DREYFUS EMERGING LEADERS FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
This is the first report to shareholders on the Dreyfus Emerging Leaders
Fund (a portfolio of Dreyfus Growth and Value Funds, Inc.). The letter is
signed by Thomas A. Frank, who is the Fund's portfolio manager.
In case you have not invested with Tom before, he is one of our most
experienced investment managers at The Dreyfus Corporation. Now a senior
portfolio manager of our Equity Group, Tom has managed another of our Funds,
Dreyfus New Leaders, since he joined Dreyfus in 1985. He also manages the
Dreyfus Variable Investment Fund: Small Cap Portfolio. For his record at that
Fund, Tom Frank was selected by Morningstar as Variable Fund Manager of the
Year in 1994.
Tom began his career as a security analyst with A.G. Becker and later
moved to Chase Manhattan Bank as vice president, Special Equities Group in
Chase Investors Management Corporation. Before joining Dreyfus, he was with
Neuberger & Berman overseeing the internal research effort of a group of
portfolio managers.
Tom received his B.A. from Williams College and subsequently attended the
Columbia University Graduate School of Business.
We are very proud that Tom is managing Dreyfus Emerging Leaders.
Sincerely,
[Stephen Canter signature logo]
Stephen Canter
Chief Investment Officer
The Dreyfus Corporation
Dear Shareholder:
We are pleased to send you this first report on Dreyfus Emerging Leaders
Fund (a portfolio of Dreyfus Growth and Value Funds, Inc.). This initial
report covers the operations of the Fund from September 29, 1995 through
February 29, 1996, a period of roughly five months.
We believe the Fund is off to a strong start. During the reporting
period, Dreyfus Emerging Leaders produced a total return of 35.37%.* This was
considerably greater than the total return of various indexes that are
frequently used to measure stock market performance. For the period from
September 30, 1995 through February 29, 1996, the broadly based Standard &
Poor's 500 Composite Stock Price Index returned 10.64% and the blue chip Dow
Jones Industrial Average, 15.67%. The Russell 2000 Index of small
capitalization stocks had a total return of 5.24%.**
We would caution our investors, however, not to regard the first
half-year performance of the Fund as routine. We benefited from very strong
general market conditions. We hope, whenever possible, to do at least as well
as the Russell 2000, and seek to outperform it over a period of years. This
is the most appropriate measure of small company investing in the domestic
market.
ECONOMIC REVIEW
The U.S. economy grew slightly less than 2.5% in the last half year,
reflecting an improvement compared to the early months of 1995. Inflation was
well behaved, reducing expectations for price increases in the months ahead.
Corporate profits, strong in most of 1995, slowed towards year-end. Moderate
growth and low inflation helped pull interest rates down sharply by January.
Although short-term interest rates are still low, long-term rates have risen
in recent weeks. When long-term rates rise above short-term rates the yield
curve steepens, and this is generally positive for sustained economic growth.
Thus, we believe that this business cycle, already five years old, may prove
to be a long one.
The picture, however, remained mixed since the growth in late 1995 was
not broad-based across all economic sectors. Faster growth was chiefly due to
strong exports, to a rally in the housing sector, to strong demand in the
service sector, and to business spending on technology. By contrast, consumer
spending in retail stores was sluggish, leaving many stores with too much
inventory, and a sharp drop in truck sales slowed overall capital spending.
These restraints, in turn, kept manufacturing slow and weakened imports,
hurting foreign economies. In addition, several events slowed the economy for
a few months near year-end - a strike at Boeing, the Federal Government
shutdown and January's snowstorm. These are now past. Recent evidence shows
that the excess inventories have cleared and that retail spending is
improving. Thus a somewhat broader-based profile now seems possible for
economic growth in coming months.
Low price inflation in the last six months has reduced market
expectations for inflation in future months. However, there is evidence of
pricing power in some sectors. Tight housing markets in some regions of the
country are boosting local housing prices; strong demand in the service
sector is prompting higher prices at hotels, cruise ships and airlines, and
crude oil prices are holding above year-ago levels. Moreover, recent data
show that a tightening labor market may finally be forcing increases in real
wages. Wages are emerging as a clear issue in this year's election, making
policy measures to repress rising wages unlikely.
Corporate profits fared well in the slow growth, low inflation
environment of 1995. Operating profits of S&P 500 companies rose an estimated
17% in the year, helped by a weaker dollar and more corporate restructuring.
However, they did slow somewhat in the fourth quarter, as rising wage costs
and foreign profit declines began to take their toll. Current market
expectations are that profits will grow only 4.3% in 1996. Key determinants
of 1996 profit growth will be how soon foreign economies start to pick up and
whether domestic companies will be able to pass higher wages into prices.
Interest rates fell substantially in 1995. Short-term market rates are
now below 5%, pulled down by the slow economy and three consecutive rate cuts
by the Federal Reserve Board. Long-term bond yields also fell considerably,
reaching a low of 5.96% by January. But long-term rates have moved upwards in
recent weeks for two key reasons. First, the economy has survived the several
obstacles discussed above. And second, hopes for an agreement to balance the
Federal budget are dampened, making this a contentious political issue to be
dealt with in the future.
We believe that the steeper yield curve now developing bodes well for
continued growth and a long economic cycle.
PORTFOLIO FOCUS
The year 1995 can only be characterized as a terrific year in the equity
markets. Small capitalization stocks, which are of course the feature of
Dreyfus Emerging Leaders Fund, had dramatic returns as well. It should not be
surprising, however, that in this environment the small company universe
represented by the Russell 2000 Index underperformed the more widely followed
Standard & Poor's 500 Composite Stock Price Index. This represented the
second year in a row of underperformance by small stocks. The fundamentals of
smaller companies are sound in the U.S.; however, investors in a hurry to
deploy huge sums of money quickly in a bull market are using larger
capitalization stocks as their investment vehicles. These companies are
generally the large U.S.-based multinationals that benefit from the weakened
dollar. The valuation gap is intriguingly wide between the firms in which we
like to invest and the so-called "nifty-fifty" stocks generally favored on
Wall Street. We believe this valuation gap has produced a fertile climate in
which to seek out relative and real values among small caps.
In preparation for anticipated strength among some of our foreign trading
partners, your Fund has invested in small companies with large foreign sales
whose products hold a dominant worldwide position. In this vein, we own OM
Group, a cobalt refiner and metallurgist; Albany International, Cl.A, the
dominant worldwide manufacturer of paper machine clothing, and International
Specialty Products, a chemical producer. Other plays are Giddings & Lewis, a
producer of machine tools and Cambrex, which sells bulk actives to the
pharmaceutical industry worldwide. Sola International hopes to market its
eyeglass lenses to the growing consumer market in China. As a sector approach
to global markets, a major theme continues to be commercial aerospace, where
the suppliers to the largest U.S. export company, Boeing, are small cap
firms. The Fund owns Rohr Industries, Thiokol and Wyman Gordon.
Capital goods stocks have outperformed consumer stocks for the past two
years. The low value of the U.S. dollar, coupled with increases in American
productivity, should extend this trend. Although we continue to underweight
the consumer sector, there are some notable exceptions. We own Talbots,
Scholastic, Canandaigua Wine, Cl.A, and Chancellor, Cl.A, a less well-known
but powerful radio broadcaster. We have high confidence in the fundamentals
and managements of these firms.
Despite its recent volatility, we continue to be constructive on the
technology sector. The Fund owns Aspect Telecommunications, a producer of
call processing equipment; Auspex Systems, a manufacturer of network file
servers for the moving and storing of data; Gensym, a maker of real time
on-line process simulation, optimization and control software; and Safeguard
Scientifics, a publicly traded venture capital fund.
Health care is another sector offering exciting growth. One of the
largest positions in the Fund is Mentor, a plastic surgery products company.
Other positions include Applied Bioscience International, a pharmaceutical
contract research organization; and GMIS and CorVel, two health care
information systems companies.
As we peer into the rest of 1996, we want to assure our shareholders that
we will invest their funds only in stocks of companies we believe in and
managements we trust.
We thank you for your interest. You may be sure we will exert our best
efforts on your behalf.
Sincerely,
[Thomas A. Frank signature logo]
Thomas A. Frank
Portfolio Manager
March 21, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. Unlike
the Fund, which can utilize a broad range of investment techniques, both the
Dow Jones Industrial Average and the Standard & Poor's 500 Composite Stock
Price Index are widely accepted unmanaged indexes of stock market
performance. The Russell 2000 Index is a widely accepted unmanaged index of
small cap stock performance.
<TABLE>
<CAPTION>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
COMMON STOCKS-97.6% SHARES VALUE
_______ ______
<S> <C> <C> <C>
CONSUMER-20.5%....... Canandaigua Wine, Cl. A ....... (a) 12,500 $ 475,000
Chancellor Broadcasting, Cl. A......... 18,500 379,250
Helen of Troy........................ (a) 22,500 517,500
Metromedia International Group .......... (a) 25,000 343,750
Mossimo................................ 20,000 490,000
Outboard Marine........................ 17,500 354,375
Scholastic........................... (a) 6,000 418,500
Sola International................... (a) 11,000 305,250
Spelling Entertainment Group......... (a) 25,000 290,625
Stratosphere......................... (a) 41,000 481,750
Sun International Hotels............. (a) 10,000 358,750
Talbots................................ 9,500 287,375
Tiffany & Co........................... 5,000 268,750
_______
4,970,875
_______
ENERGY- 4.0%............... Basin Exploration.................... (a) 40,000 200,000
Cairn Energy USA..................... (a) 20,000 217,500
Marine Drilling...................... (a) 80,000 560,000
_______
977,500
_______
FINANCIAL SERVICES-20.4%..........ACE 11,500 537,625
Alexander & Alexander Services......... 16,000 298,000
Capital Re............................. 16,600 572,700
CapMac Holdings........................ 20,000 485,000
Duff & Phelps Credit Rating............ 17,500 269,063
E.W. Blanch Holdings................... 18,000 450,000
Enhance Financial Services Group....... 17,500 426,562
Guarantee Life Cos..................... 25,000 403,125
Investors Financial Services........... 16,000 356,000
Reliance Group Holdings................ 50,000 406,250
Standard Federal Bancorporation........ 10,500 434,437
Willis Corroon Group PLC, A.D.R........ 25,000 287,500
_______
4,926,262
_______
HEALTH CARE-12.8% Applied Bioscience International (a) 30,000 213,750
Ballard Medical Products............... 17,500 288,750
Cohr................................... 10,000 140,000
Conceptus.............................. 13,000 256,750
CorVel................................. (a) 12,500 381,250
GMIS................................... (a) 37,500 492,188
Heartstream............................ 15,000 221,250
DREYFUS EMERGING LEADERS FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
_____________ ------------
HEALTH CARE (CONTINUED)............Mentor................................. 20,000 $ 512,500
NCS HealthCare, Cl. A................... 9,500 239,875
VWR Scientific Products................ 25,000 350,000
________
3,096,313
MATERIALS & ________
PROCESSING- 9.1%.................Cambrex............................... 9,000 421,875
IMCO Recycling......................... 15,000 326,250
International Specialty Products..... (a) 35,000 433,125
Minerals Technologies.................. 9,000 325,125
OM Group............................... 9,500 332,500
Viceroy Resource..................... (a) 70,000 363,653
_______
2,202,528
_______
PRODUCER DURABLES-15.0% Albany International, Cl. A.......... 16,500 319,688
Avondale Industries.................. (a) 22,000 349,250
Giddings & Lewis....................... 20,000 335,000
Huntco, Cl. A.......................... 16,500 284,625
Powell Industries.................... (a) 35,000 358,750
Rohr Industries...................... (a) 25,000 450,000
Special Devices...................... (a) 20,700 367,425
Thiokol................................ 11,500 471,500
Wolverine Tube....................... (a) 9,500 369,312
Wyman-Gordon......................... (a) 17,500 310,625
_______
3,616,175
_______
TECHNOLOGY-15.8%... Aspect Telecommunications............ (a) 10,000 471,250
Auspex Systems....................... (a) 22,500 458,437
Cheyenne Software.................... (a) 11,250 262,969
Elcom International.................... 22,500 174,375
Gensym................................. 35,000 560,000
Harmonic Lightwaves.................... 25,000 362,500
Indus Group............................ 26,500 583,000
Madge Networks, N.V.................. (a) 10,000 418,750
Objective System Integrators........... 7,000 287,000
Safeguard Scientifics......... .......(a) 5,000 254,375
_______
3,832,656
_______
TOTAL COMMON STOCKS
(cost $21,164,417)................... $23,622,309
======
DREYFUS EMERGING LEADERS FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996 (UNAUDITED)
PRINCIPAL
SHORT-TERM INVESTMENTS-10.2% AMOUNT VALUE
_______ ______
U.S. TREASURY BILLS:... 5.22%, 3/7/96 ......................... (b) $ 522,000 $ 521,567
4.96%, 4/25/96......................... 229,000 227,312
4.86%, 5/2/96.......................... 952,000 943,908
4.74%, 5/9/96.......................... 111,000 109,959
4.77%, 5/16/96......................... 660,000 653,195
______
TOTAL SHORT-TERM INVESTMENTS
(cost $2,456,183).................... $ 2,455,941
======
TOTAL INVESTMENTS (cost $23,620,600)........................................ 107.8% $26,078,250
===== ======
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (7.8%) $ (1,884,604)
===== ======
NET ASSETS.................................................................. 100.0% $24,193,646
===== ======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by broker as collateral for open short position.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF SECURITIES SOLD SHORT FEBRUARY 29, 1996 (UNAUDITED)
COMMON STOCKS SHARES VALUE
_______ ______
<S> <C> <C>
Objective System Integrators (proceeds $308,000)............................ 7,000 $ 287,000
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $23,620,600)-see statement...................................... $26,078,250
Cash.................................................................... 10,002
Receivable for investment securities sold............................... 361,875
Receivable from broker for proceeds on securities sold short............ 308,000
Dividends and interest receivable....................................... 8,654
Prepaid expenses........................................................ 1,917
______
26,768,698
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 2,605
Due to Distributor...................................................... 4,489
Payable for investment securities purchased............................. 2,199,461
Securities sold short, at value
(proceeds $308,000)-see statement..................................... 287,000
Payable for Common Stock redeemed....................................... 4,233
Accrued expenses........................................................ 77,264 2,575,052
_____ ______
NET ASSETS.................................................................. $24,193,646
======
REPRESENTED BY:
Paid-in capital......................................................... $20,484,527
Accumulated undistributed investment income-net......................... 10,243
Accumulated undistributed net realized gain on investments,
securities sold short and foreign currency transactions............... 1,220,226
Accumulated net unrealized appreciation on investments,
securities sold short and foreign currency transactions-Note 3(b)..... 2,478,650
______
NET ASSETS at value applicable to 1,398,540 outstanding shares of
Common Stock, equivalent to $17.30 per share (100 million shares
of $.001 par value authorized).......................................... $24,193,646
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF OPERATIONS
FROM SEPTEMBER 28, 1995 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 29, 1996
(UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 84,038
Cash dividends (net of $215 foreign taxes withheld at source)......... 20,512
_____
TOTAL INCOME................................................ $ 104,550
EXPENSES:
Management fee-Note 2(a).............................................. 50,733
Legal fees............................................................ 58,261
Shareholder servicing costs-Note 2(b)................................. 22,114
Auditing fees......................................................... 15,899
Registration fees..................................................... 7,425
Directors' fees and expenses-Note 2(c)................................ 4,699
Custodian fees........................................................ 3,260
Prospectus and shareholders' reports.................................. 1,190
Miscellaneous......................................................... 717
_____
TOTAL EXPENSES.............................................. 164,298
Less-expense reimbursement from Manager
due to undertaking-Note 2(a)...................................... 93,124
_____
NET EXPENSES................................................ 71,174
_____
INVESTMENT INCOME-NET....................................... 33,376
_____
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3(a):
Long transactions (including foreign currency transactions)........... $1,170,163
Short sale transactions............................................... 50,063
_____
NET REALIZED GAIN..................................................... 1,220,226
Net unrealized appreciation on investments, securities sold short
and foreign currency transactions..................................... 2,478,650
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............. 3,698,876
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $3,732,252
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM SEPTEMBER 28, 1995 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 29, 1996
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Investment income-net..................................................................... $ 33,376
Net realized gain on investments.......................................................... 1,220,226
Net unrealized appreciation on investments for the period................................. 2,478,650
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... 3,732,252
______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net..................................................................... (23,133)
______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................................. 27,066,019
Dividends reinvested...................................................................... 22,761
Cost of shares redeemed................................................................... (6,604,253)
______
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.................................. 20,484,527
______
TOTAL INCREASE IN NET ASSETS........................................................ 24,193,646
NET ASSETS:
Beginning of period....................................................................... _
_________
End of period (including undistributed investment income-net;
$10,243 on February 29, 1996)........................................................... $24,193,646
======
SHARES
______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................... 1,808,691
Shares issued for dividends reinvested.................................................... 1,452
Shares redeemed........................................................................... (411,603)
______
NET INCREASE IN SHARES OUTSTANDING...................................................... 1,398,540
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS EMERGING LEADERS FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
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 the period September 28, 1995
(commencement of operations) to February 29, 1996. This information has been
derived from the Fund's financial statements.
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period......................................................... $12.50
___
INVESTMENT OPERATIONS:
Investment income-net........................................................................ .03
Net realized and unrealized gain on investments.............................................. 4.80
___
TOTAL FROM INVESTMENT OPERATIONS........................................................... 4.83
___
DISTRIBUTIONS;
Dividends from investment income-net......................................................... (.03)
___
Net asset value, end of period............................................................... $17.30
___
___
TOTAL INVESTMENT RETURN.......................................................................... 35.37%(1,2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...................................................... .53%(1)
Ratio of net investment income to average net assets......................................... .25%(1)
Decrease reflected in above expense ratio due to
undertaking by the Manager (limited to the expense limitation
provision of the management agreement)..................................................... .53%(1)
Portfolio Turnover Rate...................................................................... 56.58%(1)
Average commission rate paid........................................................... $ .0543
Net Assets, end of period (000's omitted).................................................... $24,194
(1) Not annualized.
(2) Calculated based on net asset value on the close of business on September 29, 1995 (commencement of initial offering) to
February 29, 1996.
See notes to financial statements.
</TABLE>
DREYFUS EMERGING LEADERS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Growth and Value Funds, Inc. (the "Company") is registered under
the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company and operates as a series company currently
offering eight series, including the Dreyfus Emerging Leaders Fund (the
"Fund") which commenced operations on September 28, 1995. The Fund's
investment objective is capital growth. The Dreyfus Corporation ("Manager")
serves as the Fund's investment adviser. The Manager is a direct subsidiary
of Mellon Bank, N.A. Premier Mutual Fund Services, Inc. (the "Distributor")
acts as the distributor of the Fund's shares, which are sold to the public
without a sales charge.
The Company accounts separately for the assets, liabilities and
operations of each fund. Expenses directly attributable to each fund are
charged to that fund's operations; expenses which are applicable to all
series are allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: The Fund's 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.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(D) 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. 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 EMERGING LEADERS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(E) FEDERAL INCOME TAXES: It is the policy of the Fund 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.
(F) BROKERAGE COMMISSIONS: For the period ended February 29, 1996, the
Fund incurred total brokerage commissions of $36,822, of which $525 was paid
to Dreyfus Investment Services Corporation, a subsidiary of Mellon Bank
Corporation.
NOTE 2-INVESTMENT ADVISORY 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 .90 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings (which, in the view of
Stroock & Stroock & Lavan, counsel to the Fund, also contemplates dividends
accrued on securities sold short) and extraordinary expenses, exceed the
expense limitation of any state having jurisdiction over the Fund, the Fund
may deduct from payments to be made to the Manager, or the Manager will bear
the amount of such excess to the extent required by state law. The most
stringent state expense limitation applicable to the Fund presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Fund's net assets in accordance with
California "blue sky" regulations. The Manager has currently undertaken from
September 28, 1995 through August 31, 1996 to reduce the management fee paid
by or reimburse such excess expenses of the Fund, to the extent that the
Fund's aggregate annual expenses (exclusive of certain expenses as described
above) exceed an annual rate of 1.25 of 1% of the value of the Fund's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $93,124 for the period ended February 29, 1996.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the agreement.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $4,820 for the period from
December 1, 1995 through February 29, 1996.
(B) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the Fund's average daily net
assets for the provision of certain services. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
The Distributor may make payments to Service Agents in respect of these
services. The Distributor determines the amounts to be paid to Service
Agents. During the period ended February 29, 1996, the Fund was charged an
aggregate of $14,092 pursuant to the Shareholder Services Plan.
DREYFUS EMERGING LEADERS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $5,000 and
an attendance fee of $500 per meeting. The Chairman of the Board receives an
additional 25% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities
and securities sold short, excluding short-term securities, during the period
ended February 29, 1996 is summarized as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
________ _______
<S> <C> <C>
Long transactions................................................ $26,268,021 $6,272,084
Short sale transactions.......................................... 1,380,515 1,738,578
_______ ______
TOTAL.......................................................... $27,648,536 $8,010,662
======= ======
</TABLE>
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at
current market value. The Fund would incur a loss if the price of the
security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund would realize a gain if the
price of the security declines between those dates. Until the Fund replaces
the borrowed security, the Fund will maintain daily, a segregated account
with a broker and/or custodian, of cash and/or U.S. Government securities
sufficient to cover its short position. Securities sold short at February 29,
1996 and their related market values and proceeds are set forth in the
Statement of Securities Sold Short.
(B) At February 29, 1996, accumulated net unrealized appreciation on
investments was $2,478,650, consisting of $2,832,560 gross unrealized
appreciation and $353,910 gross unrealized depreciation.
At February 29, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
[Dreyfus lion "d" logo]
DREYFUS EMERGING LEADERS FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 259SA962
[Dreyfus logo]
Emerging Leaders
Fund
Semi-Annual
Report
February 29, 1996
