<PAGE>
Dreyfus
Growth
Opportunity
Fund, Inc.
Annual Report
February 28, 1999
<PAGE>
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by
The Dreyfus Corporation and the fund's other service providers do not
properly process and calculate date-related information from and after
January 1, 2000. The Dreyfus Corporation is working to avoid Year
2000-related problems in its systems and to obtain assurances from other
service providers that they are taking similar steps. In addition, issuers
of securities in which the fund invests may be adversely affected by Year
2000-related problems. This could have an impact on the value of the fund's
investments and its share price.
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Fellow Shareholder:
It is a pleasure to have this opportunity to communicate with my fellow
shareholders of the Dreyfus Growth Opportunity Fund, Inc.
This letter accompanies the annual report of the Dreyfus Growth Opportunity
Fund, Inc. for the 12-month period ended February 26, 1999. Over this period,
your fund produced a total return of 10.57%,* which compares with a total return
of 19.76% for the Standard and Poor's 500 Composite Stock Price Index (S&P
500),** and 4.26% for the Wilshire Large Company Value Index.***
The fund was partially restructured during the last quarter of the year, as a
result of slightly altering its investment strategy. During most of the year,
the fund was managed primarily under a disciplined "value investing" approach,
focusing on securities with high earnings yields (low price-to-earnings ratios).
Late in the year, we broadened the fund's investment focus. While we are still
sensitive to the value being paid for securities, we are taking a broader view
of value, including analysis of price to cash flow, price to sales, price to
book value, price to asset value, and valuation relative to growth rate. This
change has expanded our range of equity investments for the fund.
The relatively concentrated nature of the fund for much of the year, holding
approximately 46 securities during the first three quarters, made it more
volatile than the diversified indices referred to above, which are both composed
of approximately 147 to 500 securities. Given that the restructured portfolio
during much of the fourth quarter contained more than 100 securities, volatility
was reduced.
Value stocks underperformed growth stocks during the period. The margin was
among the widest in memory. The performance of the S&P 500 Index was largely
driven by a relatively few so-called "megacap" growth stocks or the very largest
domestically traded companies. The S&P 500 Index and many of its major security
components carry valuations well above those of any historic period by almost
any financial measure, according to our calculations. This concentrated
overvaluation, in our opinion, is reminiscent of the early 1970s' "nifty fifty"
stocks, or oil stocks in the early 1980s. Both of those markets ended with quick
and severe corrections of the overvalued securities. No one can predict such an
occurrence today, but many market participants may conclude that the risk level
of the S&P 500 Index, and many of its major security components, is high by
historic standards. Regardless, at least for the time being, positive price
momentum in this index and in many of these megacap stocks has continued, even
through this past summer's stock market correction and subsequent recovery.
The investment strategy for the fund over the past year generally kept it out
of what we considered were overvalued megacap securities. Many of these
high-priced megacap securities were the best performing stocks in the market,
restraining the fund's relative performance. This lack of value in megacap
securities was the primary reason why the fund underperformed the S&P 500 Index.
During the fourth quarter, we began to invest in some securities that our former
value process would have considered overvalued, but that our new, broader
process considered reasonably priced. Investment performance improved
considerably.
Your fund, which was managed using a value investment process during the
year, did handily *4 outperform the Wilshire Large Company Value Index for the
period. Strength was spread among various securities, many within the financial,
healthcare, communications and technology sectors of the market. Our bottoms-up
process has focussed and will continue to focus on selecting good companies, and
does not significantly over- or underweight economic sectors.
<PAGE>
Economic Review
Stresses in the financial system combined with slowing economic growth
convinced the Federal Reserve Board to lower short-term interest rates three
times during the fall of 1998: at the end of September, in mid-October, and in
mid-November. As the calendar year ended, the Fed's official stance toward rates
was neutral; they believed that they had successfully stabilized the financial
system and overall economic growth.
February 1999 saw the bond market send interest rates higher, however, as
investors worried about an acceleration in economic strength and the possibility
that the Fed might have to reverse itself and raise rates to slow economic
growth. During February, Fed Chairman Greenspan publicly worried that the Board
had gone too far with its mid-November action, which in retrospect may not have
been needed to stimulate the economy and may have actually caused some
overstimulation. The problem with too much growth is that it can become
uncontrollable, result in price inflation, and ultimately, in a recession.
Inflation, the Fed's other worry, remained well-contained throughout the
period. The decline in inflation and lower interest rates benefited companies
that sell to the consumer, as more income was left over after price increases to
buy goods and services, and the cost of debt was reduced. Home mortgages could
be refinanced at lower rates, for example, putting more discretionary income in
consumers' pockets. As consumers spent more, consumer-oriented companies
benefited.
The industrial sector has not been as fortunate. Weak Asian economies have
continued to put a damper on demand in a number of sectors such as world-traded
commodities (paper products, for example) and exporters of goods (some computer
equipment manufacturers, for example).
Stock Market Overview
The twelve-month period ended February 28, 1999 was highlighted in the U.S.
stock market by a drop in security prices during the summer months, and a
rebound in prices during the fall. Stocks declined over the summer due to
implosion of the Russian financial system and the collapse of a major U.S. hedge
fund, causing the Federal Reserve Board to take its first action lowering
interest rates during the period, which generally stabilized equity prices. The
two subsequent interest rate reductions by the Fed during the fall were probably
more directly related to worries about economic growth, and helped send stock
prices skyward.
Over the twelve-month period, large-cap growth stocks (the largest and most
expensively priced securities) turned in the highest returns, followed by
large-cap stocks in general, then large-cap value stocks (the largest companies
selling at value prices), midcap stocks (midsized companies) and finally
small-cap stocks which lost money. For example, the total return for the period
on the Russell 1000 *5 Growth Index (574 high-growth companies) was 26.55%, with
the Russell 1000 Index (1,000 of the largest companies) returning 18.02%, and
the Russell 1000 Value Index (710 value-priced companies) returning 9.20%. The
return on the Russell Midcap Index was 0.44%, while the small-cap Russell 2000
Index return was -14.14%.+
Expectations for slower profit growth at corporations have contributed to
the significant outperformance by a select few megacap growth stocks. Investors
have had more confidence in the consistent earnings growth from this small
group of stocks than for the broader stock market.
<PAGE>
Our Investment Process
We continue to practice a value-sensitive approach in managing the fund.
While we look for growing companies, we want to own securities selling at what
we believe are reasonable prices. Our focus is currently on well-established
companies with market capitalizations of $5 billion or greater. Most securities
in the fund currently pay dividends, and the fund's dividend yield is generally
close to that of the S&P 500.
We start with a list of over 1,500 equity securities that we consider
eligible for investment. To select about 100 securities for the fund, and to
help digest all of the fundamental data available on companies, we begin the
security selection process with our proprietary computer model. This model
identifies those securities that we feel offer the most appropriate exposure to
the current stock market and economic environments. This multifactor computer
model scores each stock based upon 21 different factors including various
growth, valuation, leverage, surprise and momentum factors.
Once a favorable stock is identified through our computer screen, our team of
analysts conducts in-depth fundamental analysis on the company. Our extensive
team of analysts kicks the tires on companies, visiting factories and
interviewing corporate management at different levels. Additionally, our
analysts interview customers, competitors and suppliers who might provide unique
information on the company. The overall focus of our analysts is to identify a
catalyst for positive change at a company: an unrecognized trigger event that
could result in the realization of the underlying value.
There are several reasons why a security might be sold. We constantly review
every holding in the fund, and conditions for a potential sale include a
negative score on our multifactor computer model, the discovery of unfavorable
fundamental information by our analyst, or deterioration in a security's share
price.
Turnover in the fund, defined as the buying and selling of portfolio
securities, is expected to be relatively restrained under our management, except
during periods of restructuring. In addition, attention is paid to the
realization of capital gains taxes and, when securities are to be sold, an
effort is made to realize long-term capital gains instead of short-term capital
gains. Of course, remember that the fund is not required to keep turnover or
distributions at any particular level, and that these rates will vary over time.
Examples of Our Investment Process
Describing the detailed fundamental analysis, computer modeling, and
portfolio strategy that go into the decision-making process for each security in
the fund is not possible in this short report. To generally illustrate our
process, provided below are several brief summaries of some of the better and
poorer performing securities within the fund's portfolio during the annual
period.
Perkin-Elmer's business with the most promise is the manufacturing of the
medical research equipment used to map the human gene. The future of ethical
drug discovery is focused on genetics. The stock has been a strong performer and
remained a holding at the end of the fund's fiscal year.
American International Group (AIG) is the world's largest insurance company,
focused primarily on the corporate property and casualty market worldwide. This
stock and most other financials staged an impressive rebound after last year's
worldwide financial crisis. AIG was one of the best-performing securities in the
fund. The security was a holding at fiscal year-end.
<PAGE>
Texaco was one of several poor performing energy securities in the fund
during the period and at fiscal year-end. While the fund has been underweighted
in the sector, some exposure was deemed necessary given the volatility of this
commodity, which can rebound quickly and unexpectedly.
Owens-Illinois, a virtual worldwide monopoly in glass packaging, has been
hurt by weak demand for packaged foods and beverages in the developing world.
The security performed poorly and was sold during the period as the economic
rebound in developing countries has been restrained.
In almost any fund there are both strong performing and poor performing
securities. Our job is to maximize the good and minimize the bad, while keeping
risk at tolerable levels. We will not be successful every quarter or every year,
but we work hard to reward our fellow investors over the long term.
Diligent management of your investment is our highest priority. Thank you for
entrusting us with your assets.
Sincerely,
/s/ Timothy M. Ghriskey
Timothy M. Ghriskey
Portfolio Manager
March 10, 1999
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: WILSHIRE ASSOCIATES, INC. -- Wilshire Asset Management's style
indexes are derived by applying screening criteria to a preliminary list
of companies for the top 750 universe. Companies that are placed in the
growth portfolio must rank high in terms of historical earnings, sales
growth, and return on equity. The value stocks are companies with low
price/earnings and price/book ratios and high yields.
+ SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- The Russell 1000 Index measures
the performance of the 1,000 largest companies in the Russell 3000 Index, which
represent approximately 89% of the total market capitalization of the Russell
3000 Index. The Russell 1000 Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 1000 Value Index measures the performance of those
Russell 1000 companies with lower price-to-book ratios and lower forecasted
growth values. The Russell Midcap Index consists of the bottom 800 securities in
the Russell 1000 Index as ranked by total market capitalization, and is a widely
accepted measure of medium-cap stock market performance. The Russell 2000 Index
is composed of the 2,000 smallest companies in the Russell 3000 Index. The
Russell 3000 Index is composed of 3,000 of the largest U.S. companies by market
capitalization. All indices are unmanaged and include reinvested dividends.
<PAGE>
Dreyfus Growth Opportunity Fund, Inc. February 28, 1999
- -------------------------------------------------------------------------------
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
Dollars
$326,087
Standard & Poor's 500
Composite Stock
Price Index*
$213,237
Dreyfus Growth
Opportunity Fund, Inc.
[INSERT PLOT POINT]
*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, 1999 February 28, 1999 February 28, 1999 to February 28, 1999
____________________ ____________________ __________________________ __________________________
<S> <C> <C> <C>
10.57% 14.29% 11.58% 11.97%
</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.
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments February 28, 1999
<TABLE>
<CAPTION>
Common Stocks--98.7% Shares Value
- ----------------------------------------------------------------------- ------------- ---------------
<S> <C> <C> <C>
Consumer Durables--1.6% Ford Motor............................ 59,000 $ 3,499,438
General Motors........................ 31,000 2,559,437
Newell................................ 25,000 1,062,500
-------------
7,121,375
-------------
Consumer Non-Durables--5.5% Anheuser-Busch Cos.................... 33,000 2,530,688
Clorox................................ 9,000 1,064,812
Coca-Cola............................. 65,000 4,155,938
Gillette.............................. 55,000 2,949,375
Kimberly-Clark........................ 26,000 1,228,500
PepsiCo............................... 70,000 2,633,750
Philip Morris Cos..................... 115,000 4,499,375
Procter & Gamble...................... 59,000 5,280,500
Unilever.............................. 15,000 1,086,562
-------------
25,429,500
-------------
Consumer Services--6.6% CBS................................... 49,000 1,806,875
Carnival.............................. 28,000 1,246,000
Cendant............................... 295,000 4,885,938
Clear Channel Communications.......... 20,000 (a) 1,200,000
Comcast, Cl. A........................ 26,000 1,844,375
Disney (Walt)......................... 99,000 3,483,562
McDonald's............................ 33,000 2,805,000
MediaOne Group........................ 26,000 (a) 1,417,000
Outdoor Systems....................... 12,000 (a) 335,250
Tele-Communications Ser. A Liberty Media 44,000 (a) 2,370,500
Tele-Communications Ser. A TCI Group.. 25,000 (a) 1,570,312
Time Warner........................... 82,000 5,289,000
Viacom, Cl. B......................... 25,000 (a) 2,209,375
-------------
30,463,187
-------------
Electronic Technology--16.7% Boeing................................ 69,000 2,453,812
Cisco Systems......................... 107,000 (a) 10,465,938
Compaq Computer....................... 119,000 4,194,750
Dell Computer......................... 61,000 (a) 4,887,625
EMC................................... 34,000 (a) 3,480,750
Hewlett-Packard....................... 50,000 3,321,875
Intel................................. 120,000 14,392,500
International Business Machines....... 45,000 7,650,000
Lucent Technologies................... 89,000 9,039,063
Motorola.............................. 41,000 2,880,250
Northern Telecom...................... 42,000 2,438,625
Perkin-Elmer.......................... 35,000 3,316,250
Storage Technology.................... 68,000 (a) 2,367,250
Sun Microsystems...................... 27,000 (a) 2,627,438
Texas Instruments..................... 19,000 1,694,562
United Technologies................... 10,000 1,238,750
-------------
76,449,438
-------------
</TABLE>
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments (continued) February 28, 1999
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ----------------------------------------------------------------------- ------------- ---------------
<S> <C> <C> <C>
Energy Minerals--5.0% British Petroleum Amoco, A.D.R........ 39,000 $ 3,315,000
Chevron............................... 30,000 2,306,250
Exxon................................. 116,000 7,721,250
Mobil................................. 37,000 3,077,937
Royal Dutch Petroleum, A.D.R.......... 103,000 4,519,125
Texaco................................ 26,000 1,210,625
USX-Marathon Group.................... 40,000 827,500
-------------
22,977,687
-------------
Finance--15.1% Allstate.............................. 55,000 2,062,500
American Express...................... 22,000 2,387,000
American General...................... 50,000 3,662,500
American International Group.......... 85,000 9,684,688
Associates First Capital, Cl. A....... 32,000 1,300,000
Bank of New York...................... 35,000 1,222,812
Bank One.............................. 57,000 3,063,750
BankAmerica........................... 125,000 8,164,063
Chase Manhattan....................... 62,000 4,936,750
Citigroup............................. 105,000 6,168,750
Federal Home Loan Mortgage............ 32,000 1,884,000
Federal National Mortgage Association. 48,100 3,367,000
First Union........................... 48,000 2,559,000
Fleet Financial Group................. 41,000 1,760,437
Merrill Lynch......................... 23,000 1,765,250
Morgan Stanley Dean Witter............ 42,000 3,801,000
National City......................... 23,000 1,607,125
U.S. Bancorp.......................... 33,000 1,066,312
Wells Fargo........................... 116,000 4,263,000
XL Capital Limited, Cl. A............. 74,000 4,532,500
-------------
69,258,437
-------------
Health Services--.5% McKesson HBOC......................... 33,000 2,244,000
-------------
Health Technology--10.7% Abbott Laboratories................... 34,000 1,578,875
Allergan.............................. 30,000 2,445,000
American Home Products................ 93,000 5,533,500
Amgen................................. 12,000 (a) 1,498,500
Biomet................................ 67,000 2,458,062
Bristol-Myers-Squibb.................. 23,000 2,896,563
Johnson & Johnson..................... 29,000 2,475,875
Lilly (Eli)........................... 49,000 4,639,688
Medtronic............................. 12,000 847,500
Merck & Co............................ 111,000 9,074,250
Pfizer................................ 62,000 8,180,125
Pharmacia & Upjohn.................... 37,000 2,016,500
Schering-Plough....................... 36,000 2,013,750
Warner-Lambert........................ 20,000 1,381,250
Zeneca Group, A.D.R................... 52,000 2,135,250
-------------
49,174,688
-------------
</TABLE>
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments (continued) February 28, 1999
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ----------------------------------------------------------------------- ------------- ---------------
<S> <C> <C> <C>
Industrial Services--.3% Waste Management...................... 26,000 $ 1,270,750
-------------
Non-Energy Minerals--.5% Aluminum Co. of America............... 56,000 2,268,000
-------------
Process Industries--1.4% dupont (E.I.) de Nemours.............. 52,000 2,668,250
International Paper................... 56,000 2,352,000
Monsanto.............................. 28,000 1,275,750
-------------
6,296,000
-------------
Producer Manufacturing--6.3% AlliedSignal.......................... 26,000 1,075,750
Emerson Electric...................... 10,000 574,375
General Electric...................... 226,000 22,670,625
Minnesota Mining & Manufacturing...... 10,000 740,625
Tyco International.................... 31,000 2,307,563
Xerox................................. 30,000 1,655,625
-------------
29,024,563
-------------
Retail Trade--8.6% American Stores....................... 244,000 8,235,000
CVS................................... 26,000 1,378,000
Dayton Hudson......................... 19,000 1,188,688
Gap................................... 27,000 1,746,562
Home Depot............................ 72,000 4,297,500
K mart................................ 287,000 5,022,500
Safeway............................... 23,000 1,328,250
Sears, Roebuck........................ 18,000 731,250
Wal-Mart Stores....................... 156,000 13,474,500
Walgreen.............................. 68,000 2,176,000
-------------
39,578,250
-------------
Technology Services--7.4% America Online........................ 66,000 5,869,875
Microsoft............................. 162,000 (a) 24,320,250
Oracle................................ 69,000 (a) 3,855,375
-------------
34,045,500
-------------
Transportation--.6% CNF Transportation.................... 70,000 2,957,500
-------------
Utilities--11.9% AT&T.................................. 122,000 10,019,250
AirTouch Communications............... 13,000 (a) 1,183,812
Ameritech............................. 138,000 9,021,750
Bell Atlantic......................... 72,000 4,135,500
BellSouth............................. 92,000 4,255,000
Coastal............................... 179,000 5,728,000
GTE................................... 47,000 3,049,125
MCI WorldCom.......................... 126,000 (a) 10,395,000
Sprint (FON Group).................... 31,000 2,660,188
</TABLE>
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments (continued) February 28, 1999
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ----------------------------------------------------------------------- ------------- ---------------
<S> <C> <C> <C>
Utilities (continued) Texas Utilities....................... 72,000 $ 3,055,500
USWest................................ 24,000 1,279,500
------------
54,782,625
------------
TOTAL COMMON STOCKS
(cost $378,992,572)................. $453,341,500
============
Principal
Short Term Investments--1.0% Amount
- ----------------------------------------------------------------------- ----------------
U.S. Treasury Bills; 4.47%, 5/20/1999
(cost $4,365,204)................... $ 4,409,000 $ 4,363,504
============
TOTAL INVESTMENTS (cost $383,357,776).................................. 99.7% $457,705,004
======= ============
CASH AND RECEIVABLES (NET)............................................. .3% $ 1,487,447
======= ============
NET ASSETS............................................................. 100.0% $459,192,451
======= ============
</TABLE>
Notes to Statement of Investments:
- ------------------------------------------------------------------------------
(a) Non-income producing.
See notes to financial statements.
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities February 28, 1999
<TABLE>
<CAPTION>
Cost Value
-------------- -------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $383,357,776 $457,705,004
Cash................................................... 148,739
Receivable for investment securities sold.............. 3,262,615
Dividends receivable................................... 455,330
Receivable for shares of Common Stock subscribed....... 30,500
Prepaid expenses....................................... 17,931
------------
461,620,119
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.......... 271,865
Payable for investment securities purchased............ 1,858,782
Payable for shares of Common Stock redeemed............ 200,815
Accrued expenses....................................... 96,206
------------
2,427,668
------------
NET ASSETS ................................................................... $459,192,451
============
REPRESENTED BY: Paid-in capital........................................ $344,095,466
Accumulated undistributed investment income--net........ 246,460
Accumulated net realized gain (loss) on investments.... 40,503,297
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b)........................... 74,347,228
NET ASSETS ................................................................... $459,192,451
============
SHARES OUTSTANDING
(100 million shares of $.01 par value Common Stock authorized)................. 43,085,617
NET ASSET VALUE, offering and redemption price per share....................... $10.66
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Operations Year Ended February 28, 1999
INVESTMENT INCOME
<TABLE>
<S> <C> <C> <C>
INCOME: Cash dividends (net of $61,809 foreign taxes
withheld at source)................................. $ 7,360,786
Interest............................................... 488,158
-------------
Total Income..................................... $ 7,848,944
EXPENSES: Management fee--Note 3(a)............................... 3,500,827
Shareholder servicing costs--Note 3(b).................. 1,077,696
Directors' fees and expenses--Note 3(c)................ 74,265
Custodian fees--Note 3(b)............................... 68,432
Professional fees...................................... 55,814
Prospectus and shareholders' reports.................. 38,049
Registration fees...................................... 32,074
Loan commitment fees--Note 2............................ 3,556
Interest expense--Note 2................................ 97
Miscellaneous.......................................... 2,782
-------------
Total Expenses................................... 4,853,592
-----------
INVESTMENT INCOME--NET.......................................................... 2,995,352
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments................ $69,174,036
Net realized gain (loss) on forward currency exchange contracts 988,682
Net realized gain (loss) on financial futures.......... (207,586)
-------------
Net Realized Gain (Loss)......................... 69,955,132
Net unrealized appreciation (depreciation) on investments (26,780,009)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 43,175,123
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $46,170,475
===========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
February 28, 1999 February 28, 1998
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................... $ 2,995,352 $ 2,534,692
Net realized gain (loss) on investments.............................. 69,955,132 31,562,794
Net unrealized appreciation (depreciation) on investments............ (26,780,009) 39,849,084
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 46,170,475 73,946,570
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net.......................................... (3,072,334) (3,068,901)
From net realized gain on investments................................ (19,444,090) (56,678,537)
In excess of net realized gain on investments........................ -- (10,007,745)
-------------- --------------
Total Dividends.................................................. (22,516,424) (69,755,183)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 427,315,063 1,048,195,184
Dividends reinvested................................................. 21,694,078 67,665,439
Cost of shares redeemed.............................................. (522,033,194) (1,083,149,719)
-------------- --------------
Increase (Decrease) in Net Assets from Capital Stock Transactions (73,024,053) 32,710,904
-------------- --------------
Total Increase (Decrease) in Net Assets........................ (49,370,002) 36,902,291
NET ASSETS:
Beginning of Period.................................................. 508,562,453 471,660,162
-------------- --------------
End of Period........................................................ $ 459,192,451 $ 508,562,453
============== ==============
Undistributed investment income--net.................................... $ 246,460 $ 56,204
-------------- --------------
Shares Shares
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 41,353,693 100,050,474
Shares issued for dividends reinvested............................... 2,139,455 7,113,151
Shares redeemed...................................................... (50,515,617) (103,202,945)
-------------- --------------
Net Increase (Decrease) in Shares Outstanding.................... (7,022,469) 3,960,680
============== ==============
</TABLE>
See notes to financial statements.
<PAGE>
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: 1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....... $10.15 $10.22 $ 9.56 $ 8.67 $10.89
------- ------- ------- ------- -------
Investment Operations:
Investment income--net....................... .07 .05 .10 .10 .10
Net realized and unrealized gain (loss)
on investments........................... .97 1.39 1.93 2.19 (.38)
------- ------- ------- ------- -------
Total from Investment Operations............ 1.04 1.44 2.03 2.29 (.28)
------- ------- ------- ------- -------
Distributions:
Dividends from investment income--net........ (.07) (.07) (.09) (.12) (.09)
Dividends from net realized gain on investments (.46) (1.22) (1.28) (1.26) (1.80)
Dividends in excess of net realized gain
on investments........................... -- (.22) -- (.02) (.05)
------- ------- ------- ------- -------
Total Distributions......................... (.53) (1.51) (1.37) (1.40) (1.94)
------- ------- ------- ------- -------
Net asset value, end of period ............. $10.66 $10.15 $10.22 $ 9.56 $ 8.67
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN........................ 10.57% 15.62% 22.35% 27.37% (2.11%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... 1.04% 1.06% 1.06% 1.04% 1.10%
Ratio of net investment income
to average net assets.................... .64% .50% .91% .91% 1.09%
Portfolio Turnover Rate .................... 162.98% 112.32% 137.38% 268.40% 242.75%
Net Assets, end of period (000's Omitted) .. $459,192 $508,562 $471,660 $419,240 $372,313
</TABLE>
See notes to financial statements.
<PAGE>
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, as amended (the "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 (the "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 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. Under the terms of the custody agreement, the Fund receives net
earnings credits based on available cash balances left on deposit.
(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 of 1986, as amended (the "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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended February 28, 1999, the Fund reclassified $267,238
from accumulated undistributed investment income-net to paid-in capital. Net
assets were not affected by this reclassification.
<PAGE>
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, 1999 was approximately $1,800, with a related weighted average
annualized interest rate of 5.42%.
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 1 1/2% of the average value of the Fund's net
assets, the Manager will bear such excess expense. During the period ended
February 28, 1999, 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, 1999, the Fund was charged $705,869 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, 1999, the Fund was charged $157,075 pursuant to the transfer
agency agreement.
The Fund compensates Mellon under a custody agreement for providing
custodial services for the Fund. During the period ended February 28, 1999, the
Fund was charged $68,432 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, 1999, amounted to $745,228,614
and $840,705,971, 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
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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, 1999, 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, 1999,
there were no financial futures contracts outstanding.
(b) At February 28, 1999, accumulated net unrealized appreciation on
investments was $74,347,228, consisting of $79,617,430 gross unrealized
appreciation and $5,270,202 gross unrealized depreciation.
At February 28, 1999, 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).
<PAGE>
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, 1999, 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, 1999 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, 1999, 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
New York, New York
March 30, 1999
<PAGE>
Dreyfus Growth Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
Important Tax Information (Unaudited)
For Federal tax purposes the Fund hereby designates $.468 per share as a
long-term capital gain distribution of the $.5350 per share paid on December 17,
1998.
The Fund also designates 100% of the ordinary dividends paid during the
fiscal year ended February 28, 1999 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 2000 of
the percentage applicable to the preparation of their 1999 income tax returns.
<PAGE>
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. 018AR992
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
PERIOD COMPOSITE STOCK DREYFUS GROWTH
PRICE INDEX * OPPORTUNITY FUND, INC.
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
2/28/99 326,087 213,237
*Source: Lipper Analytical Services, Inc.
