DREYFUS INTERNATIONAL VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report for Dreyfus
International Value Fund. For the 12 months ended August 31, 1997 the Fund
produced a total return of 15.72%* while the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE(R)) Index, a leading
benchmark for international investors, rose 9.05%.** Returns from abroad
lagged the U.S. because of the strength of the U.S. dollar and continued
weakness in the Japanese market, the largest foreign stock market. The
continuing strength of the U.S. dollar impacted returns negatively as
investments abroad translated into fewer dollars. During the past 12 months
the dollar strengthened 10% against the yen and more than 20% against major
European currencies. The Japanese market at the end of August, after
declining 2% during the past year, stood at 53% below its high of December
1989.
The strategy of the Fund during the year was to be well diversified by
country and industry sectors. Representation in emerging markets was limited.
The focus was to seek out securities which are undervalued relative to their
home markets. Our approach has steered us away from the banking sector in
Japan which is selling at very high price-to-earnings multiples. Securities
owned in Japan were heavily weighted toward global companies which are less
affected by the slow recovery of the Japanese economy. Japan now accounts for
31% of the EAFE(R) index and the portfolio was underweighted in Japan with a
27% weighting.
ECONOMIC AND MARKET ENVIRONMENT
European markets continued to lead for the past year. The Spanish
market rose over 70%, the Netherlands was up 64% and Sweden 57%. Even
Austria, the worst performing major European market, was up over 20%.
However, as we mentioned earlier, the strength of the U.S. dollar erased some
of the returns. In U.S. dollar terms, Spain's return was 41%, Sweden's 33%,
and the Netherlands' 34%. Markets in Asia languished with weakness centered
in Malaysia and the emerging markets Thailand, Philippines and Indonesia.
With the exception of Hong Kong, leading Asian markets were weak during the
course of the year. The portfolio's exposure to the region was limited and
the adverse impact was small. The "Asian Tigers", after registering dramatic
economic growth of 7-8% annually for the past several years, are now
consolidating. The rapid growth of the past few years resulted in
over-expansion in many areas. The finance and property sectors were
particularly hard hit.
The Japanese economy appeared to be well on its way to recovery earlier
in the year. However, the increase in consumption tax in April had a much
greater negative impact than expected. Economic statistics early in the year
may have been inflated by advance purchases of large ticket items including
housing. It appears now that additional stimulus may be necessary to resume
the recovery. In terms of its stock market, Japan has been very much of a
two-tier market. Domestic related issues, especially financials, were in a
downtrend while major Japanese multinationals with strong global market
positions performed very well. The portfolio was well represented in the
major multinationals and, as a result it significantly outperformed the
Japanese market.
In contrast to Japan, we are seeing signs of healthy economic recovery
in Europe. The strong U.S. dollar has had the effect of improving the
competitive position of the major European countries. Corporate downsizing
and restructuring, which has largely run its course here, is just beginning
in Europe. We are also starting to see signs of managements recognizing the
need to focus on shareholder value. Stock options granted to managements are
helping to redirect attention and improve corporate efficiency. In terms of
the economic cycle, the United Kingdom is by far the most advanced in Europe.
Growth in GDP is expected to approach 4% this year and remain in the 3% area
next year. The United Kingdom has benefited from less stringent labor laws
and is the most advanced in terms of the pace of corporate restructuring.
GDP growth in Germany is still somewhat sluggish but, helped by the
weak Deutschemark, is picking up. After economic growth of under 2% last
year, growth is projected at a 2.5%-3% rate next year.
France is the laggard in efficiency improvements. A more militant labor
force and government's reluctance to face the problem decisively are the
major obstacles. However, even here we are beginning to see signs of progress
and the economy is firming up. We expect GDP growth to double to the 3% range
next year after a sluggish 1.5% last year.
PORTFOLIO FOCUS
We have continued to invest in securities with favorable valuation
characteristics. The average price to earnings ratio of the stocks in the
portfolio is 19x compared with 25x for the EAFE(R) index and the price to
book value ratio is 2.2x compared with 2.5x. The Fund is now invested in 24
foreign countries and is well diversified. There is also some representation
in the emerging markets of Asia and Latin America. Those economies are growing
faster but are also more volatile. Because of this increased volatility,
emerging markets exposure of the portfolio is now under 5%.
During the past year, the Fund significantly outperformed its benchmark
(MSCI EAFE(R)) Index. The outperformance was primarily due to stock
selection. Although value stocks did not outperform in every country, our
emphasis was on value stocks with positive earnings momentum. Combining value
with positive earnings momentum has enhanced returns. Our country allocation
has not changed significantly through the year and our modest underweighting
of Japan also enhanced returns.
Going forward, we will continue to search for securities which are
temporarily undervalued and out of favor but where earnings momentum is
improving. The universe that we can select from is nearly twice the size of
the U.S. market and we are finding many opportunities. Even in Japan, where
the market declined by over 2% in the last 12 months, more than half of our
holdings registered double digit increases.
Though the Fund trailed the spectacular returns generated by the U.S.
market, we are pleased that it significantly outperformed its benchmark, the
EAFE(R) Index. Over the longer term, we feel diversification into investments
abroad still makes sense and we will continue to strive for returns exceeding
the benchmark. Thank you for your continued participation in Dreyfus
International Value Fund.
Sincerely,
[Sandor Oseh Signature Logo]
Sandor Cseh
Portfolio Manager
September 17, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE (R))Index is an unmanaged
index composed of a sample of companies representative of the market
structure of European and Pacific Basin countries. The return indicated
includes net dividends reinvested. The Index is the property of Morgan
Stanley & Co., Incorporated.
DREYFUS INTERNATIONAL VALUE FUND AUGUST 31, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS INTERNATIONAL
VALUE FUND
AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST
(EAFERegistration Mark) INDEX
Dollars
$12,317
Dreyfus International
Value Fund
$11,538
Morgan Stanley
Capital International
Europe, Australasia,
Far East (EAFERegistration Mark) Index*
*Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
Average Annual Total Returns
One Year Ended From Inception (9/29/95)
August 31, 1997 to August 31, 1997
---------- ------------
<S> <C>
15.72% 11.46%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus International
Value Fund on 9/29/95 (Inception Date) to a $10,000 investment made in the
Morgan Stanley Capital International Europe, Australasia, Far East
(EAFERegistration Mark) 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. The Morgan Stanley Capital International
Europe, Australasia, Far East (EAFERegistration Mark) Index, which is the
property of Morgan Stanley & Co. Incorporated, is an unmanaged index composed
of a sample of companies representative of the market structure of European
and Pacific Basin countries and includes net dividends reinvested. 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>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS AUGUST 31, 1997
Common Stocks-94.4% Shares Value
------- -------
<S> <C> <C> <C>
Argentina-1.1% YPF Sociedad Anonima, ADS........... 33,000 $ 1,074,563
-------
Australia-2.7% Amcor............................... 60,000 361,406
Australia and New Zealand Banking... 166,787 1,192,391
Boral............................... 357,524 1,037,559
-------
2,591,356
-------
Austria-.1% Creditanstalt-Bankverein............ 800 134,491
-------
Denmark-.9% Tele Danmark, ADS................... 32,000 854,000
-------
France-10.6% Alcatel Alsthom, ADS................ 61,992 1,526,553
Axa-UAP............................. 13,500 858,375
C.S.F. (Thompson)................... 28,104 753,103
DEXIA France........................ 9,800 843,703
Danone.............................. 6,026 895,015
Elf Aquitaine, ADS.................. 29,000 1,616,750
Michelin............................ 13,087 733,207
Rhone-Poulenc, ADR.................. 22,418 849,082
Societe Generale.................... 11,425 1,415,338
Usinor.............................. 44,000 761,225
-------
10,252,351
-------
Germany-8.3% Bayer............................... 25,500 936,231
Deutsche Bank....................... 24,000 1,399,824
GEA................................. 2,800 975,233
Siemens............................. 24,400 1,493,300
Tarkett............................. 19,000 430,672
VEBA................................ 17,300 937,306
Viag................................ 2,850 1,180,935
Volkswagen.......................... 900 644,349
-------
7,997,850
-------
Greece-.6% Hellenic Telecommunication Organization, GDR 50,000 (a,b) 542,500
-------
Hong Kong-3.0% Cheung Kong......................... 41,000 433,806
Guoco Group......................... 130,000 504,903
HSBC................................ 16,763 510,460
HongKong Electric................... 231,500 809,504
Swire Pacific....................... 419,500 603,539
-------
2,862,212
-------
Indonesia-.4% PT Indosat, ADS..................... 20,000 433,750
-------
Italy-3.6% ENI, ADS............................ 18,000 999,000
Fiat................................ 165,000 505,760
Istituto Mobiliare Italiano, ADS.... 26,000 724,750
Telecom Italia...................... 370,000 1,295,759
-------
3,525,269
-------
Japan-26.7% Canon............................... 50,000 1,377,058
Credit Saison....................... 57,200 1,471,277
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997
Common Stocks (continued) Shares Value
------- -------
Japan (continued) Dai-Tokyo Fire & Marine Insurance.... 162,000 $ 738,251
Fuji Machine Manufacturing.......... 16,000 549,168
Hitachi............................. 131,000 1,202,631
Honda Motor......................... 32,000 984,533
Ito-Yokado.......................... 24,000 1,290,216
Kao................................. 100,000 1,472,170
Mabuchi Motor....................... 22,900 1,215,930
Matsumotokiyoshi.................... 12,000 458,529
Mikuni Coca Cola.................... 41,000 552,724
Minebea............................. 131,000 1,300,141
Mitsubishi Heavy Industries......... 174,000 1,149,831
Murata Manufacturing................ 36,000 1,461,914
Namco............................... 21,500 723,720
Nichiei............................. 10,400 1,143,992
Nishimatsu Construction............. 105,000 616,574
Ono Pharmaceutical.................. 11,000 341,162
Rohm................................ 10,000 1,033,827
Sankyo.............................. 27,000 652,055
Sekisui Chemical.................... 71,000 598,957
Sekisui House....................... 35,000 329,997
Sony................................ 17,000 1,476,305
Toshiba............................. 174,000 958,431
Toyota Motor........................ 31,000 807,625
Yamanouchi Pharmaceutical........... 40,000 952,774
Yamato Transport.................... 90,000 1,079,316
-------
25,939,108
-------
Malaysia-.7% Affin Holdings...................... 210,000 241,851
IOI Properties...................... 50,000 49,700
Perusahaan Otomobil Nasional........ 125,000 364,182
-------
655,733
-------
Netherlands-5.9% ABN-Amro............................ 42,064 823,449
Akzo Nobel, ADS..................... 12,000 939,000
Hollandsche Beton Groep............. 29,600 653,517
Hunter Douglas...................... 17,732 740,356
Koninklijke KNP..................... 43,000 921,941
Philips Electronics, ADR............ 14,000 1,002,750
Royal PTT Nederland, ADS............ 18,790 671,743
-------
5,752,756
-------
New Zealand-.5% Air New Zealand..................... 184,000 498,156
-------
Norway-.8% Christiania Bank.................... 60,000 204,559
Orkla AS-B.......................... 8,500 550,037
-------
754,596
-------
Peru-.6% Telefonica del Peru, ADS............ 22,000 514,250
-------
Philippines-.4% Philippine Long Distance Telephone, ADS 16,000 404,000
-------
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997
Common Stocks (continued) Shares Value
------- -------
Portugal-.5% Banco Totta & Acores................ 26,000 $ 466,133
-------
Singapore-1.6% Development Bank of Singapore....... 82,000 868,012
Singapore Airlines.................. 89,000 647,701
-------
1,515,713
-------
South Korea-.4% Kookmin Bank, ADS................... 25,070 (a,b) 363,515
-------
Spain-3.8% Corporacion Bancaria de Espana, ADS. 52,000 1,296,750
Gas Y Electridad.................... 15,000 927,248
Repsol, ADS......................... 36,000 1,417,500
-------
3,641,498
-------
Sweden-1.3% Marieberg Tidnings.................. 24,400 628,498
Scania AB........................... 14,000 382,819
Scania AB 'A', ADS.................. 9,250 252,641
Scania AB 'B', ADS.................. 1,250 34,141
-------
1,298,099
-------
Switzerland-3.9% Magazine Zum Globus................. 885 (a) 632,482
Nestle.............................. 800 928,734
Sulzer.............................. 1,000 699,906
Union Bank of Switzerland........... 1,100 1,088,781
Zurich Versicherungs................ 1,300 471,077
-------
3,820,980
-------
United Kingdom-15.0% BTR 341,129 1,206,368
Bunzl............................... 273,779 1,039,250
Cable & Wireless, ADS............... 27,000 718,875
Laird Group......................... 136,000 865,930
LucasVarity......................... 362,000 1,156,856
Medeva.............................. 173,000 617,409
National Westminster Bank........... 91,274 1,166,010
Powergen............................ 108,122 1,370,716
Rio Tinto........................... 74,554 1,177,395
Royal & Sun......................... 142,000 1,151,763
Safeway............................. 215,933 1,313,575
Scapa Group......................... 55,000 201,639
Smith (David S.).................... 50,765 174,584
Stakis.............................. 405,000 683,270
Tomkins............................. 357,000 1,731,585
-------
14,575,225
-------
United States-1.0% Pharmacia & Upjohn.................. 29,000 987,813
-------
TOTAL COMMON STOCKS
(cost $87,793,564)................ $ 91,455,917
=======
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997
Preferred Stocks-1.2% Shares Value
------- -------
Austria-.6% Bank Austria........................ 16,800 $ 635,138
-------
Germany-.6% Hugo Boss........................... 400 534,055
-------
TOTAL PREFERRED STOCKS
(cost $1,059,012)................. $ 1,169,193
=======
Principal
Short-Term Investments-10.3% Amount
-------
U.S. Treasury Bills: 5.02%, 9/18/97...................... $ 7,875,000 $ 7,852,635
5.06%, 10/16/97..................... 2,141,000 2,126,891
-------
TOTAL SHORT-TERM INVESTMENTS
(cost $9,983,784)................. $ 9,979,526
=======
TOTAL INVESTMENTS (cost $98,836,360)..................................... 105.9% $102,604,636
==== =======
LIABILITIES, LESS CASH AND RECEIVABLES................................... (5.9%) $ (5,708,687)
==== =======
NET ASSETS............................................................... 100.0% $ 96,895,949
==== =======
Notes to Statement of Investments:
(a) Non-income producing.
(b) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
August 31, 1997, these securities amounted to $906,015 or approximately
.94% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1997
Cost Value
------- -------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $ 98,836,360 $102,604,636
Cash denominated in foreign currencies..... $ 1,447,878 1,427,690
Dividends receivable....................... 190,572
Receivable for investment securities sold.. 113,082
Prepaid expenses........................... 24,437
Receivable for shares of Common Stock subscribed 2,500
-------
104,362,917
-------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 89,116
Due to Distributor......................... 20,595
Cash overdraft due to Custodian............ 17,416
Payable for investment securities purchased 7,194,432
Net unrealized depreciation on forward
currency exchange contracts-Note 4(a)...... 50,605
Payable for shares of Common Stock redeemed 31,164
Accrued expenses........................... 63,640
-------
7,466,968
-------
NET ASSETS.................................................................. $ 96,895,949
-------
REPRESENTED BY: Paid-in capital............................ $ 90,664,021
Accumulated undistributed investment income-net 548,169
Accumulated net realized gain (loss) on investments and
foreign currency transactions.............. 1,949,938
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 3,733,821
-------
NET ASSETS.................................................................. $ 96,895,949
=======
SHARES OUTSTANDING
(100 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............. 6,436,919
NET ASSET VALUE, offering and redemption price per share-Note 3(d).......... $15.05
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends (net of $178,331 foreign taxes
withheld at source).................... $1,152,380
Interest................................... 314,615
------
Total Income......................... $1,466,995
EXPENSES: Management fee-Note 3(a)................... 567,130
Shareholder servicing costs-Note 3(b)...... 152,668
Custodian fees............................. 57,750
Registration fees.......................... 46,306
Professional fees.......................... 23,859
Directors' fees and expenses-Note 3(c)..... 8,015
Prospectus and shareholders' reports....... 7,265
Loan commitment fees-Note 2................ 625
Miscellaneous.............................. 1,915
------
Total Expenses....................... 865,533
Less-reduction in management fee due to
undertaking-Note 3(a).................. (18,565)
------
Net Expenses......................... 846,968
------
INVESTMENT INCOME-NET....................................................... 620,027
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments
and foreign currency transactions...... $2,357,700
Net realized gain (loss) on forward currency
exchange contracts..................... (225,718)
------
Net Realized Gain (Loss)............. 2,131,982
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions...... 3,810,469
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 5,942,451
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,562,478
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
August 31, 1997 August 31, 1996*
--------- ---------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................... $ 620,027 $ 235,391
Net realized gain (loss) on investments............................. 2,131,982 208,090
Net unrealized appreciation (depreciation) on investments........... 3,810,469 (76,648)
------- -------
Net Increase (Decrease) in Net Assets Resulting from Operations... 6,562,478 366,833
------- -------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net............................................... (290,696) (16,553)
Net realized gain on investments.................................... (376,194) (13,940)
------- -------
Total Dividends................................................... (666,890) (30,493)
------- -------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....................................... 89,144,565 29,459,331
Dividends reinvested................................................ 522,275 30,423
Cost of shares redeemed............................................. (24,304,311) (4,188,262)
------- -------
Increase (Decrease) in Net Assets from Capital Stock Transactions. 65,362,529 25,301,492
------- -------
Total Increase (Decrease) in Net Assets....................... 71,258,117 25,637,832
NET ASSETS:
Beginning of Period................................................. 25,637,832 ---
------- -------
End of Period....................................................... $ 96,895,949 $ 25,637,832
------- -------
UNDISTRIBUTED INVESTMENT INCOME-NET..................................... $ 548,169 $ 218,838
------- -------
Shares Shares
------- -------
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 6,171,987 2,260,166
Shares issued for dividends reinvested.............................. 38,601 2,436
Shares redeemed..................................................... (1,712,155) (324,116)
------- -------
Net Increase (Decrease) in Shares Outstanding..................... 4,498,433 1,938,486
======= =======
*From September 29, 1995 (commencement of operations) to August 31, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL VALUE FUND
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.
Year Ended August 31,
---------------
PER SHARE DATA 1997 1996(1)
---- ----
<S> <C> <C>
Net asset value, beginning of period.................................... $13.23 $12.50
---- ----
Investment Operations:
Investment income-net................................................... .07 .15
Net realized and unrealized gain (loss)
on investments........................................................ 1.98 .65
---- ----
Total from Investment Operations........................................ 2.05 .80
---- ----
Distributions:
Dividends from investment income-net.................................... (.10) (.04)
Dividends from net realized gain on investments......................... (.13) (.03)
---- ----
Total Distributions..................................................... (.23) (.07)
---- ----
Net asset value, end of period.......................................... $15.05 $13.23
===== ====
TOTAL INVESTMENT RETURN..................................................... 15.72% 6.43%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. 1.49% 1.39%(2)
Ratio of net investment income
to average net assets................................................. 1.09% 1.78%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager.................................... .03% .51%(2)
Portfolio Turnover Rate................................................. 25.35% 19.14%(2)
Average commission rate paid (3)........................................ $.0315 $.0348
Net Assets, end of period (000's Omitted)............................... $96,896 $25,638
(1) From September 29, 1995 (commencement of operations) to August 31,
1996.
(2) Not annualized.
(3) The Fund is required to disclose its average commission rate paid
per share for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INTERNATIONAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus International Value Fund (the "Fund") is a series of Dreyfus
Growth and Value Funds, Inc. (the "Company") which 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 Fund. The Fund's investment objective is long-term
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") is 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 funds' operations; expenses which are applicable to all
fund's are allocated among them on a pro rata basis.
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.
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 Funds' 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 INTERNATIONAL VALUE FUND
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 Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from substantially all Federal
income and excise taxes.
NOTE 2-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended August
31, 1997, the Fund did not borrow under the Facility.
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 1% of the value of the Fund's average
daily net assets and is payable monthly. The Manager had undertaken from
September 1, 1996 through August 31, 1997 to reduce the management fee paid
by the Fund, to the extent that the Fund's aggregate expenses, exclusive of
taxes, brokerage, interest on borrowings (which, in the view of Stroock &
Stroock & Lavan LLP, counsel to the Fund, also contemplates loan commitment
fees) and extraordinary expenses, exceed an annual rate of 1.50% of the value
of the Fund's average daily net assets. The reduction in management fee,
pursuant to the undertaking, amounted to $18,565 during the period ended
August 31, 1997.
(B) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the Fund's average daily net
assets for the provision of certain services. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
The Distributor may make payments to Service Agents (a securities dealer,
financial institution or other industry professional) in respect of these
services. The Distributor determines the amounts to be paid to Service
Agents. During the period ended August 31, 1997, the Fund was charged an
aggregate of $141,783 pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $10,234 during the period ended August 31, 1997.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Company 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.
(D) Effective March 3, 1997, a 1% redemption fee is charged on certain
redemptions of Fund shares (including redemptions through the use of the Fund
Exchanges service) where the shares being redeemed were issued subsequent to
a specified effective date and the redemption or exchange occurs less than
fifteen days following the date of issuance.
DREYFUS INTERNATIONAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the period ended August 31, 1997, amounted to $76,232,478 and
$13,019,381, respectively.
In addition, the following summarizes open forward currency exchange
contracts at August 31, 1997:
<TABLE>
<CAPTION>
Foreign Unrealized
Currency Appreciation
Forward Currency Exchange Contracts Amounts Cost Value (Depreciation)
- --------------------------------- --------- ------- ------- -------
<S> <C> <C> <C> <C>
Purchases:
- ------------
Australian Dollars, expiring 9/1/97...... 52,185 $ 39,060 $ 38,147 $ (913)
Australian Dollars, expiring 9/4/97...... 149,620 109,641 109,372 (269)
British Pounds, expiring 9/1/97.......... 21,324 34,311 34,592 281
British Pounds, expiring 9/2/97.......... 201,658 325,376 327,130 1,754
British Pounds, expiring 9/4/97.......... 416,287 676,133 675,301 (832)
Dutch Guilders, expiring 9/2/97.......... 728,333 356,991 357,341 350
French Francs, expiring 9/30/97.......... 7,550,764 1,252,058 1,240,575 (11,483)
German Deutsche Marks, expiring 9/2/97... 1,324,399 735,083 732,198 (2,885)
Hong Kong Dollars, expiring 9/2/97....... 233,872 30,194 30,177 (17)
Italian Lira, expiring 9/4/97............ 122,027,415 68,981 69,049 68
Japanese Yen, expiring 9/2/97............ 179,150,740 1,511,183 1,481,687 (29,496)
Malaysian Ringgits, expiring 9/2/97...... 286,593 101,391 98,232 (3,159)
Norwegian Krone, expiring 9/2/97......... 485,776 64,972 64,948 (24)
Singapore Dollars, expiring 9/1/97....... 265,401 178,121 175,587 (2,534)
Singapore Dollars, expiring 9/2/97....... 258,333 169,510 170,912 1,402
Swedish Krona, expiring 9/2/97........... 2,132,066 273,380 270,532 (2,848)
------
TOTAL................................ $ (50,605)
======
</TABLE>
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 and to settle foreign currency transactions.
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.
(B) At August 31, 1997, accumulated net unrealized appreciation on
investments and forward currency exchange contracts was $3,717,671,
consisting of $7,548,589 gross unrealized appreciation and $3,830,918 gross
unrealized depreciation.
At August 31, 1997, 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 INTERNATIONAL VALUE FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS INTERNATIONAL VALUE FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus International Value Fund
(one of the Series constituting Dreyfus Growth and Value Funds, Inc.) as of
August 31, 1997, 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
confirmation of securities owned as of August 31, 1997 by correspondence with
the custodian and brokers. 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 International Value Fund at August 31, 1997, and 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.
[ERNST & YOUNG LLP SIGNATURE LOGO]
New York, New York
October 7, 1997
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund elects to provide each
shareholder with their portion of the Fund's foreign taxes paid and the
income sourced from foreign countries. Accordingly, the Fund hereby makes the
following designations regarding its fiscal year ended August 31, 1997:
- the total amount of taxes paid to foreign countries was $178,331
- the total amount of income sourced from foreign countries was
$1,081,352
As required by Federal tax law rules, shareholders will receive
notification of their proportionate share of foreign taxes paid and foreign
sourced income for the 1997 calendar year with Form 1099-DIV which will be
mailed by January 31, 1998.
For Federal tax purposes the Fund hereby designates $.008 per share as a
long-term capital gain distribution of the $.234 per share paid on December
19, 1996.
Registration Mark
[DREYFUS LION 'D' LOGO]
DREYFUS INTERNATIONAL VALUE 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.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 254AR978
Registration Mark
[DREYFUS LOGO]
International
Value Fund
Annual Report
August 31, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS INTERNATIONAL VALUE FUND AND THE MORGAN
STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR
EAST (EAFE(R)) INDEX
EXHIBIT A:
MORGAN STANLEY
DREYFUS CAPITAL
PERIOD INTERNATIONAL INTERNATIONAL EUROPE,
VALUE AUSTRALASIA, FAR EAST
FUND (EAFE(R)) INDEX *
9/29/95 10,000 10,000
11/30/95 9,944 10,002
2/29/96 10,482 10,483
5/31/96 10,836 10,814
8/31/96 10,643 10,580
11/30/96 11,263 11,179
2/28/97 11,384 10,823
5/31/97 12,292 11,631
8/31/97 12,317 11,538
* Source: Lipper Analytical Services, Inc.
