August 1990 to February 1992, he was employed as an Associate at
Ropes & Gray, and prior thereto, he was employed as an Associate at
Sidley & Austin. He is 30 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate General
Counsel of the Distributor and an officer of other investment companies
advised or administered by Dreyfus. From September 1992 to August
1994, he was an attorney with the Board of Governors of the Federal
Reserve System. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From 1988 to August
1994, he was manager of the High Performance Fabric Division of Springs
Industries Inc. He is 33 years old.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President, Treasurer
and Chief Financial Officer of the Distributor and an officer of other
investment companies advised or administered by Dreyfus. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the Distributor and
an officer of other investment companies advised or administered by
Dreyfus. From 1984 to July 1994, he was Assistant Vice President in
the Mutual Fund Accounting Department of Dreyfus. He is 59 years old.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From January 1992 to July 1994, he was a
Senior Legal Product Manager, and from January 1990 to January 1992, he
was a mutual fund accountant, for The Boston Company Advisers, Inc. He
is 28 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of common stock outstanding on December 20, 1994.
The following entities owned of record and beneficially 5% or more of
the Fund's shares outstanding as of December 20, 1994: Class A - Fayez
Sarofim & Co., Two Houston Center, Suite 2907, Houston, Texas 77001 -
13.0%; Class B - Smith Barney Shearson, Inc., New York, New York - 7.3%.
MANAGEMENT AGREEMENTS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the
Fund."
Management Agreement. Dreyfus supervises investment management of the
Fund pursuant to the Management Agreement (the "Management Agreement")
dated August 24, 1994 between Dreyfus and the Fund. The Management
Agreement is subject to annual approval by (i) the Fund's Board of Directors
or (ii) vote of a majority (as defined in the Act) of the Fund's
outstanding voting securities, provided that in either event its continuance
also is approved by a majority of the Fund's Directors who are not
"interested persons" (as defined in the Act) of the Fund or Dreyfus, by vote
cast in person at a meeting called for the purpose of voting on such
approval. The Management Agreement was approved by shareholders on August
3, 1994, and was last approved by the Fund's Board of Directors, including a
majority of Directors who are not "interested persons" of any party to the
Management Agreement, at a meeting held on January 11, 1995. The Management
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Directors or by vote of the holders of a majority of the Fund's shares, or,
on not less than 90 days' notice, by Dreyfus. The Management Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of Dreyfus: Howard
Stein, Chairman of the Board and Chief Executive Officer; W. Keith Smith,
Vice Chairman of the Board; Robert E. Riley, President, Chief Operating
Officer and a director; Lawrence S. Kash, Vice Chairman-Distribution and a
director; Philip L. Toia, Vice Chairman-Operations and Administration; Paul
H. Snyder, Vice President-Finance and Chief Financial Officer; Daniel C.
Maclean, Vice President and General Counsel; Barbara E. Casey, Vice
President-Dreyfus Retirement Services; Diane M. Coffey, Vice President-
Corporate Communications; Elie M. Genadry, Vice President-Institutional
Sales; Henry D. Gottmann, Vice President-Retail Sales and Service; Mark N.
Jacobs, Vice President-Legal and Secretary; Jeffrey N. Nachman, Vice
President-Mutual Fund Accounting; Katherine C. Wickham, Vice President-
Human Resources; Maurice Bendrihem, Controller; and Mandell L. Berman, Frank
V. Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M. Smerling and
David B. Truman, directors.
As compensation for Dreyfus' services, the Fund has agreed to pay
Dreyfus a monthly management fee at the annual rate of .75 of 1% of the
Fund's average daily net assets. For the period from July 15, 1993
(commencement of operations) through October 31, 1993 and for the fiscal
year ended October 31, 1994, the management fees payable amounted to $8,343
and $99,498, respectively, which fees were waived pursuant to an
undertaking in effect.
Dreyfus maintains office facilities on behalf of the Fund, and
furnishes the Fund statistical and research data, clerical help,
accounting, data processing, bookkeeping and internal auditing and certain
other required services to the Fund. Dreyfus also may make such advertising
and promotional expenditures using its own resources, as it from time to
time deems appropriate.
Sub-Investment Advisory Agreement. Sarofim provides investment
advisory assistance and day-to-day management of the Fund's investments
pursuant to the Sub-Investment Advisory Agreement (the "Sub-Advisory
Agreement") dated August 24, 1994 between Sarofim and Dreyfus. The
Sub-Advisory Agreement is subject to annual approval by (i) the Fund's
Board of Directors or (ii) vote of a majority (as defined in the Act) of the
Fund's outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's Directors who are
not "interested persons" (as defined in the Act) of the Fund or Sarofim, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The Sub-Advisory Agreement was last approved by the Fund's Board
of Directors, including a majority of the Directors who are not "interested
persons" of any party to the Sub-Advisory Agreement, at a meeting held on
January 11, 1995. Shareholders of the Fund approved the Sub-Advisory
Agreement on August 3, 1994. The Sub-Advisory Agreement is terminable
without penalty, on 60 days' notice, (i) by Dreyfus or (ii) by the Fund's
Board of Directors or by vote of the holders of a majority of the Fund's
shares, or, on not less than 90 days' notice, (iii) by Sarofim. The
Sub-Advisory Agreement will terminate automatically in the event of its
assignment (as defined in the Act) or upon the termination of the
Management Agreement for any reason.
Under the Sub-Advisory Agreement, Dreyfus has agreed to pay Sarofim a
monthly fee at the annual rate set forth in the Fund's Prospectus. For the
period July 15, 1993 (commencement of operations) through October 31, 1993,
and for the fiscal year ended October 31, 1994, no sub-advisory fee was
paid by Dreyfus to Sarofim pursuant to an agreement in effect between
Dreyfus and Sarofim.
The following persons are officers and/or directors of Sarofim: Fayez
S. Sarofim, Chairman of the Board and President; Raye G. White, Executive
Vice President, Secretary, Treasurer and a director; Russell M. Frankel,
Russell B. Hawkins, William K. McGee, Jr., Charles E. Sheedy and Ralph
Thomas, Senior Vice Presidents; and Nancy Daniel, Frank P. Lee and James A.
Reynolds, III, Vice Presidents.
Sarofim provides day-to-day management of the Fund's investments in
accordance with the stated policies of the Fund, subject to the supervision
of Dreyfus and the approval of the Fund's Board of Directors. Dreyfus and
Sarofim provide the Fund with portfolio managers who are authorized by the
Fund's Board of Directors to execute purchases and sales of securities.
The Fund's portfolio managers are Thomas A. Frank, Russell B. Hawkins,
Elaine Rees, Fayez S. Sarofim, Richard C. Shields and Howard Stein. Dreyfus
also maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the Fund
as well as other funds advised by Dreyfus. All purchases and sales are
reported for the Board's review at the meeting subsequent to such
transactions.
Expenses. All expenses incurred in the operation of the Fund are borne
by the Fund except to the extent specifically assumed by Dreyfus and/or
Sarofim. The expenses borne by the Fund include: organizational costs,
taxes, interest, brokerage fees and commissions, if any, fees of Directors
who are not officers, directors, employees or holders of 5% or more of the
outstanding voting securities of Dreyfus or Sarofim or their affiliates,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining corporate existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of shareholders' reports and meetings and any extraordinary expenses.
Class A and Class B shares are subject to an annual service fee for ongoing
personal services relating to shareholder accounts and services related to
the maintenance of shareholder accounts. In addition, Class B shares are
subject to an annual distribution fee for distributing Class B shares pursuant
to a distribution plan adopted in accordance with Rule 12b-1 under the Act.
See "Distribution Plan and Shareholder Services Plan."
Dreyfus has agreed that if in any fiscal year the aggregate expenses of
the Fund, exclusive of interest, taxes, brokerage and (with the prior
written consent of the necessary state securities commissions)
extraordinary expenses, but including the advisory fees paid by the Fund,
exceed the expense limitation of any state having jurisdiction over the
Fund, Dreyfus will bear the excess expense to the extent required by state
law. Such payment, if any, will be estimated daily, and reconciled and paid
on a monthly basis.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distribution Plan and
Shareholder Services Plan."
Class A and Class B shares are subject to a Shareholder Services Plan
and Class B shares only are subject to a Distribution Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the Act provides, among other things, than an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board
of Directors has adopted such a plan (the "Distribution Plan") with respect
to Class B shares, pursuant to which the Fund pays the Distributor for
distributing Class B shares. The Fund's Board of Directors believes that
there is a reasonable likelihood that the Distribution Plan will benefit
the Fund and the holders of Class B shares. In some states, certain
financial institutions effecting transactions in Fund shares may be required
to register as dealers pursuant to state law.
A quarterly report of the amounts expended under the Distribution Plan,
and the purposes for which such expenditures were incurred, must be made to
the Directors for their review. In addition, the Distribution Plan
provides that it may not be amended to increase materially the costs which
holders of Class B shares may bear for distribution pursuant to the
Distribution Plan without the approval of the holders of Class B shares and
that other material amendments of the Distribution Plan must be approved by
the Board of Directors, and by the Directors who are not "interested
persons" (as defined in the Act) of the Fund and have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements entered into in connection with the Distribution Plan, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Distribution Plan is subject to annual approval by such
vote of the Directors cast in person at a meeting called for the purpose of
voting on the Distribution Plan. The Distribution Plan was so approved by
the Directors at a meeting held on January 11, 1995 and by shareholders on
August 3, 1994. The Distribution Plan may be terminated at any time by
vote of a majority of the Directors who are not "interested persons" and
have no direct or indirect financial interest in the operation of the
Distribution Plan or in any agreements entered into in connection with the
Distribution Plan or by vote of the holders of a majority of Class B shares.
For the period from November 1, 1993 through August 23, 1994, the Fund
paid Dreyfus Service Corporation, as former distributor, $39,690 with
respect to Class B under the Distribution Plan. For the period from August
24, 1994 through October 31, 1994, the Fund paid the Distributor $14,924
with respect to Class B under the Distribution Plan.
Shareholder Services Plan. The Fund has adopted a Shareholder Services
Plan, pursuant to which the Fund pays the Distributor for the provision of
certain services to the holders of Class A and Class B shares. Under the
Shareholder Services Plan, the Distributor may make payments to certain
financial institutions, securities dealers and other financial industry
professionals (collectively, "Service Agents") in respect to 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 Directors for their review. In addition, the
Shareholder Services Plan provides that it may not be amended without
approval of the Directors, and by the Directors who are neither "interested
persons" (as defined in the Act) of the Fund nor have any 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 of the Directors cast in person at a meeting
called for the purpose of voting on the Shareholder Services Plan. The
Shareholder Services Plan was so approved on January 11, 1995. The
Shareholder Services Plan is terminable at any time by vote of a majority
of the Directors 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. For the period from November 1, 1993 through August 23,
1994, the Fund paid Dreyfus Service Corporation, as former distributor,
$11,338 with respect to Class A, and $13,230, with respect to Class B,
pursuant to the Shareholder Services Plan. For the period from August 24,
1994 through October 31, 1994, the Fund paid the Distributor $3,623, with
respect to Class A, and $4,875, with respect to Class B, pursuant to the
Shareholder Services Plan.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund
Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement dated August 24, 1994 which is renewable annually.
The Distributor also acts as distributor for the other funds in the Premier
Family of Funds, the Dreyfus Family of Funds and for certain other
investment companies.
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.
Offering Prices. Based upon the Fund's net asset value at the close of
business on October 31, 1994 the maximum offering price of the Fund's
shares would have been as follows:
Class A shares:
NET ASSET VALUE per share. . . . . . . . . . . . . . . . . . . . .$14.03
Sales load for individual sales of shares aggregating less
than $50,000 - 4.5 percent of offering price
(approximately 4.7 percent of net asset value per share). . . .66
------
Offering price to public . . . . . . . . . . . . . . . . . . . . .$14.69
======
Class B shares:
NET ASSET VALUE, redemption price and offering
price to public . . . . . . . . . . . . . . . . . . . . . . .$13.89
======
TeleTransfer Privilege. TeleTransfer purchase orders may be made
between the hours of 8:00 a.m. and 4:00 p.m., New York time, on any
business day that The Shareholder Services Group, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange are open. Such purchases will be credited to the shareholder's
Fund account on the next bank business day. To qualify to use the
TeleTransfer Privilege, the initial payment for purchase of Fund shares
must be drawn on, and redemption proceeds paid to, the same bank and account
as are designated on the Account Application or Shareholder Services Form on
file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and signature-
guaranteed. See "Redemption of Fund Shares--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.
- --------
* Class B shares are subject to a contingent deferred sales charge on certain
redemptions, see "How to Redeem Fund Shares" in the Fund's Prospectus.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund
Shares."
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 Fund 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 Exchange 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 Fund is committed to pay in cash all
redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of the
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Directors reserves the right to make payments in whole
or in part in securities or other assets in case of an emergency or any time
a cash distribution would impair the liquidity of the Fund to the detriment
of the existing shareholders. In such event, the securities would be valued
in the same manner as the Fund's portfolio is valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of 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 Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Class A and Class B shares of the Fund may be
exchanged for shares of the respective class of certain other funds advised
or administered by Dreyfus. Shares of the same Class of such other funds
purchased by exchange will be purchased on the basis of relative net asset
value per share as follows:
A. Class A shares of funds purchased without a sales load may be
exchanged for Class A shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
B. Class A shares of funds purchased with or without a sales load may
be exchanged without a sales load for Class A shares of other
funds sold without a sales load.
C. Class A shares of funds purchased with a sales load, Class A
shares of funds acquired by a previous exchange from Class A
shares purchased with a sales load and additional Class A shares
acquired through reinvestment of dividends or distributions of any
such funds (collectively referred to herein as "Purchased Shares")
may be exchanged for Class A 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.
D. Class B shares of any fund may be exchanged for Class B shares of
other funds without a sales load. Class B shares of any fund
exchanged for Class B shares of another fund will be subject to
the higher applicable contingent deferred sales charge ("CDSC") of
the two funds, and for purposes of calculating CDSC rates and
conversion periods, will be deemed to have been held since the
date the Class B shares being exchanged were initially purchased.
To accomplish an exchange under item C above, an investor's Service
Agent must notify the Transfer Agent of the investor's prior ownership of
such Class A shares and the investor's 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 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.
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 shares of the same Class of the fund into which the
exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs and IRAs
set up under Simplified Employee Pension Plans ("SEP-IRAs") with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among the funds in the Premier Family of Funds or the
Dreyfus Family of Funds. To exchange shares held in Personal Retirement
Plans, the shares exchanged must have a current value of at least $100.
Auto-Exchange Privilege. Auto-Exchange permits an investor to
purchase, in exchange for Class A or Class B 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. Shares will be exchanged on the basis of relative net asset value
as described above under "Fund Exchanges." Enrollment in or modification
or cancellation of this Privilege is effective three business days following
notification by the investor. An investor will be notified if his account
falls below the amount designated to be exchanged under this Privilege. In
this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement
plans are eligible for this Privilege. Exchanges of IRA shares may be made
between IRA accounts 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 Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
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. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan. Class B shares
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to any
applicable CDSC.
Dividend Sweep. Dividend Sweep allows investors to invest 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 with respect to Class A shares by
a fund may be invested without imposition of a sales load in Class
A shares of other funds that are offered without a sales load.
B. Dividends and distributions paid with respect to Class A shares by
a fund which does not charge a sales load may be invested in Class
A shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Dividends and distributions paid with respect to Class A shares by
a fund which charges a sales load may be invested in Class A
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 with respect to Class B shares by
a fund may be invested without imposition of any applicable CDSC
in Class B shares of other funds and the Class B shares of such
other funds will be subject on redemption to any applicable CDSC.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund
Shares."
Valuation of Portfolio Securities. The Fund's investment securities,
including covered call options written by the 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 dollars at the midpoint of the New
York interbank market spot exchange rate as quoted on the day of such
translation by the Federal Reserve Bank of New York or if no such rate is
quoted on such date, at the exchange rate previously quoted by the Federal
Reserve Bank of New York or at such other quoted market exchange rate as
may be determined to be appropriate by the Advisers. Forward currency
contracts will be valued at the current cost of offsetting the contract.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of net asset value does not
take place contemporaneously with the determination of prices of certain of
the Fund's securities. Short-term investments are carried at amortized
cost, which approximates value. Any securities or other assets for which
recent market quotations are not readily available are valued at fair value
as determined in good faith by the Fund's Board of Directors. Expenses and
fees of the Fund, including the advisory fee paid by the Fund are accrued
daily and taken into account for the purpose of determining the net asset
value of Fund shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Board of Directors, are valued at fair value as
determined in good faith by the Board of Directors. The Board of Directors
will review the method of valuation on a current basis. In making their
good faith valuation of restricted securities, the Directors 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 of Directors if the Directors 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 of
Directors.
Expenses and fees, including the advisory fees (reduced by the expense
limitation, if any), and fees pursuant to the Shareholder Services Plan,
with respect to the Class A and Class B shares, and fees pursuant to the
Distribution Plan, with respect to the Class B shares only, are accrued
daily and taken into account for the purpose of determining the net asset
value of the relevant Class of shares. Because of the difference in
operating expenses incurred by each Class, the per share net asset value of
each Class will differ.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management of the Fund believes that the Fund has qualified for the
fiscal period ended October 31, 1994 as a "regulated investment company"
under the Code. The Fund intends to continue to so qualify if such
qualification is in the best interests of its shareholders. As a regulated
investment company, the 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 pay out to its shareholders at least 90% of its net
income (consisting of net investment income and net short-term capital
gain), must derive less than 30% of its annual gross income from gain on
the sale of securities held for less than three months, and must meet
certain asset diversification and other requirements. Accordingly, the Fund
may be restricted in the selling of securities held for less than three
months. The Code, however, allows the Fund to net certain offsetting
positions, making it easier for the Fund to satisfy the 30% test. 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 the 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 the Fund's income, the entire amount
or a portion of the dividends from net investment income may qualify for
the dividends received deduction allowable to qualifying U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income
of the Fund distributed to the Fund's qualifying corporate shareholders
will be eligible for the dividends received deduction only to the extent
that the 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 more than 46 days 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.
The 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). The Fund may
make an election under Section 853, 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-US. 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 gain realized from the sale or
other disposition of certain market discount bonds will be treated as
ordinary income under Section 1276. Finally, all or a portion of the gain
realized from engaging in "conversion transactions" may be treated as
ordinary income under Section 1258. "Conversion transactions" are defined
to include certain forward, futures, option and straddle transactions,
transactions marketed or sold to produce capital gains, or transactions
described in Treasury regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss the Fund realizes 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 the Fund characterized in the manner described
above.
Offsetting positions held by the 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
Section 1092 of the Code, which, in certain circumstances, overrides or
modifies the provisions of Sections 1256 and 988 of the Code. If the 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. The 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" 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" 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.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could under special tax rules affect the amount, timing and
character of distributions to shareholders by causing the Fund to recognize
income prior to the receipt of cash payments. For example, the Fund could
be required to accrue as income each year a portion of the discount (or
deemed discount) at which such securities were issued and to distribute
such income. In such case, the Fund may have to dispose of securities which
it might otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
Dreyfus assumes general supervision over placing orders on behalf of
the Fund for the purchase or sale of investment securities. Allocation of
brokerage transactions, including their frequency, is made in Dreyfus' best
judgment 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 Advisers' 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 Advisers and the Advisers' fees are not
reduced as a consequence of the receipt of such supplemental information.
Such information may be useful to Dreyfus in serving both the Fund and
other funds which it advises and to Sarofim in serving both the Fund and
the other funds or accounts it advises, and, conversely, supplemental
information obtained by the placement of business of other clients may be
useful to the Advisers in carrying out their obligations to the Fund.
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 Dreyfus being engaged simultaneously in the purchase or sale
of the same security. Certain of the Fund's transactions in securities of
foreign issuers may not benefit from the negotiated commission rates
available to the Fund for transactions in securities of domestic issuers.
When transactions are executed in the over-the-counter market, the Fund will
deal with the primary market makers unless a more favorable price or
execution otherwise is obtainable.
Portfolio turnover may vary from year to year as well as within a year.
Under normal market conditions, it is anticipated that in any fiscal year
the turnover rate generally will be less than 100%; however, in periods in
which extraordinary market conditions prevail, the Advisers will not be
deterred from changing 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 Dreyfus based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
For the period July 15, 1993 (commencement of operations) through
October 31, 1993 and for the fiscal year ended October 31, 1994, the Fund
paid brokerage commissions of $4,789, and $11,081, respectively, none of
which was paid to the Distributor. There were no gross spreads or
concessions on principal transactions for the period July 15, 1993
(commencement of operations) through October 31, 1993 or the fiscal year
ended October 31, 1994.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."
The average annual total return for the 1 and 1.299 year periods ended
October 31, 1994 for Class A was 1.45% and 5.48%, respectively. The
average annual total return for Class B was 1.47% and 5.44%, respectively,
for such periods. Average annual total return is calculated by determining
the ending redeemable value of an investment purchased at maximum offering
price 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's 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 the
maximum applicable CDSC has been paid upon redemption at the end of the
period.
Total return is calculated by subtracting the amount of the Fund's
maximum offering price per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect
to the reinvestment of dividends and distributions during the period and
any applicable CDSC), and dividing the result by the maximum offering price
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 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 shares,
which, if reflected would reduce the performance quoted. The total return
for the Fund's Class A and Class B shares for the period July 15, 1993
(commencement of operations) through October 31, 1994 was 12.24% and 11.12%,
respectively. Based on net asset value per share, the total return for the
Fund's Class A and Class B shares for this period was 7.18% and 7.12%,
respectively.
From time to time, advertising materials for the Fund may refer to the
fact that the Fund currently looks for successful companies with
established brands that are expanding into the world marketplace. From time
to time, advertising materials or the Fund may also refer to the clients of
Sarofim, such as large corporations, states, universities and other
institutions and organizations.
From time to time, advertising materials for the Fund may refer to
Morningstar ratings and related analyses supporting the rating.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Shares have no preemptive or subscription rights and are
freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-
2696, as counsel for the Fund, has rendered its opinion as to certain legal
matters regarding the due authorization and valid issuance of the shares of
Common Stock being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX
Description of certain ratings assigned by Standard & Poor's
Corporation ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch
Investors Service, Inc. ("Fitch") and Duff & Phelps Credit Rating Co.
("Duff"):
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, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Bonds rated B have a greater vulnerability to default but presently has
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 is dependent upon favorable business, financial and economic conditions
to meet timely payments of principal. In the event of adverse business,
financial or economic conditions, it is 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
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
The designation A-1 by S&P 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 sign (+) designation.
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 are generally 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.
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.
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.
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+.
Duff
AAA
Bond Ratings
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. Considerable
variability in risk 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.
<TABLE>
PREMIER GROWTH FUND, INC.
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
COMMON STOCKS--84.5% SHARES VALUE
-------------- -------------
<S> <C> <C> <C>
AEROSPACE & ELECTRONICS--6.3% Emerson Electric 3,000 $ 182,250
General Electric................. 12,000 586,500
Motorola......................... 4,000 235,500
Texas Instruments................ 2,500 187,188
-------------
1,191,438
-------------
AUTO RELATED--1.6% Ford Motor 10,000 295,000
-------------
BANKING--6.5% Citicorp 10,000 477,500
Deutsche Bank A.D.R. ............ 900 438,300
Union Bank of Switzerland........ 1,510 320,867
-------------
1,236,667
-------------
CHEMICALS--4.9% Dow Chemical 7,000 514,500
duPont (EI) de Nemours........... 7,000 417,375
-------------
931,875
-------------
ENERGY--8.6% Chevron 6,000 270,000
Elf Aquitaine A.D.S. ............ 5,000 183,125
Exxon............................ 4,500 282,938
Mobil............................ 3,500 301,000
Royal Dutch Petroleum............ 4,000 466,000
TOTAL, Cl. B, A.D.S. ............ 4,000 132,000
-------------
1,635,063
-------------
FINANCIAL--3.7% Eurafrance 1,000 346,019
HSBC Holdings PLC, A.D.R. ....... 3,000 348,000
-------------
694,019
-------------
FOOD, BEVERAGE & TOBACCO--18.6% Coca-Cola 15,000 753,750
Guinness PLC, A.D.R. ............ 10,000 371,250
Kellogg.......................... 3,000 176,250
LVMH Moet Hennessy Louis Vuitton A.D.R. 15,050 485,362
Nestle A.D.R. ................... 4,000 187,000
PepsiCo. ........................ 8,000 280,000
Philip Morris Cos. .............. 12,500 765,625
Sara Lee......................... 5,000 123,125
Seagram.......................... 12,000 370,500
-------------
3,512,862
-------------
HEALTH CARE--8.3% Johnson & Johnson 6,000 327,750
Merck............................ 15,000 536,250
Pfizer........................... 5,000 370,625
Roche Holdings A.D.S. ........... 7,500 332,344
-------------
1,566,969
-------------
INSURANCE--2.4% AXA 8,000 370,796
Zuerich Versicherung............. 100 91,126
-------------
461,922
-------------
MEDIA/ENTERTAINMENT--5.1% News A.D.S 6,000 293,250
Pearson PLC...................... 40,000 413,581
Reader's Digest Association, Cl. A 6,000 263,250
-------------
970,081
-------------
PREMIER GROWTH FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- -------------
METALS--1.3% Debeers Consolidated Mining A.D.R. 10,000 $ 238,750
-------------
MULTI INDUSTRY--3.7% Eaux (Generale Des) 4,000 366,214
Minnesota Mining & Manufacturing. 6,000 332,250
-------------
698,464
-------------
OFFICE & BUSINESS EQUIPMENT--3.6% AT&T 8,000 440,000
Ericsson (LM) Telephone, Cl. B, A.D.R. 2,500 152,344
MCI Communications............... 4,000 92,000
-------------
684,344
-------------
PERSONAL CARE--5.9% Gillette 4,500 334,688
L'Oreal A.D.R. .................. 9,000 391,500
Procter & Gamble................. 3,500 218,750
Unilever N.V. ................... 1,500 178,125
-------------
1,123,063
-------------
PHOTOGRAPHY--1.5% Eastman Kodak 6,000 288,750
-------------
RETAIL--2.5% Toys R Us 5,000 (a) 192,500
Wal-Mart Stores.................. 12,000 282,000
-------------
474,500
-------------
TOTAL COMMON STOCKS
(cost $15,066,320)............. $16,003,767
=============
PRINCIPAL
CORPORATE BOND--.0% AMOUNT
-------------
Zuerich International,
2%, 3/1/2001
(cost $3,384).................. $ 5,000 $ 3,342
=============
SHORT-TERM INVESTMENTS--14.6%
U.S. TREASURY BILLS: 4.81%, 11/10/1994 $ 1,555,000 $ 1,553,074
4.595%, 11/25/1994............. 1,207,000 1,203,404
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,756,478).............. $ 2,756,478
=============
TOTAL INVESTMENTS (cost $17,826,182) ................................ 99.1% $18,763,587
====== =============
CASH AND RECEIVABLES (NET).................................................. .9% $ 179,021
====== =============
NET ASSETS.................................................................. 100.0% $18,942,608
====== =============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
PREMIER GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $17,826,182)-see statement...................................... $18,763,587
Cash.................................................................... 135,279
Receivable for subscriptions to Common Stock............................ 110,152
Dividends and interest receivable....................................... 28,402
Prepaid expenses........................................................ 88,041
Due from The Dreyfus Corporation........................................ 25,382
-------------
19,150,843
LIABILITIES:
Payable for investment securities purchased............................. $132,066
Due to the Distributor.................................................. 10,732
Payable for Common Stock redeemed....................................... 5,820
Accrued expenses and other liabilities.................................. 59,617 208,235
---------- -------------
NET ASSETS ................................................................ $18,942,608
=============
REPRESENTED BY:
Paid-in capital......................................................... $17,864,411
Accumulated undistributed investment income-net-Note 1(c)............... 140,756
Accumulated undistributed net realized gain on investments.............. 36
Accumulated net unrealized appreciation on investments-Note 3........... 937,405
-------------
NET ASSETS at value......................................................... $18,942,608
=============
Shares of Common Stock outstanding:
Class A Shares
(150 million shares of $.001 par value authorized).................... 575,647
=============
Class B Shares
(150 million shares of $.001 par value authorized).................... 782,479
=============
NET ASSET VALUE per share:
Class A Shares
($8,075,402 / 575,647 shares)......................................... $14.03
=======
Class B Shares
($10,867,206 / 782,479 shares)........................................ $13.89
=======
See notes to financial statements.
</TABLE>
<TABLE>
PREMIER GROWTH FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $17,080 foreign taxes withheld at source)...... $242,276
Interest.............................................................. 129,340
----------
TOTAL INCOME.................................................... $371,616
EXPENSES:
Investment advisory fee--Note 2(a).................................... 99,498
Shareholder servicing costs-Note 2(c)................................. 63,185
Distribution fees (Class B shares)-Note 2(b).......................... 54,614
Registration fees..................................................... 34,353
Organization expenses................................................. 18,717
Auditing fees......................................................... 15,374
Directors' fees and expenses-Note 2(d)................................ 13,614
Legal fees............................................................ 11,818
Prospectus and shareholders' reports.................................. 11,648
Custodian fees........................................................ 6,029
Miscellaneous......................................................... 1,508
----------
330,358
Less-investment advisory fee waived due to
undertaking-Note 2(a)............................................. 99,498
----------
TOTAL EXPENSES.................................................. 230,860
----------
INVESTMENT INCOME--NET.......................................... 140,756
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................ $ 36
Net unrealized appreciation on investments.............................. 713,079
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 713,115
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $853,871
==========
See notes to financial statements.
</TABLE>
<TABLE>
PREMIER GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31,
-------------------------------
1993* 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income (loss)--net........................................... $ (8,679) $ 140,756
Net realized gain on investments........................................ 59 36
Net unrealized appreciation on investments for the year................. 224,326 713,079
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 215,706 853,871
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 3,328,136 6,206,463
Class B shares........................................................ 2,451,603 9,723,924
Cost of shares redeemed:
Class A shares........................................................ (196,158) (1,868,176)
Class B shares........................................................ (7,760) (1,865,001)
------------- -------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............ 5,575,821 12,197,210
------------- -------------
TOTAL INCREASE IN NET ASSETS.................................... 5,791,527 13,051,081
NET ASSETS:
Beginning of year....................................................... 100,000 5,891,527
------------- -------------
End of year [including investment (loss)-net of ($8,679) in 1993 and
undistributed investment income-net of $140,756 in 1994]............. $ 5,891,527 $ 18,942,608
============= =============
SHARES
--------------------------------------------------------------
CLASS A CLASS B
------------------------------- -----------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------------- -----------------------------
1993 1994 1993* 1994
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 263,706 463,318 190,488 729,175
Shares redeemed........................ (15,066) (140,311) (599) (140,585)
------------- ------------- ------------- -------------
NET INCREASE IN SHARES OUTSTANDING 248,640 323,007 189,889 588,590
============= ========== ============ =============
* From July 15, 1993 (commencement of operations) to October 31, 1993.
See notes to financial statements.
</TABLE>
PREMIER GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated February 28,
1995.
See notes to financial statements.
PREMIER GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. The Dreyfus
Corporation ("Dreyfus") serves as the Fund's investment adviser. Fayez
Sarofim & Co. ("Sarofim") serves as the Fund's sub-investment adviser.
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus, until
August 24, 1994, acted as the distributor of the Fund's shares. Effective
August 24, 1994, Dreyfus became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
The Fund offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within six years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(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. Bid price is used when no asked price is available. Short-term
investments are carried at amortized cost, which approximates value.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
During the year ended October 31, 1994, the Fund reclassed $8,679 from
accumulated undistributed investment income to paid-in capital and reclassed
$59 from paid-in capital to accumulated undistributed net realized capital
gains. These reclass adjustments resulted primarily from a net-operating loss
in a prior fiscal year, which is not deductable for Federal income tax
purposes and cannot be carried forward to any future tax year.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
PREMIER GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the
investment advisory fee is computed at the annual rate of .75 of 1% of the
average daily value of the Fund's net assets and is payable monthly. The
Investment Advisory Agreement further provides that if in any full fiscal
year the aggregate expenses of the Fund, excluding interest, taxes, brokerage
and extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund may deduct from the fee to be paid to
Dreyfus, or Dreyfus will bear, such excess expense 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 (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 11/2% of the excess over $100 million of the average value of the
Fund's net assets in accordance with California "blue sky" regulations.
However, Dreyfus has undertaken from November 1, 1993 through December
31, 1994, or until such time as the net assets of the Fund exceed $50
million, regardless of whether they remain at that level, to waive receipt of
the investment advisory fee payable to it by the Fund. The investment
advisory fee waived pursuant to the undertaking amounted to $99,498 for the
year ended October 31, 1994.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and
Sarofim, Dreyfus has agreed to pay Sarofim a monthly sub-advisory fee,
computed at the following annual rates:
<TABLE>
ANNUAL FEE AS A PERCENTAGE OF
TOTAL NET ASSETS AVERAGE DAILY NET ASSETS
------------------ -----------------------------
<S> <C> <C>
0 to $25 million....................................... .11 of 1%
$25 up to $75 million.................................. .18 of 1%
$75 up to $200 million................................. .22 of 1%
$200 up to $300 million................................ .26 of 1%
In excess of $300 million.............................. .275 of 1%
</TABLE>
Sarofim is currently waiving its sub-investment advisory fee.
Dreyfus Service Corporation retained $10,171 during the year ended
October 31, 1994 from commissions earned on sales of the Fund's Class A
shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $34,556
from contingent deferred sales charges imposed upon redemptions of the Fund's
Class B shares.
(B) On August 3, 1994, the Fund's Shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Fund's Class B shares at an annual rate of
.75 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Fund pay Dreyfus Service Corporation at
an annual rate of .75 of 1% of the value of the Fund's Class B shares average
daily net assets, for the costs and expenses in connection with advertising,
marketing and distributing the Fund's Class B shares. Dreyfus Service
Corporation made payments to one or more Service Agents based on the value of
the Fund's Class B shares owned by clients of the Service Agent.
PREMIER GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended October 31, 1994, $14,924 was charged to the Fund
pursuant to the Class B Distribution Plan and $39,690 was charged to the Fund
pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Fund pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing 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. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $11,338 and $13,230 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
October 31, 1994, $3,623 and $4,975 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of Dreyfus and/or Dreyfus
Service Corporation. Each director who is not an "affiliated person" receives
an annual fee of $1,500 and an attendance fee of $250 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the year ended October 31, 1994,
amounted to $11,492,819 and $69,563, respectively.
At October 31, 1994, accumulated net unrealized appreciation on
investments was $937,405, consisting of $1,175,048 gross unrealized
appreciation and $237,643 gross unrealized depreciation.
At October 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER GROWTH FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
PREMIER GROWTH FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Premier Growth Fund, Inc., including the statement of investments, as of
October 31, 1994, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier Growth Fund, Inc. at October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated years, in conformity with generally accepted accounting
principles.
(Ernst & Young LLP Signature Logo)
New York, New York
December 9, 1994
