DREYFUS NEW LEADERS FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report that Dreyfus New Leaders Fund, Inc. achieved a
total return of 11.02%* for the first six months of this year, the fiscal
period ended June 30, 1996. This compares with a total return of 10.09% for
the Standard & Poor's 500 Composite Stock Price Index** and 10.36% for the
Russell 2000 Stock Index.***
In this report we present a review of the economic climate during the
six-month period, a summary of market conditions and an account of factors
affecting the portfolio.
ECONOMIC ENVIRONMENT
The U.S. economy appears to be rebounding in 1996 following its midcycle
growth slowdown of last year. Yet overall corporate profit growth is slowing
this year. Although actual inflation remains steady, faster economic growth
has reignited fears of higher future inflation. This has pushed bond yields
higher and built expectation of a Federal Reserve Board (the "Fed")
tightening in coming months. This year is the sixth expansion year for this
business cycle, and we believe that it will prove a long cycle.
Economic growth has accelerated since year-end. The first quarter's 2.3%
real Gross Domestic Product growth comprised a demand rebound that depleted
inventories. Even stronger second quarter growth is apparent, led by
manufacturers' attempts to rebuild inventories. In addition, steady job
creation continues to support growth in consumer incomes and spending. As
yet, there are few indications of economic cooling. Some previously strong
capital goods sectors may now be slowing, but overall economic growth appears
to be broadening to more industries. Despite better economic performance this
year than last, profit growth may have peaked last year.
Non-oil price inflation has remained tame this year, although surging oil
prices boosted overall inflation temporarily this spring. Nevertheless, signs
of a faster economic pace have reignited fears of higher future inflation,
especially coming from upward pressure on wages as the labor market tightens.
Thus, bond yields have risen substantially this year. Short-term market rates
are also higher in expectation of Federal Reserve tightening in coming
months. So far, long-term rates have risen much more than short-term rates,
forcing the yield curve to steepen. A steep yield curve is usually supportive
of sustained growth in the real economy.
As we look forward, the question arises whether the higher interest rates
already in place and those in prospect will effectively cool the economy. At
present, however, any advance signs of an eventual cooling off are hard to
discern. The preoccupation at present is with the economy's impressive
strength, and the problems such growth could create.
MARKET OVERVIEW
The broad trend of the stock market was strongly upward during the six
months under review. However, there were many crosscurrents at work. Not all
stock groups benefited equally. The blue chips in the Dow Jones Industrial
Average enjoyed solid advances for the six months, as did the broader market
as represented by the NASDAQ Composite and the Standard & Poor's 500
Composite Stock Price Index. However, as spring turned into summer, the S & P
500 receded from its May high, technology stocks began to lag, and small
capitalization stocks were unable to maintain the very fast growth pace of
earlier months.
From time to time, unexpected signs of economic strength, particularly
employment and unemployment numbers, jolted the equity markets with the
specter of renewed inflation. Especially in the latter part of the half-year,
concern over inflation and higher interest rates restrained market
performance in a number of industry categories.
Profits, always a major element in stock performance, continued strong
for a good part of the period. However, fear of rising labor costs and
intensified competition at home and abroad have cast some shadows over the
profit outlook. This has been balanced, however, by the very large sum of
money that continues to be invested in equity mutual funds, much of it from
people planning for their retirement.
As the half-year ended, broad market averages were still solidly above
where they stood when the year began. This, however, was prior to the
downdraft in stock prices that occurred in mid-July.
PORTFOLIO FOCUS
The companies in which the Fund's capital is invested have by and large
produced above-average returns during the period. In fact, for the first time
in two years, small cap stocks in general slightly outperformed their larger
compatriots. In the final analysis, as you know, it is good products, good
management and good business fundamentals that drive investment results. We
believe we have assembled companies with these characteristics in your Fund.
Your Fund's performance was also helped by some external factors. First,
a record number of new companies were born during this period, and these
dynamic companies were getting an especially warm reception in the initial
public offering arena. We owned a number of these issues. Second, in an
economic environment of positive growth accompanied by a rising dollar, the
companies in which we invest tend to perform relatively better than the
large, U.S.-based multinationals that comprise a large part of the S&P 500
Index. Last, after two years of relative dormancy in the small cap
marketplace, our style of investing re-emerged into fashion. By the end of
the second quarter, however, it became apparent to us that the investment
landscape may once again have shifted. Technology, health care and recent IPO
darlings were unceremoniously dumped. Of course, wholesale liquidation
provides opportunities, and we will be, as usual, vigilant in uncovering
oversold situations in the coming months.
We are pleased to report that your Fund outperformed the Russell 2000
Index as well as the S&P 500 in the first six months. From the beginning of
the year, your managers have been reducing the weighting in technology, where
a lot of the excitement had occurred, but where a lot of the recent earnings
disappointments and reality checks have been centered. We remain enthusiastic
about McAfee Associates, a utility software company, and PictureTel
Corporation, a supplier of video conferencing equipment. We had redeployed
some of the proceeds from technology into the health care sector in order to
seek the growth in earnings usually attributed to technology. Stocks that we
continue to like are Mentor, a plastic surgery products company; Universal
Health Services; CI. B., a hospital management company; and CorVel, a health
care information systems company.
We continue to be sanguine as to the health of the industrial economy in
the U.S. and abroad. Companies in the materials and processing sectors that
we are enthusiastic about include Cambrex, which sells bulk additives to the
pharmaceutical industry; Culligan Water Technologies; and USA Waste Service.
Machinery stocks we favor include Albany International Cl. A, the dominant
worldwide manufacturer of
paper machine clothing; Titan, Wheel International, a manufacturer of wheels
and tires; and Keystone International, a producer of valves for fluid
handling. As a sector approach to global markets, a major theme continues to
be commercial aerospace, where the suppliers to the largest U.S. export
company, Boeing, are small cap firms. The Fund's portfolio owns Rohr, Coltec
Industries, Thiokol, and Crane.
Capital goods stocks have outperformed consumer stocks for the past two
years. We expect this trend to continue and therefore continue to underweight
the consumer segment of the economy. Still, there are always exceptions.
These exceptions include Tiffany & Co., Jones Apparel Group and Consolidated
Stores. Meredith is a publishing favorite.
As the interest rate outlook remains uncertain, we think a continued
underweighting in financial services is appropriate. The exception here,
however, is niche insurance companies. Although characterized as interest
rate-sensitive, we believe their growth prospects transcend the macroeconomic
environment. Examples include Everest Reinsurance Holdings, FINOVA Group,
Executive Risk and Frontier Insurance Group.
The workhorse sector of the Fund has been the energy companies. Our early
and contrary commitment to this sector has added value to your Fund's
portfolio in almost every month of 1996. Names we like are exploration and
production companies Parker & Parsley Petroleum, Flores and Rucks, and Cairn
Energy USA; onshore driller Nabors Industries; and Global Industries, an
offshore energy construction corporation. We look for even better things to
come from this sector for the balance of the year.
As we conclude, it has once again become fashionable to spend a great
deal of time and energy trying to forecast macroeconomics and Federal Reserve
policy. We want to assure the shareholders of the New Leaders Fund that we
will not be participants in this current vogue. We know from experience that
good, consistent long-term performance comes from uncovering companies with
good business fundamentals at reasonable valuations. We will not stray from
this pursuit.
We thank you for your interest. You may be sure we will exert our best
efforts on your behalf.
Sincerely,
[Thomas A. Frank signature logo]
Thomas A. Frank
Portfolio Manager
July 17, 1996
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 stock market performance.
***SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Russell 2000 Index is a widely accepted unmanaged index of small cap stock
performance.
<TABLE>
DREYFUS NEW LEADERS FUND, INC.
STATEMENT OF INVESTMENTS JUNE 30, 1996 (UNAUDITED)
COMMON STOCKS-93.1% SHARES VALUE
_______ _______
<S> <C> <C> <C> <C>
CONSUMER-15.2% Boise Cascade Office Products........ (a) 170,000 $ 5,886,250
Canandaigua Wine, Cl. A.............. (a) 210,000 6,300,000
Consolidated Stores.................. (a) 248,000 9,114,000
Individual Investors Group........... (a,b,d) 307,692 2,492,305
Infinity Broadcasting, Cl. A......... (a) 230,000 6,900,000
Jones Apparel Group.................. (a) 215,000 10,561,875
Meredith............................. 200,000 8,350,000
Outboard Marine...................... 325,000 5,890,625
Sensormatic Electronics.............. 325,000 5,321,875
Sola International................... (a) 225,000 6,468,750
Station Casinos...................... (a) 480,000 6,900,000
Stein Mart........................... (a) 230,000 4,197,500
Sun International Hotels............. 165,000 8,002,500
Talbots.............................. 200,000 6,475,000
Tiffany & Co......................... 130,000 9,490,000
United States Satellite Broadcasting, Cl. A. 108,000 4,077,000
Warnaco Group, Cl. A................. 210,000 5,407,500
_____________
111,835,180
_____________
ENERGY-7.9% Cairn Energy USA..................... (a) 591,500 8,502,813
Dreco Energy Services, Cl. A......... (a) 142,500 3,918,750
Flores & Rucks....................... (a) 275,000 9,487,500
Global Industries.................... (a) 390,000 11,602,500
Marine Drilling...................... (a) 400,000 4,050,000
Nabors Industries.................... (a) 500,000 8,125,000
Parker & Parsley Petroleum........... 375,000 10,406,250
Unit................................. 318,500 2,110,062
_____________
58,202,875
_____________
FINANCIAL SERVICES-17.2% ACE.................................. 100,000 4,700,000
Alexander & Alexander Services....... 300,000 5,925,000
Capital Re........................... 141,000 5,181,750
Charter One Financial................ 162,000 5,649,750
Chittenden........................... 256,250 5,765,625
Colonial BancGroup, Cl. A............ 90,000 3,015,000
Dime Bancorp......................... (a) 380,000 4,940,000
Enhance Financial Services Group..... 250,000 7,000,000
Everest Reinsurance Holdings......... 415,000 10,738,125
Executive Risk....................... 210,000 8,032,500
FINOVA Group......................... 175,000 8,531,250
Frontier Insurance Group............. 220,550 7,608,975
Greenpoint Financial................. 280,000 7,910,000
Hibernia, Cl. A...................... 450,000 4,893,750
National Re.......................... 150,000 5,662,500
Presidential Life.................... 375,000 3,890,625
DREYFUS NEW LEADERS FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1996 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
FINANCIAL SERVICES (CONTINUED) Reliance Group Holdings.............. 747,500 $ 5,606,250
Standard Federal Bancorporation...... 205,000 7,892,500
USLIFE............................... 200,000 6,575,000
Western National..................... 397,500 7,304,063
_____________
126,822,663
_____________
HEALTH CARE-12.8% ADAC Laboratories.................... 200,000 4,550,000
AmeriSource Health, Cl. A............ (a) 125,000 4,156,250
Apria Healthcare Group............... (a) 125,000 3,921,875
ChiRex............................... 346,600 3,985,900
CorVel............................... (a) 185,000 6,613,750
Guidant.............................. 100,000 4,925,000
Guilford Pharmaceuticals............. (a) 150,000 3,562,500
Heartport............................ 200,000 6,050,000
Kinetic Concepts..................... 205,000 3,177,500
Living Centers of America............ (a) 83,500 2,870,312
Mentor............................... 580,000 14,790,000
OccuSystems.......................... (a) 175,000 6,540,625
OrthoLogic........................... (a) 150,000 1,912,500
Possis Medical....................... (a) 65,000 1,080,625
Quantum Health Resources............. (a) 270,000 4,590,000
STERIS............................... (a) 161,000 5,152,000
Total Renal Care Holdings............ 129,300 5,462,925
Trex Medical......................... (c) 50,000 512,500
Trex Medical......................... 61,500 1,160,812
Universal Health Services, Cl. B..... (a) 340,000 8,882,500
_____________
93,897,574
_____________
INDUSTRIAL SERVICES-.0% Separation Technologies.............. (a,b,d) 81,984 311,539
_____________
MATERIALS &
PROCESSING-15.3% Amax Gold (a) 34,900 191,950
Cambrex.............................. (a) 170,000 8,691,250
Crane................................ 150,000 6,150,000
Crompton & Knowles................... 300,000 5,025,000
Culligan Water Technologies.......... 250,000 9,500,000
Freeport McMoRan..................... 200,000 7,100,000
IMCO Recycling....................... 321,000 5,778,000
International Specialty Products..... 250,000 2,750,000
Jacobs Engineering Group............. (a) 175,000 4,615,625
Longview Fibre....................... 275,000 4,675,000
Minerals Technologies................ 150,000 5,137,500
OM Group............................. 165,000 6,476,250
Philip Environmental................. (a) 900,000 7,087,500
Santa Fe Pacific Gold................ 562,500 7,945,313
DREYFUS NEW LEADERS FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1996 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
MATERIALS &
PROCESSING (CONTINUED) Schulman (A.)........................ 100,000 $2,450,000
Sterling Chemicals................... (a) 505,000 5,870,625
USA Waste Service.................... (a) 320,000 9,480,000
Uniroyal Chemical.................... (a) 400,000 5,950,000
Witco................................ 220,000 7,562,500
_____________
112,436,513
_____________
PRODUCER DURABLES-9.9% Albany International, Cl. A.......... 300,000 6,787,500
Applied Extrusion Technologies....... (a) 250,000 3,187,500
BW/IP................................ 205,000 3,895,000
Coltec Industries.................... (a) 700,000 9,975,000
Huntco, Cl. A........................ 150,000 2,775,000
Keystone International............... 275,000 5,706,250
MagneTek............................. (a) 400,000 3,850,000
Manitowoc............................ 150,000 5,381,250
Precision Castparts.................. 195,000 8,385,000
Rohr................................. (a) 500,000 10,437,500
Stewart & Stevenson Services......... 215,000 4,891,250
Titan Wheel International............ 317,500 5,080,000
Watts Industries, Cl. A.............. 121,500 2,262,937
_____________
72,614,187
_____________
TECHNOLOGY-14.8% Aspect Telecommunications............ (a) 175,000 8,662,500
Auspex Systems....................... (a) 350,000 5,250,000
GTECH Holdings....................... (a) 260,000 7,702,500
IDX Systems.......................... 200,000 7,800,000
InterVoice........................... (a) 250,000 4,968,750
MEMC Electronic Materials............ 85,000 3,293,750
McAfee Associates.................... (a) 160,000 7,840,000
Microchip Technology................. (a) 200,000 4,950,000
Network General...................... (a) 290,000 6,235,000
PictureTel........................... (a) 195,000 7,678,125
Security Dynamics Technologies....... (a) 55,000 4,523,750
Softkey International................ (a) 160,000 3,030,000
Sterling Commerce.................... 175,000 6,496,875
Synopsys............................. (a) 95,000 3,776,250
Thermotrex........................... (a) 150,000 7,387,500
Thiokol.............................. 210,000 8,295,000
Toolex-Alpha, N.V. .................. 212,000 5,088,000
Transition Systems................... 200,300 5,708,550
_____________
108,686,550
_____________
TOTAL COMMON STOCKS
(cost $538,922,914)................ $684,807,081
===============
DREYFUS NEW LEADERS FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1996 (UNAUDITED)
PREFERRED STOCKS-.3% SHARES VALUE
_______ _______
INDUSTRIAL SERVICES-.1% Separation Technologies,
Ser. A, 6%, Cum. Conv. ......... (a,b,d) 243,385 $ 924,863
_____________
TECHNOLOGY-.2% Crystal Dynamics, Ser. D........... (a,d) 180,000 1,350,000
_____________
TOTAL PREFERRED STOCKS
(cost $2,281,463)................ $ 2,274,863
===============
PRINCIPAL
SHORT-TERM INVESTMENTS-6.3% AMOUNT
____________
U.S. TREASURY BILLS: 4.98%, 7/25/96....................... $ 7,047,000 $ 7,023,111
4.96%, 8/1/96........................ 8,818,000 8,779,465
4.97%, 8/8/96........................ 4,728,000 4,702,658
5.03%, 8/22/96....................... 12,406,000 12,313,451
5.05%, 9/12/96....................... 4,973,000 4,920,883
5.09%, 9/19/96....................... 8,486,000 8,388,157
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $46,135,041)................. $ 46,127,725
===============
TOTAL INVESTMENTS (cost $587,339,418) ................................... 99.7% $733,209,669
====== ===============
CASH AND RECEIVABLES (NET)................................................ .3% $ 2,100,879
====== ===============
NET ASSETS................................................................ 100.0% $735,310,548
====== ===============
</TABLE>
<TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Investment in non-controlled affiliates (cost $2,242,999) - see Note
1(d).
(c) Security 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 June 30,
1996, this security amounted to $512,500 or .1% of net assets.
(d) Securities restricted as to public resale. Investments in restricted
securities, with an aggregate value of $5,078,707, represents
approximately .69% of net assets:
ACQUISITION PURCHASE PERCENTAGE OF
ISSUER: DATE PRICE NET ASSETS VALUATION*
___ ______ __________ ___________ _________
<S> <C> <C> <C> <C>
Crystal Dynamics, Ser. D................ 7/10/95 $7.50 .18% $7.50
Individual Investors Group.............. 12/15/93 3.25 .34 10% Discount to
Market Value
Separation Technologies................. 1/13/95 3.80 .04 $3.80
Separation Technologies,
Ser. A, 6% Cum. Conv................ 7/12/93-1/13/95 3.80 .13 $3.80
*The valuation of these securities has been determined in good faith
under the direction of the Board of Directors.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW LEADERS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $587,339,418)-see statement..................................... $733,209,669
Cash.................................................................... 1,000,773
Receivable for investment securities sold............................... 7,392,089
Dividends and interest receivable....................................... 410,606
Receivable for subscriptions to Common Stock............................ 172,248
Prepaid expenses........................................................ 67,462
____________
742,252,847
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 530,552
Due to Distributor...................................................... 152,063
Payable for investment securities purchased............................. 3,649,262
Payable for Common Stock redeemed....................................... 2,430,624
Accrued expenses........................................................ 179,798 6,942,299
____________ _____________
NET ASSETS ................................................................ $735,310,548
=============
REPRESENTED BY:
Paid-in capital......................................................... $553,971,620
Accumulated net investment (loss) and distributions in excess of
investment income-net................................................. (139,081)
Accumulated undistributed net realized gain on investments and
foreign currency transactions......................................... 35,607,758
Accumulated net unrealized appreciation on investments-Note 4(b)........ 145,870,251
_____________
NET ASSETS at value applicable to 17,715,035 shares outstanding
(100 million shares of $.01 par value Common Stock authorized).......... $735,310,548
==============
NET ASSET VALUE, offering and redemption price per share
($735,310,548 / 17,715,035 shares)...................................... $41.51
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW LEADERS FUND, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Cash dividends........................................................ $ 2,562,273
Interest.............................................................. 1,164,624
_____________
TOTAL INCOME.................................................... 3,726,897
EXPENSES:
Management fee-Note 3(a).............................................. 2,521,897
Shareholder servicing costs-Note 3(b)................................. 1,141,425
Registration fees..................................................... 48,684
Custodian fees-Note 3(b).............................................. 35,740
Professional fees..................................................... 33,176
Prospectus and shareholders' reports.................................. 25,784
Directors' fees and expenses-Note 3(c)................................ 19,672
Miscellaneous......................................................... 7,168
__________
TOTAL EXPENSES.................................................. 3,833,546
Less-reduction in expenses due to redemption fee-Note 3(d)............ 39,460
__________
NET EXPENSES.................................................... 3,794,086
__________
INVESTMENT (LOSS)-NET........................................... (67,189)
__________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments transactions-Note 4(a):
Long transactions:
Unaffiliated issuers.............................................. $33,909,897
Affiliated issuers................................................ 661,851
Short sale transactions............................................... (18,384)
__________
NET REALIZED GAIN..................................................... 34,553,364
Net unrealized appreciation (depreciation) on investments and securities sold short:
Unaffiliated issuers.................................................. 38,261,766
Affiliated issuers.................................................... (2,286,522) 35,975,244
__________ __________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 70,528,608
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $70,461,419
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW LEADERS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1996
1995 (UNAUDITED)
________ __________
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net....................................... $ 838,637 $ (67,189)
Net realized gain on investments................................... 46,627,417 34,553,364
Net unrealized appreciation on investments for the period.......... 81,828,227 35,975,244
_____________ _____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. 129,294,281 70,461,419
_____________ _____________
DIVIDENDS TO SHAREHOLDERS:
From investment income-net......................................... (969,861) -
In excess of investment income-net................................. (71,892) -
From net realized gain on investments.............................. (46,321,288) -
_____________ _____________
TOTAL DIVIDENDS.................................................. (47,363,041) -
_____________ _____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold...................................... 208,486,040 136,846,417
Dividends reinvested............................................... 46,258,284 -
Cost of shares redeemed............................................ (121,356,015) (78,942,275)
_____________ _____________
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS........... 133,388,309 57,904,142
_____________ _____________
TOTAL INCREASE IN NET ASSETS................................. 215,319,549 128,365,561
NET ASSETS:
Beginning of period................................................ 391,625,438 606,944,987
_____________ _____________
End of period [including distributions in excess of investment income-net:
($71,892) in 1995 and ($139,081) in 1996]........................ $ 606,944,987 $ 735,310,548
============== ===============
SHARES SHARES
_______________ ______________
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................ 5,863,111 3,482,848
Shares issued for dividends reinvested............................. 1,274,764 -
Shares redeemed.................................................... (3,403,602) (2,000,853)
_____________ _____________
NET INCREASE IN SHARES OUTSTANDING............................... 3,734,273 1,481,995
============== ===============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW LEADERS FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1996
___________________________________________________
PER SHARE DATA: 1991 1992 1993 1994 1995 (UNAUDITED)
______ ______ ______ ______ ______ ______________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $24.25 $32.29 $32.17 $34.13 $31.33 $37.39
______ ______ ______ ______ ______ _________
INVESTMENT OPERATIONS:
Investment income (loss)-net.......... .23 .14 .07 .10 .06 -
Net realized and unrealized gain (loss)
on investments...................... 10.78 2.81 5.30 (.22) 9.17 4.12
______ ______ ______ ______ ______ _________
TOTAL FROM INVESTMENT OPERATIONS.... 11.01 2.95 5.37 (.12) 9.23 4.12
______ ______ ______ ______ ______ _________
DISTRIBUTIONS:
Dividends from investment income-net.. (.23) (.14) (.07) (.08) (.07) -
Dividends in excess of investment
income-net.......................... - - - - - -
Dividends from net realized gain
on investments...................... (2.74) (2.93) (3.34) (2.60) (3.10) -
______ ______ ______ ______ ______ _________
TOTAL DISTRIBUTIONS................. (2.97) (3.07) (3.41) (2.68) (3.17) -
______ ______ ______ ______ ______ _________
Net asset value, end of period........ $32.29 $32.17 $34.13 $31.33 $37.39 $41.51
====== ====== ====== ====== ====== =========
TOTAL INVESTMENT RETURN................... 45.39% 9.43% 17.07% (.15%) 29.80% 11.02%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.29% 1.21% 1.22% 1.16% 1.19% .56%(1)
Ratio of net investment income (loss) to
average net assets.................. .76% .43% .19% .30% .17% (.01%)(1)
Decrease in above expense ratios due to
an undertaking by the Manager and
redemption fee...................... .06% .04% .04% .05% .02% .01%(1)
Portfolio Turnover Rate............... 107.64% 119.45% 127.97% 94.21% 108.80% 48.71%(1)
Average commission rate paid(2)....... - - - - - $.0574
Net Assets, end of period (000's Omitted) $194,007 $233,619 $338,967 $391,625 $606,945 $735,311
(1) Not annualized.
(2) For fiscal years beginning January 1, 1996, the Fund is required to
disclose its average commission rate paid per share
for purchases and sales of investment securities.
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS NEW LEADERS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus New Leaders 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 maximize capital
appreciation. 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. (the "Distributor") acts as
the distributor of the Fund's shares, which are sold to the public without a
sales charge.
(A) PORTFOLIO VALUATION: Investments in securities 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, except for open short positions, where
the asked price is used for valuation purposes. 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.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest, 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 discount on investments, is recognized on
the accrual basis.
(D) AFFILIATED ISSUERS: Issuers in which the Fund held 5% or more of the
outstanding voting securities are defined as "affiliated" in the Act.
(E) 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. This may result in distributions
that are in excess of investment income-net and net realized gain on a fiscal
year basis. 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.
DREYFUS NEW LEADERS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(F) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying with
the applicable provisions of the Internal Revenue Code, and to make
distributions of taxable income sufficient to relieve it from substantially
all Federal income and excise taxes.
NOTE 2-LINE OF CREDIT
The Fund participates in a $100 million unsecured line of credit provided
by The Bank of New York, primarily for temporary or emergency purposes,
including the meeting of redemption requests that otherwise might require the
untimely disposition of securities. Interest is payable at the Federal Funds
rate plus .50% on an annualized basis. For the period ended June 30, 1996,
the Fund did not borrow under the line of credit.
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 for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings
(which, in the view of Stroock & Stroock & Lavan, counsel to the Fund, also
contemplates dividends and interest accrued on securities sold short),
extraordinary expenses, exceed 11\2% of the average value of the Fund's net
assets for any full year. There was no expense reimbursement for the six
months ended June 30, 1996.
(B) Under the Shareholder Services Plan, the Fund pays the Distributor,
at an annual rate of .25 of 1% of the value of the Fund's average daily net
assets for the provision of certain services. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
The Distributor may make payments to Service Agents (a securities dealer,
financial institution or other industry professional) in respect of these
services. The Distributor determines the amounts to be paid to Service
Agents. During the six months ended June 30, 1996, the Fund was charged an
aggregate of $840,632, pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $192,281 during the six months ended June 30, 1996.
Effective May 10, 1996, the Fund entered into a custody agreement with
Mellon to provide custodial services for the Fund. For the period from May
10, 1996 through June 30, 1996, $10,963 was paid to Mellon pursuant to the
custody agreement.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation and the Director Emeritus receives 50% of such compensation.
DREYFUS NEW LEADERS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) A 1% redemption fee is charged on certain redemptions of Fund shares
(including redemptions through use of the Exchange
Privilege) where the shares being redeemed were issued subsequent to a
specified effective date and the redemption or exchange occurs within a
six-month period following the date of issuance. During the six months ended
June 30, 1996, redemption fees amounted to $39,460.
NOTE 4-SECURITIES TRANSACTIONS:
(A) The following summarizes the aggregate amount of purchases and sales
of investment securities excluding short-term securities, during the six
months ended June 30, 1996:
<TABLE>
PURCHASES SALES
______________ ______________
<S> <C> <C>
Long transactions:
Unaffiliated issuers........................................... $365,766,037 $308,149,774
Affiliated issuers............................................. _ 1,276,769
______________ ______________
365,766,037 309,426,543
Short sale transactions.......................................... 734,430 _
______________ ______________
TOTAL...................................................... $366,500,467 $309,426,543
============== ==============
</TABLE>
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at
current market value. The Fund would incur a loss if the price of the
security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund would realize a gain if the
price of the security declines between those dates. Until the Fund replaces
the borrowed security, the Fund will maintain daily, a segregated account
with a broker and custodian, of cash and/or U.S. Government securities
sufficient to cover its short position. At June 30, 1996, there were no
securities sold short outstanding.
(B) At June 30, 1996, accumulated net unrealized appreciation on
investments was $145,870,251, consisting of $159,137,936 gross unrealized
appreciation and $13,267,685 gross unrealized depreciation.
At June 30, 1996, 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 NEW LEADERS FUND, INC.
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS NEW LEADERS FUND, INC.
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus New Leaders Fund, Inc., including the statement of investments, as of
June 30, 1996, and the related statements of operations and changes in net
assets and financial highlights for the six month period ended June 30, 1996.
These financial statements and financial highlights are the responsibility of
the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
December 31, 1995 and financial highlights for each of the five years in the
period ended December 31, 1995 and in our report dated February 9, 1996, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
[Ernst & Young LLP signature logo]
New York, New York
August 1, 1996
[Dreyfus lion "d" logo]
DREYFUS NEW LEADERS 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. 085SA966
[Dreyfus logo]
New Leaders
Fund, Inc.
Semi-Annual
Report
June 30, 1996
