DREYFUS GROWTH OPPORTUNITY FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
One of my more pleasant duties as portfolio manager of the Dreyfus Growth
Opportunity Fund, Inc. is writing this letter to the shareholders. This
report covers the annual reporting period ended February 28, 1997 during
which the Fund's total return was 22.35%,* compared to 26.15% for the
Standard and Poor's 500 Composite Stock Price Index** and 23.66% for the
Standard and Poor's Barra Value Index.*** The performance of these major
indexes proved to be extremely difficult to beat during this period given the
stock market's overwhelming focus on the largest companies, particularly in
the last half of the fiscal year. Indeed, the largest multinational companies
are prospering, but economic strength is benefiting many companies, and one
of our goals with the Fund is to diversify economic exposure, not to
concentrate it in just a narrow part of the economy. Regardless, the
performance results of the Fund came close to these market benchmarks, and
outperformed the vast majority of mutual funds that also seek long-term
capital growth. We are generally pleased with these results, especially since
the Fund does not attempt to replicate these indexes and, therefore, has a
different and, we believe, ultimately lower risk profile.
ECONOMIC REVIEW
Economic evidence in early 1997 indicates that real GDP growth has not
slowed significantly. A key economic risk now developing lies in a further
increase of labor market tightness which could fuel faster wage inflation.
This is reigniting fears of higher future price inflation, even while current
prices are held low by the strong dollar. Market interest rates have recently
been led higher by rising expectations for a Federal Reserve tightening in
coming months, which could help temper demand and would support our view that
we are still in a long economic cycle.
In the household sector, confidence is soaring, job insecurity is
disappearing and real wages are rising. Hence, consumer spending growth
appears fairly solid in early 1997. Simultaneously, a rebound in production
of consumer goods is underway, both to meet the demand and to replenish
inventories left depleted at year-end. Elsewhere, capital goods orders have
been slowing since last fall, while export orders are less strong in early
1997, somewhat hurt by the higher dollar. However, a rise in demand for
consumer goods typically will attract imports, bolstering growth overseas;
better foreign economic growth may help offset the higher dollar to sustain
demand for U.S. exports.
Although wages have been on the rise since the fall of 1996, price
inflation has continued to decelerate. Hence, real wages are rising,
rewarding productivity in many instances. The risks for the future from wage
hikes that are driven by labor shortages are twofold: first, they may fuel
overheating in the economy, ultimately promoting price inflation; second,
they may slow profits for some companies. Profits are also vulnerable this
year for import-competing companies and at multinationals that have not
hedged their foreign currency exposure. Nonetheless, we expect overall
profits to sustain steady growth in 1997.
Market interest rates have shifted higher recently. Short-term rates are
taking their cue from the Fed, expecting a tightening within a few months.
Long-term rates, still within the trading range established over the last 12
months, have nevertheless trended higher. Announcement of a balanced Federal
budget agreement would represent a positive development that could curtail
the rise in bond yields.
The economy will shortly begin its seventh expansion year, a trend that
we believe could continue. A step by the Federal Reserve to tighten interest
rates could prolong this favorable business cycle.
MARKET OVERVIEW
The stock market activity encompassed by the six-month fiscal period
under review was remarkable, by any standard. The Dow Jones Industrials began
the period in early September in the 5700s, broke through 6000 by
mid-October, churned around a bit in December, then resumed a steady rise,
breaking the 7000-point barrier Valentine's week. But that
was not the end of the story. In February, Federal Reserve Chairman Alan
Greenspan returned to a theme he had initiated earlier - his worries about
stock market excesses, which could bring about a need for raising interest
rates. By the end of February, the market mood had changed. Investors were
preoccupied with Greenspan's warnings, even though the Fed Chairman explained
that the ongoing business expansion was moderate and did not appear to be
inflationary.
Nonetheless, a sell-off occurred in the last week of February, costing
the Dow Jones Industrial Average 53.88 points for the week and sending the
Standard & Poor's 500 down 10.95 points, the Nasdaq Composite 25.32 points
and the Russell 2000 Index of small cap stocks 6.32 points. Even so, as
February ended, the DJIA still held a gain of 1,341 points for the preceding
twelve months, the S&P 500 was up by 146.45 and Nasdaq by 222.92. Small caps,
however, as measured by the Russell 2000, were showing an increase of only
35.95 points for the twelve-month period.
As these varying results indicate, the market is a highly selective one,
closely attuned to such factors as interest rates and corporate profits. In
this climate, larger companies appeared to fare better than smaller ones, and
"value" stocks - sought after for their low price valuations - stood up
better than growth stocks.
Stock market sell-offs, when they occurred, were, however, gratifyingly
short-lived. It appeared that some fundamentals gave the market resilience.
One such factor was the continued high demand for stocks, particularly from
those putting money away for retirement. The Investment Company Institute,
the trade association of the mutual fund industry, reported that in January,
1997, mutual funds took in $29.39 billion in new money from investors. This
smashed all previous records.
Another supportive factor is corporate profits. The Wall Street Journal
calculated that, among the stocks in the Dow Jones Industry Groups, profits
in the fourth quarter of 1996 were above security analysts' average estimates
for 56% of the companies, below estimates for 27% and matched the estimates
for 17% of companies analyzed.
To judge by the market's performance, however, investors can quickly
ignore the market's fundamental strengths, particularly when scared by a hint
of higher interest rates, or by specific cases of disappointing profits. This
latter factor has affected such market keystones as AT&T, but also shows up
in recent valuations of some technology stocks, particularly the smaller
capitalized ones.
Thus, as the fiscal half-year ended, the mood of investors appeared to be
hopeful, but very wary.
TEAM EFFORT
Managing your investment assets is certainly a team effort. In our last
shareholder's letter I described our research work and the significant part
our team of analysts plays in selecting investments for your Fund. The effort
employed to manage your assets is much broader, and this letter will review
some of the other hard work involved on your behalf.
Your Dreyfus Growth Opportunity Fund is managed in a disciplined manner.
It is a stock fund, and you should realize that, by owning this Fund, you
will always have stock market exposure. This Fund selects companies which
have the opportunity for growth, traditionally labeled value stocks. All
investment managers look for companies which are growing; a value manager
looks for these growing companies, but is price-sensitive, and does not want
to pay much for them. Further, your Fund often buys and sells stocks based on
the level of interest rates, in a disciplined process designed to both
protect your assets in a potentially negative stock market environment, and
to allow market participation in a potentially positive stock market
environment. Your Fund has established various buy and sell criteria which
help maintain this disciplined process of managing the Fund. Both an
extensive team of research analysts and proprietary computer models are
employed in this process. Finally, the experience of your portfolio manager
provides both the final determination about whether to buy or sell a
security, and the overall structure of the portfolio of investments.
Trading is another area where we attempt to add value. Dreyfus has
dedicated security traders who focus on implementing the investment decisions
of the portfolio manager. This team of traders works hard to achieve the best
prices possible when the securities in your Fund are bought or sold. Both the
experience of these traders and the portfolio manager's guidelines for each
trade are part of this process. Additionally, the traders provide a flow of
timely information to the analysts and portfolio manager.
The accounting team at Dreyfus also works hard to make sure that, among
other duties, security trades settle properly, that available cash is
properly calculated, and that the daily value of the Fund is exact. Our legal
staff seeks to monitor compliance with all legal and regulatory requirements,
and to keep us apprised of new legal developments. Finally, our marketing
team makes sure that our shareholders receive regular communication on the
Fund and other pertinent information.
Managing your assets is a team effort at The Dreyfus Corporation.
PORTFOLIO FOCUS
Investment results during this annual period benefited from holdings such
as Great Western Financial, Nationsbank, BankAmerica, McKesson, Allegiance,
Cooper Cameron, Xerox, and Telebras, A.D.R., the Brazilian telephone company.
Relative performance results were penalized by holdings including First
Brands, La Quinta Inns, Grand Casinos, Lockheed Martin, Cabletron Systems,
Consolidated Freightways and Northeast Utilities.
It is both an honor and a pleasure to be managing your investment assets.
Sincerely,
[Timothy M. Ghriskey signature logo]
Timothy M. Ghriskey
Portfolio Manager
March 19, 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 SPX market capitalization is in the Value Index
DREYFUS GROWTH OPPORTUNITY FUND, INC. FEBRUARY 28, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS GROWTH
OPPORTUNITY FUND, INC.
AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
[Exhibit A:
$201,709
Standard & Poor's 500
Composite Stock
Price Index*
Dollars
$166,808
Dreyfus Growth
Opportunity Fund
2/4/72
(years shown above are as of month end February)
*Source: Lipper Analytical Services, Inc.]
<TABLE>
<CAPTION>
Average Annual Total Returns
One Year Ended Five Years Ended Ten Years Ended From Inception (2/4/72)
February 28, 1997 February 28, 1997 February 28, 1997 to February 28, 1997
-------------------- -------------------- -------------------- -----------------------
<S> <C> <C> <C>
22.35% 9.44% 10.45% 11.88%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Growth
Opportunity Fund, Inc. on 2/4/72 (Inception Date) to a $10,000 investment
made in the Standard & Poor's 500 Composite Stock Price Index on that date.
For comparative purposes, the value of the Index on 1/31/72 is used as the
beginning value on 2/4/72. All dividends and capital gain distributions are
reinvested.
The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Standard & Poor's 500 Composite Stock Price
Index is a widely-accepted, unmanaged index of overall stock market
performance which does not take into account charges, fees and other
expenses. Further information relating to Fund performance, including expense
reimbursements, if applicable, is contained in the Financial Highlights
section of the Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1997
Common Stocks-94.0% Shares Value
------- -------
<S> <C> <C>
Consumer Durables-4.3% General Motors......................... 154,000 $ 8,912,750
Newell................................. 300,000 11,137,500
-------
20,050,250
-------
Consumer Non-Durables-10.2% First Brands........................... 340,000 8,457,500
Kimberly-Clark......................... 90,000 9,540,000
Philip Morris Cos...................... 77,000 10,404,625
Reebok International................... 207,000 9,677,250
Warnaco Group, Cl. A................... 312,000 9,945,000
-------
48,024,375
-------
Consumer Services-2.6% Grand Casinos.......................... 292,500 3,217,500
La Quinta Inns......................... 450,000 8,887,500
-------
12,105,000
-------
Electronic Technology-13.6% Cabletron Systems 244,000 (a) 7,320,000
Intel.................................. 71,000 10,073,125
International Business Machines........ 58,000 8,337,500
Lockheed Martin........................ 100,000 8,850,000
Micron Technology...................... 295,000 11,062,500
Seagate Technology..................... 230,000 (a) 10,867,500
Storage Technology..................... 185,000 (a) 7,723,750
-------
64,234,375
-------
Energy Minerals-5.8% Mobil.................................. 70,000 8,592,500
Phillips Petroleum..................... 215,000 8,895,625
Tosco.................................. 358,500 9,993,188
-------
27,481,313
-------
Finance-15.8% Allstate............................... 146,000 9,252,750
BankAmerica............................ 91,000 10,351,250
Chase Manhattan........................ 103,000 10,312,875
Federal Home Loan Mortgage............. 352,000 10,472,000
Great Western Financial................ 310,000 13,601,250
NationsBank............................ 200,000 11,975,000
PMI Group.............................. 160,000 8,760,000
-------
74,725,125
-------
Health Services-4.4% Allegiance............................. 381,000 10,048,875
McKesson............................... 160,000 10,600,000
-------
20,648,875
-------
Health Technology-2.3% Forest Laboratories, Cl. A............. 285,000 (a) 10,865,625
-------
Industrial Services-1.9% Cooper Cameron......................... 136,000 (a) 8,908,000
-------
Non-Energy Minerals-2.4% Aluminum Co. of America 157,000 11,186,250
-------
Process Industries-2.0% duPont (E.I.) de Nemours 87,000 9,330,750
-------
Producer Manufacturing-10.2% General Signal.. 200,000 8,725,000
Masco................................... 280,000 9,835,000
Olin.................................... 227,000 9,080,000
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997
Common Stocks (continued) Shares Value
------- -------
Producer
Manufacturing (continued) Raychem................................. 108,000 $ 9,193,500
Xerox................................... 183,000 11,437,500
-------
48,271,000
-------
Retail Trade-4.1% Dayton Hudson.......................... 225,000 9,450,000
Pier 1 Imports......................... 565,000 9,816,875
-------
19,266,875
-------
Transportation-2.1% Consolidated Freightways............... 400,000 9,900,000
-------
Utilities-12.3% Coastal................................ 205,000 9,327,500
El Paso Natural Gas.................... 189,996 10,188,535
Hong Kong Telecom, A.D.R............... 520,000 9,035,000
Northeast Utilities.................... 762,000 7,905,750
Telecomunicacoes Brasileirs-Telebras, A.D.R 115,000 11,155,000
Tenaga Nasional Berhad................. 2,185,000 10,480,250
-------
58,092,035
-------
TOTAL COMMON STOCKS
(cost $382,967,168).................. $443,089,848
=======
Convertible Preferred Stocks-2.3%
Energy Minerals;Petroleo Brasileiro S/A-Petrobras
(cost $9,682,620).................... 53,000 $ 10,843,087
=======
Principal
Short-Term Investments-3.5% Amount
-------
U.S. Treasury Bills: 5.30%, 3/13/97......................... $ 101,000 $ 100,841
5.29%, 4/10/97......................... 507,000 504,186
5.12%, 4/24/97......................... 394,000 391,029
5.26%, 5/15/97......................... 5,304,000 5,248,096
5.05%, 5/22/97......................... 4,405,000 4,354,255
5.30%, 5/29/97......................... 6,077,000 6,000,551
-------
TOTAL SHORT-TERM INVESTMENTS
(cost $16,601,692)................... $ 16,598,958
=======
TOTAL INVESTMENTS (cost $409,251,480)....................................... 99.8% $470,531,893
==== =======
CASH AND RECEIVABLES (NET).................................................. .2% $ 1,128,269
==== =======
NET ASSETS.................................................................. 100.0% $471,660,162
==== =======
Notes to Statement of Investments:
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997
Cost Value
------- -------
ASSETS: Investments in securities-See Statement of Investments $409,251,480 $470,531,893
Cash....................................... 279,113
Dividends receivable....................... 848,776
Receivable for investment securities sold.. 429,479
Prepaid expenses........................... 50,572
-------
472,139,833
-------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 331,263
Payable for shares of Common Stock redeemed 70,889
Accrued expenses........................... 77,519
-------
479,671
-------
NET ASSETS.................................................................. $471,660,162
=======
REPRESENTED BY: Paid-in capital............................ $384,675,853
Accumulated undistributed investment income-net 590,413
Accumulated net realized gain (loss) on investments 25,115,743
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 61,278,153
-------
NET ASSETS.................................................................. $471,660,162
=======
SHARES OUTSTANDING
(100 MILLION SHARES OF $.01 PAR VALUE COMMON STOCK AUTHORIZED).............. 46,147,406
NET ASSET VALUE, offering and redemption price per share.................... $10.22
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1997
INVESTMENT INCOME
INCOME: Cash dividends (net of $52,755 foreign taxes
withheld at source).................... $ 7,776,646
Interest................................... 793,616
-------
Total Income........................... $ 8,570,262
EXPENSES: Management fee-Note 3(a)................... 3,268,604
Shareholder servicing costs-Note 3(b)...... 1,067,204
Directors' fees and expenses-Note 3(c)..... 74,079
Registration fees.......................... 72,209
Professional fees.......................... 59,761
Custodian fees-Note 3(b)................... 46,709
Prospectus and shareholders' reports....... 33,447
Interest-Note 2............................ 3,179
Miscellaneous.............................. 2,875
-------
Total Expenses......................... 4,628,067
-------
INVESTMENT INCOME-NET....................................................... 3,942,195
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments and
foreign currency transactions.......... $76,302,661
Net realized gain (loss) on forward
currency exchange contracts............ 1,164,623
Net realized gain (loss) on financial futures
Short transactions..................... 232,200
-------
Net Realized Gain (Loss)............... 77,699,484
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions...... 9,461,455
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 87,160,939
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $91,103,134
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
February 28, 1997 February 29, 1996
--------------- ---------------
OPERATIONS:
Investment income-net.............................................. $ 3,942,195 $ 3,652,873
Net realized gain (loss) on investments............................ 77,699,484 50,930,644
Net unrealized appreciation (depreciation) on investments.......... 9,461,455 42,207,027
-------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 91,103,134 96,790,544
-------- --------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net......................................... (3,443,419) (4,560,750)
From net realized gain on investments.............................. (51,853,831) (49,121,207)
In excess of net realized gain on investments...................... --- (729,910)
-------- --------
Total Dividends.................................................. (55,297,250) (54,411,867)
-------- --------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold...................................... 662,770,682 328,651,642
Dividends reinvested............................................... 53,467,286 52,738,775
Cost of shares redeemed............................................ (699,623,243) (376,842,186)
-------- --------
Increase (Decrease) in Net Assets from Capital Stock Transactions 16,614,725 4,548,231
-------- --------
Total Increase (Decrease) in Net Assets........................ 52,420,609 46,926,908
NET ASSETS:
Beginning of Period................................................ 419,239,553 372,312,645
-------- --------
End of Period...................................................... $ 471,660,162 $ 419,239,553
======== ========
UNDISTRIBUTED INVESTMENT INCOME-NET.................................. $ 590,413 $ 91,637
-------- --------
Shares Shares
-------- --------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................ 65,581,850 34,615,381
Shares issued for dividends reinvested............................. 5,657,914 5,855,690
Shares redeemed.................................................... (68,950,505) (39,577,869)
-------- --------
Net Increase (Decrease) in Shares Outstanding.................... 2,289,259 893,202
======== ========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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.
<TABLE>
<CAPTION>
Fiscal Year Ended February,
--------------------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 9.56 $ 8.67 $10.89 $12.21 $13.20
---- ---- ---- ---- ----
Investment Operations:
Investment income (loss)-net................. .10 .10 .10 (.02) .01
Net realized and unrealized gain (loss)
on investments............................. 1.93 2.19 (.38) 1.30 (.98)
---- ---- ---- ---- ----
Total from Investment Operations............. 2.03 2.29 (.28) 1.28 (.97)
---- ---- ---- ---- ----
Distributions:
Dividends from investment income-net......... (.09) (.12) (.09) -- (.02)
Dividends from net realized gain on investments (1.28) (1.26) (1.80) (2.60) --
Dividends in excess of net realized gain on investments -- (.02) (.05) -- --
---- ---- ---- ---- ----
Total Distributions.......................... (1.37) (1.40) (1.94) (2.60) (.02)
---- ---- ---- ---- ----
Net asset value, end of period............... $10.22 $ 9.56 $ 8.67 $10.89 $12.21
==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN.......................... 22.35% 27.37% (2.11%) 11.07% (7.36%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... 1.06% 1.04% 1.10% 1.09% 1.00%
Ratio of net investment income (loss)
to average net assets...................... .91% .91% 1.09% (.14%) .11%
Portfolio Turnover Rate...................... 137.38% 268.40% 242.75% 194.59% 90.03%
Average commission rate paid *............... $.0578 $.0790 -- -- --
Net Assets, end of period (000's Omitted).... $ 471,660 $419,240 $372,313 $463,323 $569,791
*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
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 (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 February 28, 1997, there were
no outstanding borrowings under the Facility.
The average daily amount of borrowings outstanding under a previous line
of credit during the period ended February 28, 1997 was approximately
$48,000, with a related weighted average annualized interest rate of 6.57%.
The maximum amount borrowed under this line of credit at any time during the
period ended February 28, 1997 was $10.1 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 11\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
February 28, 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 February 28, 1997, the Fund was charged an aggregate
of $656,286 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 $268,918 during the period ended February 28, 1997.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period from May 10, 1996 through
February 28, 1997, $37,436 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 February 28, 1997, amounted to
$576,334,987 and $614,712,306, 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 (CONTINUED)
which is typically limited to the unrealized gain on each contract. At
February 28, 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. 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. At
February 28, 1997, there were no financial futures contracts outstanding.
(B) At February 28, 1997, accumulated net unrealized appreciation on
investments was $61,280,413, consisting of $70,217,623 gross unrealized
appreciation and $8,937,210 gross unrealized depreciation.
At February 28, 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).
DREYFUS GROWTH OPPORTUNITY FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS GROWTH OPPORTUNITY FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Growth Opportunity Fund, Inc., including the statement of
investments, as of February 28, 1997, 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 and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of
February 28, 1997 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Growth Opportunity Fund, Inc. at February 28, 1997, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
[ERNST & YOUNG LLP signature logo]
New York, New York
April 2, 1997
DREYFUS GROWTH OPPORTUNITY FUND, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.395 per share as a
long-term capital gain distribution of the $1.365 per share paid on December
16, 1996.
The Fund also designates 13.29% of the ordinary dividends paid during the
fiscal year ended February 28, 1997 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1998 of
the percentage applicable to the preparation of their 1997 income tax
returns.
[Dreyfus lion "d" logo]
Registration Mark
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. 018AR972
Dreyfus logo]
Registration Mark
Growth
Opportunity
Fund, Inc.
Annual Report
February 28, 1997
