DREYFUS GROWTH OPPORTUNITY FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this semi-annual report for Dreyfus
Growth Opportunity Fund, Inc. for the six-month period ended August 31, 1997.
Over this period, your Fund produced a total return of 13.54%,* which
compares with a total return of 14.78% for the Standard & Poor's 500
Composite Stock Price Index** and 14.00% for the Standard & Poor's Barra
Value Index.***
Once again, the stock market focused on the mega caps, the very largest
publicly traded companies, during most of this six-month period. One of our
strategies with the Fund is to diversify risk in order to control it. One of
the ways that we accomplish this goal is by buying companies of various
sizes. While recently the market may have favored the mega caps, tomorrow is
another day. With the valuations of many of these huge companies stretched
well beyond historic levels, we believe that a more diversified strategy
continues to be prudent. Despite the stock market's recent preference, the
performance results of the Fund during the measurement period were very close
to those of the S & P 500 Index and the S&P Barra Value Index. We are
generally pleased with these results, especially since we believe the Fund
has a lower risk profile than these indices.
Economic Review
The economy has maintained a strong growth trend since last fall,
gradually eroding expectations for a natural slowdown "just around the
corner." Inflation has held steady, even in the face of a substantially
tighter labor market. Corporate profits have continued to surprise on the
upside. Market interest rates have held within a now long-established
trading range. In this setting, monetary policy has remained benign: the
Federal budget is close to being in balance and the Federal Reserve Board (the
"Fed") has kept policy rates unchanged since March.
Real GDP grew at above a 4% rate in the nine months from the third
quarter of 1996 to midyear. Indeed, the initial estimate of near 2% growth
in this year's second quarter was raised to 3.6%, erasing the record of even
a temporarily slow period. Virtually all major economic sectors have
contributed to the economy's growth. In turn, the economy has provided
personal income that, in the prevailing low-inflation environment, has
translated into strong real purchasing power. The strength in demand has begu
n to raise imports, bolstering foreign economies. Inventories have also
started to accumulate at a faster pace, although inventory levels are
currently still quite lean in relation to sales.
The labor market has tightened substantially in recent months as the
pace of new hiring has consistently exceeded the increase in the labor force.
Despite this, wage growth has been moderate while overall compensation
growth has accelerated only modestly. In their determination to hold the
line on prices, companies have resorted to unconventional hiring methods
that, so far, have avoided the need for higher wage offers.
Consensus expectations for corporate profits have been ratcheted
upwards virtually every month for the last several months. So far, positive
surprises in reported profits have justified the market's higher estimates.
However, the strength of the dollar overseas and other factors could affect
future profits.
Market interest rates have been stable since early 1996, oscillating
within a fairly narrow range. Several factors have kept rates steady: the
absence of faster inflation, positive Federal budget developments and an
accommodating Federal Reserve. Although the Fed has not changed policy rates
since March, they have held a bias towards tightening since last summer.
Therefore a move to tighten interest rates should not come as a surprise.
Market Overview
After acting like a high-speed elevator for a number of months, the
stock markets performed more like a roller coaster as the fiscal half-year
drew to a close on August 31.
After a brief sinking spell in March, caused by higher interest rates,
the markets then climbed to one record after another until stopped by another
retreat in the last three weeks of August. The Dow Jones Industrial Average,
which started the six-month period at 6877.74, ended it at 7622.42, a gain of
some 745 points despite the August decline. Along the way, the Dow reached a
high of 8259.31 in early August.
The broader S & P 500, on a total return basis including reinvested
dividends, gained 14.78% for the six months, even after the Index dropped
60.85 points from its August high. Similarly, the Nasdaq Composite showed a
six-month gain in total return of 21.26%, even though when August ended the
index stood 43.12 points below the early August high.
While the market was rising, investors appeared to favor the larger
capitalized stocks, which enjoyed the sharpest rise and subsequently gave up
the most in prices. The smallest stocks, as measured by the Russell 2000
small cap index, increased their total return by 18.53% for the half-year and
the index finished the fiscal period at its high for the year.
Interest rates, and the anticipation of where they might go in the
future, were the dominant influences on the market. The rising elevator
effect came to a halt in March when investors were shaken by the Federal
Reserve's action raising interest rates by a quarter-point, the first such
action in two years. Once that had been absorbed, however, the market
resumed its upward ride until fears of higher interest rates and their
companion, higher inflation, took hold again in August.
The August decline was prompted by several factors, including the
Teamsters strike against United Parcel Service, resulting in a settlement
considered favorable to the labor union. This revived all the dormant fears
that national wage levels might rise, thus reviving inflation, and giving the
Fed reason to step on the monetary brakes once again.
Yet the economic environment for the equity market remained favorable.
Many commentators used the phrase "Goldilocks economy" - not too hot and not
too cold - to describe the economy's performance.
Stock price volatility, much of it on the down side, took over
especially in the last three weeks of August. From the start of the calendar
year through the end of August, 30% of stock trading sessions ended with the
Dow rising or falling 1% or more. Much to the relief of investors, the
volatility on September 2, the day after Labor Day, was all on the up side
with the Dow rising 3.38% for the day, the S&P 500 up 3.13%, the Nasdaq
Composite up 1.94% and the Russell 2000 gaining 1.09%.
Some of the August selling, no doubt, was prompted by the reduction in
the capital gains tax for securities held more than 18 months. How long that
will continue to impact the market is an open question.
Until now, the porridge on which the equity markets have been feeding
has been not too hot and not too cold. At these levels, of course, any
unexpected development can bring sharp reactions, particularly in view of the
market's spectacular gains since August 1996. Looking ahead, much depends on
whether the economy can maintain its "Goldilocks" condition, and not bring on
another dose of anti-inflation actions from the monetary authorities.
VALUE INVESTING
We believe value stocks can be an important part of an investment
portfolio for a number of reasons.
First, stocks with low valuations theoretically have by definition more
upside potential than downside risk. Buying value stocks is akin to buying
clothes at wholesale prices or on sale instead of paying full retail.
Second, many analysts have low expectations for the earnings growth
rate of value stocks, resulting in the low valuations assigned to these
securities. Low growth expectations tend to be easier for management to meet
or even exceed than high expectations. A company expected to grow at only
5%, usually a value stock, can often exceed this forecast. It is harder for
a company which is expected to grow at 30% to continue to grow 30% on a
compounded basis, year after
year after year. Additionally, our experience is that analysts' forecasts
are all too often incorrect. They tend to be overly pessimistic on
low-expectation stocks and overly optimistic on high-expectation stocks.
Third, value investors tend to work more with actual data and with
near-term projections when analyzing companies. Obviously, this type of data
is more accurate than long-term forecasts.
Fourth, value stocks possess a number of favorable characteristics:
higher dividends, more stock repurchases, more takeovers, and more
restructurings. Dividends are cash, usually paid out quarterly to common
stock shareholders. Dividends are the only actual tangible return to the
common stock shareholder from the company. To realize more value than the
dividend, the stock must be sold to another investor. Theoretically, if
shareholders could not sell a stock (which of course they can), investors woul
d only buy stocks that paid a cash dividend. Next, companies selling at low
valuations usually have the option to repurchase their own stock with any
available cash and add to earnings in the process. Management repurchasing
stock provides demand for that stock, forcing the price higher, everything
else being equal. Regarding another advantage, takeovers tend to happen to
inexpensively priced companies, in whatever way a potential buyer might
define this value. Obviously, a buyer prefers not to pay a premium price
when buying a company. Finally, restructurings tend to occur with value
stocks because these companies often tend to have a problem which needs to be
fixed. It is in the process of fixing this problem, and usually through some
sort of restructuring of the company in this process, that value is realized.
Value stocks are often ignored by Wall Street analysts. Because these
companies may be in a relatively dull business or may well have a problem,
easily explaining their stories through a report to the general investing
public and making it seem interesting can be difficult. It is much easier
for analysts to promote a glamour stock with a simple story, even if that
story is already universally known and recognized in the stock price. This
lack of attention and focus by Wall Street provides a decided advantage for
relatively undiscovered or underfollowed value stocks.
As human beings, we are fascinated about "what's hot" and the latest
trends. We are intrigued by the latest products and what the future of our
world may hold. These topics make for interesting reading and discussion,
but the companies involved with the newest technology and with developments
well out into the future also attract competitors, and the future holds many
uncertainties. In this sense, value stocks make less complicated investment
stories. Many of us are also attracted to glamorous things, whether material
goods or stocks. Value stocks are usually not glamorous. The businesses are
often relatively mundane, which does not make for good conversation but can
make for good investment performance. Most of us fear any problems, and
value stocks usually have a problem that needs to be fixed. Generally, we
are comforted by stocks that are already winners. If a stock has done well,
we usually feel more comfortable investing in it. Good historic performance,
however, is probably not a rational reason to invest in a company. Real
money in the stock market is not made by following the herd of other
investors, copying what they have already done and where money has already
been made. Real money is made leading this herd. As the herd follows,
demand for the security is increased, resulting in higher prices.
PORTFOLIO FOCUS
Investment results during this semi-annual period benefited from
holdings such as IBM, Lockheed Martin, Adaptec, Tosco, Travelers Group,
Bankamerica, Equitable Cos., Allegiance, Cooper Cameron, Ingersoll-Rand,
Xerox, Masco, Dayton Hudson, Pier 1 Imports, CNF Transportation, Coastal, and
Telecomunicacoes Brasileirs - Telebras A.D.R., the Brazilian telephone
company. Relative performance results were penalized by holdings including
Fruit of the Loom Cl.A., La Quinta Inns, Cabletron Systems, 3 Com, Aetna,
Biogen, Aluminum Co. of America, and B.F. Goodrich.
Thank you for entrusting Dreyfus with the management of your
investments.
Sincerely,
[Timothy M. Ghriskey signature logo]
Timothy M. Ghriskey
Portfolio Manager
September 17, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
***The Standard & Poor's Barra Value Index is a capitalization-weighted index
of all the stocks in the Standard & Poor's 500 Composite Stock Price Index
that have low price-to-book ratios. It is designed so that approximately 50%
of the S&P 500's market capitalization is in the Value Index.
<TABLE>
<CAPTION>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
Common Stocks-94.4% Shares Value
------- -------
<S> <C> <C> <C>
Consumer Durables-2.1% General Motors........ 179,000 $ 11,232,250
-------
Consumer Non-Durables-8.7% Fruit of The Loom, Cl. A 317,000 8,479,750
Kimberly-Clark......................... 200,000 9,487,500
NIKE, Cl. B............................ 167,000 8,913,625
Philip Morris Cos...................... 231,000 10,077,375
Warnaco Group, Cl. A................... 312,000 10,120,500
-------
47,078,750
-------
Consumer Services-3.8% Circus Circus Enterprises 460,000 (a) 11,011,250
La Quinta Inns......................... 450,000 9,450,000
-------
20,461,250
-------
Electronic Technology-16.9% Adaptec.......... 240,000 (a) 11,520,000
Cabletron Systems...................... 323,400 (a) 9,782,850
China Light & Power.................... 1,900,000 8,801,290
Empresa Nacional de Electricidad, A.D.R. 455,000 10,123,750
International Business Machines........ 116,000 11,701,500
Lockheed Martin........................ 100,000 10,368,750
Micron Technology...................... 215,000 9,580,937
Storage Technology..................... 203,000 (a) 10,340,312
3Com........................................ 190,000 (a) 9,488,125
91,707,514
Energy Minerals-6.0% Mobil................... 140,000 10,185,000
Phillips Petroleum..................... 215,000 10,225,938
Tosco....................................... 358,500 11,852,906
32,263,844
Finance-15.8% Allstate....................... 146,000 10,667,125
BankAmerica............................ 153,000 10,069,313
Bankers Trust NY....................... 110,000 11,412,500
Chase Manhattan........................ 103,000 11,452,313
Equitable Cos.......................... 266,000 11,571,000
First Union............................ 215,000 10,333,438
NationsBank............................ 149,000 8,846,875
Travelers Group........................ 177,000 11,239,500
85,592,064
-------
Health Services-5.7% Aetna................... 90,000 8,589,375
Allegiance............................. 381,000 11,953,875
PacifiCare Health Systems, Cl. B....... 154,000 (a) 10,529,750
-------
31,073,000
Health Technology-1.9% Biogen................ 266,000 (a) 10,473,750
Industrial Services-2.1% Cooper Cameron...... 174,000 (a) 11,288,250
Non-Energy Minerals-3.8% Aluminum Co. of America...... 125,000 10,281,250
Georgia-Pacific........................ 112,000 10,220,000
-------
20,501,250
-------
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997 (UNAUDITED)
Common Stocks (continued) Shares Value
------- -------
Process Industries-5.8% duPont (E.I.) de Nemours 174,000 $ 10,842,375
Goodrich (B.F.)........................ 220,000 9,267,500
Temple-Inland.......................... 175,000 11,287,500
-------
31,397,375
-------
Producer Manufacturing-11.6% Caterpillar..... 184,000 10,683,500
Grupo Carso, Cl. A1.................... 1,300,000 9,053,064
Ingersoll-Rand......................... 192,000 11,544,000
Masco....................................... 232,000 10,309,500
Raychem................................ 110,000 10,236,875
Xerox....................................... 143,000 10,796,500
-------
62,623,439
-------
Retail Trade-4.1% Dayton Hudson.............. 185,000 10,545,000
Pier 1 Imports......................... 697,500 11,857,500
-------
22,402,500
-------
Transportation-3.9% CNF Transportation....... 287,000 10,367,875
CSX......................................... 187,000 10,694,062
-------
21,061,937
-------
Utilities-2.2% Coastal....................... 205,000 11,838,750
-------
TOTAL COMMON STOCKS
(cost $432,879,189).................. $510,995,923
=======
Convertible Preferred Stocks-1.6%
Energy Minerals; Petroleo Brasileiro-Petrobras
(cost $6,382,953).................... 35,000 $ 8,529,547
=======
Principal
Short-Term Investments-6.6% Amount
-------
U.S. Treasury Bills: 5.34%, 10/16/97......... $ 600,000 (b) $ 596,046
5.12%, 11/28/97........................ 35,869,000 35,412,746
-------
TOTAL SHORT-TERM INVESTMENTS
(cost $36,017,169)................... $ 36,008,792
=======
TOTAL INVESTMENTS (cost $475,279,311)....................................... 102.6% $555,534,262
==== =======
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (2.6%) $ (14,283,411)
==== =======
NET ASSETS.................................................................. 100.0% $541,250,851
==== =======
Notes to Statement of Investments:
(a) Non-income producing.
(b) Held by custodian in a segregated account as collateral for open
futures positions.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF FINANCIAL FUTURES AUGUST 31, 1997 (UNAUDITED)
Market Value Unrealized
Covered (Depreciation)
Financial Futures: Contracts by Contracts Expiration at 8/31/97
- ------------------ ----------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Standard & Poor's 500........................ 30 $13,546,500 September '97 ($918,000)
======
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1997 (UNAUDITED)
Cost Value
------- -------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $475,279,311 $555,534,262
Receivable for investment securities sold.. 8,235,420
Dividends receivable....................... 909,679
Receivable for futures variation margin-Note 4(a) 49,500
Receivable for shares of Common Stock subscribed 35,500
Prepaid expenses........................... 26,483
-------
564,790,844
-------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 415,766
Payable for investment securities purchased 20,882,693
Cash overdraft due to Custodian............ 1,942,053
Payable for shares of Common Stock redeemed 236,571
Accrued expenses........................... 62,910
-------
23,539,993
-------
NET ASSETS.................................................................. $541,250,851
-------
-------
REPRESENTED BY: Paid-in capital............................ $415,727,480
Accumulated undistributed investment income-net1,735,775
Accumulated net realized gain (loss) on investments 44,455,327
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions
[including ($918,000) net unrealized (depreciation)
....................... on financial futures] 79,332,269
-------
NET ASSETS.................................................................. $541,250,851
=======
SHARES OUTSTANDING
(100 MILLION SHARES OF $.01 PAR VALUE COMMON STOCK AUTHORIZED).............. 49,465,633
NET ASSET VALUE, offering and redemption price per share.................... $10.94
====
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED AUGUST 31, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $57,978 foreign taxes
withheld at source).................... $ 3,851,765
Interest................................... 509,062
-------
Total Income........................... $ 4,360,827
EXPENSES: Management fee-Note 3(a)................... 1,889,201
Shareholder servicing costs-Note 3(b)...... 511,329
Custodian fees-Note 3(b)................... 73,677
Registration fees.......................... 50,549
Directors' fees and expenses-Note 3(c)..... 38,450
Professional fees.......................... 28,550
Prospectus and shareholders' reports....... 18,915
Loan commitment fees-Note 2................ 5,399
Interest-Note 2............................ 2,204
Miscellaneous.............................. 1,332
-------
Total Expenses......................... 2,619,606
-------
INVESTMENT INCOME-NET....................................................... 1,741,221
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments and foreign
currency transactions.................. $44,622,409
Net realized gain (loss) on forward currency
exchange contracts..................... 201,646
-------
Net Realized Gain (Loss)............... 44,824,055
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions [including
($918,000) net unrealized (depreciation) on
financial futures]..................... 18,054,116
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 62,878,171
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $64,619,392
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
August 31, 1997 Year Ended
(Unaudited) February 28, 1997
--------- ----------
OPERATIONS:
Investment income-net................................................ $ 1,741,221 $ 3,942,195
Net realized gain (loss) on investments.............................. 44,824,055 77,699,484
Net unrealized appreciation (depreciation) on investments............ 18,054,116 9,461,455
-------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations.... 64,619,392 91,103,134
-------- --------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................ (595,859) (3,443,419)
Net realized gain on investments..................................... (25,484,471) (51,853,831)
-------- --------
Total Dividends.................................................... (26,080,330) (55,297,250)
-------- --------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 711,079,878 662,770,682
Dividends reinvested................................................. 25,294,067 53,467,286
Cost of shares redeemed.............................................. (705,322,318) (699,623,243)
-------- --------
Increase (Decrease) in Net Assets from Capital Stock Transactions.. 31,051,627 16,614,725
-------- --------
Total Increase (Decrease) in Net Assets.......................... 69,590,689 52,420,609
NET ASSETS:
Beginning of Period.................................................. 471,660,162 419,239,553
-------- --------
End of Period........................................................ $ 541,250,851 $ 471,660,162
======== ========
UNDISTRIBUTED INVESTMENT INCOME-NET.................................... $ 1,735,775 $ 590,413
-------- --------
Shares Shares
-------- --------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 68,223,546 65,581,850
Shares issued for dividends reinvested............................... 2,699,466 5,657,914
Shares redeemed...................................................... (67,604,785) (68,950,505)
-------- --------
Net Increase (Decrease) in Shares Outstanding...................... 3,318,227 2,289,259
======== ========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
Six Months Ended
August 31, 1997 Year Ended February,
----------------------------------------------------
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $10.22 $ 9.56 $ 8.67 $10.89 $12.21 $13.20
---- ---- ---- ---- ---- ----
Investment Operations:
Investment income (loss)-net.......... .04 .10 .10 .10 (.02) .01
Net realized and unrealized gain (loss)
on investments...................... 1.25 1.93 2.19 (.38) 1.30 (.98)
---- ---- ---- ---- ---- ----
Total from Investment Operations...... 1.29 2.03 2.29 (.28) 1.28 (.97)
---- ---- ---- ---- ---- ----
Distributions:
Dividends from investment income-net.. (.01) (.09) (.12) (.09) - (.02)
Dividends from net realized gain on investments (.56) (1.28) (1.26) (1.80) (2.60) -
Dividends in excess of net realized gain
on investments...................... - - (.02) (.05) - -
---- ---- ---- ---- ---- ----
Total Distributions................... (.57) (1.37) (1.40) (1.94) (2.60) (.02)
---- ---- ---- ---- ---- ----
Net asset value, end of period........ $10.94 $10.22 $ 9.56 $ 8.67 $10.89 $12.21
==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN................... 13.54%(1) 22.35% 27.37% (2.11%) 11.07% (7.36%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .52%(1) 1.06% 1.04% 1.10% 1.09% 1.00%
Ratio of net investment income (loss)
to average net assets............... .35%(1) .91% .91% 1.09% (.14%) .11%
Portfolio Turnover Rate............... 58.63%(1) 137.38% 268.40% 242.75% 194.59% 90.03%
Average commission rate paid (2)...... $.0518 $.0578 $.0790 - - -
Net Assets, end of period (000's Omitted) $541,251 $471,660 $419,240 $372,313 $463,323 $569,791
(1) Not annualized.
(2) For fiscal years beginning September 1, 1995, the Fund is required to disclose its average commission rate paid per
share for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Growth Opportunity Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company. The Fund's investment objective is to provide
long-term capital growth consistent with the preservation of capital. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon"). Premier
Mutual Fund Services, Inc. is the distributor of the Fund's shares, which are
sold to the public without a sales charge.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options)
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. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from change in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discounts on investments, is recognized on
the accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the
DREYFUS GROWTH OPPORTUNITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Fund has agreed to pay commitment fees on its pro rata portion of the
Facility. Interest is charged to the Fund at rates based on prevailing market
rates in effect at the time of borrowings. At August 31, 1997, there were no
outstanding borrowings under the Facility.
The average daily amount of borrowings outstanding during the period
ended August 31, 1997 was approximately $75,000, with a related weighted
average annualized interest rate of 5.75%. The maximum amount borrowed under
this line of credit at any time during the period ended August 31, 1997 was
$5.4 million.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings ( which in the view of
Stroock & Stroock & Lavan, counsel to the Fund, also includes loan commitment
fees) and extraordinary expenses, exceed 1-1\2% of the average value of the
Fund's net assets, the Manager will bear such excess expense, for any full
fiscal year. No expense reimbursement was required for the period ended
August 31, 1997.
(B) Under the Shareholder Services Plan, the Fund reimburses Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, an amount not
to exceed an annual rate of .25 of 1% of the value of the Fund's average
daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the period ended August 31, 1997, the Fund was charged an aggregate of
$309,400 pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $129,342 during the period ended August 31, 1997.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended August 31, 1997,
$73,677 was charged by Mellon pursuant to the custody agreement.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $4,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, financial futures and forward currency
exchange contracts, during the period ended August 31, 1997, amounted to
$286,209,883 and $283,949,236, respectively.
The Fund enters into forward currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. When executing forward currency exchange
contracts, the Fund is obligated to buy or sell a foreign currency at a
specified rate on a certain date in the future. With respect to sales of
forward currency exchange contracts, the Fund would incur a loss if the value
of the contract increases between the date the forward contract is opened and
the date the forward contract is closed. The Fund realizes a gain if the
value of the contract decreases between those dates. With respect to
purchases of forward currency exchange contracts, the Fund would incur a loss
if the value of the contract decreases between the date the forward contract
is opened and the date the forward contract is closed. The Fund realizes a
gain if the value of the contract increases between those dates. The Fund is
also exposed to credit risk associated with counter party nonperformance on
these forward currency exchange contracts
DREYFUS GROWTH OPPORTUNITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
which is typically limited to the unrealized gain on each contract. At August
31, 1997, there were no forward currency exchange contracts outstanding.
The Fund may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Fund is exposed to
market risk as a result of changes in the value of the underlying financial
instruments (see the Statement of Financial Futures). Investments in
financial futures require the Fund to "mark to market" on a daily basis,
which reflects the change in the market value of the contracts at the close
of each day's trading. Typically, variation margin payments are received or
made to reflect daily unrealized gains or losses. When the contracts are
closed, the Fund recognizes a realized gain or loss. These investments
require initial margin deposits with a custodian, which consist of cash or
cash equivalents, up to approximately 10% of the contract amount. The amount
of these deposits is determined by the exchange or Board of Trade on which
the contract is traded and is subject to change. Contracts open at August 31,
1997, and their related unrealized depreciation are set forth in the
Statement of Financial Futures.
(B) At August 31, 1997, accumulated net unrealized appreciation on
investments and financial futures was $79,336,951, consisting of $93,593,980
gross unrealized appreciation and $14,257,029 gross unrealized depreciation.
At August 31, 1997, 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).
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS GROWTH
OPPORTUNITY FUND, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 018SA978
Registration Mark
[Dreyfus logo]
Growth
Opportunity
Fund, Inc.
Semi-Annual
Report
August 31, 1997
