DREYFUS NEW LEADERS FUND, INC.
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report that Dreyfus New Leaders Fund, Inc. outperformed its
benchmark index for the semi-annual fiscal period ended June 30, 1998. Your Fund
produced a total return of 8.28%,* compared to 5.66% for our benchmark, the
Russell 2500 Index.** Nonetheless, Standard & Poor's 500 Composite Stock Price
Index, which mainly reflects larger capitalized stocks, had a total return of
17.72% for the same period.***
We are also pleased to report that the Fund's Board of Directors has approved
changes to the Fund's investment policies to permit the Fund to invest mainly in
stocks of small and mid-sized companies, with market capitalizations of up to $5
billion. This will provide us with the flexibility to search for companies with
moderately higher market valuations than we could before, and enable us to hold
onto positions which have grown out of the small cap universe. We are excited
about this change in mandate. This change also explains the Fund's new benchmark
- -- the Russell 2500 Index. Previously, the Fund's benchmark was the Russell 2000
Index.
Economic Review
Fears of Federal Reserve Board tightening appear to have eased due to
accumulating evidence of slower overall economic growth since the spring.
Monetary tightening has been deterred by the Asian financial crisis. The Fed's
main domestic concern is that the tight labor market has begun to fuel faster
wage growth across many industries. However, thus far rising wages have still
not meant rising prices. Instead, this cost-price mix threatens to further erode
corporate profit margins. Market interest rates have already reflected the
slower economy, and the interest rate curve has become quite flat.
The shift to slower economic growth this spring is largely due to the drag
from Asia's recession, but may well be reinforced this summer by the multiplier
effect of the General Motors strike. Among broader economic factors, the trade
deficit has widened sharply due to both weak exports and strong growth in
imports. Also, inventories soared earlier this year, potentially creating some
drag on future production. However, slowing industrial output has largely been
met by shortening the manufacturing work week, not by cutting jobs. Hence, the
shift to slower growth has not relieved the tightness in the labor market.
Instead, the virtual absence of bad news has left consumers to enjoy the
benefits of rising real wages and lower interest rates that, in turn, have
boosted spending and home ownership.
Although growth in corporate profits has slowed in many sectors in the past
year, consensus estimates of future profit growth continue to be cut by many
analysts. Profit margins had already begun to shrink under the weight of rising
labor costs, making companies' reported profits increasingly dependent on growth
of sales. Overall profits could thus prove quite vulnerable to a period of
significantly slower economic growth.
Virtually all Treasury market interest rates have already fallen near to the
floor set by the Federal Funds rate. This implies that further substantial
interest rate drops are unlikely unless the economy weakens enough to justify
action by the Fed to ease credit.
Market Overview
Measured broadly, the half-year ended June 30, 1998 was another period of
solid advance for the stock market. Yet that general statement did not apply to
all categories of stocks.
To be sure, the S& P 500 achieved a new record of 17.72% at the end of the
six-month period. The Dow Jones Industrial Average (DJIA), while it didn't reach
its all-time record, nonetheless gained 14.16% for the six months, closing the
half-year above 9000. Small and medium size stocks, however, underperformed
large cap issues. The Standard & Poor's MidCap 400 Index gained just 8.63% for
the half-year, and the Russell 2000 Index of small cap issues advanced a mere
4.93%.(+)
The first calendar quarter provided most of the strength for the six months,
particularly among the large cap companies. In the April-June quarter, the S&P
500 gained 3.32% and the DJIA 2.15%, while the Russell 2000 actually dropped by
4.66%.
Stock categories that were strongest during the half-year included financials,
particularly banks, brokerages, insurance and diversified financial services;
technology, especially communications and computer issues; and cyclical consumer
stocks such as advertising, airlines, automotive, broadcasting and home
construction.
The weak categories for the period included precious metals, oil drilling and
oilfield suppliers, and some industrial issues.
Corporate profits dropped sharply from the strong pace of last year. Based on
reports from 82% of companies in the S&P 500, First Call, the statistical
service, estimated that corporate operating profits were up about 3% in the
second quarter compared to a year earlier. Of course there were optimists
forecasting a hefty rise in profits for later this year and early 1999, which
could potentially propel stock prices upward. Yet most investors seemed
preoccupied with the here and now, which included the strike at General Motors
plants and the continuing fallout from financial troubles in Japan and Southeast
Asia.
As expected, the Fed at its last meeting made no change in interest rates,
even though inflationary pressures are a constant worry for the Fed. The reason
for their inaction may well have been the precarious state of some economies
elsewhere in the world and the desire not to precipitate a major correction in
the U.S. stock market. Even so, the Fed thought it timely to issue a stern
warning to banks not to become overextended with unwise loans, which happened in
the 1980s.
Despite warnings like this, and that stock prices are extremely high
historically in relation to earnings and cash flow, investors still appeared
eager to own equities. Moreover, surveys of consumer sentiment continued to show
that the average consumer was more confident about the future than had been the
case in a generation.
Portfolio Focus
Some portfolio managers have on their large caps and others have on their
small caps. We have on our thinking caps. As you know, our mandate is to be in
small caps and medium sized caps; however, we always keep in mind that superior
long-term investment returns in the equity market are driven by stocks of
companies with a combination of good management and solid fundamentals,
purchased at attractive valuations. We work diligently to uncover these
opportunities every business day for our shareholders.
The most rewarding sector for your Fund in the first half of 1998 was consumer
services. This group was the best contributor to the Russell 2500's performance
during this period, as well as the sector where we added the most value in our
selections. The best performing consumer stock was Outdoor Systems, which was a
big winner last year. Outdoor Systems is one of the few remaining publicly held
pure play billboard advertising companies. Other good consumer stocks were
Westpoint Stevens, the industry leader in home textiles; Chancellor Media Cl.A,
the second largest radio broadcaster after CBS; Warnaco Group Cl.A, the intimate
apparel manufacturer, and Tiffany. Consumer stocks that hurt performance were
Consolidated Stores, the closeout retailer which was one of last year's winners,
Talbots, and Rio Hotel & Casino. We still hold Consolidated Stores and Rio Hotel
& Casino, and Talbots was sold.
The second largest contributor to performance in this period was from our
investments in utilities. We believe that management of these companies has
become more proactive and shareholder-friendly and, most importantly, the
industry has become less regulated. The best performers for your Fund were
telecom utilities: ITC DeltaCom, Metromedia Fiber Network Cl.A and NEXTLINK
Communications. There were no losing positions in terms of six-month
performance.
In a nice turnaround from last year, technology was the third best performing
group for the Fund. The biggest winner was CBT Group PLC ADR, a provider of
educational training software; followed by Intuit, a provider of financial
software solutions; and Aspect Development, a manufacturer of component and
supplier management software solutions which continued its outperformance from
last year. We purchased two semiconductor companies, Advanced Micro Devices and
Altera, for your Fund at the tail end of the Asian crisis, prematurely, but we
continue to maintain that the semiconductor stocks have discounted the weakness
in demand from Asia.
We continued to add value in financial services in the first half. This
segment provided the most performance to the Fund last year. The top investments
in this sector were all insurance companies: Reliance Group Holdings, Terra Nova
(Bermuda) Holdings Cl.A, Enhance Financial Services Group, and Frontier
Insurance Group. Not all insurers were good investments, however, as TIG
Holdings, CapMAC Holdings, and W.R. Berkley all posted losses during this
period. Although CapMAC was ultimately bought out by MBIA, and we sold TIG
Holdings, we continue to own W.R. Berkley and believe that this stock continues
to represent good value at current prices.
We added value in the producer segment by maintaining our large position in
Thiokol. Despite its name change to Cordant Technologies, the stock has
maintained its rocket booster performance. Other gainers, although lesser ones,
were Gleason, a global leader in gear production machinery, and the industrial
conglomerate Crane. Weaker industrial demand has negatively affected MagneTek
and Coltec Industries. Titan International, a manufacturer of wheels and tires
for agricultural and industrial markets, saw its results hampered by capacity
constraints and a strike.
The energy group had been the best performing sector for the portfolio in the
past two years; however, for the first half of this year, this segment's results
hurt our aggregate performance. A positive contributor was Global Industries, an
offshore construction producer. It was the top contributing stock in this sector
during the first half, after having been one of the top performers for the two
previous years. Other winners were ERG Spa, an Italian refining and marketing
outfit; and Camco International, which is due to be acquired by Schlumberger
International. The poorest performers were oilfield services companies: ENSCO
International and Cooper Cameron; followed by Gulf coast exploration and
production outfit Ocean Energy.
Chemical, paper and metals industries are worldwide commodities companies and
companies in these industries have seen their pricing power eroded by plummeting
Asian demand. Stocks in this sector represent real value. However, until Asian
demand bottoms, the most companies in this sector can do is to consolidate with
their competitors to cut costs and reduce capacity. The best stocks of this
category in the Fund were cement producer Southdown; Culligan Water
Technologies, which was acquired at a substantial premium by U.S. Filter Corp.;
and OM Group, a specialty chemical producer. Investments where we were too early
but which we still hold include: Freeport-McMoRan Copper & Gold, a copper and
gold producer; Foster Wheeler, a global engineering and construction outfit; and
paper producers Boise Cascade and Jefferson Smurfit.
Our auto & transportation stock selections underperformed the index. The Fund
was underinvested in the sector in general and it lacked exposure to the airline
industry in particular, which benefited from declining fuel costs. Our
investments here included Wisconsin Central Transportation (railroad), trucker
CNF Transportation, and poultry equipment manufacturer CTB International.
The health care sector provided gains for your Fund but our selections trailed
the index. Winners were McKesson Corp., the largest U.S. health care supply
management company; ICN Pharmaceuticals, which received FDA approval for its
hepatitis C treatment; and one of last year's winners, Universal Health Services
Cl.B, the third largest hospital management company in the country. Mentor, on
the other hand, continues to disappoint us with underwhelming sales in several
emerging markets; Gilead Sciences is a biotechnology company which saw the
profile on its HIV infection and AIDS drug reduced; and Varian Associates, a
conglomerate, was buffeted by its semiconductor business.
Regardless of economic and market fluctuations, we continue to build your Fund
one company at a time. We want to assure our investors that we prune our
mistakes, support our winners, and keep a keen eye on our stocks' fundamentals.
We thank you for your interest. You can be sure that we will continue to exert
our best efforts on your behalf.
Sincerely,
[Hilary R. Woods signature logo] [Paul Kandel signature logo]
Hilary R. Woods Paul Kandel
Co-Portfolio Manager Co-Portfolio Manager
July 17, 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 Russell
2500 Index is a widely accepted unmanaged index of small to mid-cap stock
performance.
***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. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor' s MidCap 400 Index is a broad-based index of 400 companies and is a
widely accepted, unmanaged index of mid-cap stock market performance. The
Russell 2000 Index is an unmanaged index of small cap stock performance.
<TABLE>
<CAPTION>
DREYFUS NEW LEADERS FUND, INC.
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STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
Common Stocks--92.7% Shares Value
- -------------------------------------------------------
_____________ ____________
<S> <C> <C>
Commercial Services--2.9% Outdoor Systems (a) 540,000 $ 15,120,000
Robert Half International (a) 175,000 9,778,125
_____________
24,898,125
_____________
Consumer Durables--1.0% Sola International (a) 262,500 8,580,469
_____________
Consumer Non-Durables--2.5% Warnaco Group, Cl. A 265,000 11,245,938
Whitman 450,000 10,321,875
_____________
21,567,813
_____________
Consumer Services--7.7% Chancellor Media, Cl. A (a) 255,000 12,662,344
Individual Investor Group (a) 307,692 1,230,768
Jacor Communications (a) 175,000 10,325,000
Meredith 250,000 11,734,375
Premier Parks (a) 185,000 12,325,625
Rio Hotel & Casino (a) 350,000 6,606,250
Sun International Hotels (a) 250,000 11,375,000
_____________
66,259,362
_____________
Electronic Technology--4.7% Aspect Telecommunications (a) 355,000 9,718,125
Cordant Technologies 250,000 11,531,250
Lexmark International Group, Cl. A (a) 100,000 6,100,000
Perkin-Elmer 150,000 9,328,125
Quantum (a) 200,000 4,150,000
_____________
40,827,500
_____________
Energy Minerals--2.6% Devon Energy 201,100 7,025,931
EEX (a) 610,000 5,718,750
Ocean Energy (a) 515,000 10,074,688
_____________
22,819,369
_____________
Finance--20.6% 20th Century Industries 330,000 9,466,875
Amerin (a) 360,000 10,507,500
Bank United, Cl. A 200,000 9,575,000
Berkley (W.R.) 245,000 9,815,312
Capital Re 140,000 10,027,500
CCB Financial 90,000 9,562,500
Charter One Financial 320,000 10,780,000
Colonial BancGroup, Cl. A 285,000 9,191,250
Dime Bancorp 375,000 11,226,563
Enhance Financial Services Group 400,000 13,500,000
Everest Reinsurance Holdings 295,000 11,339,063
Executive Risk 150,000 11,062,500
Hibernia, Cl. A 445,000 8,983,438
PMI Group 140,000 10,272,500
Reliance Group Holdings 600,000 10,500,000
ReliaStar Financial 230,000 11,040,000
Terra Nova (Bermuda) Holdings, Cl. A 350,000 10,981,250
_____________
177,831,251
_____________
DREYFUS NEW LEADERS FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
_____________ ____________
Health Services--6.0% Beverly Enterprises (a) 700,000 $ 9,668,750
Covance (a) 500,000 11,250,000
ICN Pharmaceuticals 100,000 4,568,750
McKesson 180,000 14,625,000
Universal Health Services, Cl. B (a) 190,000 11,091,250
_____________
51,203,750
_____________
Health Technology--3.1% Allergan 200,000 9,275,000
Gilead Sciences (a) 250,000 8,015,625
Heska 371,300 4,107,506
Varian Associates 140,000 5,460,000
_____________
26,858,131
_____________
Industrial Services--4.8% Camco International 100,000 7,787,500
Cooper Cameron (a) 175,000 8,925,000
ENSCO International 400,000 6,950,000
Foster Wheeler 300,000 6,431,250
Global Industries (a) 650,000 10,968,750
Separation Technologies (a,b,c) 81,984 311,539
_____________
41,374,039
_____________
Non-Energy Minerals--1.7% Allegheny Teledyne 266,300 6,091,612
Freeport-McMoRan Copper & Gold 550,000 8,353,125
_____________
14,444,737
_____________
Process Industries--7.6% Albany International, Cl. A 331,650 7,938,872
Bemis 250,000 10,218,750
Boise Cascade 200,000 6,550,000
Crompton & Knowles 315,000 7,934,062
Jefferson Smurfit (a) 400,000 6,287,500
OM Group 272,000 11,220,000
Republic Services 237,800 5,707,200
Westpoint Stevens (a) 280,000 9,240,000
_____________
65,096,384
_____________
Producer Manufacturing--7.6% Coltec Industries (a) 400,000 7,950,000
CTB International (a) 400,000 5,425,000
Harsco 250,000 11,453,125
Howmet International 685,000 10,275,000
MagneTek (a) 600,000 9,450,000
Osmonics (a) 254,800 3,057,600
Titan International 490,000 8,330,000
Wyman-Gordon (a) 500,000 9,968,750
_____________
65,909,475
_____________
Retail Trade--3.6% Barnes & Noble (a) 275,000 10,295,312
Consolidated Stores (a) 240,000 8,700,000
Tiffany 250,000 12,000,000
_____________
30,995,312
_____________
DREYFUS NEW LEADERS FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
_____________ ____________
Technology Services--6.7% Aspect Development (a) 135,000 $ 10,209,375
CBT Group PLC, A.D.R. 215,000 11,502,500
Intuit (a) 200,000 12,250,000
J D Edwards (a) 270,000 11,593,125
Networks Associates (a) 250,000 11,968,750
_____________
57,523,750
_____________
Utilities--9.6% BEC Energy 225,000 9,337,500
Illinova 320,000 9,600,000
ITC DeltaCom 340,000 14,529,687
LG&E Energy 315,000 8,524,687
Metromedia Fiber Network, Cl. A 270,000 12,588,750
NEXTLINK Communications, Cl. A 315,000 11,930,625
Niagara Mohawk Power (a) 500,000 7,468,750
Premisys Communications (a) 350,000 8,706,250
_____________
82,686,249
_____________
TOTAL COMMON STOCKS
(cost $594,256,929) $798,875,716
=============
</TABLE>
<TABLE>
<CAPTION>
Preferred Stocks--.2%
- -------------------------------------------------------
Industrial Services--.1% Separation Technologies,
<S> <C> <C>
Ser. A, 6%, Cum. Conv. (a,b,c) 243,385 $ 924,863
_____________
Technology Services--.1% Crystal Dynamics, Ser. D, Conv. (a,c) 180,000 675,000
_____________
TOTAL PREFERRED STOCKS
(cost $2,281,463) $ 1,599,863
=============
</TABLE>
<TABLE>
<CAPTION>
Principal
Short-Term Investments--5.7% Amount
- ------------------------------------------------------------------------------------------
_____________
<S> <C> <C>
U.S. Treasury Bills: 4.93%, 9/3/1998 $ 8,367,000 $ 8,293,956
4.98%, 9/10/1998 4,300,000 4,258,591
5.02%, 9/17/1998 35,424,000 35,049,214
4.88%, 9/24/1998 1,272,000 1,257,461
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $48,847,195) $ 48,859,222
=============
TOTAL INVESTMENTS (cost $645,385,587) 98.6% $849,334,801
======= =============
CASH AND RECEIVABLES (NET) 1.4% $ 12,427,399
======= =============
NET ASSETS 100.0% $861,762,200
======= =============
DREYFUS NEW LEADERS FUND, INC.
- -----------------------------------------------------------------------------
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
(b) Investments in non-controlled affiliates (cost $1,243,000)-see Note 1(d).
(c)Securities restricted as to public resale. Investments in restricted
securities, with an aggregate value of $1,911,402 represents approximately .22%
of net assets:
</TABLE>
<TABLE>
<CAPTION>
Acquisition Purchase Percentage of
Issuer Date Price Net Assets Valuation*
_____ _____________ ________ ____________ _________
<S> <C> <C> <C> <C>
Crystal Dynamics, Ser. D 7/10/95 $7.50 .08% $3.75
Separation Technologies 1/13/95 3.80 .03 3.80
Separation Technologies,
Ser. A, 6% Cum. Conv 7/12/93-1/13/95 3.80 .11 3.80
- -----------------
* The valuation of these securities has been determined in good faith under the direction of the Board of Directors.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW LEADERS FUND, INC.
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STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
_____________ ____________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $645,385,587 $849,334,801
Cash 4,048,660
Receivable for investment securities sold 25,619,403
Dividends and interest receivable 398,940
Receivable for shares of Common Stock subscribed 61,048
Prepaid expenses 77,329
_____________
879,540,181
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 593,664
Due to Distributor 174,097
Payable for investment securities purchased 15,740,379
Payable for shares of Common Stock redeemed 1,156,794
Accrued expenses 113,047
_____________
17,777,981
_____________
NET ASSETS $861,762,200
=============
REPRESENTED BY: Paid-in capital $555,357,497
Accumulated investment (loss) (1,605,910)
Accumulated net realized gain (loss) on investments 104,061,399
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 203,949,214
_____________
NET ASSETS $861,762,200
=============
SHARES OUTSTANDING
(100 MILLION SHARES OF $.01 PAR VALUE COMMON STOCK AUTHORIZED) 17,946,995
NET ASSET VALUE, offering and redemption price per share--Note 3(d) $48.02
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW LEADERS FUND, INC.
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STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends $ 2,545,675
Interest 872,855
____________
Total Income $ 3,418,530
EXPENSES: Management fee--Note 3(a) 3,306,273
Shareholder servicing costs--Note 3(b) 1,556,559
Prospectus and shareholders' reports 51,639
Custodian fees--Note 3(b) 43,752
Registration fees 23,391
Directors' fees and expenses--Note 3(c) 19,115
Professional fees 14,388
Loan commitment fees--Note 2 4,108
Miscellaneous 5,215
____________
Total Expenses 5,024,440
____________
INVESTMENT (LOSS) (1,605,910)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments $84,384,024
Net unrealized appreciation (depreciation) on investments (10,653,322)
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 73,730,702
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $72,124,792
============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW LEADERS FUND, INC.
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STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
________________ _______________
<S> <C> <C>
OPERATIONS:
Investment (loss) $ (1,605,910) $ (2,637,097)
Net realized gain (loss) on investments 84,384,024 88,188,933
Net unrealized appreciation (depreciation) on investments (10,653,322) 56,242,763
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations 72,124,792 141,794,599
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized gain on investments -- (75,672,264)
_____________ _____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold 212,535,931 467,417,822
Dividends reinvested -- 72,972,658
Cost of shares redeemed (282,432,129) (527,978,672)
_____________ _____________
Increase (Decrease) in Net Assets from Capital Stock Transactions (69,896,198) 12,411,808
_____________ _____________
Total Increase (Decrease) in Net Assets 2,228,594 78,534,143
NET ASSETS:
Beginning of Period 859,533,606 780,999,463
_____________ _____________
End of Period $861,762,200 $859,533,606
============= =============
INVESTMENT (LOSS) $ (1,605,910) --
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold 4,589,166 10,396,629
Shares issued for dividends reinvested -- 1,671,965
Shares redeemed (6,023,750) (11,857,646)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding (1,434,584) 210,948
============= =============
SEE NOTES TO FINANCIAL STATEMENTS.
</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.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998 Year Ended December 31,
______________________________________________________
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993
__________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $44.35 $40.74 $37.39 $31.33 $34.13 $32.17
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income (loss)--net (.09) (.14) (.05) .06 .10 .07
Net realized and unrealized gain (loss)
on investments 3.76 7.99 6.47 9.17 (.22) 5.30
______ ______ ______ ______ ______ ______
Total from Investment Operations 3.67 7.85 6.42 9.23 (.12) 5.37
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net -- -- -- (.07) (.08) (.07)
Dividends from net realized gain on investments -- (4.24) (3.07) (3.10) (2.60) (3.34)
______ ______ ______ ______ ______ ______
Total Distributions -- (4.24) (3.07) (3.17) (2.68) (3.41)
______ ______ ______ ______ ______ ______
Net asset value, end of period $48.02 $44.35 $40.74 $37.39 $31.33 $34.13
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN 8.28%* 19.54% 17.31% 29.80% (.15%) 17.07%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .57%* 1.12% 1.17% 1.19% 1.16% 1.22%
Ratio of net investment income (loss)
to average net assets (.18%)* (.33%) (.15%) .17% .30% .19%
Decrease reflected in above expense ratios
due to undertakings by the Manager -- -- -- .02% .05% .04%
Portfolio Turnover Rate 44.29%* 82.28% 102.22% 108.80% 94.21% 127.97%
Net Assets, end of period (000's Omitted) $861,762 $859,534 $780,999 $606,945 $391,625 $338,967
- -----------------------------
* Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS NEW LEADERS FUND, INC.
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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") 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 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 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 discount on investments, is recognized on the
accrual basis. Under the terms of the custodian agreement, the Fund received net
earnings credits of $2,144 during the period ended June 30, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(D) AFFILIATED ISSUERS: Issuers in which the Fund held 5% or more of the
outstanding voting securities are defined as "affiliated" in the Act. The
following summarizes affiliated issuers during the period ended June 30, 1998:
<TABLE>
<CAPTION>
Shares
_________________________________________________
Beginning End of Dividend Market
Name of Issuer of Period Purchases Sales Period Income Value
_____________ _________ _________ _________ _________ _________ ___________
<S> <C> <C> <C> <C> <C> <C>
Separation Technologies--Common 81,984 -- -- 81,984 -- $ 311,539
Separation Technologies--Preferred 243,385 -- -- 243,385 -- 924,863
</TABLE>
DREYFUS NEW LEADERS FUND, INC.
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(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 capital 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.
(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--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. During the period ended June
30, 1998, the Fund did not borrow under the Facility.
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, exclusive of taxes,
brokerage, commitment fees, interest on borrowings (which, in the view of
Stroock & Stroock & Lavan LLP, counsel to the Fund, also contemplates dividends
on securities sold short), and extraordinary expenses, exceed 1-1/2% of the
value of the Fund' s average net assets, the Fund may deduct from the
payments to be made to the Manager, or the Manager will bear such excess
expense. During the period ended June 30, 1998, there was no expense
reimbursement pursuant to the Agreement.
(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 period ended
June 30, 1998, the Fund was charged $1,102,091 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 June 30, 1998, the Fund was charged $198,070 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 June 30, 1998, the Fund was
charged $43,752 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.
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) A 1% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemptions through use of the Fund
Exchanges service) 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 period ended June
30, 1998, redemption fees amounted to $71,245.
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended June 30, 1998, amounted
to $376,700,264 and $478,034,437, respectively.
At June 30, 1998, accumulated net unrealized appreciation on investments was
$203,949,214, consisting of $232,558,020 gross unrealized appreciation and
$28,608,806 gross unrealized depreciation.
At June 30, 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 lion "d" logo] (reg.tm)
[dreyfus logo] (reg.tm)
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. 085SA986
New Leaders
Fund, Inc.
Semi-Annual
Report
June 30, 1998
