Dreyfus
Growth and Income
Fund, Inc.
ANNUAL REPORT October 31, 2000
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
12 Statement of Securities Sold Short
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
17 Notes to Financial Statements
22 Report of Independent Auditors
23 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus
Growth and Income Fund, Inc.
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Growth and Income Fund,
Inc., covering the 12-month period from November 1, 1999 through October 31,
2000. Inside, you' ll find valuable information about how the fund was managed
during the reporting period, including a discussion with the fund's portfolio
manager, Douglas D. Ramos, CFA.
The Standard & Poor' s 500 Composite Stock Price Index, a broad measure of
large-cap stock performance, rose more than 6% over the 12-month reporting
period. Investor enthusiasm over technology stocks drove most major stock market
indices to new highs. Conversely, in the first nine months of 2000, the equity
investment environment was marked by dramatic price fluctuations. Additionally,
the moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
Since stocks provided returns well above their historical averages during the
second half of the 1990s, some investors may have developed unrealistic
expectations in equities. Recent volatility has reminded investors of both the
risks of investing and the importance of fundamental research and investment
selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620
Thank you for investing in Dreyfus Growth and Income Fund, Inc.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
DISCUSSION OF FUND PERFORMANCE
Douglas D. Ramos, CFA, Portfolio Manager
How did Dreyfus Growth and Income Fund, Inc. perform relative to its benchmark?
For the 12-month period ended October 31, 2000, the fund's total return was
8.10% .(1) For the same period, the total return of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index"), the fund's benchmark, was 6.08%
.(2)
We believe that the fund outperformed the S&P 500 Index largely due to our
effective management of the fund's technology holdings. During the first half of
the period, much of the market' s overall advance was driven by gains in
technology-related stocks. Although the fund held fewer technology stocks on
average than the S&P 500 Index, our technology holdings produced higher returns
than those of the S&P 500 Index. During the second half of the period, when many
technology stocks slumped, our relatively light exposure to technology stocks
helped us preserve most of the fund's earlier gains.
What is the fund's investment approach?
The fund focuses primarily on low- and moderately-priced stocks with market
capitalizations of $1 billion or more at the time of purchase. The fund uses
fundamental analysis to create a broadly diversified, value-tilted portfolio
typically exhibiting a weighted average price-to-earnings ratio less than that
of the S&P 500 Index and long-term projected earnings growth greater than that
of the S& P 500 Index. We generally look to avoid the risks associated with
market timing.
We typically measure a stock' s relative value by looking at its price in
relation to the company's business prospects and intrinsic worth, as measured by
a wide range of financial and business data. By examining each company's
fundamentals, together with economic and industry trends, we typically look for
factors that could trigger a rise in the stock's price, such as new competitive
opportunities or internal oper The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
ational improvements. The result of our approach was a portfolio containing
stocks from a variety of different market sectors and industries.
What other factors influenced the fund's performance?
The U.S. stock market experienced high levels of volatility throughout the
reporting period, largely due to a sharp rise in technology stocks during the
first half and a severe decline in the second half. Although many technology
stocks failed to meet our investment criteria for growth at a reasonable price,
we identified and invested in several that met our standards, making technology
our largest single area of investment. Our holdings included semiconductor chip
and equipment makers, such as LSI Logic and Applied Materials; diversified
telecommunications companies, such as Ericsson (LM) Telephone and Nortel
Networks; and business and Internet software developers, such as Oracle.
Overall, our selections performed much better than the technology component of
the S&P 500 Index during the first half of the period, and were responsible for
virtually all of the fund's gains from November 1999 through mid-March 2000.
During the second half of the period, market strength shifted from technology to
other industry groups, including financial services, health care and utilities.
We responded by moving some of our assets out of technology stocks and into
these other areas. These moves limited the impact of the technology decline on
the fund's performance.
In particular, we increased our positions in financial services, the fund's
second-largest group of holdings. Our financial stocks included mortgage
lenders, such as Federal National Home Mortgage Association ("Fannie Mae");
insurers, such as John Hancock Financial Services; and fee-oriented banks, such
as the Bank of New York. These stocks, which suffered in response to rising
interest rates during the first half of the period, rebounded sharply in the
second half, rising as a group more than 20% from their lows. Our diverse health
care holdings -- including hospital firms, such as HCA Healthcare; HMOs, such as
Wellpoint Health Networks; pharmaceutical firms, such as Merck & Co.; and
generic drug makers, such as ALZA -- also performed well.
And although our utility holdings represented approximately 5% of the fund's
portfolio, our energy-oriented utilities rose even more sharply in response to
climbing natural gas and petroleum prices.
On the other hand, slowing revenue growth hurt the fund's investments in
consumer cyclicals and communications services companies during the period.
Communications services holdings, such as AT& T and WorldCom, faced the
additional burden of rising competition in the long-distance market.
What is the fund's current strategy?
We remain committed to our value-tilted investment approach. From mid-March 2000
through the end of the period, value-oriented stocks generally outperformed
growth-oriented stocks, the first time they have done so on a sustained basis
since late 1997. While we can't be sure this trend will continue, we believe
value-oriented stocks remain attractively priced relative to growth-oriented
stocks. Accordingly, as of October 31, 2000, the fund remains invested in a wide
range of securities that we believe are attractively valued relative to the S&P
500 Index while offering above-average potential for growth.
November 15, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER 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.
<TABLE>
<CAPTION>
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Growth and Income
Fund, Inc. and the Standard & Poor's 500 Composite Stock Price Index
--------------------------------------------------------------------------------
Average Annual Total Returns AS OF 10/31/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FUND 12/31/91 8.10% 13.37% 13.09%
((+)) SOURCE: LIPPER INC.
</TABLE>
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 $10,000 INVESTMENT MADE IN THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ON THAT DATE. ALL DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. UNLIKE THE FUND, WHICH CAN INVEST IN BOTH EQUITY AND DEBT
SECURITIES, THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE COMPRISED SOLELY OF
COMMON STOCKS. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--99.8% Shares Value ($)
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COMMERCIAL SERVICES--1.4%
<S> <C> <C>
Lamar Advertising 77,100 (a) 3,700,800
McGraw-Hill Cos. 261,400 16,778,612
20,479,412
CONSUMER NON-DURABLES--6.3%
Anheuser-Busch Cos. 192,000 8,784,000
Coca-Cola 144,000 8,694,000
Flowers Industries 178,000 2,736,750
Intimate Brands 276,000 6,589,500
Kimberly-Clark 175,000 11,550,000
PepsiCo 386,000 18,696,875
Philip Morris Cos. 425,000 15,565,625
Procter & Gamble 158,500 11,322,844
UST 382,000 9,645,500
93,585,094
CONSUMER SERVICES--5.7%
Adelphia Communications, Cl. A 184,900 (a) 6,136,369
Cendant 1,585,400 (a) 19,024,800
Clear Channel Communications 173,580 (a) 10,425,649
Disney (Walt) 244,900 8,770,481
Infinity Broadcasting, Cl. A 141,250 (a) 4,696,562
Time Warner 189,300 14,369,763
USA Networks 347,000 (a) 7,026,750
Viacom, Cl. B 259,315 (a) 14,748,541
85,198,915
ELECTRONIC TECHNOLOGY--16.3%
American Tower, Cl. A 305,100 (a) 12,490,031
Amkor Technology 358,000 (a) 8,055,000
Applied Materials 111,000 (a) 5,896,875
Cabletron Systems 346,900 (a) 9,409,663
Compaq Computer 572,100 17,397,561
Gateway 221,000 (a) 11,405,810
General Dynamics 100,000 7,156,250
Hewlett-Packard 212,000 9,844,750
Intel 886,200 39,879,000
International Business Machines 270,000 26,595,000
KLA-Tencor 191,000 (a) 6,458,188
LSI Logic 354,000 (a) 11,637,750
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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ELECTRONIC TECHNOLOGY (CONTINUED)
Lucent Technologies 123,000 2,867,438
Micron Technology 307,000 (a) 10,668,250
Motorola 372,000 9,276,750
National Semiconductor 168,400 (a) 4,378,400
Nortel Networks 241,000 10,965,500
Novellus Systems 145,900 (a) 5,972,781
Sun Microsystems 75,000 (a) 8,315,625
Teradyne 209,000 (a) 6,531,250
Texas Instruments 201,000 9,861,562
United Technologies 89,000 6,213,312
241,276,746
ENERGY MINERALS--6.2%
Anadarko Petroleum 321,000 20,560,050
Conoco, Cl. A 203,000 5,239,938
Exxon Mobil 403,831 36,016,677
Royal Dutch Petroleum, ADR 364,000 21,612,500
Texaco 156,500 9,243,281
92,672,446
FINANCE--19.1%
American Express 186,000 11,160,000
American General 115,300 9,281,650
American International Group 331,156 32,453,288
Associates First Capital, Cl. A 81,000 3,007,125
Bank of America 207,900 9,992,194
Bank of New York 230,000 13,239,375
Chase Manhattan 150,500 6,847,750
Citigroup 840,866 44,250,573
Federal Home Loan Mortgage 408,200 24,492,000
Federal National Mortgage Association 360,500 27,758,500
FleetBoston Financial 155,036 5,891,368
Goldman Sachs Group 49,000 4,890,813
Hartford Financial Services Group 92,000 6,848,250
Household International 160,800 8,090,250
John Hancock Financial Services 335,100 (a) 10,597,537
Knight Trading Group 227,300 (a) 6,804,794
MBNA 135,000 5,070,937
Morgan (J.P.) 42,000 6,951,000
COMMON STOCKS (CONTINUED) Shares Value ($)
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FINANCE (CONTINUED)
Morgan Stanley Dean Witter & Co. 262,000 21,041,875
Washington Mutual 131,000 5,764,000
Wells Fargo 398,000 18,432,375
282,865,654
HEALTH SERVICES--3.3%
HCA-Healthcare 915,200 36,550,800
Wellpoint Health Networks 98,600 (a) 11,530,038
48,080,838
HEALTH TECHNOLOGY--9.7%
ALZA 76,000 (a) 6,151,250
Abbott Laboratories 113,000 5,967,813
American Home Products 172,700 10,966,450
Baxter International 110,000 9,040,625
Bristol-Myers Squibb 221,000 13,467,188
Johnson & Johnson 104,000 9,581,000
King Pharmaceuticals 211,000 (a) 9,455,437
Merck & Co. 402,000 36,154,875
Pfizer 495,750 21,410,203
Pharmacia 153,303 8,431,665
Schering-Plough 254,000 13,128,625
143,755,131
INDUSTRIAL SERVICES--1.4%
Schlumberger 189,000 14,387,625
Transocean Sedco Forex 129,000 6,837,000
21,224,625
NON-ENERGY MINERALS--.3%
Alcoa 173,000 4,962,937
PROCESS INDUSTRIES--1.9%
Dow Chemical 141,000 4,318,125
International Paper 216,000 7,911,000
Monsanto 321,100 (a) 8,185,500
Rohm & Haas 259,000 7,786,187
28,200,812
PRODUCER MANUFACTURING--6.8%
Emerson Electric 118,000 8,665,625
General Electric 1,160,000 63,582,500
Masco 330,500 6,176,219
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER MANUFACTURING (CONTINUED)
Tyco International 387,000 21,938,062
100,362,406
RETAIL TRADE--2.8%
Costco Wholesale 69,500 (a) 2,545,437
Gap 164,000 4,233,250
Lowe's 116,600 5,327,163
May Department Stores 174,350 4,576,688
TJX Cos. 490,200 13,357,950
Target 412,000 11,381,500
41,421,988
TECHNOLOGY SERVICES--7.7%
Avaya 295,250 (a) 3,967,422
Charter Communications, Cl. A 748,700 (a) 14,599,650
Computer Associates International 169,900 5,415,563
Computer Sciences 205,600 (a) 12,952,800
Electronic Data Systems 342,300 16,066,706
Microsoft 614,000 (a) 42,289,250
Network Associates 158,600 (a) 3,053,050
Oracle 472,000 (a) 15,576,000
113,920,441
UTILITIES--10.9%
AT&T 164,500 3,814,344
AT&T--Liberty Media Group, Cl. A 344,000 (a) 6,192,000
BellSouth 213,000 10,290,563
Coastal 371,100 27,994,856
Duke Energy 225,000 19,448,438
Dynegy, Cl. A 123,200 5,705,700
Enron 105,000 (a) 8,616,562
Niagara Mohawk Power 423,900 (a) 6,782,400
SBC Communications 466,600 26,916,987
Southern Energy 81,100 (a) 2,209,975
TXU 210,800 7,812,775
Telefonos de Mexico, Cl. L, ADR 137,000 7,389,437
Verizon Communications 416,220 24,062,719
WorldCom 213,300 (a) 5,065,875
162,302,631
TOTAL COMMON STOCKS
(cost $1,161,881,814) 1,480,310,076
Principal
SHORT-TERM INVESTMENTS--.3% Amount ($) Value ($)
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U.S. TREASURY BILLS:
5.94%,12/21/2000 1,125,000 1,115,089
6.12%, 1/18/2001 3,800,000 (b) 3,749,346
TOTAL SHORT-TERM INVESTMENTS
(cost $4,865,331) 4,864,435
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TOTAL INVESTMENTS (cost $1,166,747,145) 100.1% 1,485,174,511
LIABILITIES, LESS CASH AND RECEIVABLES (.1%) (1,487,154)
NET ASSETS 100.0% 1,483,687,357
(A) NON-INCOME PRODUCING.
(B) PARTIALLY HELD BY BROKERS AS COLLATERAL FOR OPEN SHORT POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF SECURITIES SOLD SHORT
October 31, 2000
COMMON STOCKS Shares Value ($)
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Nortel 120,000 5,460,000
Oracle 245,000 8,085,000
TOTAL SECURITIES SOLD SHORT (proceeds $13,408,102) 13,545,000
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 1,166,747,145 1,485,174,51
Receivable from brokers for proceeds on securities sold short 13,408,102
Receivable for investment securities sold 3,681,301
Dividends receivable 848,362
Receivable for shares of Common Stock subscribed 235,851
Receivable for futures variation margin--Note 4(a) 55,430
Prepaid expenses 9,165
1,503,412,722
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 1,194,322
Cash overdraft due to Custodian 1,291,635
Securities sold short, at value (proceeds $13,408,102)
--see Statement of Securities Sold Short 13,545,000
Payable for investment securities purchased 2,849,187
Payable for shares of Common Stock redeemed 560,902
Accrued expenses 284,319
19,725,365
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NET ASSETS ($) 1,483,687,357
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,075,882,566
Accumulated undistributed investment income--net 728,247
Accumulated net realized gain (loss) on investments 88,786,076
Accumulated net unrealized appreciation (depreciation)
on investments and securities sold short--Note 4(b) 318,290,468
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NET ASSETS ($) 1,483,687,357
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SHARES OUTSTANDING
(300 million shares of $.001 par value Common Stock authorized) 76,904,079
NET ASSET VALUE, offering and redemption price per share ($) 19.29
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $111,845 foreign taxes withheld at source) 16,412,890
Interest 2,537,024
TOTAL INCOME 18,949,914
EXPENSES:
Management fee--Note 3(a) 11,561,659
Shareholder servicing costs--Note 3(b) 2,799,452
Directors' fees and expenses--Note 3(c) 113,052
Custodian fees--Note 3(b) 102,478
Prospectus and shareholders' reports 89,938
Professional fees 68,327
Registration fees 25,256
Miscellaneous 35,219
TOTAL EXPENSES 14,795,381
INVESTMENT INCOME--NET 4,154,533
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments:
Long transactions 89,239,083
Short sale transactions (997,956)
Net realized gain (loss) on financial futures 5,257,942
NET REALIZED GAIN (LOSS) 93,499,069
Net unrealized appreciation (depreciation) on investments
and securities sold short [including ($3,879,202) net
unrealized (depreciation) on financial futures] 26,437,342
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 119,936,411
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 124,090,944
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
------------------------------------
2000 1999
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OPERATIONS ($):
Investment income--net 4,154,533 9,205,307
Net realized gain (loss) on investments 93,499,069 174,872,620
Net unrealized appreciation (depreciation)
on investments 26,437,342 122,580,859
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 124,090,944 306,658,786
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (3,839,868) (10,712,803)
Net realized gain on investments (169,987,626) (102,070,849)
TOTAL DIVIDENDS (173,827,494) (112,783,652)
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CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 651,194,432 718,800,250
Dividends reinvested 166,158,765 107,345,114
Cost of shares redeemed (861,824,779) (1,103,206,818)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (44,471,582) (277,061,454)
TOTAL INCREASE (DECREASE) IN NET ASSETS (94,208,132) (83,186,320)
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NET ASSETS ($):
Beginning of Period 1,577,895,489 1,661,081,809
END OF PERIOD 1,483,687,357 1,577,895,489
Undistributed investment income--net 728,247 413,582
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 34,109,871 37,570,438
Shares issued for dividends reinvested 8,835,349 6,074,347
Shares redeemed (44,963,245) (57,679,437)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (2,018,025) (14,034,652)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
-------------------------------------------------------------------
2000 1999 1998 1997 1996
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PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 19.99 17.87 19.82 20.53 17.96
Investment Operations:
Investment income--net .05(a) .11(a) .18 .34 .35
Net realized and unrealized
gain (loss) on investments 1.51 3.26 1.14 1.97 3.05
Total from Investment Operations 1.56 3.37 1.32 2.31 3.40
Distributions:
Dividends from investment income--net (.05) (.12) (.18) (.37) (.32)
Dividends from net realized gain
on investments (2.21) (1.13) (3.09) (2.65) (.51)
Total Distributions (2.26) (1.25) (3.27) (3.02) (.83)
Net asset value, end of period 19.29 19.99 17.87 19.82 20.53
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TOTAL RETURN (%) 8.10 19.79 7.23 12.97 19.41
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .96 1.03 1.10 1.01 1.02
Ratio of interest expense and
dividends on securities sold short
to average net assets -- .00(b) -- .01 .01
Ratio of net investment income
to average net assets .27 .56 .97 1.67 1.78
Portfolio Turnover Rate 54.80 96.42 101.87 129.48 131.30
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Net Assets, end of period ($ x 1,000) 1,483,687 1,577,895 1,661,082 1,912,408 2,068,453
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN .01%.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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"), which is a wholly-owned subsidiary
of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service
Corporation (the "Distributor" ), a wholly-owned subsidiary of the Manager,
became the distributor of the fund' s shares, which are sold to the public
without a sales charge. Prior to March 22, 2000, Premier Mutual Fund Services,
Inc. was the distributor.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States, 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 The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $11,985 during the period ended October 31, 2000 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.
(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, 2000, 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 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 the Distributor, 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, 2000, the fund was charged $1,588,985
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 provid The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ing personnel and facilities to perform transfer agency services for the fund.
During the period ended October 31, 2000, the fund was charged $827,668 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, 2000, the fund was
charged $102,478 pursuant to the custody agreement.
(c) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective January 1, 2000,
each Board member who is not an "affiliated person" as defined in the Act
receives an annual fee of $40,000 and an attendance fee of $6,000 for each
meeting attended and $500 for telephone meetings. These fees are allocated among
the funds in the Fund Group. The Chairman of the Board receives an additional
25% of such compensation. Prior to January 1, 2000, each Board member who was
not an "affiliated person" as defined in the Act received from the fund an
annual fee of $4,500 and an attendance fee of $500 per meeting. The Chairman of
the Board received an additional 25% of such compensation. Subject to the fund's
Emeritus Program Guidelines, Emeritus Board Members, if any, receive 50% of the
fund's annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
(d) During the period ended October 31, 2000, the fund incurred total brokerage
commissions of $1,733,779 of which $73,642 was paid to Dreyfus Brokerage
Services, a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
(a) The following summarizes the aggregate amount of purchases and sales of
investment securities and securities sold short, excluding short-term
securities, during the period ended October 31, 2000:
Purchases ($) Sales ($)
--------------------------------------------------------------------------------
Long transactions 819,991,032 939,898,938
Short sale transactions 5,673,323 18,083,469
TOTAL 825,664,355 957,982,407
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 permissible
liquid assets sufficient to cover its short position.
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. At October 31, 2000, there were no financial
futures outstanding.
(b) At October 31, 2000, accumulated net unrealized appreciation on investments
and securities sold short was $318,290,468, consisting of $383,282,207 gross
unrealized appreciation and $64,991,739 gross unrealized depreciation.
At October 31, 2000, 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).
The Fund
REPORT OF 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 and
securities sold short as of October 31, 2000, 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 auditing standards generally accepted
in the United States. 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, 2000 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, 2000, 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 accounting principles generally accepted
in the United States.
New York, New York
December 8, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $1.560 per share as a
long-term capital gain distribution of the $2.222 per share paid on December 3,
1999.
The fund also designates 35.905% of the ordinary dividends paid during the
fiscal year ended October 31, 2000 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 2001 of
the percentage applicable to the preparation of their 2000 income tax returns.
The Fund
NOTES
For More Information
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
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 010AR0010
