DREYFUS GROWTH OPPORTUNITY FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
The Dreyfus Growth Opportunity Fund, Inc. completed its annual reporting
period ended February 28, 1998. Over this period, your Fund produced a total
return of 15.62%* which compares with a total return of 34.99% for the
Standard and Poor's 500 Composite Stock Price Index (the "S&P 500")** and
30.98% for the Standard and Poor's Barra Value Index.***
The performance results of the Fund during this measurement period were
certainly below our expectations relative to these indices. Given that we
position the Fund for where we believe the market is going and not where it
has been, it can occasionally take some time for the market to realize the
value of our investments. Value investing can require some patience.
Regardless, we have made changes in the holdings, and hope to look back on
this period as one of abnormality.
Economic Review
Accumulating evidence indicates that the economy may have started a shift
toward slower growth this winter. Unlike the late phases of other postwar
business cycles, this year's shift to slower real economic growth is
occurring in tandem with decelerating price inflation. Hence, growth in the
nominal dollar economy (before adjusting for inflation), which determines
overall corporate revenues, could slow considerably. Meanwhile, wage growth
began to accelerate last fall. Slower revenue growth and rising costs have
begun to squeeze profit margins in some sectors, although overall corporate
profit growth has stayed positive. Earlier this year, the Federal Reserve
Board (the "Fed") shifted to a neutral policy stance, abandoning last year's
tightening bias. This stable policy has kept short-term rates steady,
thwarting market expectations for a sustained drop in long-term rates.
The shift to slower economic growth is not broad-based. Rather, the
available evidence shows that it predominantly affects manufacturers. This is
indicated by falling export orders, sluggish capital goods orders, weak
automobile production and a shorter manufacturing workweek. By contrast,
strength in the service-producing sector persists unabated. While employment
costs seem well controlled in the manufacturing sector, wages and benefits
paid to service sector workers began to accelerate last fall. The picture
emerging is of late-cycle inflation pressures developing for services in the
domestic economy alongside deterioration in the traded goods economy.
Overall corporate profits posted positive surprises throughout 1997. For
manufacturers, profits were boosted by strong demand as well as higher
productivity and lower unit labor costs. This year, many manufacturers face a
deterioration of their gross revenues. For service sector companies, last
year's profits were boosted by strong demand growth. This year, some service
companies may enjoy a window of opportunity to raise prices, but the risk to
profit growth is that power to counteract rising labor costs by raising
prices may be diminished.
The above hot and cold mix to slower economic growth has kept the Fed's
policy neutral, at least for now. Although long-term bond yields are below
year-ago levels, substantially lower yields have proven difficult to attain
in the absence of lower short-term rates.
This kind of environment can foster a healthy economic outlook for the
long run, but may be vulnerable to short-term surprises.
Market Overview
Only four months after enduring the largest-ever one-day drop in the Dow
Jones Industrial Average, the stock market was back again setting new records
by the end of February.
The widely followed Dow Jones Industrials had broken new ground, and the
more widely based S&P 500 had also achieved a new record. Smaller stocks, as
represented by the Russell 2000 Index, had not recouped the ground lost last
fall,
and the NASDAQ Composite, while close to its previous high, had not climbed
all the way back. Yet signs of market strength continued into early March,
especially for the largest stocks.
How solid was this recovery from last October's lows? One lesson to be
learned was that the market was highly sensitive to any bad news, especially
about corporate profits. Despite the market's resilience, a number of stocks
- - particularly in the electronics sector - suffered reverses when companies
forecast lower earnings for the early months of 1998.
In late 1997, large stocks, particularly heavily capitalized global
corporations, had been depressed in price by the so-called "Asian flu" - the
severe financial problems affecting Japan, Korea, Singapore, Thailand,
Indonesia and the Philippines. In the new year, however, these companies
appeared to make an adjustment to the Asian problems. In addition, very large
companies were sought out by investors as offering a better refuge in
uncertain times than small and medium-size companies.
And the weapons-inspection crisis with Iraq, though it eased with an
agreement at the close of the fiscal period, provided more reasons for
investors to seek out the large, well-established stocks.
As the stock market approached its spring quarter, there was no shortage
of reasons to worry whether the recent strength could be maintained. For one,
there was the ever-present fear that the Fed might try to curb ebullience in
the market - and the U.S. economy - by raising interest rates again. Also,
there were predictions that the Asian flu had yet to make its full force felt
in the American economy. Then there were the uncertainties brought on by the
White House scandals, continued defiance by Iraq's Saddam Hussein, and the
advance shadow of the approaching midterm elections.
Even though interest rates have crept up in early 1998, the average price
of stocks in the S & P 500 stood at 26 times operating earnings at the end of
February compared to 20.7 a year earlier. And the dividend yield of stocks in
the S&P 500 was at an all-time low of 1.51%.
Nonetheless, the resilience of the stock market was supported by a number
of impressive factors. Inflation is lower than at any time in a generation.
Interest rates are low by most recent standards. And corporate profits,
though likely to be lower than last year, have still been growing at
double-digit rates. In addition, cash flows into mutual funds and into stocks
have been setting new records.
Market bears interpret these developments as signs that a market "top" is
close at hand. However, recent swings in stock prices indicate that many
investors still regard drops in the market as a good opportunity to acquire
more shares at reasonable prices.
Portfolio Focus
Performance during this past year was somewhat restrained by our
disciplined value investing approach. As the period began, we believed that
the valuation of most major market benchmarks and many of the largest
securities had become excessive during this past year, and we constructed an
investment portfolio with a relatively low correlation to the S&P 500. In
doing so, we believed that the risk level of the Fund was significantly lower
than that of major benchmarks, and that the values we uncovered would
eventually be realized. While the market was more than cooperative through
much of the year, during the fall months the Fund was negatively impacted by
the Asian economic crisis. Many of the same companies and sectors that had
done so well earlier in the year were penalized during the fourth calendar
quarter due to either export exposure to Asian countries or commodity
exposure that might hurt selling prices in a weaker global marketplace. Late
in the calendar year, we restructured the Fund's security holdings for this
new economic environment, favoring domestically oriented companies and
businesses with less economic cyclicality.
Value Investing and Our Investment Process
To briefly review our investment philosophy, while there are other
investment disciplines practiced at Dreyfus, we are passionate believers in
value investing. Paying attention to the value of securities has proven in
numerous industry and academic studies to result in superior and more
consistent long-term investment returns. As value investors, we want to buy
growing companies, but we want to pay as little for them as we have to. In
this sense, it is designed to be a lower-risk, more conservative style of
equity investing.
Our approach to the selection of securities starts and ends with our
analysts, who are an integral part of our investment team. Our Dreyfus
analysts contribute their proprietary forecasts to our computer models, their
analysis and opinions to our decision-making process, and their constant flow
of information to our ongoing assessment of owned securities. We screen the
universe of stocks by computer according to two principal methods. The first
computer screen determines value by calculating each security's earnings
yield (our forecast for earnings divided by the security price) which, to
justify purchase, must be greater than the risk-free yield available on
reasonably long-term U.S. Treasury securities. Being paid more than this
risk-free rate for the risk inherent in equity investing is central to our
value discipline. The second computer screen looks at 19 other factors that
have historically influenced stock returns. We input into this model the
current economic and stock market trends, and the computer calculates each
security's exposure to this environment. Combining all of this data with our
analysts' in-depth knowledge of the individual companies, we then construct a
portfolio of approximately 50 securities. We use the same disciplined criteria
and several other factors to determine when selling a security is in our
shareholders' best interest.
Examples of Our Investment Process
While discussing all the detail that goes into the decision-making and
implementation process of buying, owning and eventually selling a security in
the Fund is not possible in this short report, provided below are several
brief examples of securities actually owned by your Fund.
One of the securities in the Fund during part of the annual period was
Owens-Illinois, primarily a manufacturer of glass containers for consumable
items like food and beverages. We bought the stock in November of 1997 and
continued to own it at the end of the Fund's fiscal year.
When we evaluated Owens-Illinois, our computer model showed it to be a
competitively priced value stock. We expected to be paid in total earnings
power more than the risk-free interest rate than we could have received from
a fairly long-term U.S. Treasury investment. Additionally, our multifactor
computer model calculated an overall score for Owens-Illinois of +3, with
zero being the average security score. Various factors in the model
demonstrated that the security's growth was being offered for sale at a
discount, that its reported earnings would likely be above consensus
expectations, and that the company was well positioned for the current
economic and market environment. The glass container industry had
consolidated from about sixteen North American manufacturers in 1981 to only
three major players today, and this oligopoly was expected to lead to higher
selling prices. Further, the trend away from glass containers appeared to be
stabilizing, if not reversing, as glass gives a perception of quality.
International markets were the primary future growth engines for the company
since, by offering to share its proprietary manufacturing technology,
Owens-Illinois had the inside track on making acquisitions of foreign
companies. Finally, management itself owned 20% of the company, and we
believe it to be an advantage when management's financial interests are the
same as those of our shareholders.
Owens-Illinois appreciated nicely and remained an attractive investment
for the Fund as of the date of this letter. Operations remained fundamentally
strong. During 1997, the company delivered earnings per share more than ten
cents greater than Wall Street analysts had been forecasting a year before
when we had first started our in-depth analysis of the company.
During the annual period, Digital Equipment was a Fund holding that
initially did not perform well but had its inherent value realized via a
takeover by Compaq Computer. Digital is a computer hardware and services
company that became tarnished by the Asian economic crisis, given its
significant exposure to those foreign markets. When we purchased the stock in
late October, the timing was unfortunate since its stock price was hurt only
days later by the overall stock market's negative reaction to the Asian
crisis. Eventually the stock price declined enough that it triggered one of
our security sale rules which attempts to protect the Fund from large losses.
After carefully reconsidering the investment thesis behind our holding and
all available fundamental data, we decided to retain ownership at least
temporarily. Digital's stock price subsequently stopped declining,
appreciated sharply in mid-January of 1998, and the company received a
takeover proposal from Compaq Computer later that month. The result was that
Digital became a solid winner for the Fund.
Intel, the computer microprocessor manufacturer of the actual "brains" of
computers, was already held in the Fund at the start of the fiscal year.
According to our computer valuation model, Intel was a value stock given an
earnings yield greater than the 5-year U.S. Treasury Bond yield. Our
multifactor computer-model score was only average for the security, but we
believed that this data told only part of the story and that other strong
fundamental factors existed to warrant purchase. Primarily, Wall Street
analysts had become pessimistic about the stock, depressing the share price,
because of its product transition to the new Pentium II microprocessor.
Delays and fire sale pricing of old microprocessors were the primary concerns
of the consensus analysis. In all of this pessimism and concern over what we
believed were transitory issues, we saw opportunity.
In mid-August of 1997, we sold Intel when the valuation of the security
could no longer be justified. Due to appreciation in the stock price, Intel's
earnings yield had dropped below the minimum risk-free interest rate, that of
the 90-day U.S. Treasury Bill. At this point, we were no longer being paid
even the minimum risk-free rate to own the security and, theoretically at
such a level, we would prefer to own the risk-free security. We sold the
stock and looked for another inexpensive equity security in which to reinvest
the proceeds. Additionally, while Intel's operating fundamentals at the time
remained strong, we were worried that Wall Street analysts had become too
optimistic about the company and that expectations had become too high. In
fact, soon after our sale, overly optimistic Wall Street earnings estimates
were cut and the stock entered a period of underperformance that lasted
through the end of the year. During the period that we owned the stock, it
made a significant contribution to the Fund's total return.
This type of detailed fundamental analysis is performed every day for
your Fund. Obviously, not all portfolio holdings have been as rewarding as
those discussed in this letter, but every current and potential new holding
within the Fund is subjected to the same rigorous standards on a regular
basis. Of course, portfolio holdings may change at any time, and specific
companies mentioned in this letter may no longer be Fund holdings.
Plus and Minus
In addition to Owens-Illinois, Digital Equipment and Intel, investment
results during this annual period benefited from holdings such as CNF
Transportation, Equitable Cos., Cooper Cameron, Travelers, Storage
Technology, Dayton Hudson, and Pier 1 Imports. Relative performance results
during the fiscal year were penalized by holdings including Cabletron
Systems, Micron Technology, 3Com, Georgia-Pacific, Adaptec, and Fruit of the
Loom, Cl.A.
We will continue to manage your investments with dedication and
discipline.
Sincerely,
[Timothy M. Ghriskey signature logo]
Timothy M. Ghriskey
Portfolio Manager
March 25, 1998
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.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - 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.
DREYFUS GROWTH OPPORTUNITY FUND, INC. FEBRUARY 28, 1998
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:
Dollars
$272,284
Standard & Poor's 500
Composite Stock
Price Index*
$192,859
Dreyfus Growth
Opportunity Fund, Inc.
*Source: Lipper Analytical Services, Inc.]
Average Annual Total Returns
<TABLE>
<CAPTION>
One Year Ended Five Years Ended Ten Years Ended From Inception (2/4/72)
February 28, 1998 February 28, 1998 February 28, 1998 to February 28, 1998
____________________ ____________________ _____________________ __________________________
<S> <C> <C>
15.62% 14.40% 12.07% 12.02%
</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, 1998
Common Stocks-95.7% Shares Value
_____________ _____________
<S> <C> <C> <C>
Commercial Services-2.1% Ikon Office Solutions 320,000 $ 10,460,000
_____________
Consumer Durables-2.1% General Motors 159,000 10,961,063
_____________
Consumer Non-Durables-8.6% Kimberly - Clark 215,000 11,972,812
Philip Morris Cos...................... 251,000 10,902,812
RJR Nabisco Holdings................... 275,000 9,504,688
Warnaco Group, Cl. A................... 312,000 11,583,000
_____________
43,963,312
_____________
Consumer Services-3.8% Circus Circus Enterprises 325,000 (a) 7,150,000
La Quinta Inns......................... 565,000 12,006,250
_____________
19,156,250
_____________
Electronic Technology-12.8% Adaptec.................................. 215,000 (a) 5,684,062
Ceridian............................... 220,000 10,243,750
Digital Equipment...................... 200,000 (a) 11,387,500
International Business Machines........ 116,000 12,114,750
Lockheed Martin........................ 100,000 11,668,750
Raytheon, Cl. A........................ 10,139 588,062
Storage Technology..................... 193,000 (a) 13,172,250
_____________
64,859,124
_____________
Energy Minerals-10.3% British Petroleum, A.D.S................................... 120,000 9,922,500
Mobil.................................. 140,000 10,141,250
Phillips Petroleum..................... 215,000 10,535,000
Tosco.................................. 323,500 12,009,937
USX - Marathon Group................... 284,000 9,815,750
_____________
52,424,437
_____________
Finance-18.5% Allstate.................................. 100,000 9,325,000
BankAmerica............................ 153,000 11,857,500
Bankers Trust New York................. 95,000 11,233,750
Chase Manhattan........................ 95,000 11,785,937
Citicorp............................... 77,000 10,202,500
Equitable Cos.......................... 256,000 13,392,000
NationsBank............................ 192,000 13,152,000
Travelers.............................. 234,500 13,073,375
_____________
94,022,062
_____________
Health Technology-4.6% Amgen.................................. 195,000 (a) 10,359,375
Biogen................................. 300,000 13,237,500
_____________
23,596,875
_____________
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Common Stocks (continued) Shares Value
_____________ _____________
Industrial Services-1.7% Cooper Cameron.................................. 159,000 (a) $ 8,526,375
_____________
Process Industries-2.1% Owens - Illinois 286,000 (a) 10,975,250
_____________
Producer Manufacturing-9.2% General Electric 200,000 15,550,000
Masco.................................. 182,000 9,896,250
Raychem................................ 220,000 9,556,250
Xerox.................................. 135,000 11,972,813
_____________
46,975,313
_____________
Retail Trade-4.8% American Stores.................................. 500,000 12,593,750
Sears, Roebuck......................... 220,000 11,673,750
_____________
24,267,500
_____________
Transportation-4.1% CNF Transportation.................................. 262,000 10,250,750
CSX......................................... 187,000 10,460,313
_____________
20,711,063
_____________
Utilities-11.0% AT&T.................................. 200,000 12,175,000
Ameritech.............................. 246,000 10,255,125
Coastal................................ 180,000 11,452,500
Dominion Resources..................... 86,000 3,429,250
Empresa Nacional Electricidad, A.D.S... 495,000 9,126,563
Telefonos de Mexico, Cl. L, A.D.R...... 185,000 9,377,188
_____________
55,815,626
_____________
TOTAL COMMON STOCKS
(cost $385,895,976).................. $486,714,250
=============
Convertible Preferred Stocks-2.1%
Banking; Sanwa Fin., 1.25% (Units)
(cost $10,224,504)................... 425 (b) $ 10,389,076
=============
Principal
Convertible Corporate Bonds-1.9% Amount
_____________
Finance; Sumitomo Bank Treasury Company, Bond,
9.40%, 12/29/2049
(cost $9,480,000).................... $ 9,400,000 (b) $ 9,606,913
=============
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Short-Term Investments-2.8% Amount Value
_____________ _____________
U.S. Treasury Bills; 5.28%, 4/23/1998
(cost $14,355,555)................... $14,468,000 (c) $ 14,353,847
=============
TOTAL INVESTMENTS (cost $419,956,035)....................................... 102.5% $521,064,086
======= =============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (2.5%) $ (12,501,633)
======= =============
NET ASSETS.................................................................. 100.0% $508,562,453
======= =============
</TABLE>
Notes to Statement of Investments:
(a) Non-income producing.
(b) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At February 28,
1998, these securities amounted to $19,995,989 or approximately 3.9% of net
assets.
(c) Partially held by custodian in a segregated account as collateral for open
Financial Futures positions.
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES FEBRUARY 28, 1998
Market Value Unrealized
Covered by Appreciation
Financial Futures: Contracts Contracts Expiration at 2/28/98
_______________ ________ ____________ _________ ____________
<S> <C> <C> <C> <C>
S & P 500 March.............................. 25 $6,565,625 March 1998 $19,186
========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998
Cost Value
_____________ _____________
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $419,956,035 $521,064,086
Cash....................................... 543,272
Receivable for investment securities sold.. 3,717,476
Dividends and interest receivable.......... 756,198
Receivable for shares of Common Stock subscribed 37,639
Prepaid expenses........................... 31,369
_____________
526,150,040
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 366,872
Payable for investment securities purchased 10,224,504
Payable for shares of Common Stock redeemed 6,882,132
Payable for futures variation margin-Note 4(a) 10,000
Accrued expenses........................... 104,079
_____________
17,587,587
_____________
NET ASSETS.................................................................. $508,562,453
=============
REPRESENTED BY: Paid-in capital............................ $417,386,757
Accumulated undistributed investment income-net....... 56,204
Accumulated distributions in excess of net realized
gain on investments......................... (10,007,745)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions
(including $19,186 net unrealized appreciation
on financial futures)-Note 4(b)............ 101,127,237
_____________
NET ASSETS.................................................................. $508,562,453
=============
SHARES OUTSTANDING
(100 million shares of $.01 par value Common Stock authorized).............. 50,108,086
NET ASSET VALUE, offering and redemption price per share.................... $10.15
======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1998
INVESTMENT INCOME
INCOME: Cash dividends (net of $108,293 foreign taxes
withheld at source).............. $ 7,114,000
Interest............................. 788,216
____________
Total Income................... $ 7,902,216
EXPENSES: Management fee-Note 3(a)............. 3,800,814
Shareholder servicing costs-Note 3(b) 1,203,892
Custodian fees-Note 3(b)............. 107,021
Directors' fees and expenses-Note 3(c) 77,867
Registration fees.................... 61,260
Professional fees.................... 54,832
Prospectus and shareholders' reports. 40,985
Interest expense-Note 2.............. 10,811
Loan commitment fees-Note 2.......... 7,718
Miscellaneous........................ 2,324
____________
Total Expenses................. 5,367,524
____________
INVESTMENT INCOME-NET................................................. 2,534,692
____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments and
foreign currency transactions.... $31,782,823
Net realized gain (loss) on forward currency
exchange contracts............... 201,646
Net realized gain (loss) on financial futures (421,675)
____________
Net Realized Gain (Loss)....... 31,562,794
Net unrealized appreciation (depreciation)
on investments and foreign currency transactions
(including $19,186 net unrealized appreciation
on financial futures)............ 39,849,084
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................ 71,411,878
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $73,946,570
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS GROWTH OPPORTUNITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
February 28, 1998 February 28, 1997
_________________ ________________
OPERATIONS:
<S> <C> <C>
Investment income-net.......................................... $ 2,534,692 $ 3,942,195
Net realized gain (loss) on investments........................ 31,562,794 77,699,484
Net unrealized appreciation (depreciation) on investments...... 39,849,084 9,461,455
_______________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations 73,946,570 91,103,134
_______________ _____________
DIVIDENDS TO SHAREHOLDERS:
From investment income-net..................................... (3,068,901) (3,443,419)
From net realized gain on investments.......................... (56,678,537) (51,853,831)
In excess of net realized gain on investments.................. (10,007,745) ----
_______________ _____________
Total Dividends.............................................. (69,755,183) (55,297,250)
_______________ _____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.................................. 1,048,195,184 662,770,682
Dividends reinvested........................................... 67,665,439 53,467,286
Cost of shares redeemed........................................ (1,083,149,719) (699,623,243)
_______________ _____________
Increase (Decrease) in Net Assets from Capital Stock Transactions...... 32,710,904 16,614,725
_______________ _____________
Total Increase (Decrease) in Net Assets.................. 36,902,291 52,420,609
NET ASSETS:
Beginning of Period............................................ 471,660,162 419,239,553
_______________ _____________
End of Period.................................................. $ 508,562,453 $ 471,660,162
=============== =============
Undistributed investment income-net................................ $ 56,204 $ 590,413
_______________ _____________
Shares Shares
_______________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold.................................................... 100,050,474 65,581,850
Shares issued for dividends reinvested......................... 7,113,151 5,657,914
Shares redeemed................................................ (103,202,945) (68,950,505)
_______________ _____________
Net Increase (Decrease) in Shares Outstanding................ 3,960,680 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.
Fiscal Year Ended February 28,
______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $10.22 $ 9.56 $ 8.67 $10.89 $12.21
_______ _______ _______ _______ _______
Investment Operations:
Investment income (loss)-net................. .05 .10 .10 .10 (.02)
Net realized and unrealized gain (loss) on investments 1.39 1.93 2.19 (.38) 1.30
_______ _______ _______ _______ _______
Total from Investment Operations............. 1.44 2.03 2.29 (.28) 1.28
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income-net......... (.07) (.09) (.12) (.09) -
Dividends from net realized gain on investments (1.22) (1.28) (1.26) (1.80) (2.60)
Dividends in excess of net realized gain on investments (.22) - (.02) (.05) -
_______ _______ _______ _______ _______
Total Distributions.......................... (1.51) (1.37) (1.40) (1.94) (2.60)
_______ _______ _______ _______ _______
Net asset value, end of period............... $10.15 $10.22 $ 9.56 $ 8.67 $10.89
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN.......................... 15.62% 22.35% 27.37% (2.11%) 11.07%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... 1.06% 1.06% 1.04% 1.10% 1.09%
Ratio of net investment income (loss) to average net assets .50% .91% .91% 1.09% (.14%)
Portfolio Turnover Rate...................... 112.32% 137.38% 268.40% 242.75% 194.59%
Average commission rate paid*................ $.0515 $.0578 $.0790 - -
Net Assets, end of period (000's Omitted).... $508,562 $471,660 $419,240 $372,313 $463,323
</TABLE>
* 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.
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 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. Securities
for which there are no such valuations are valued at fair value as determined
in good faith under the direction of the Board of Directors. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange. Forward currency exchange contracts are valued
at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in the market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions and the difference
between the amount 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 investmen
ts 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.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-BANK 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 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.
The average daily amount of borrowings outstanding during the period
ended February 28, 1998 was approximately $182,500, with a related weighted
average annualized interest rate of 5.92%.
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 LLP, 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.
During the period ended February 28, 1998, there was no expense reimbursement
pursuant to the Agreement.
(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, 1998, the Fund was charged $821,355
pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the
period ended February 28, 1998, the Fund was charged $258,492 pursuant to the
transfer agency agreement.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended February 28, 1998,
the Fund was charged $107,021 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, 1998 amounted to
$548,357,901 and $566,927,976, respectively.
DREYFUS GROWTH OPPORTUNITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 which is typically limited to the
unrealized gain on each open contract. At February 28, 1998, 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.
Contracts open at February 28, 1998, and their related unrealized
appreciation are set forth in the Statement of Financial Futures.
(B) At February 28, 1998, accumulated net unrealized appreciation on
investments and financial futures was $101,127,237, consisting of
$108,302,473 gross unrealized appreciation and $7,175,236 gross unrealized
depreciation.
At February 28, 1998, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS 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 statements of
investments and financial futures, as of February 28, 1998, 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 the financial highlights. Our procedures
included verification by examination of securities held by the custodian as
of February 28, 1998 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, 1998, 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
March 31, 1998
DREYFUS GROWTH OPPORTUNITY FUND, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.255 per share as a
long-term capital gain distribution (of which 4.31% is subject to the 20%
maximum Federal tax rate) of the $.936 per share paid on December 15, 1997
and also designates $.242 per share as a long-term capital gain distribution
of the $.569 per share paid on March 31, 1997.
The Fund also designates 17.64% of the ordinary dividends paid during the
fiscal year ended February 28, 1998 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1999
of the percentage applicable to the preparation of their 1998 income tax
returns.
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. 018AR982
Registration Mark
[Dreyfus logo]
Growth
Opportunity
Fund, Inc.
Annual Report
February 28, 1998
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:
STANDARD
& POOR'S 500 DREYFUS
COMPOSITE GROWTH
PERIOD STOCK OPPORTUNITY
PRICE INDEX * FUND
2/4/72 10,000 10,000
2/29/72 10,278 9,960
2/28/73 11,081 8,820
2/28/74 9,867 7,160
2/28/75 8,771 7,080
2/29/76 11,165 10,682
2/28/77 11,636 11,262
2/28/78 10,667 12,211
2/28/79 12,440 16,629
2/29/80 15,505 26,925
2/28/81 18,855 33,910
2/28/82 17,137 26,074
2/28/83 23,716 34,885
2/29/84 26,285 39,066
2/28/85 31,768 37,827
2/28/86 41,448 49,397
2/28/87 53,679 61,723
2/29/88 52,230 61,686
2/28/89 58,429 71,300
2/28/90 69,443 75,369
2/28/91 79,610 81,796
2/29/92 92,307 106,260
2/28/93 102,129 98,441
2/28/94 110,626 109,343
2/28/95 118,742 107,041
2/29/96 159,902 136,342
2/28/97 201,709 166,808
2/28/98 272,284 192,859
*Source: Lipper Analytical Services, Inc.
