DREYFUS GROWTH AND INCOME FUND, INC.
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report for the Dreyfus Growth & Income
Fund, Inc. The past 12 months have been a very challenging investment
environment with many crosscurrents buffeting world economies and financial
markets. During the period ended October 31, 1998, your Fund produced a total
return of 7.23%,* which compares with a total return of 22.01% for the Standard
& Poor' s 500 Composite Stock Price Index** and 12.40% for the Wilshire Large
Company Growth Index.*** Although the Fund's results could be characterized as
disappointing, as we will discuss, they are not surprising given current market
circumstances and the Fund's history and evolution.
ECONOMIC REVIEW
So far in 1998, the main regions of the world have had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment; unemployment was only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year. The U.S. economy cooled enough over the months that the Fed decided to
stand pat. Evidence of economic cooling continued to accumulate and worries
about the world economy intensified. Financial stresses pushed the Fed to ease
credit in both late September and mid-October. After many years of subpar
economic growth, continental Europe moved into a sustained economic expansion.
The overall European economy benefited as interest rates in peripheral countries
such as Spain and Italy fell, approaching the lower levels established by
Germany, on the eve of currency unification. Unlike the U.S., Europe has
substantial excess capacity of productive plant and labor. In Asia, weak
economies were pervasive as a result of the Asian financial crisis. The Latin
American economies weakened as the financial stresses spread throughout that
region.
A main influence on the U.S. economy this year was the foreign financial
crisis and cooling of the world economy. The positive effects hit first. Actual
inflation and expected inflation dropped, causing a decline in long-term
Treasury bond yields and mortgage rates. This caused a boom in housing. The fall
in inflation helped the consumer sector as more of the growth in consumer income
was left over after inflation to buy goods and services. Consumers benefited
from a combination of good growth in income after inflation, a strong labor
market and past increases in the price of assets they owned.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports. One result of this industrial weakness was to cool off a
U.S. economy that had been growing rapidly.
The major change in the economic outlook over recent months has been a
downward shift in expectations for world economic growth. A credit crunch
developed in emerging countries and former communist countries, sharply reducing
the economic outlook for Asia and Latin America as well as for
commodity-exporting countries throughout the world. The effect on Europe and the
U.S. has been to lower expectations of profit growth and drive down bond yields.
Evidence of a weaker world economy accumulated as the financial stresses
continued. A worsened financial crisis occurred between the Russian default in
mid-August and the fallout from the Long-Term Capital Management (hedge fund)
crisis through early October. However, proactive steps were taken to stabilize
the Japanese banks, design a support package for Brazil and ease monetary
policy. The prospects for world economic weakness and monetary ease in the major
countries will be powerfully influenced by whether foreign financial stresses
calm down or intensify in the coming months. There appears to be a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.
MARKET OVERVIEW
The 12-month reporting period ended October 31, 1998 encompassed some very
different market phases. There was stock market strength during the early part
of the period. Then small-cap indices started to erode in the spring and were
joined by large-cap indices by mid-summer. A sharp decline until the end of
August was followed by a brief rebound and then a renewed decline amid financial
fears until early October. The last few weeks of the fiscal year saw a strong
rally in response to the easing of monetary policy. Returns on mid-cap and
small-cap stock indices tended to be weaker than on large-caps, with a negative
total return on small-cap indices.
Three key trends influenced stock market behavior during the fiscal year.
First, the Federal Reserve kept the Federal Funds rate flat at 5.5% for nearly
11 months of the fiscal year, but then eased policy twice. Second, weakness in
emerging country economies contributed to declining commodity prices and a drop
in long-term Treasury bond yields to multidecade lows. Third, expectations for
corporate profits dropped, first in the sectors sensitive to Asian developments
such as oil, basic materials and exports and then for a broader list of stocks.
The trigger for the sharp decline in stocks in August appeared to be the
Russian default in the summer of 1998. This resulted in deepening concerns about
weaker economic growth and corporate profits. There was also a global margin
call on risky assets held by hedge funds and financial institutions. This raised
the cost of debt financing for many corporations and many emerging countries.
Expectations for economic activity in emerging countries in Asia and Latin
America shifted down sharply, while expectations for U.S. corporate profits
weakened somewhat. Despite the fall in Treasury bond yields, financial stocks
led the summer selloff due to concerns about financial contagion among emerging
countries and potential loan losses by financial institutions. However, in the
last few weeks of the fiscal year, these fears began to ebb and the stock market
rebounded.
The erosion of expectations about average corporate profit growth over the
last year contributed to an outperformance by a small group of super-cap growth
stocks for much of the fiscal year. Investors had more confidence in the
prospect for strong persistent earnings growth for this small group of stocks
than for the broad market. Value stocks, which often have greater cyclical
sensitivity to earnings fluctuations, lagged behind these super-growth stocks.
In addition, many of the financial stocks that fall into the value category
dropped sharply following the Russian default and global margin call concerns.
The fiscal year ended October 31, 1998 was characterized by very different
performances of the various market sectors. Super-cap growth stocks did best,
followed by large-cap stocks in general with mid-cap and small-cap stocks
lagging behind. For example, the total return for the fiscal year on the Russell
1000 Index with a heavy large-cap representation was 19.71%, while the Russell
1000 Growth Index returned 24.64% and the Russell 1000 Value Index returned
14.83% . The return on the Russell Midcap Index was 4.46% while the small-cap
Russell 2000 Index return was -11.84%.(+)
PORTFOLIO FOCUS
It is our intention that the Fund should be primarily focused on investments
in mid- to large-capitalization companies with above-average earnings growth
prospects whose common stocks are selling at below-average price-to-earnings
ratios.
However, given the recent market environment, where extreme performance gaps
exist between very large-capitalization companies and the rest of the equity
market, we repositioned the Fund away from both small and mid-cap stocks toward
larger-cap companies. We did maintain our policy to invest in stocks with
below-average price-to-earnings ratios.
During the reporting period, we did maintain some of the Fund's holdings in
small-cap stocks. This decision did not serve the the Fund well in this
investment climate, as liquidity and large capitalization were primary drivers
of performance.
Investments in Biogen, Freddie Mac, Beverly Enterprises, Lexmark International
Group, Cl. A, and Federal National Mortgage Association produced the largest
positive contributions to the Fund. On the other side of the ledger, issue
selection and a small- to mid-cap preference hurt results. An assortment of
stocks from various industries (PhyCor, Wisconsin Central Transportation,
Adaptec, Washington Mutual, and RJR Nabisco Holdings) registered the largest
negative results.
In the market environment during the reporting period, favoring
large-capitalization growth stocks, we believe that issue selection with a large
capitalization bias generally was a key factor determining investment success.
We will continue to look for stocks that we believe have above-average long-term
earnings growth potential and are attractively priced relative to the broad
market average. An example of a recently purchased stock that meets our
investment criteria is Dayton Hudson. Dayton Hudson is a general merchandise
retailer and the fifth largest retailer in the country, operating 1,141 stores
in 40 states under the names Hudson's, Marshall Field's, Dayton's, Target, and
Mervyn' s. Target, which accounts for roughly 75% of the company's revenues and
profits, is the company' s growth engine and the reason we own the stock.
Recently purchased at a 20% price-to-earnings discount to the S&P 500, based on
1999 projected earnings, we expect the company can increase its earnings 15% to
19% over the near term and 15% longer term, well above the market's projected
growth.
One last note: during October we engaged in tax loss selling to reduce the
Fund' s realized capital gains. This left us with an unusual amount of cash and
cash equivalents at the end of the reporting period. We hedged most of this cash
position with S&P futures.
We are grateful for the opportunity to invest your capital and will be working
diligently on your behalf.
Sincerely,
[Douglas D. Ramos signature]
Douglas D. Ramos
Portfolio Manager
November 16, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index of
U.S. stock market performance.
*** SOURCE: WILSHIRE ASSOCIATES, INC. -- The Wilshire Large Company Value Index
is constructed by using a blend of price-to-book and forecast price-to-earnings
ratios. The largest 750 stocks in the Wilshire 5000 are ranked based on a style
score that is 75% price-to-earnings ratio and 25% forecast P/E. The universe is
divided so that companies that represent half of the total capitalization fall
into growth and the remainder are placed into value.
(+) 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.
DREYFUS GROWTH AND INCOME FUND, INC. OCTOBER 31, 1998
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS GROWTH AND INCOME
FUND, INC. WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND THE
WILSHIRE LARGE COMPANY VALUE INDEX
Dollars
$31,019
Standard & Poor's 500 Composite Stock Price Index*
$29,283
Wilshire Large Company Value Index**
$22,906
Dreyfus Growth and Income Fund, Inc.
*Source: Lipper Analytical Services, Inc.
*Source: Wilshire Associates, Inc.
Average Annual Total Returns
- --------------------------------------------------------------------------------
One Year Ended Five Years Ended From Inception (12/31/91)
October 31, 1998 October 31, 1998 to October 31, 1998
___________________ ___________________ _________________________
7.23% 10.37% 12.88%
- ------------------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Growth and Income
Fund, Inc. on 12/31/91 (Inception Date) to a $10,000 investment made on that
date in the Standard & Poor's 500 Composite Stock Price Index as well as to the
Wilshire Large Company Value Index which are described below. 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. Unlike the Fund, which can invest in both equity and debt
securities, the Standard & Poor's 500 Composite Stock Price Index is a widely
accepted, unmanaged index of overall stock market performance comprised solely
of common stocks. The Wilshire Large Company Value Index composed of the largest
750 stocks in the Wilshire 5000 Index which meet certain statistical criteria
for "value" , has been selected as an additional benchmark index for the Fund
because, like the Fund, it focuses on "value" stocks. Since mid-1997, the Fund
has been managed pursuant to a disciplined "value" investment style.
Accordingly, the Wilshire Index is a more representative benchmark with regard
to the Fund' s more recent performance results. The Indices do not take into
account charges, fees and other expenses. Further information relating to Fund
performance, including expense reimbursements, if applicable, is contained in
the Financial Highlights section of the Prospectus and elsewhere in this report
<TABLE>
<CAPTION>
DREYFUS GROWTH AND INCOME FUND, INC.
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STATEMENT OF INVESTMENTS OCTOBER 31, 1998
Common Stocks--86.0% Shares Value
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<S> <C> <C>
Consumer Cyclical--1.2% General Motors . . . . . . . . . . . . . . . 310,000 $ 19,549,375
________________
Consumer Durables--3.9% Eastman Kodak . . . . . . . . . . . . . . . . 104,300 8,083,250
Ford Motor . . . . . . . . . . . . . . . . . 200,000 10,850,000
Leggett & Platt . . . . . . . . . . . . . . . 1,381,400 32,290,225
Newell . . . . . . . . . . . . . . . . . . . 295,000 12,980,000
________________
64,203,475
________________
Consumer Non-Durables--6.0% ConAgra . . . . . . . . . . . . . . . . . . . 996,600 30,334,012
Kimberly-Clark . . . . . . . . . . . . . . . 613,000 29,577,250
Philip Morris Cos . . . . . . . . . . . . . . 771,100 39,422,488
________________
99,333,750
________________
Consumer Services--.8% Carnival . . . . . . . . . . . . . . . . . . 261,100 8,453,112
Cendant . . . . . . . . . . . . . . . . . . . 362,400 4,144,950
________________
12,598,062
________________
Electronic Technology--10.0% Boeing . . . . . . . . . . . . . . . . . . . 275,000 10,312,500
Compaq Computer . . . . . . . . . . . . . . . 441,000 13,946,625
International Business Machines . . . . . . . 196,000 29,093,750
Lexmark International Group, Cl. A . . . . . 324,600 22,701,713
Lockheed Martin . . . . . . . . . . . . . . . 144,000 16,038,000
Perkin-Elmer . . . . . . . . . . . . . . . . 328,300 27,679,793
Seagate Technology . . . . . . . . . . . . . 56,400 (a) 1,487,550
Sun Microsystems . . . . . . . . . . . . . . 225,000 (a) 13,106,250
Sundstrand . . . . . . . . . . . . . . . . . 218,400 10,251,150
United Technologies . . . . . . . . . . . . . 218,500 20,812,125
________________
165,429,456
________________
Electronics-Instruments--.7% Raytheon, Cl. B . . . . . . . . . . . . . . . 209,900 12,187,319
________________
Energy Minerals--5.0% British Petroleum, A.D.S. . . . . . . . . . . 372,000 32,898,750
Mobil . . . . . . . . . . . . . . . . . . . . 300,000 22,706,250
Texaco . . . . . . . . . . . . . . . . . . . 405,300 24,039,356
USX-Marathon Group . . . . . . . . . . . . . 120,000 3,922,500
________________
83,566,856
________________
Finance--19.1% ACE . . . . . . . . . . . . . . . . . . . . . 414,000 14,024,250
BankAmerica . . . . . . . . . . . . . . . . . 237,000 13,612,688
BankBoston . . . . . . . . . . . . . . . . . 558,000 20,541,375
CIGNA . . . . . . . . . . . . . . . . . . . . 164,700 12,012,806
Chase Manhattan . . . . . . . . . . . . . . . 252,000 14,316,750
Chubb . . . . . . . . . . . . . . . . . . . . 240,300 14,778,450
Citigroup . . . . . . . . . . . . . . . . . . 371,300 17,474,306
EXEL, Cl. A . . . . . . . . . . . . . . . . . 92,000 7,032,250
Federal Home Loan Mortgage . . . . . . . . . 688,000 39,560,000
Federal National Mortgage Association . . . . 519,000 36,751,688
DREYFUS GROWTH AND INCOME FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------------- -----------------
Finance (continued) First Union . . . . . . . . . . . . . . . . . 502,500 $ 29,145,000
Fleet Financial Group . . . . . . . . . . . . 828,000 33,068,250
Norwest . . . . . . . . . . . . . . . . . . . 825,000 30,679,687
SunAmerica . . . . . . . . . . . . . . . . . 378,500 26,684,250
Torchmark . . . . . . . . . . . . . . . . . 216,000 7,992,000
Waddell & Reed Financial, Cl. A . . . . . . . 12,290 251,945
________________
317,925,695
________________
Finance Companies--.2% Household International . . . . . . . . . . . 104,700 3,828,093
________________
Health Services--4.7% Aetna . . . . . . . . . . . . . . . . . . . . 219,000 16,342,875
Beverly Enterprises . . . . . . . . . . . . . 802,300 (a) 5,415,525
Columbia/HCA Healthcare . . . . . . . . . . . 739,700 15,533,700
Tenet Healthcare . . . . . . . . . . . . . . 900,000 (a) 25,143,750
Wellpoint Health Networks . . . . . . . . . . 203,200 (a) 14,960,600
________________
77,396,450
________________
Health Technology--4.9% Amgen . . . . . . . . . . . . . . . . . . . . 122,700 (a) 9,639,619
Biogen . . . . . . . . . . . . . . . . . . . 578,600 (a) 40,212,700
Pharmacia & Upjohn . . . . . . . . . . . . . 578,800 30,640,225
________________
80,492,544
________________
Industrial Services--1.3% Waste Management . . . . . . . . . . . . . . 488,675 22,051,459
________________
Non-Energy Minerals--.5% Aluminum Co. of America . . . . . . . . . . . 103,000 8,162,750
________________
Process Industries--2.0% duPont (EI) de Nemours . . . . . . . . . . . 275,000 15,812,500
Great Lakes Chemical . . . . . . . . . . . . 289,000 12,029,625
Mead . . . . . . . . . . . . . . . . . . . . 173,000 5,471,125
________________
33,313,250
________________
Producer Manufacturing--4.9% AlliedSignal . . . . . . . . . . . . . . . . 444,000 17,288,250
Industrial Flexible Material . . . . . . . . 725,000 (a,d) ---
Masco . . . . . . . . . . . . . . . . . . . . 1,158,600 32,658,038
Tyco International . . . . . . . . . . . . . 41,000 2,539,438
Xerox . . . . . . . . . . . . . . . . . . . . 295,300 28,607,187
________________
81,092,913
________________
Retail Trade--6.1% American Stores . . . . . . . . . . . . . . . 1,198,000 39,009,875
Dayton Hudson . . . . . . . . . . . . . . . . 489,000 20,721,375
Federated Department Stores . . . . . . . . . 398,000 (a) 15,298,125
May Department Stores . . . . . . . . . . . . 440,000 26,840,000
________________
101,869,375
________________
Transportation--2.5% Burlington Northern Santa Fe . . . . . . . . 103,000 3,180,125
CNF Transportation . . . . . . . . . . . . . 406,200 12,287,550
DREYFUS GROWTH AND INCOME FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------------- -----------------
Transportation (continued) Union Pacific . . . . . . . . . . . . . . . . 310,300 $ 14,778,038
Wisconsin Central Transportation . . . . . . 787,700 (a) 11,913,962
________________
42,159,675
________________
Utilities--12.2% AT&T . . . . . . . . . . . . . . . . . . . . 322,000 20,044,500
Bell Atlantic . . . . . . . . . . . . . . . . 580,000 30,812,500
Coastal . . . . . . . . . . . . . . . . . . . 1,138,000 40,114,500
Duke Energy . . . . . . . . . . . . . . . . . 300,000 19,406,250
GTE . . . . . . . . . . . . . . . . . . . . . 514,000 30,165,375
SBC Communications . . . . . . . . . . . . . 706,600 32,724,413
Texas Utilities . . . . . . . . . . . . . . . 677,800 29,653,750
________________
202,921,288
________________
TOTAL COMMON STOCKS
(cost $1,271,055,487) . . . . . . . . . . . $1,428,081,785
________________
</TABLE>
<TABLE>
<CAPTION>
Principal
Short-Term Investments--14.2% Amount
- ------------------------------------------------------------------------------- -------------
<S> <C> <C>
U.S. Treasury Bills: 4.90%, 11/12/98 . . . . . . . . . . . . . . . $49,889,000 $ 49,836,118
4.89%, 11/19/98 . . . . . . . . . . . . . . . 29,764,000 29,713,103
4.89%, 11/27/98 . . . . . . . . . . . . . . . 12,052,000 (b) 12,023,316
4.47%, 12/17/98 . . . . . . . . . . . . . . . 7,080,000 7,045,379
4.36%, 12/24/98 . . . . . . . . . . . . . . . 26,506,000 26,348,819
4.02%, 1/7/99 . . . . . . . . . . . . . . . . 6,706,000 (c) 6,655,303
3.81%, 1/14/99 . . . . . . . . . . . . . . . 60,378,000 (b) 59,867,202
3.84%, 1/21/99 . . . . . . . . . . . . . . . 26,434,000 26,167,810
4.18%, 1/28/99 . . . . . . . . . . . . . . . 19,102,000 18,907,160
________________
TOTAL SHORT-TERM INVESTMENTS
(cost $236,563,437) . . . . . . . . . . . . $ 236,564,210
________________
TOTAL INVESTMENTS (cost $1,507,618,924). . . . . . . . . . . . . . . . . . . . . . 100.2% $1,664,645,995
_______ ________________
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . (.2%) $ (3,564,186)
_______ ________________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $1,661,081,809
_______ ________________
Notes to Statement of Investments:
</TABLE>
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(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as collateral for
open financial futures positions.
(c) Partially held by brokers as collateral for open short sale positions.
(d) Security restricted to public resale:
<TABLE>
<CAPTION>
Acquisition Purchase Percentage of
Issuer Date Price Net Assets Valuation*
_____ __________ ________ ____________ __________
<S> <C> <C> <C> <C>
Industrial Flexible Material 3/31/1993 $5.00 0.00% Zero
- ---------------------
* The valuation of this security has been determined in good faith under the
direction of the Board of Directors.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH AND INCOME FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF FINANCIAL FUTURES OCTOBER 31, 1998
Market Value Unrealized
Covered Appreciation
Financial Futures Contracts by Contracts Expiration at 10/31/98
_______________ ____________ _______________ ______________ ____________
<S> <C> <C> <C> <C>
Standard & Poor's 500. . . . . . . . . . . . ........... 755 $208,606,500 December '98 $12,256,438
____________
STATEMENT OF SECURITIES SOLD SHORT OCTOBER 31, 1998
Common Stocks Shares Value
_______________ _________ _________
Waddell & Reed Financial
(proceeds $243,044). . . . . . . . . . . . . . . . . 12,145 $254,286
_________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH AND INCOME FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1998
Cost Value
_______________ _______________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $1,507,618,924 $1,664,645,995
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217,483
Receivable for investment securities sold . . . . . . . . . . . 46,834,461
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 1,992,009
Receivable for futures variation margin--Note 4(a) . . . . . . 1,642,125
Receivable for shares of Common Stock subscribed . . . . . . . 362,558
Receivable from brokers for proceeds on securities sold short . . 243,044
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 54,352
_______________
1,715,992,027
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . . . . 1,478,439
Payable for investment securities purchased . . . . . . . . . . 37,541,467
Payable for shares of Common Stock redeemed . . . . . . . . . . 15,358,212
Securities sold short, at value
(proceeds $243,044)--see statement . . . . . . . . . . . . 254,286
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 277,814
_______________
54,910,218
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,661,081,809
_______________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $1,397,415,602
Accumulated undistributed investment income--net . . . . . . . 1,921,078
Accumulated net realized gain (loss) on investments
and foreign currency transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,472,862
Accumulated net unrealized appreciation (depreciation)
on investments, securities sold short and foreign currency
transactions [including $12,256,438 net unrealized
appreciation on financial futures]--Note 4(b). . . . . . . . . . . . . . . . . . . . . . . 169,272,267
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,661,081,809
_______________
SHARES OUTSTANDING
(300 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED). . . . . . . . . . . . . . 92,956,756
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $17.87
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH AND INCOME FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $231,928 foreign
taxes withheld at source) . . . . . . . . . . . . . . . . . $ 30,808,466
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,096,543
______________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 38,905,009
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . . . . . . . . 14,098,441
Shareholder servicing costs--Note 3(b) . . . . . . . . . . . . 6,171,418
Prospectus and shareholders' reports . . . . . . . . . . . . 137,512
Custodian fees--Note 3(b) . . . . . . . . . . . . . . . . . . . 135,916
Directors' fees and expenses--Note 3(c) . . . . . . . . . . . 77,526
Professional fees . . . . . . . . . . . . . . . . . . . . . . . 51,100
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 15,690
Loan commitment fees--Note 2 . . . . . . . . . . . . . . . . . 154
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 30,090
______________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 20,717,847
______________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,187,162
______________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments:
Long transactions (including foreign currency transactions) . $ 79,646,525
Short sale transactions . . . . . . . . . . . . . . . . . . 139,776
Net realized gain (loss) on financial futures . . . . . . . . . 2,859,271
Net realized gain (loss) on forward currency exchange contracts . . 284,378
______________
Net Realized Gain (Loss) . . . . . . . . . . . . . . . . 82,929,950
Net unrealized appreciation (depreciation) on investments, foreign
currency transactions and securities sold short (including
$19,022,018 net unrealized appreciation on financial futures). . . . . . . . . . . . . . . 44,244,823
______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 127,174,773
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $145,361,935
______________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GROWTH AND INCOME FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1998 October 31, 1997
________________ ________________
OPERATIONS:
<S> <C> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,187,162 $ 33,665,240
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . 82,929,950 302,097,740
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 44,244,823 (82,003,170)
__________________ __________________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 145,361,935 253,759,810
__________________ __________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,696,807) (36,481,865)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . (295,927,118) (255,311,969)
__________________ __________________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . (313,623,925) (291,793,834)
__________________ __________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 816,239,753 3,234,126,408
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298,840,613 278,761,496
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,198,145,049) (3,630,898,456)
__________________ __________________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . (83,064,683) (118,010,552)
__________________ __________________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . (251,326,673) (156,044,576)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,912,408,482 2,068,453,058
__________________ __________________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,661,081,809 $1,912,408,482
__________________ __________________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . $ 1,921,078 $ 1,430,723
__________________ __________________
CAPITAL SHARE TRANSACTIONS: Shares Shares
________________ ________________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,083,320 164,975,986
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 17,179,545 15,539,230
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,800,453) (184,787,972)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . (3,537,588) (4,272,756)
__________________ __________________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS GROWTH AND INCOME 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>
Year Ended October 31,
_______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . $19.82 $20.53 $17.96 $16.49 $16.86
_______ _______ _______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .18 .34 .35 .44 .34
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . 1.14 1.97 3.05 1.67 (.34)
_______ _______ _______ _______ _______
Total from Investment Operations . . . . . . . . 1.32 2.31 3.40 2.11 --
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net . . . . . (.18) (.37) (.32) (.47) (.33)
Dividends from net realized gain on investments . (3.09) (2.65) (.51) (.17) (.04)
_______ _______ _______ _______ _______
Total Distributions . . . . . . . . . . . . . . (3.27) (3.02) (.83) (.64) (.37)
_______ _______ _______ _______ _______
Net asset value, end of period . . . . . . . . . $17.87 $19.82 $20.53 $17.96 $16.49
_______ _______ _______ _______ _______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . 7.23% 12.97% 19.41% 13.17% .05%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets . 1.10% 1.01% 1.02% 1.05% 1.14%
Ratio of dividends on securities sold short to
average net assets . . . . . . . . . . . . . . -- .01% .01% .01% --
Ratio of net investment income to
average net assets . . . . . . . . . . . . . . .97% 1.67% 1.78% 2.55% 2.18%
Portfolio Turnover Rate . . . . . . . . . . . . 101.87% 129.48% 131.30% 132.46% 97.47%
Net Assets, end of period (000's Omitted) . . . $1,661,082 $1,912,408 $2,068,453 $1,763,371 $1,717,733
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS GROWTH AND INCOME FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Growth and Income Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act") as a non-diversified
open-end management investment company. The Fund's investment objective is to
provide investors with long-term capital growth, current income and growth of
income, consistent with reasonable investment risk. 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, 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.
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 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 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. Under the terms of the custody agreement, the Fund received net
earnings credits of $17,632 based on available cash balances left on deposit.
Income earned under this arrangement is included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. 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.
DREYFUS GROWTH AND INCOME FUND, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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.
NOTE 2--BANK LINES OF CREDIT:
The Fund may borrow up to $10 million for leveraging purposes under a
short-term unsecured line of credit and participates with other Dreyfus-managed
funds in a $100 million unsecured line of credit primarily to be utilized for
temporary or emergency purposes, including the financing of redemptions.
Interest is charged to the Fund at rates which are related to the Federal Funds
rate in effect at the time of borrowings. During the period ended October 31,
1998, the Fund did not borrow under either line of credit.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management 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.
(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
October 31, 1998, the Fund was charged $4,320,415 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 October 31, 1998, the Fund was charged $1,121,225 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 October 31, 1998, the Fund was
charged $135,916 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 following summarizes the aggregate amount of purchases and sales of
investment securities and securities sold short, excluding short-term
securities, financial futures and forward currency exchange contracts during the
period ended October 31, 1998:
Purchases Sales
_________________ _________________
Long
transactions.................................. $1,765,555,938 $2,159,591,762
Short sale
transactions............................... 2,362,138 1,300,769
_________________ _________________
TOTAL...................................... $1,767,918,076 $2,160,892,531
_________________ _________________
DREYFUS GROWTH AND INCOME FUND, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 permissable
liquid assets sufficient to cover its short position. Securities sold short at
October 31, 1998, and their related market values and proceeds are set forth in
the Statement of Securities Sold Short.
The Fund enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. When executing forward currency exchange contracts, the Fund
is obligated to buy or sell a foreign currency at a specified rate on a certain
date in the future. With respect to sales of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract increases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
decreases between those dates. With respect to purchases of forward currency
exchange contracts, the Fund would incur a loss if the value of the contract
decreases between the date the forward contract is opened and the date the
forward contract is closed. The Fund realizes a gain if the value of the
contract increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency exchange
contracts which is typically limited to the unrealized gain on each open
contract. At October 31, 1998, there were no open forward currency exchange
contracts.
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 contract at the
close of each day's trading. Accordingly, variation margin payments are received
or made to reflect daily unrealized gains or losses. When the contracts are
closed, the Fund recognizes a realized gain or loss. These investments require
initial margin deposits with a custodian, which consist of cash or cash
equivalents, up to approximately 10% of the contract amount. The amount of these
deposits is determined by the exchange or Board of Trade on which the contract
is traded and is subject to change. Contracts open at October 31, 1998 are set
forth in the Statement of Financial Futures.
(B) At October 31, 1998, accumulated net unrealized appreciation on
investments, financial futures and securities sold short was $169,272,267,
consisting of $225,778,216 gross unrealized appreciation and $56,505,949 gross
unrealized depreciation.
At October 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS GROWTH AND INCOME FUND, INC.
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS GROWTH AND INCOME FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Growth and Income Fund, Inc., including the statements of investments,
financial futures and securities sold short, as of October 31, 1998, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of October 31, 1998 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Growth and Income Fund, Inc. at October 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated years, in conformity with generally accepted accounting
principles.
New York, New York
December 10, 1998
DREYFUS GROWTH AND INCOME FUND, INC.
- --------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes, the Fund hereby designates $2.166 per share as a
long-term capital gain distribution of the $3.146 per share paid on December 16,
1997. The Fund also designates $.0020 per share as a long-term capital gain
distribution of the $.052 per share paid on March 31, 1998.
The Fund also designates 32.787% of the ordinary dividends paid during the
fiscal year ended October 31, 1998 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1999 of
the percentage applicable to the preparation of their 1998 income tax returns.
[reg.tm logo]
(reg.tm)
DREYFUS GROWTH AND INCOME 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. 010AR9810
Growth and
Income Fund, Inc.
Annual Report
October 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS GROWTH AND INCOME FUND, INC. WITH THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND
THE WILSHIRE LARGE COMPANY VALUE INDEX
EXHIBIT A:
DREYFUS STANDARD
GROWTH AND WILSHIRE & POOR'S 500
PERIOD INCOME LARGE COMPANY COMPOSITE STOCK
FUND, INC. VALUE INDEX** PRICE INDEX *
12/31/91 10,000 10,000 10,000
10/31/92 11,257 10,804 10,281
10/31/93 13,986 13,181 11,814
10/31/94 13,993 12,834 12,270
10/31/95 15,836 16,594 15,510
10/31/96 18,910 20,265 19,245
10/31/97 21,362 26,053 25,423
10/31/98 22,906 29,283 31,019
*Source: Lipper Analytical Services, Inc.
**Source: Wilshire Associates, Inc.
