PREMIER GROWTH FUND, INC.
PROSPECTUS MARCH 1, 1996
AS REVISED DECEMBER 1, 1996
Registration Mark
Premier Growth Fund, Inc. (the "Fund") is an open-end, diversified,
management investment company, known as a mutual fund. The Fund's primary
investment objective is to provide you with long-term capital growth
consistent with the preservation of capital. Current income is a secondary
objective. The Fund invests principally in equity securities issued by foreign
and domestic issuers located throughout the world.
By this Prospectus, the Fund is offering four Classes of shares --
Class A, Class B, Class C and Class R -- which are described herein. See
"Alternative Purchase Methods."
You can purchase or redeem all Classes of 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 March 1, 1996, 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. The Securities and Exchange Commission
maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. For a free copy of the Statement of
Additional Information, write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-645-6561. When telephoning, ask
for Operator 144.
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............................ 6
Management of the Fund............................. 8
How to Buy Shares.................................. 9
Shareholder Services............................... 14
How to Redeem Shares............................... 18
Distribution Plan and Shareholder Services Plan.... 22
Dividends, Distributions and Taxes................. 22
Performance Information............................ 24
General Information................................ 25
Appendix........................................... 26
Page 2
<TABLE>
<CAPTION>
FEE TABLE
CLASS A CLASS B CLASS C CLASS R
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................ 5.75% None None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)......... None* 4.00% 1.00% None
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees................... .75% .75% .75% .75%
12b-1 Fees........................ None .75% .75% None
Other Expenses..................... 1.00% .94% 1.00% .75%
Total Fund Operating Expenses..... 1.75% 2.44% 2.50% 1.50%
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 C CLASS R
1 Year........................... $ 74 $65/$25** $35/$25** $15
3 Years.......................... $109 $106/$76** $78 $47
5 Years.......................... $147 $150/$130** $133 $82
10 Years........................... $252 $245***$284 $179
</TABLE>
* 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 shares.
*** Ten year figure assumes conversion of Class B shares to Class A
shares at the end of the sixth year following the date of purchase.
- ------------------------------------------------------------------------------
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, ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- ------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by the Fund and investors, the
payment of which will reduce investors' annual return. Other Expenses for
Class C and Class R are based on applicable amounts for Class A for the
Fund's last fiscal year. Long-term investors in Class B or Class C 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 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 for Class A, Class B and Class C are included in
the Statement of Additional Information, available upon request. No
financial information is available for Class R shares, which had not been
offered as of the date of the Fund's financial statements.
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 Class A, Class B and
Class C for each year indicated. This information has been derived from
the Fund's financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------------------------- ------------------------ ----------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
--------------------------- ------------------------ ---------------
PER SHARE DATA 1993(1) 1994 1995 1993(1) 1994 1995 1995(2)
------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.50 $13.21 $14.03 $12.50 $13.17 $13.89 $15.56
------- ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income (loss)--net (.01) .16 .20 (.03) .09 .12 (.01)
Net realized and unrealized
gain on investments .72 .66 2.39 .70 .63 2.34 .67
------- ------ ------- ------- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .71 .82 2.59 .67 .72 2.46 .66
------- ------ ------- ------- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net -- -- (.21) -- -- (.13) --
------- ------ ------- ------- ------ ------ ------
Net asset value, end of year $13.21 $14.03 $16.41 $13.17 $13.89 $16.22 $16.22
======= ====== ======= ======= ====== ====== =======
TOTAL INVESTMENT RETURN(3) 5.68%(4) 6.21% 18.77% 5.36%(4) 5.47% 17.88% 4.71%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets .77%(4) 1.33% 1.22% 1.14%(4) 2.07% 1.98% 1.56%(4)
Ratio of net investment income (loss)
to average net assets (.12%)(4) 1.49% 1.59% (.53%)(4) .71% .84% (.63%)(4)
Decrease reflected in above
expense ratios due to
undertakings by Dreyfus .88%(4) .75% .53% 1.01%(4) .75% .46% .73%(4)
Portfolio Turnover Rate -- .71% 1.16% -- .71% 1.16% 1.16%
Net Assets, end of year (000's omitted) $3,338 $8,075 $18,822 $2,554 $10,867 $32,555 $48
(1) From July 15, 1993 (commencement of operations) to October 31, 1993.
(2) From June 21, 1995 (commencement of initial offering) to October 31,1995.
(3) Exclusive of sales load.
(4) 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 four methods of purchasing Fund shares.
Orders for purchases of Class R shares, however, may be placed only for
certain eligible investors as described below. If you are not eligible to
purchase Class R shares, you may choose from Class A, Class B and Class C
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 share represents an identical pro rata
interest in the Fund's investment portfolio.
Page 4
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 5.75% 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 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 Shares_Class B Shares" and "How to Redeem
Shares--Contingent Deferred Sales 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 such Class, and
will no longer be subject to the distribution fee. Class B shares that
have been acquired through the reinvestment of dividends and distributions
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.
Class C 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 C shares are
subject to a 1% CDSC, which is assessed only if you redeem Class C shares
within one year of purchase. See "How to Buy Shares -- Class C Shares"
and "How to Redeem Shares -- Contingent Deferred Sales Charge -- Class C
Shares." These shares also are subject to an annual service fee at the
rate of .25 of 1% , and an annual distribution fee at the rate of .75 of
1%, of the value of the average daily net assets of Class C. See
"Distribution Plan and Shareholder Services Plan." The distribution fee
paid by Class C will cause such Class to have a higher expense ratio and
to pay lower dividends than Class A.
Class R shares may not be purchased directly by individuals,
although eligible institutions may purchase Class R shares for certain
accounts maintained by individuals. Class R shares are sold at net asset
value per share only to institutional investors acting for themselves or
in a fiduciary, advisory, agency, custodial or similar capacity for
qualified or non-qualified employee benefit plans, including pension,
profit-sharing, SEP-IRAs and other deferred compensation plans, whether
established by corporations, partnerships, non-profit entities or state
and local governments, but not including IRAs or IRA "Rollover Accounts."
Class R shares are not subject to an annual service fee or distribution
fee.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
If you are not eligible to purchase Class R shares, you should consider
whether, during the anticipated life of your investment in the Fund, the
accumulated distribution fee and CDSC, if any, on Class B or Class C
shares 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 return of Class A. Additionally, 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
or Class C shares may exceed the initial sales charge on Class A shares
during the life of the investment. Finally, you should consider the
effect of the CDSC period and any conversion rights of the Classes in the
context of your own investment time frame. For example, while Class
Page 5
C shares have a shorter CDSC period than Class B shares, Class C shares do
not have a conversion feature and, therefore, are subject to an ongoing
distribution fee. Thus, Class A and Class B shares may be more attractive
than Class C shares to investors with longer term investment outlooks.
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 investment objective is to provide you
with long-term capital growth consistent with the preservation of
capital. Current income is a secondary objective. 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, as amended
(the "1940 Act")) 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 at least 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 under "Appendix --
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 Ratings Group, a division of The
McGraw-Hill Companies, Inc. ("S&P"), Fitch Investors Service, L.P.
("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 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 "Investment Considerations and Risks_Lower Rated Securities"
below for a discussion of certain risks and "Appendix" in the Statement of
Additional Information.
While seeking desirable investments, the Fund may invest 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 "Appendix--Certain
Portfolio Securities--Money Market Instruments." 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 all of its assets in money market
instruments. TheFund also may invest in money market instruments in
anticipation of investing cash positions.
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.
Page 6
The Fund's annual portfolio turnover rate is not expected to exceed 100%.
The Fund also may engage in foreign currency transactions. See "Investment
Considerations and Risks" below and "Appendix--Investment Techniques."
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an
overall investment program and should invest only if they are willing to
undertake the risks involved. See "Investment Objectives and Management
Policies--Management Policies" in the Statement of Additional Information
for a further discussion of certain risks.
EQUITY SECURITIES -- Equity securities fluctuate in value, often
based on factors unrelated to the value of the issuer of the securities,
and such fluctuations can be pronounced. Changes in the value of the
Fund's portfolio securities will result in changes in the value of its
shares and thus the Fund's total return to investors.
The securities of the smaller companies in which the Fund may
invest may be subject to more abrupt or erratic market movements than
larger, more established companies, because these securities typically
are traded in lower volume and the issuers typically are more subject to
changes in earnings and prospects.
FIXED-INCOME SECURITIES -- Even though interest-bearing securities
are investments which promise a stable stream of income, the prices of
such securities generally 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 issuer. Once the rating
of a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold
the security. Certain securities purchased by the Fund, such as those
rated Baa or lower by Moody's and BBB or lower by S&P, Fitch and Duff,
may be subject to such risk with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated
fixed-income securities. See "Lower Rated Securities" and
"Appendix--Certain Portfolio Securities--Ratings" below and "Appendix" in
the Statement of Additional Information.
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.
Because 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, seizure or nationalization of foreign deposits and adoption
of governmental restrictions that might adversely affect the payment of
principal, interest and dividends on the foreign securities or restrict
the payment of principal, interest and dividends to investors located
outside the country of the issuers, whether from currency blockage or
otherwise.
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.
FOREIGN CURRENCY TRANSACTIONS -- 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. See
"Appendix -- Investment Techniques -- Foreign Currency Transactions."
Page 7
LOWER RATED SECURITIES -- The Fund may invest up to 35% of its net
assets in higher yielding (and, therefore, higher risk) debt 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 (commonly known as junk
bonds). 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. 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. See "Appendix -- Certain Portfolio Securities
-- Ratings."
SIMULTANEOUS INVESTMENTS -- 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, 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
ADVISERS -- 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
September 30, 1996, Dreyfus managed or administered approximately $81
billion in assets for more than 1.7 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 authority of the Fund's Board 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 $220 billion in assets as of
June 30, 1996, including approximately $83 billion in proprietary mutual
fund assets. As of June 30, 1996, Mellon, through various subsidiaries,
provided non-investment services, such as custodial or administration
services, for more than $876 billion in assets, including approximately
$57 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, 1996, Sarofim managed approximately $30.2 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 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
in the Statement of Additional Information. Dreyfus and Sarofim also
provide research services for the Fund and for other funds advised by
Dreyfus or Sarofim, respectively, through a professional staff of
portfolio managers and securities analysts.
Page 8
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,
1995, the Fund paid Dreyfus a monthly management fee at the effective
annual rate of .29 of 1% of the value of the Fund's average daily net
assets 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:
ANNUAL FEE AS A PERCENTAGE OF
FUND'S AVERAGE DAILY
TOTAL ASSETS NET ASSETS
------------- -----------------------------
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%
For the fiscal year ended October 31, 1995, Dreyfus paid
Sarofim a monthly sub-advisory fee at the effective annual rate of .05 of
1% of the value of the Fund's average daily net assets pursuant to an
agreement in effect between Dreyfus and Sarofim.
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. 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.
In allocating brokerage transactions for the Fund, the
Advisers seek to obtain the best execution of orders at the most
favorable net price. Subject to this determination, the Advisers may
consider, among other things, the receipt of research services and/or the
sale of shares of the Fund or other Funds managed, advised or
administered by Dreyfus or Sarofim as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See
"Portfolio Transactions" in the Statement of Additional Information.
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 60 State Street, Boston,
Massachusetts 02109. The Distributor's ultimate parent is Boston
Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus
Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY SHARES
GENERAL -- Class A, Class B and Class C 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.
Class R shares are offered only to institutional investors
acting for themselves or in a fiduciary, advisory, agency, custodial or
similar capacity, for qualified or non-qualified employee benefit plans,
including pension, profit-sharing, SEP-IRAs and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local
Page 9
governments ("Retirement Plans"). The term "Retirement Plans" does not
include IRAs or IRA "Rollover Accounts". Class R shares may be purchased
for a Retirement Plan only by a custodian, trustee, investment manager or
other entity authorized to act on behalf of such Plan. Institutions
effecting transactions in Class R shares for the accounts of their
clients may charge their clients direct fees in connection with such
transactions.
When purchasing Fund shares, you must specify which Class is
being purchased. 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.
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. You should consult your
Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. However, the minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and
403(b)(7) Plans with only one participant is $750, with no minimum for
subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250.
Subsequent investments in a spousal IRA must be at least $250. The initial
investment must be accompanied by the Account Application. The Fund
reserves the right to vary the initial and subsequent investment minimum
requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code"),
imposes various limitations on the amount that may be contributed to
certain Retirement Plans. These limitations apply with respect to
participants at the plan level and, therefore, do not directly affect the
amount that may be invested in the Fund by a Retirement Plan.
Participants and plan sponsors should consult their tax advisers for
details.
You may purchase Fund shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable to
"The Dreyfus Family of Funds"or, if for Dreyfus retirement plan accounts,
to "The Dreyfus Trust Company, Custodian." Payments which are mailed
should be sent to Premier Growth Fund, Inc., P.O. Box 6587, Providence,
Rhode Island 02940-6587, 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. For Dreyfus retirement plan accounts,
payments which are mailed both should be sent to The Dreyfus Trust
Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427.
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,
together with the Fund's DDA# 8900117826/Premier Growth Fund, Inc., 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, and must indicate the Class of shares being
purchased. 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
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 invest-
Page 10
ment in your account does not clear. The Fund makes available to certain
large institutions the ability to issue purchase instructions through
compatible computer facilities.
Fund shares also may be purchased through Dreyfus-AUTOMATIC
Asset BuilderRegistration Mark and the Government Direct Deposit
Privilege described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be
aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.
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 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. For further information
regarding the methods employed in valuing the Fund's investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
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. For certain institutions that have entered
into agreements with the Distributor, payment for the purchase of Fund
shares may be transmitted, and must be received by the Transfer Agent,
within three business days after the order is placed. If such payment is
not received within three business days after the order is placed, the
order may be canceled and the institution could be held liable for
resulting fees and/or losses.
The Distributor may pay dealers a fee of up to .5% of the
amount invested through such dealers in Fund shares by 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 $1,000,000 ("Eligible Benefit Plans"). Shares of funds
in the Dreyfus Family of Funds then held by Eligible Benefit Plans will
be aggregated to determine the fee payable. The Distributor reserves the
right to cease paying these fees at any time. The Distributor will pay
Page 11
such fees from its own funds, other than amounts received from the Fund,
including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the 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").
CLASS A SHARES -- The public offering price for Class A shares is the
net asset value per share of that Class plus, except for shareholders
beneficially owning Class A shares on November 30, 1996, a sales load as
shown below:
<TABLE>
<CAPTION>
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 5.75 6.10 5.00
$50,000 to less than $100,000 4.50 4.70 3.75
$100,000 to less than $250,000 3.50 3.60 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
$1,000,000 or more -0- -0- -0-
</TABLE>
For shareholders who beneficially owned Class A shares on
November 30, 1996, 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>
<CAPTION>
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
$1,000,000 or more -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of
Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within one year of purchase.
The terms contained in the section of the Fund's Prospectus entitled "How
to Redeem Shares -- Contingent Deferred Sales Charge" (other than the
amount of the CDSC and 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.
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 sub-
Page 12
sidiaries, 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 Eligible Benefit Plans. 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 Premier
Family of Funds or the Dreyfus Family of Funds or certain other products
made available by the Distributor to such plans.
Class A shares may be purchased at net asset value through
certain broker-dealers and other financial institutions which have
entered into an agreement with the Distributor, which includes a
requirement that such shares be sold for the benefit of clients
participating in a "wrap account" or a similar program under which such
clients pay a fee to such broker-dealer or other financial institution.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, through a broker-dealer or other
financial institution with the proceeds from the redemption of shares of
a registered open-end management investment company not managed by
Dreyfus or its affiliates. The purchase of Class A shares of the Fund
must be made within 60 days of such redemption and the shareholder must
have either (i) paid an initial sales charge or a CDSC or (ii) been
obligated to pay at any time during the holding period, but did not
actually pay on redemption, a CDSC with respect to such redeemed shares.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, by (i) qualified separate accounts
maintained by an insurance company pursuant to the laws of any State or
territory of the United States, (ii) a State, county or city or
instrumentality thereof, (iii) a charitable organization (as defined in
Section 501(c)(3) of the Code) investing $50,000 or more in Fund shares,
and (iv) a charitable remainder trust (as defined in Section 501(c)(3) of
the Code).
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
Class A shares. In some instances, those incentives may be offered only
to certain dealers who have sold or may sell significant amounts of
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 Shares."
The Distributor compensates certain Service Agents for selling Class B
and Class C 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.
CLASS C SHARES -- The public offering price for Class C 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
redemptions of Class C shares made within the first year of purchase. See
"Class B Shares" above and "How to Redeem Shares."
CLASS R SHARES -- The public offering price for Class R shares is the
net asset value per share of that Class.
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 advised by Dreyfus which
are sold with a sales load and shares acquired by a previous
Page 13
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 4.5% 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. Class A shares
purchased by shareholders beneficially owning Fund shares on November 30,
1996 are subject to a different sales load schedule, as described above
under "Class A Shares".
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 shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the 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 shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5452.
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 shares of a Class, 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
("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 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
Shares." Redemption proceeds for Exchange Account shares are paid by
Federal wire or check only. Exchange Account shares also are eligible for
the Auto-Exchange Privilege, Dividend Sweep and the Automatic Withdrawal
Plan. 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. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT
PLANS, EXCHANGES MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN
ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND.
Page 14
To request an exchange, 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, available by calling 1-800-645-6561, or
by oral request from any of the authorized signatories on the account by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions (including over The
Dreyfus TouchRegistration Mark Automated Telephone System) by calling
1-800-645-6561. If you are calling from overseas, call 516-794-5452. See
"How to Redeem 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 or Class C shares at the time of an exchange; however, Class B
or Class C 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 or
Class C shares will be calculated from the date of the initial purchase
of the Class B or Class C 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 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 the 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. See "Dividends,
Distributions and Taxes."
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for 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. WITH RESPECT TO CLASS R SHARES HELD
BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE AUTO-EXCHANGE PRIVILEGE
MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE
FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND. The
amount you designate, which can be expressed either in terms of a
specific dollar or share amount ($100 minimum), will be
Page 15
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 or Class C shares at the time of
an exchange; however, Class B or Class C 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 or Class C shares will be calculated from the date of
the initial purchase of the Class B or Class C 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. 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. See "Dividends,
Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-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 a
Dreyfus-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.
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
Page 16
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 Dividend Sweep.
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.
Particular Retirement Plans, including Dreyfus sponsored retirement
plans, may permit certain participants to establish an automatic
withdrawal plan from such Retirement Plans. Participants should consult
their Retirement Plan sponsor and tax adviser for details. Such a
withdrawal plan is different than the Automatic Withdrawal Plan. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. 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.
No CDSC with respect to Class B shares will be imposed on
withdrawals made under the Automatic Withdrawal Plan, provided that the
amounts withdrawn under the plan do not exceed on an annual basis 12% of
the account value at the time the shareholder elects to participate in
the Automatic Withdrawal Plan. Withdrawals with respect to Class B shares
under the Automatic Withdrawal Plan that exceed on an annual basis 12% of
the value of the shareholder's account will be subject to a CDSC on the
amounts exceeding 12% of the initial account value. Class C shares
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to
any applicable CDSC. Purchases of additional Class A shares where the
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; or 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, which can be obtained by
calling 1-800-645-6561, 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
Page 17
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.
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 of the Fund 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. Purchases made pursuant to a Letter of Intent will be made at the
then-current net asset value plus the applicable sales load in effect at
the time such Letter of Intent was executed.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of 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 their clients 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.
Distributions from qualified Retirement Plans, IRAs (including
IRA "Rollover Accounts") and certain non-qualified deferred compensation
plans, except distributions representing returns of non-deductible
contributions to the Retirement Plan or IRA, generally are taxable income
to the participant. Distributions from such a Retirement Plan or IRA to a
participant prior to the time the participant reaches age 591/2 or
becomes permanently disabled may subject the participant to an additional
10% penalty tax imposed by the IRS. Participants should consult their tax
advisers concerning the timing and consequences of distributions from a
Retirement Plan or IRA. Participants in qualified Retirement Plans will
receive a disclosure statement describing the consequences of a
distribution from such a Plan from the administrator, trustee or
custodian of the Plan, before receiving the distribution. The Fund will
not report to the IRS redemptions of Fund shares by qualified Retirement
Plans, IRAs or certain non-qualified deferred compensation plans. The
administrator, trustee or custodian of such Retirement Plans and IRAs
will be responsible for reporting distributions from such Plans and IRAs
to the IRS.
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 DREYFUS-AUTOMATIC ASSET
BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE
TRANSFER AGENT, THE REDEMPTION
Page 18
PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR
PURCHASE CHECK, TELETRANSFER PURCHASE OR DREYFUS-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
DREYFUS-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.
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>
<CAPTION>
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
------------------- -----------------------------
<S> <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.
Page 19
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.
CLASS C SHARES -- A CDSC of 1% payable to the Distributor is imposed
on any redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such CDSC will be
the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge -- Class B Shares" above.
WAIVER OF CDSC -- The CDSC may 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 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 retirement 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
pursuant to the Automatic Withdrawal Plan, as described in the Fund's
Prospectus. If the Fund's Board determines 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 or Class C 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 redemption privilege or telephone exchange privilege (which
is
Page 20
granted automatically unless you refuse it), you authorize the Transfer
Agent to act on telephone instructions (including over The Dreyfus
TouchRegistration Mark Automated Telephone System) 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 or, if for Dreyfus
retirement plan accounts, to The Dreyfus Trust Company, Custodian, P.O.
Box 6427, Providence, Rhode Island 02940-6427. Written redemption
requests must be signed by each shareholder, including each owner of a
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 shares (minimum $500 per
day) by telephone if you have checked the appropriate box and supplied
the necessary information on the 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 calling 1-800-645-6561 or, if you
are calling from overseas, call 516-794-5452. 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 redemp-
Page 21
tion 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 Shares" for a discussion of additional conditions or fees
that may be imposed upon redemption.
In addition, the Distributor or its designee will accept
orders from Selected Dealers with which the Distributor 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.
REINVESTMENT PRIVILEGE -- You may reinvest up to the number
of Class A or Class B shares you have redeemed, within 45 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. Upon reinvestment, with respect to Class B shares, or Class A
shares if such shares were subject to a CDSC, the shareholder's account
will be credited with an amount equal to the CDSC previously paid upon
redemption of the Class A or Class B shares reinvested. The Reinvestment
Privilege may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
(CLASS A, CLASS B AND CLASS C ONLY)
Class B and Class C shares are subject to a Distribution Plan
and Class A, Class B and Class C shares are subject to a Shareholder
Services Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1
under the 1940 Act, the Fund pays the Distributor for distributing the
Fund's Class B and Class C shares at an annual rate of .75 of 1% of the
value of the average daily net assets of Class B and Class C.
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, Class B and Class C shares a fee at the annual rate of .25 of 1% of
the value of the average daily net assets of each such Class. 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. TheDistributor may make payments to
Service Agents in respect of these services. The Distributor determines
the amounts to be paid to Service Agents.
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 1940 Act. 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. Dividends and distributions paid in
cash to Retirement Plans,
Page 22
however, may be subject to additional tax as described below. All expenses
are accrued daily and deducted before the declaration of dividends.
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 a particular Class will be borne exclusively by
that Class. Class B and Class C shares will receive lower per share
dividends than Class A shares which will receive lower per share dividends
than Class R shares because of the higher expenses borne by the relevant
Class. See "Fee Table."
Dividends paid by the Fund to qualified Retirement Plans, IRAs
(including IRA "Rollover Accounts") or certain non-qualified deferred
compensation plans ordinarily will not be subject to taxation until the
proceeds are distributed from the Retirement Plan. The Fund will not
report dividends paid to such Plans and IRAs to the IRS. Generally,
distributions from such Retirement Plans, except those representing
returns of non-deductible contributions thereto, will be taxable as
ordinary income and, if made prior to the time the participant reaches
age 591/2, generally will be subject to an additional tax equal to 10% of
the taxable portion of the distribution. If the distribution from such a
Retirement Plan (other than certain governmental or church plans) or IRAs
for any taxable year following the year in which the participant reaches
age 701/2 is less than the "minimum required distribution" for that
taxable year, an excise tax equal to 50% of the deficiency may be imposed
by the IRS. The administrator, trustee or custodian of such a Retirement
Plan or IRA will be responsible for reporting distributions from such
Plans and IRAs to the IRS. Participants in qualified Retirement Plans
will receive a disclosure statement describing the consequences of a
distribution from such a Plan from the administrator, trustee or
custodian of the Plan prior to receiving the distribution. Moreover,
certain contributions to a qualified Retirement Plan or IRA in excess of
the amounts permitted by law may be subject to an excise tax.
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.
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 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, or an exchange on behalf of a Retirement Plan which is not tax
exempt may result in, a taxable gain or loss.
Page 23
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 Dreyfus
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.
With respect to individual investors and certain
non-qualified Retirement Plans, 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, 1995 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. 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 and Class C total
return figures include any 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 and Class C should be expected to
be lower than that of Class A and the performance of Class A, Class B and
Class C should be expected to be lower than that of Class R. 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, Class B and Class C for one, five and ten year
Page 24
periods, or for shorter periods depending upon the length of time during
which the Fund has operated. Computations of average annual total return
for periods of less than one year represent an annualization of the
Class's actual total return for the applicable period.
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
net asset value (or maximum offering price in the case of Class A) 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 or Class C 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 400 million shares of Common Stock, par value $.001 per share.
The Fund's shares are classified into four classes -- Class A,Class B,
Class C and Class R. Each share has one vote and shareholders will vote
in the aggregate and not by class except as otherwise required by law.
However, only holders of Class B or Class C shares, as the case may be,
will be entitled to vote on matters submitted to shareholders pertaining
to the Distribution Plan.
Unless otherwise required by the 1940 Act, 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
Board members 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 Board member from office or for
any other purpose. Fund shareholders may remove a Board member by the
affirmative vote of a majority of the Fund's outstanding shares. In
addition, the Board will call a meeting of shareholders for the purpose
of electing Board members if, at any time, less than a majority of the
Board members then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and
sends 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.
Page 25
APPENDIX
INVESTMENT TECHNIQUES
FOREIGN CURRENCY TRANSACTIONS -- Foreign currency transactions may be
entered into for a variety of purposes, including: to fix in U.S.
dollars, between trade and settlement date, the value of a security the
Fund has agreed to buy or sell; to hedge the U.S. dollar value of
securities the Fund already owns, particularly if it expects a decrease
in the value of the currency in which the foreign security is
denominated; or to gain exposure to the foreign currency in an attempt to
realize gains.
Foreign currency transactions may involve, for example, the
Fund's purchase of foreign currencies for U.S. dollars or the maintenance
of short positions in foreign currencies, which would involve the Fund
agreeing to exchange an amount of a currency it did not currently own for
another currency at a future date in anticipation of a decline in the
value of the currency sold relative to the currency the Fund contracted
to receive in the exchange. The Fund's success in these transactions will
depend principally on the Advisers' ability to predict accurately the
future exchange rates between foreign currencies and the U.S. dollar.
BORROWING MONEY -- The Fund is permitted to borrow to the extent
permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331/3% of the value of its total assets. 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 its
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 securities on a forward
commitment or when-issued basis, which means delivery and payment take
place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate receivable on a forward
commitment or when-issued security are fixed when the Fund enters into
the commitment, but the Fund does not make payment until it receives
delivery from the counterparty. The Fund will commit to purchase such
securities only with the intention of actually acquiring the securities,
but the Fund may sell these securities before the settlement date if it
is deemed advisable. A segregated account of the Fund consisting of
permissible liquid assets at least equal at all times to the amount of
the commitments will be established and maintained at the Fund's
custodian bank.
CERTAIN PORTFOLIO SECURITIES
CONVERTIBLE SECURITIES -- Convertible securities may be converted at
either a stated price or stated rate into underlying shares of common
stock. Convertible securities have characteristics similar to both
fixed-income and equity securities. Convertible securities generally are
subordinated to other similar but non-convertible securities of the same
issuer, although convertible bonds, as corporate debt obligations, enjoy
seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because
of the subordination feature, however, convertible securities typically
have lower ratings than similar non-convertible securities.
DEPOSITARY RECEIPTS -- The Fund may invest in the securities of
foreign issuers in the form of American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs") and other forms of depositary
receipts. 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.
Page 26
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. Zero coupon securities also are 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 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.
WARRANTS -- 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. The Fund may invest up to 5% of its net assets in warrants, except
that this limitation does not apply to warrants purchased by the Fund
that are sold in units with, or attached to, other securities. Included
in such amount, but not to exceed 2% of the value of the Fund's net
assets, may be warrants which are not listed on the New York or American
Stock Exchange.
MONEY MARKET INSTRUMENTS -- The Fund may invest in the following
types of money market instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities include U.S.
Treasury securities that differ in their interest rates, maturities and
times of issuance. Some obligations issued or guaranteed by U.S.
Government agencies and instrumentalities are supported by the full faith
and credit of the U.S. Treasury; others by the right of the issuer to
borrow from the Treasury; others by discretionary authority of the U.S.
Government to purchase certain obligations of the agency or
instrumentality; and others only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates
of interest. 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 since it is not so
obligated by law.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund
buys, and the seller agrees to repurchase, a security at a mutually
agreed upon time and price (usually within seven days). The repurchase
agreement thereby determines the yield during the purchaser's holding
period, while the seller's obligation to repurchase is secured by the
value of the underlying security. Repurchase agreements could involve
risks in the event of a default or insolvency of the other party to the
agreement, including possible delays or restrictions upon the Fund's
ability to dispose of the underlying securities. The Fund may enter into
repurchase agreements with certain banks or non-bank dealers.
BANK OBLIGATIONS. The Fund may purchase certificates of
deposit, time deposits, bankers' acceptances and other short-term
obligations issued by domestic banks, foreign subsidiaries or foreign
branches of domestic banks, domestic and foreign branches of foreign
banks, domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign
subsidiaries or foreign branches 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. See "Description of the Fund--Investment Considerations and
Risks--Foreign Securities."
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 (in no event
longer than seven days) at a stated interest rate.
Page 27
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
the drawer to pay the face amount of the instrument upon maturity. The
other short-term obligations may include uninsured, direct obligations
bearing fixed, floating or variable interest rates.
COMMERCIAL PAPER. 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 at least A3 by Moody's or A- 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.
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 -- 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 are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest. S&P, Fitch and Duff typically assign a CCC rating
to debt which has a current identifiable vulnerability to default and is
dependent upon favorable business, financial and economic conditions to
meet timely payments of interest and repayment of principal. Such
securities, though high yielding, are characterized by great risk. See
"Appendix" in the Statement of Additional Information for a general
description of securities ratings.
The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to
rate. 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. 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.
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.
070P120196
Page 28
PREMIER GROWTH FUND, INC.
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 1, 1996
AS REVISED DECEMBER 1, 1996
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 March 1, 1996, 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-7
Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . B-13
Distribution Plan and Shareholder Services Plan. . . . . . . . . . . . . B-15
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . B-20
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . B-21
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . B-23
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . B-24
Information About the Fund . . . . . . . . . . . . . . . . . . . . . . . B-25
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors . . . . . . . . . . . . . . . . . . . B-26
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-27
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . B-33
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . B-43
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the Fund"
and "Appendix."
Portfolio Securities
Repurchase Agreements. The Fund's custodian or subcustodian will have
custody of, and will hold in a segregated account, securities acquired by the
Fund under a repurchase agreement. Repurchase agreements are considered by the
staff of the Securities and Exchange Commission to be loans by the Fund. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement, 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.
Commercial Paper and Other Short-Term Corporate Obligations. These
instruments 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. 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. 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.
Depositary Receipts. These securities may be purchased through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the underlying security and a depositary, whereas a
depositary may establish an unsponsored facility without participation by the
issuer of the deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities.
Convertible Securities. Although to a lesser extent than with fixed-
income securities, the market value of convertible securities tends to decline
as interest rates increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the market value of
convertible securities tends to vary with fluctuations in the market value of
the underlying common stock. A unique feature of convertible securities is that
as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the value
of the underlying common stock. While no securities investments are without
risk, investment in convertible securities generally entail less risk than
investments in common stock of the same issuer.
Convertible securities are investment that provide for a stable stream of
income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than non-
convertible securities of similar quality because of the potential for capital
appreciation.
Foreign Government Obligations; Securities of Supranational Entities. The
Fund may invest in obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Advisers to be of comparable
quality to the other obligations in which the Fund may invest. Such securities
also include debt obligations of supranational entities. Supranational entities
include international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Management Policies
Forward Commitments. Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (generally changing in the
same way, i.e., appreciating when interest rates decline and depreciating when
interest rates rise) based upon the public's perception of the creditworthiness
of the issuer and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when-issued basis may expose the
Fund to risks because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when 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.
Investment Consideration and Risks
Lower Rated Securities. The Fund is permitted to invest in securities
rated Ba by Moody's Investors Service, Inc. ("Moody's") and BB by Standard &
Poor's Ratings Group, a division of the McGraw-Hill Companies, Inc. ("S&P"),
Fitch Investors Service, L.P. ("Fitch") and Duff & Phelps Credit Rating Co.
("Duff," and with the other rating agencies, the "Rating Agencies") and as low
as Caa by Moody's or CCC by S&P, Fitch or Duff. Such securities, though higher
yielding, are characterized by risk. See "Description of the Fund--Investment
Considerations and Risks--Lower Rated Securities" in the Prospectus for a
discussion of certain risks and the "Appendix" for a general description of the
Rating Agencies' ratings. Although ratings may be useful in evaluating the
safety of interest and principal payments, they do not evaluate the market value
risk of these securities. The Fund will rely on the 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. These securities generally are considered by the Rating
Agencies to be, on balance, predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in the
higher rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of such
issuers generally is greater than is the case with the higher rated securities.
For example, during an economic downturn or a sustained period of rising
interest rates, highly leveraged issuers of these securities may not have
sufficient revenues to meet their interest payment obligations. The
issuer's ability to service its debt obligations also may be affected adversely
by specific corporate developments, forecasts, or the unavailability of
additional financing. The risk of loss because of default by the issuer is
significantly greater for the holders of these securities because such
securities generally are unsecured and often are subordinated to other creditors
of the issuer.
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.
The credit risk factors pertaining to lower rated securities also apply to
lower rated zero coupon securities. 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, which cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act of 1940, as amended (the
"1940 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 Board members 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 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of the
Fund's total assets). For purposes of this Investment Restriction, the entry
into options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not constitute
borrowing.
7. 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.
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 1940 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 1940 Act.
17. Purchase or retain the securities of any issuer if the officers or
Board members 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 issuer.
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 fundamental policies, 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 (i) invest in real estate limited
partnerships or in mineral leases, or (ii) 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
Board members 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 Board member who is deemed to be an "interested person" of
the Fund, as defined in the 1940 Act, is indicated by an asterisk.
Board Members of the Fund
CLIFFORD L. ALEXANDER, JR., Board member. 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 and Mutual of America Life
Insurance Company. He is 63 years old and his address is 400 C Street,
N.E., Washington, D.C. 20002.
PEGGY C. DAVIS, Board member. 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. She is 53 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. He is Chairman
of the Board of Noel Group, Inc., a venture capital company; and a
director of the Muscular Dystrophy Association, HealthPlan Services
Corporation, Belding Heminway Company, Inc., a manufacturer of industrial
threads, specialty yarns, home furnishings and fabrics, Curtis Industries,
Inc., a national distributor of securities products, chemicals and
automotive and other hardware, and Staffing Resources, Inc. For more than
five years prior to January 1995, he was President, a director and, until
August 1994, Chief Operating Officer of Dreyfus and Executive Vice
President and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus and, until August 24, 1994, the Fund's distributor.
From August 1994 to December 31, 1994, he was a director of Mellon Bank
Corporation. He is 52 years old and his address is 200 Park Avenue, New
York, New York 10166.
ERNEST KAFKA, Board member. 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. He is Associate
Clinical Professor of Psychiatry at Cornell Medical School. For more than
the past five years, Dr. Kafka has held numerous administrative positions,
including President of the NY Psychoanalytic Society, and has published
many articles on subjects in the field of psychoanalysis. He is 63 years
old and his address is 23 East 92nd Street, New York, New York 10021.
SAUL B. KLAMAN, Board member. 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. He is 76 years
old and his address is 431-B Dedham Street, The Gables, Newton Center,
Massachusetts 02159.
NATHAN LEVENTHAL, Board member. 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. 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 Board
members of the Fund who are not "interested persons" of the Fund, as defined in
the 1940 Act, will be selected and nominated by the Board members who are not
"interested persons" of the Fund.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the Board
receives an additional 25% of such compensation. Emeritus Board members are
entitled to receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members. The aggregate amount of compensation paid
to each Board member by the Fund for the fiscal year ended October 31, 1995, and
by all other funds in the Dreyfus Family of Funds for which such person is a
Board member (the number of which is set forth in parenthesis next to each Board
member's total compensation) for the year ended December 31, 1995 is as follows:
Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Member
_________________ _________________ _________________
Clifford Alexander, Jr. $2,750 $ 94,386 (17)
Peggy C. Davis $2,750 $ 81,636 (15)
Joseph S. DiMartino $3,073 $448,618 (94)
Ernest Kafka $2,750 $ 81,136 (15)
Saul B. Klaman $2,750 $ 81,886 (15)
Nathan Leventhal $2,750 $ 81,636 (15)
____________________________
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $342 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive Officer
and a director of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From December 1991 to July
1994, she was President and Chief Compliance Officer of Funds Distributor,
Inc., the ultimate parent of which is Boston Institutional Group, Inc.
She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by 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. He is 31 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor, Inc.
and an officer of other investment companies advised or administered by
Dreyfus. From September 1989 to July 1994, she was an Assistant Vice
President and Client Manager for The Boston Company, Inc. She is 32 years
old.
JOSEPH S. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by 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 33 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment companies
advised or administered by Dreyfus. She is 26 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by Dreyfus.
From April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank & Trust Company. From December 1991 to March 1993, he was
employed as a Fund Accountant at The Boston Company, Inc. He is 27 years
old.
RICHARD W. INGRAM, Vice President and Assistant Secretary. Senior Vice
President and Director of Client Services and Treasury Operations of Funds
Distributor, Inc. and an officer of other investment companies advised or
administered by Dreyfus. From March 1994 to November 1995, he was Vice
President and Division Manager for First Data Investor Services Group.
From 1989 to 1994, Mr. Ingram was Vice President, Assistant Treasurer and
Tax Director - Mutual Funds of The Boston Company, Inc. He is 40 years
old.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
Board members and officers of the Fund, as a group, owned less than 1% of
the Fund's shares outstanding on January 19, 1996.
The following shareholders owned of record or beneficially 5% or more of
the Fund's shares outstanding as of January 19, 1996: Class A - Merrill Lynch
Pierce Fenner & Smith, 4800 Deer Lake Drive E., Jacksonville, Fl 32246 - owned
of record 6.7%; Fayez Sarofim & Co.. P.O. Box 52830, Houston, TX 77052 - owned
beneficially 5.7%; Southwest Securities, Inc., 1201 Elm Street, Suite 4300,
Dallas, TX 75270-2134 - owned of record 5.3%; Class B - Merrill Lynch Pierce
Fenner & Smith, 4800 Deer Lake Drive E., Jacksonville, Fl 32246 -owned of record
9.0%; Class C - Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive E.,
Jacksonville, FL 32246 - owned of record 63.9%; PaineWebber for the benefit of
Mrs. Anita Thanas Economy, Bangor, ME 04401 - owned of record 12.3%; and Steven
and Jill Andross, South Windsor, CT 06074 - owned beneficially 11.5%.
MANAGEMENT AGREEMENT
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 or (ii) vote of a majority
(as defined in the 1940 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 Board members who are not "interested persons" (as defined in the
1940 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,
including a majority of the Board members who are not "interested persons" of
any party to the Management Agreement, at a meeting held on January 10, 1996.
The Management Agreement is terminable without penalty, on 60 days' notice, by
the Fund's Board 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 1940
Act).
The following persons are officers and/or directors of Dreyfus: W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E. Canter,
Vice Chairman, Chief Investment Officer and a director; Lawrence S. Kash, Vice
Chairman-Distribution and a director; Philip L. Toia, Vice Chairman-Operations
and Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Barbara E. Casey, Vice President-Dreyfus
Retirement Services; William F. Glavin, Jr., Vice-President-Corporate
Development; Mark N. Jacobs, Vice President, General Counsel and Secretary;
Patrice M. Koslowski, Vice President-Corporate Communications; Marybeth
Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice President-
Mutual Fund Accounting; Andrew S. Wasser, Vice-President-Information Services;
Elvira Oslapas, Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and Julian M. Smerling, directors.
Dreyfus maintains office facilities on behalf of the Fund, and furnishes
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.
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 years ended October 31,
1994 and 1995, the management fees payable amounted to $8,343, $99,498 and
$240,420, respectively, which fees were reduced by $8,343, $99,498 and $148,716,
respectively, resulting in no management fees being paid in fiscal 1993 and 1994
and $91,704 being paid in fiscal 1995.
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 or (ii) vote of a majority (as defined
in the 1940 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 Board
members who are not "interested persons" (as defined in the 1940 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, including a majority of the Board members who are not "interested
persons" of any party to the Sub-Advisory Agreement, at a meeting held on
January 10, 1996. Shareholders of the Fund approved the Sub-Advisory Agreement
on August 3, 1994. The Sub-Advisory Agreement is terminable without penalty (i)
by Dreyfus on 60 days' notice, (ii) by the Fund's Board or by vote of the
holders of a majority of the Fund's shares on 60 days' notice, or (iii) by
Sarofim on not less than 90 days' notice. The Sub-Advisory Agreement will
terminate automatically in the event of its assignment (as defined in the 1940
Act) or upon the termination of the Management Agreement for any reason.
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. Dreyfus and Sarofim provide the
Fund with portfolio managers who are authorized by the Fund's Board to execute
purchases and sales of securities. The Fund's portfolio managers are Russell B.
Hawkins, Elaine Rees and Fayez S. Sarofim. 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.
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. For the fiscal year ended October 31, 1995, $15,125 was paid by
Dreyfus to Sarofim pursuant to an agreement in effect between Dreyfus and
Sarofim.
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 Board members 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. In addition, Class B and Class C
shares are subject to an annual distribution fee and Class A, Class B and Class
C shares are subject to an annual service fee. See "Distribution Plan and
Shareholder Services Plan."
Dreyfus has agreed that if in any fiscal year the aggregate expenses of
the Fund, exclusive of taxes, brokerage, interest and (with the prior written
consent of the necessary state securities commissions) extraordinary expenses,
but including the management fee, exceed the expense limitation of any state
having jurisdiction over the Fund, the Fund may deduct from the payment to be
made to Dreyfus under the Management Agreement, or Dreyfus will bear, such
excess expense to the extent required by state law. Such deduction or payment,
if any, will be estimated daily, and reconciled and effected
or paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to Dreyfus is not subject to reduction
as the value of the Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis 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. In some states, certain financial
institutions effecting transactions in Fund shares may be required to register
as dealers pursuant to state law.
For the fiscal year ended October 31, 1995, the Distributor retained
$16,054 from the sales loads on Class A shares and $47,270 from contingent
deferred sales charges ("CDSC") on Class B shares. For the period August 24,
1994 through October 31, 1994, the Distributor retained $1,076 from the sales
loads on Class A shares and $7,699 from the CDSC on Class B shares. For the
period November 1, 1993 through August 23, 1994 and for the fiscal year ended
October 31, 1993, Dreyfus Service Corporation, as the Fund's distributor during
such periods, retained $10,171 and $2,449, respectively, from sales loads on
Class A shares, and $34,556 and $256, respectively, from CDSCs on Class B
shares. For the period from June 21, 1995 (commencement of initial offering of
Class C shares), through October 31, 1995, no amount was retained from the CDSC
on Class C shares.
Sales Loads--Class A. The scale of sales loads applies to purchases of
Class A shares made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or a trustee or other fiduciary purchasing
securities for a single trust estate or a single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code")) although more than one beneficiary is involved; or a group
of accounts established by or on behalf of the employees of an employer or
affiliated employers pursuant to an employee benefit plan or other program
(including accounts established pursuant to Sections 403(b), 408(k), and 457 of
the Code); or an organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the purchases
are made through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class A
shares aggregating less than $50,000 subject to the schedule of sales charges
set forth in the Fund's Prospectus at a price based upon the net asset value of
the Fund's Class A shares on October 31, 1995:
Class A shares:
NET ASSET VALUE per share. . . . . . . . . . . . . . . . . . . . $16.41
Sales load for individual sales of shares aggregating less
than $50,000 - 5.75%* of offering price
(approximately 6.1% of net asset value per share). . . . . 1.00
Offering price to public . . . . . . . . . . . . . . . . . . . . $17.41
__________________
* Class A shares purchased by shareholders beneficially owning Class A
shares on November 30, 1996 are subject to a different sales load schedule
as described under "How to Buy Shares-Class A Shares" in the Fund's
Prospectus.
TeleTransfer Privilege. TeleTransfer purchase orders may be made at any
time. Purchase orders received by 4:00 P.M., New York time, on any business day
that Dreyfus Transfer, Inc., the Fund's transfer and dividend disbursing agent
(the "Transfer Agent"), and the New York Stock Exchange are open for business.
Such purchases will be credited to the shareholder's Fund account on the next
bank business day following such purchase order. Purchase orders made after
4:00 P.M., New York time, on any business day the Transfer Agent and the New
York Stock Exchange are open for business, or orders made on Saturday, Sunday or
any Fund Holiday (e.g., when the New York Stock Exchange is not open for
business), will be credited to the shareholder's Fund account on the second bank
business day following such purchase order. To qualify to use the TeleTransfer
Privilege, the initial payment for purchase of 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 Shares-
- -TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
year the account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distribution Plan and
Shareholder Services Plan."
Class B and Class C shares are subject to a Distribution Plan and Class A,
Class B and Class C shares are subject to a Shareholder Services Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the 1940 Act provides, among other things, that an
investment company may bear expenses of distributing its shares only pursuant to
a plan adopted in accordance with the Rule. The Fund's Board has adopted such a
plan (the "Distribution Plan") with respect to Class B and Class C shares,
pursuant to which the Fund pays the Distributor for distributing the relevant
Class of shares. The Fund's Board believes that there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and the holders of
Class B and Class C shares.
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
Board for its review. In addition, the Distribution Plan provides that it may
not be amended to increase materially the costs which holders of Class B or
Class C shares may bear for distribution pursuant to the Distribution Plan
without the approval of the holders of such shares and that other material
amendments of the Distribution Plan must be approved by the Fund's Board, and by
the Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund and have no direct or indirect financial interest in the operation
of the 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 Board members cast in person at a meeting
called for the purpose of voting on the Distribution Plan. The Distribution
Plan was last so approved by the Board at a meeting held on January 10, 1996.
As to each such Class of shares, the Distribution Plan may be terminated at any
time by vote of a majority of the Board members who are not "interested persons"
and have no direct or indirect financial interest in the operation of the
Distribution Plan or in any agreements entered into in connection with the
Distribution Plan or by vote of the holders of a majority of such Class of
shares.
For the fiscal year ended October 31, 1995, the Fund paid the Distributor
$146,453 with respect to Class B under the Distribution Plan. For the period
from June 21, 1995 (commencement of initial offering of Class C shares) through
October 31, 1995, the Fund paid the Distributor $5 with respect to Class C 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, Class B and Class C shares. The
Services provided may include personal services relating the shareholder
accounts, such as answering shareholder inquiries regarding the Company and
providing reports and other information, and services related to the maintenance
of such shareholder accounts. Under the Shareholder Services Plan, the
Distributor may make payments to certain financial institutions, securities
dealers and other financial industry professionals (collectively, "Service
Agents") in respect of these services.
A quarterly report of the amounts expended under the Shareholder Services
Plan, and the purposes for which such expenditures were incurred, must be made
to the Board for its review. In addition, the Shareholder Services Plan
provides that material amendments must be approved by the Fund's Board, and by
the Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund and have no direct or indirect financial interest in the operation
of the Shareholder Services Plan or in any agreements entered into in connection
with the Shareholder Services Plan, by vote cast in person at a meeting called
for the purpose of considering such amendments. The Shareholder Services Plan
is subject to annual approval by such vote of the Board members cast in person
at a meeting called for the purpose of voting on the Shareholder Services Plan.
The Shareholder Services Plan was last so approved on January 10, 1996. As to
each such Class of shares, the Shareholder Services Plan is terminable at any
time by vote of a majority of the Board members who are not "interested persons"
and who have no direct or indirect financial interest in the operation of the
Shareholder Services Plan or in any agreements entered into in connection with
the Shareholder Services Plan.
For the fiscal year ended October 31, 1995, the Fund paid the Distributor
$31,321, with respect to Class A, and $48,817, with respect to Class B, pursuant
to the Shareholder Services Plan. For the period from June 21, 1995
(commencement of initial offering of Class C shares) through October 31, 1995,
the Fund paid the Distributor $2 with respect to Class C under the Distribution
Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem 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 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 reserves the right
to make payments in whole or in part in securities (which may include non-
marketable securities) or other assets in case of an emergency or any time a
cash distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. In such event, the securities would be valued in the
same manner as the Fund's 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. Shares of any Class 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. Exchanges for shares of funds that are offered without a sales load
will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged for
shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged without
a sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively referred
to herein as "Purchased Shares") may be exchanged for shares of
other funds sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to the Offered
Shares exceeds the maximum sales load that could have been imposed
in connection with the Purchased Shares (at the time the Purchased
Shares were acquired), without giving effect to any reduced loads,
the difference will be deducted.
E. Shares of funds subject to a CDSC that are exchanged for shares of
another fund will be subject to the higher applicable CDSC of the
two funds, and for purposes of calculating CDSC rates and conversion
periods, if any, will be deemed to have been held since the date the
shares being exchanged were initially purchased.
To accomplish an exchange under item D above, an investor's Service Agent
must notify the Transfer Agent of the investor's prior ownership of Fund 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 (including over The Dreyfus Touch(R) Automated Telephone System)
from any person representing himself or herself to be the investor or a
representative of the investor's Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Telephone exchanges may be subject to limitations
as to the amount involved or the number of telephone exchanges permitted.
Shares issued in certificate form are not eligible for telephone exchange.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investors' Retirement Plan account in one fund and such investor's
Retirement Plan account in another Fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for 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 shares of the Fund, shares of the same Class of another fund in
the Premier Family of Funds or the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. With respect to Class R shares held by a
Retirement Plan, exchanges may be made only between the investor's Retirement
Plan account in one Fund and such investor's Retirement Plan account in another
Fund. Shares will be exchanged on the basis of relative net asset value as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by the investor. An investor will be notified if 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 the Auto-
Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield on
the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated at any time by the investor,
the Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan.
Dividend Sweep. Dividend Sweep allows investors to invest automatically
their dividends or dividends and capital gain distributions, if any, from the
Fund in shares of the same Class of another fund in the Premier Family of Funds
or the Dreyfus Family of Funds of which the investor is a shareholder. Shares
of the same Class of other funds purchased pursuant to this privilege will be
purchased on the basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are offered
without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds the maximum
sales load charged by the fund from which dividends or distributions
are being swept, without giving effect to any reduced loads, the
difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in shares
of other Funds that impose a CDSC and the applicable CDSC, if any,
will be imposed upon redemption of such shares.
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 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 may
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. Expenses and fees of the Fund, including the
management fee and fees pursuant to the Distribution Plan and Shareholder
Services Plan, are accrued daily and taken into account for the purpose of
determining the net asset value of Fund shares. Because of the difference in
operating expenses incurred by each Class, the per share net asset value of each
Class will differ.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Board, are valued at fair value as determined in good
faith by the Board. The Board will review the method of valuation on a current
basis. In making its good faith valuation of restricted securities, the Board
generally will take the following factors into consideration: restricted
securities which are, or are convertible into, securities of the same class of
securities for which a public market exists usually will be valued at market
value less the same percentage discount at which purchased. This discount will
be revised periodically by the Board if the Board members believe that it no
longer reflects the value of the restricted securities. Restricted securities
not of the same class as securities for which a public market exists usually
will be valued initially at cost. Any subsequent adjustment from cost will be
based upon considerations deemed relevant by the Board.
New York Stock Exchange Closings. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends, Distributions and
Taxes."
Management of the Fund believes that the Fund has qualified for the fiscal
year ended October 31, 1995 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. 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 46 days or more and has received a dividend from net
investment income with respect to such shares, the portion designated by the
Fund as qualifying for the dividends received deduction will not be eligible for
such shareholder's dividends received deduction. In addition, the Code provides
other limitations with respect to the ability of a qualifying corporate
shareholder to claim the dividends received deduction in connection with holding
Fund shares.
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 of the Code, provided that more than 50% of the value of the Fund's total
assets at the close of the taxable year consists of securities in foreign
corporations, and the Fund satisfies the applicable distribution provisions of
the Code. The foreign tax credit available to shareholders is subject to
certain limitations imposed by the Code.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains and losses. However, a portion of the gain or loss
realized from the disposition of foreign currencies (including foreign currency
denominated bank deposits) and non-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 of
the Code. Finally, all or a portion of the gain realized from engaging
in "conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and straddle transactions, transactions marketed or
sold to produce capital gains, or transactions described in Treasury regulations
to be issued in the future.
Under Section 1256 of the Code, any gain or loss 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 Sections 1092 and 1258 of the Code,
which, in certain circumstances, overrides or modifies the provisions of
Sections 1256 and 988 of the Code. As such all or a portion of any short-term
or long-term capital gain from certain "straddle" transactions may be
recharacterized as ordinary income. 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 of the Code. 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
gain or ordinary income.
If the Fund invests in an entity that is classified as a "passive foreign
investment company" ("PFIC") for Federal income tax purposes, the operation of
certain provisions of the Code applying to PFICs could result in the imposition
of certain Federal income taxes on the Fund. In addition, gain realized from
the sale or other disposition of PFIC securities may be treated as ordinary
income under Section 1291 of the Code.
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%. 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 years ended October 31, 1994 and 1995, the Fund paid
brokerage commissions of $4,789, $11,081 and $29,626, 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 years ended October 31, 1994
and 1995.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance Information."
Class R shares had not been offered as of the date of the financial
statements and, therefore, no performance data is provided for Class R.
The average annual total return for the 1 and 2.299 year periods ended
October 31, 1995 for Class A was 13.44% and 11.07%, respectively. The average
annual total return for Class B for such periods was 13.88% and 11.33%,
respectively. Average annual total return is calculated by determining the
ending redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) per share with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial investment,
taking the "n"th root of the quotient (where "n" is the number of years in
the period) and subtracting 1 from the result. A Class'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 or Class C
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 net
asset value (maximum offering price in the case of Class A) per share at the
beginning of a stated period from the net asset value per share at the end of
the period (after giving effect to the reinvestment of dividends and
distributions during the period and any applicable CDSC), and dividing the
result by the net asset value (maximum offering price in the case of Class A)
per share at the beginning of the period. Total return also may be
calculated based on the net asset value per share at the beginning of the period
instead of the maximum offering price per share at the beginning of the period
for Class A shares or without giving effect to any applicable CDSC at the end of
the period for Class B or Class C shares. In such cases, the calculation would
not reflect the deduction of the sales load with respect to Class A shares or
any applicable CDSC with respect to Class B or Class C shares, which, if
reflected would reduce the performance quoted. The total return for the Fund's
Class A and Class B shares for the period July 15, 1993 (commencement of
operations) through October 31, 1995 was 27.30% and 27.99%, respectively. Based
on net asset value per share for Class A or without giving effect to the CDSC
for Class B, the total return for the Fund's Class A and Class B shares for this
period was 33.31% and 30.99%, respectively. The total return for the Fund's
Class C shares for the period June 21, 1995 (commencement of initial offering)
through October 31, 1995 was 3.71%. Without giving effect to the CDSC, the
total return for the Fund's Class C shares for this period was 4.71%.
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 for 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.
From time to time, advertisements may include statistical data or general
discussions about the growth and development of Dreyfus Retirement Services (in
terms of new customers, assets under management, market share, etc.) and its
presence in the defined contribution plan market.
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.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc. a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend
disbursing agent. Under a transfer agency agreement with the Fund, the Transfer
Agent arranges for the maintenance of shareholder account records for the Fund,
the handling of certain communications between shareholders and the Fund and the
payment of dividends and distributions payable by the Fund. For these services,
the Transfer Agent receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses. The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's custodian. Neither
the Transfer Agent nor The Bank of New York 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 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 S&P, Moody's, Fitch and 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, 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 payment.
B
Bonds rated B have a greater vulnerability to default but presently have
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default, and
are dependent upon favorable business, financial and economic conditions to meet
timely payments of 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>
<CAPTION>
PREMIER GROWTH FUND, INC.
STATEMENT OF INVESTMENTS OCTOBER 31, 1 995
COMMON STOCKS-93.6% SHARES VALUE
_______ ______
<S> <C> <C>
Aerospace & Electronics-9.5% Emerson Electric....................... 7,000 $498.750
General Electric....................... 25,000 1,581,250
Intel.................................. 12,000 838,500
Motorola............................... 10,000 656,250
Philips Electronics NVA.D.R............ 25,000 965,625
Texas Instruments...................... 5,000 341,250
______
4,881,625
______
Auto Related-1.4% Ford Motor.............................. 25,000 718,750
______
Banking-7.5% Citicorp................................ 25,000 1,621,875
Deutsche Bank A.D.R.................... 16,000 724,000
HSBC Holdings A.D.R.................... 5,500 805,750
Union Bank of Switzerland ............. 3,010 689,212
______
3,840,837
______
Capital Goods-1.0% AlliedSignal............................ 12,000 510,000
______
Chemicals-6.0% Air Liquide A.D.R....................... 30,000 1,005,000
Dow Chemical............................ 11,500 789,188
duPont [E.I.) de Nemours................ 12,500 779,688
Norsk Hydro A.D.R....................... 12,500 500,000
______
3,073,876
______
Energy-8.2% Chevron................................. 8,000 374,000
Elf Aquitaine A.D.S..................... 15,000 506,250
Exxon .................................. 12,500 954,688
Mobil................................... 3,500 352,625
Royal Dutch Petroleum................... 10,000 1,228,750
Total, Cl. B, A.D.S..................... 25,000 771,875
______
4,188,188
______
Financial-2.0% Eurafrance.............................. 3,060 1,024,700
______
Food, Beverage & Tobacco-19.0% Coca-Cola .............................. 28,000 2,012,500
Guinness PLC, A.D.R..................... 25,000 1,000,000
Kellogg ................................ 14,000 1,011,500
LVMH Moet Hennessy Louis Vuitton A.D.S. 26,050 1,038,744
Nestle A.D.R............................ 18,000 940,500
PepsiCo................................. 22,000 1,160,500
Philip Morris Cos....................... 20,000 1,690,000
Sara Lee................................ 5,000 146,875
Seagram................................. 22,000 792,000
______
9,792,619
______
Health Care-13.5% Abbott Laboratories..................... 25,000 993,750
Johnson & Johnson ...................... 19,000 1,548,500
Merck................................... 30,000 1,725,000
Pfizer.................................. 25,000 1,434,375
Roche Holdings A.D.S ................... 17,000 1,234,625
______
6,936,250
______
PREMIER GROWTH FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1 995
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ ______
Insurance-2.4% AXA..................................... 12,000 $667,527
Zurich Versicherung .................... 2,000 572,435
______
1,239,962
______
Leisure Time-4.0% Disney (Walt)........................... 12,000 691,500
Eastman Kodak .......................... 12,000 751,500
McDonalds .............................. 15,000 615,000
______
2,058,000
______
Media/Entertainment-2.5% News A.D.S.............................. 12,000 238,500
Pearson PLC............................. 75,288 748,579
Reader's Digest Association, Cl A....... 6,000 301,500
______
1,288,579
______
Metals-.5% Debeers Consolidated Mining A.D.R....... 10,000 275,000
Multi Industry-2.4% Eaux (Generale Des) 6,000 558,525
Minnesota Mining & Manufacturing ....... 12,000 682,500
______
1,241,025
______
Office & Business Equipment-2.3% AT&T.................................... 8,000 512,000
Ericsson (LM) Telephone, Cl. B, A. D. R 10,000 213,594
General Motors, CL. E................... 10,000 471,250
______
1,196,844
______
Paper & Forest Products-1.0% International Paper..................... 13,500 499,500
______
Personal Care-8.1% Gillette................................ 22,000 1,064,250
International Flavor & Fragrances....... 15,000 723,750
L'Oreal A.D.R........................... 20,000 980,000
Procter & Gamble........................ 15,000 1,215,000
Unilever N.V. A.D.R..................... 1,500 196,500
______
4,179,500
______
Retail-.9% Wal-Mart Stores......................... 20,000 432,500
______
Utilities-1.4%...Veba 18,000 738,793
______
TOTAL COMMON STOCKS
(cost $41,720,676).................... $48,116,548
______
______
PREFERRED STOCK-.7%
Media/Entertainment News A.D.S., Cum $.4428
(cost $369,053)....................... 20,000 $365,000
======
PREMIER GROWTH FUND, INC.
STATEMENT OF INVESTMENTS {CONTINUED) OCTOBER 31, 1995
PRINCIPAL
CORPORATE BOND-.0% AMOUNT VALUE
_______ ______
Zurich International, 2%, 3/1/2001
[cost $3,384)......................... $5,000 $4,348
======
Short-Term Investments-5.2%
U.S. Treasury Bills: 6.15%, 11/16/1995........................ $64,000 $63,862
5.72%, 11/24/1995....................... 27,000 26,912
5.35%, 12/7/1995........................ 622,000 618,840
6.52%, 12/14/1995....................... 1,417,000 1,408,172
5.42%, 12/21/1995....................... 224,000 222,387
5.34%, 12/28/1995....................... 340,000 337,195
______
TOTAL SHORT-TERM INVESTMENTS
(cost $2.677.257)..................... $2,677,368
======
TOTAL INVESTMENTS (cost $44,770,370)......................................... 99.5% $51,163,264
==== ======
CASH AND RECEIVABLES (NET.................................................... .5% $ 261,688
==== ======
NET ASSETS................................................................... 100.0% $51,424,952
==== ======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $44,770,370)-see statement...................................... $51,163,264
Receivable for subscriptions to Common Stock............................ 493,069
Dividends and interest receivable ...................................... 75,873
Prepaid expenses ....................................................... 44,863
______
51,777,069
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 32,626
Due to Distributor ..................................................... 30,046
Due to Custodian........................................................ 162,980
Payable for Common Stock redeemed ...................................... 68,165
Accrued expenses and other liabilities.................................. 58,300 352,117
______ ______
NET ASSETS ................................................................. $51,424,952
======
REPRESENTED BY:
Paid-in capital......................................................... $44,825,781
Accumulated undistributed investment income net......................... 270,337
Accumulated net realized (loss) on investments and foreign currency
transactions.......................................................... (64,954)
Accumulated net unrealized appreciation on investments and foreign
currency transactions ................................................ 6,393,788
______
NET ASSETS at value ........................................................ $51,424,952
======
Shares of Common Stock outstanding:
Class A Shares
(100 million shares of $.001 par value authorized).................... 1,147,183
======
Class B Shares
(100 million shares of $.001 par value authorized).................... 2,007,089
======
Class C Shares
(I00 million shares of $.00I par value authorized) ................... 2,940
======
NET ASSET VALUE per share:
Class A Shares
($18,822,141 / 1,147,183 shares)...................................... $16.41
======
Class B Shares
($32,555,139 / 2,007,089 shares)...................................... $ 16.22
======
Class C Shares
($47,672 / 2,940 shares).............................................. $ 16.22
======
See notes to financial statements.
PREMIER GROWTH FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1995
INVESTMENT INCOME:
Income:
Cash dividends (net of $34,858 foreign taxes withheld at source)...... $662,384
Interest.............................................................. 239,070
_____
Total Income...................................................... $ 901,454
Expenses:
Investment advisory fee-Note 2(a) .................................... 240,420
Distribution fees-Note 2(b) .......................................... 146,458
Shareholder servicing costs-Note 2(c) ................................ 136,125
Registration fees .................................................... 51,755
Auditing fees......................................................... 28,910
Legal fees............................................................ 23,650
Directors' fees and expenses-Note 2(d)................................ 17,750
Prospectus and shareholders' reports.................................. 14,946
Custodian fees ....................................................... 10,324
Miscellaneous......................................................... 16,608
_____
686,946
Less-reduction in advisory fee due to undertakings-Note 2(a).......... 148,716
_____
Total Expenses.................................................... 538,230
_____
INVESTMENT INCOME-NET ............................................ 363,224
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments and foreign currency
transactions-Note 3................................................... $(64,990)
Net unrealized appreciation on investments and foreign currency transactions 5,456,383
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 5,391,393
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................... $5,754,617
=====
See notes to financial statements.
PREMIER GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31,
________________________________
1994 1995
_______ ______
OPERATIONS:
Investment income-net................................................... $ 140,756 $363,224
Net realized gain (loss) on investments ................................ 36 (64,990)
Net unrealized appreciation on investments for the year................. 713,079 5,456,383
_______ ______
Net Increase In Net Assets Resulting From Operations ................. 853,871 5,754,617
_______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income net:
Class A shares........................................................ - (126,276)
Class B shares........................................................ - (107,367)
Class C shares - -
_______ ______
Total Dividends................................................... - (233,643)
_______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 6,206,463 10,672,133
Class B shares........................................................ 9,723,924 23,316,171
Class C shares........................................................ - 47,427
Dividends reinvested:
Class A shares........................................................ - 118,079
Class B shares........................................................ - 92,549
Class C shares - -
Cost of shares redeemed:
Class A shares ....................................................... (1,868,176) (2,206,613)
Class B shares........................................................ (1,865,001) (5,078,376)
Class C shares - -
_______ ______
Increase In Net Assets From Capital Stock Transactions ........... 12,197,210 26,961,370
_______ ______
Total Increase In Net Assets ................................... 13,051,081 32,482,344
NET ASSETS:
Beginning of year....................................................... 5,891,527 18,942,608
_______ ______
End of year (including undistributed investment income net:
$ 140,756 in 1994 and $270,337 in 1995) .............................. $ 18,942,608 $51,424,952
======= ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
________________________________________________________________________________________
CLASS A CLASS B CLASS C
________________________________ _______________________________ _______
YEAR ENDED
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, OCTOBER 31,
________________________________ ________________________________
1995 1996 1995 1996 1996*
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 463,318 709,874 729,175 1,554,836 2,940
Shares issued for dividends
reinvested............. - 8,918 - 7,027 -
Shares redeemed........ (140,311) 1,147,256) 1,140,585) (337,253) -
_______ _______ _______ _______ _______
Net Increase In Shares
Outstanding.......... 323,007 571,536 588,590 1,224,610 2,940
======= ======= ======= ======= =======
* From June 21, 1995 (commencement of initial offering) to October 31, 1995.
See notes to financial statements.
</TABLE>
Premier Growth Fund, Inc.
Financial Highlights
Reference is made to page 4 of the Fund's Prospectus dated March 1, 1996,
as Revised December 1, 1996.
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.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc. Dreyfus is a
direct subsidiary of Mellon Bank, N.A.
The Fund offers Class A, Class B and Class C shares. Class A shares are
subject to a sales charge imposed at the time of purchase, Class B shares are
subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within six years of purchase and Class C
shares are subject to a contingent deferred sales charge imposed at the time
of redemption on redemptions made within one year of purchase. Other
differences between the three 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. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
(b) Foreign currency transactions: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest, foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities,
resulting from changes in exchange rates. Such gains and losses are included
with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(d) 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
PREMIER GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, it is the policy of
the Fund not to distribute such gain.
(e) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $67,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1995. If not
applied, the carryover expires in fiscal 2003.
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, exclusive of 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 (excluding 12b-1 Distribution Plan fees and certain
expenses as described above) exceed 2 1/2% of the first $30 million, 2% of
the next $70 million and 1 1/2% of the excess over $ 100 million of the
average value of the Fund's net assets in accordance with California "blue
sky" regulations.
However, Dreyfus had undertaken from November 1, 1994 through June 30,
1995, to reduce the management fee paid by the Fund, to the extent that the
Fund's aggregate expenses (exclusive of certain expenses as described above)
exceeded specified annual percentages of the Fund's average daily net assets.
The Manager has currently undertaken from July I, 1995 through October 31,
1996 to reduce the management fees paid by, or reimburse such excess expenses
of the Fund, to the extent that the Fund's aggregate annual expenses
(excluding 12b-1 Distribution Plan fees and certain expenses as described
above] exceed an annual rate of 1.25 of 1% of the average daily value of the
Fund's net assets. The reduction in investment advisory fee, pursuant to the
undertakings, amounted to $ 148,716 for the year ended October 31, 1995.
PREMIER GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS {CONTINUED)
Pursuant to a Sub-lnvestment Advisory Agreement between Dreyfus and
Sarofim, Dreyfus has agreed to pay Sarofim a monthly sub-advisory fee,
computed at the following annual rates:
Annual Fee as a Percentage of
Total Net Assets Average Daily Net Assets
-------------- -----------------------
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 %
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus,
retained $446 during the year ended October 31, 1995 from commissions earned
on sales of the Fund's shares.
[b) Under a Distribution Plan (the "Plan") adopted pursuant to Rule 12b-
1 under the Act, the Fund pays the Distributor for distributing the Fund's
Class B and Class C shares at an annual rate of .75 of 1 % of the value of
the average daily net assets of Class B and Class C shares. During the year
ended October 31, 1995, $ 146,453 was charged to the Fund for the Class B
shares and $5 was charged to the Fund for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended October 31, 1995,
$31,321, $48,817 and $2 were charged to Class A, B and C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
(d) Each director who is not an "affiliated person," as defined in the
Act receives from the Fund an annual fee of $ 1,500 and an attendance fee of
$250 per meeting. The Chairman of the Board receives an additional 25% of
such compensation.
NOTE 3-Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the year ended October 31, 1995,
amounted to $27,415,226 and $324,553, respectively.
At October 31, 1995, accumulated net unrealized appreciation on
investments was $6,392,894, consisting of $6,941,354 gross unrealized
appreciation and $548,460 gross unrealized depreciation, excluding foreign
currency transactions.
At October 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER 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, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995 by correspondence with the custodian.
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, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated years, in conformity with generally accepted accounting
principles.
New York, New York
December 1, 1995
