<PAGE>
Dreyfus
Small Company
Value Fund
Semi-Annual
Report
April 30, 1997
<PAGE>
Dreyfus Small Company Value Fund
- ---------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report that the Dreyfus Small Company Value Fund turned in
a solid performance for the first half of fiscal year 1997. For the six months
ended April 30, 1997, the Fund's total return was 10.90%* as compared to the
Fund's benchmark index, the Russell 2000, which returned 1.61%.**
ECONOMIC ENVIRONMENT
At this point momentum in the domestic economy continues to be strong, though
most signs of inflation have remained tame. The Federal Reserve Board (the
"Fed") took a first preemptive step in March by raising interest rates by 25
basis points. Employment remains high (unemployment low), though prices for
commodities such as foodstuffs, metals and energy have not increased any faster.
Consumer debt levels continue to hover near historically high levels.
MARKET ENVIRONMENT
The stock market environment in 1996 underwent a transition midyear to
increased volatility, more rapid sector rotation and a bias towards growth
stocks among large capitalization firms (especially those in the top tier of the
Standard & Poor's 500 Composite Stock Price Index). Coming into 1997, Fed policy
began to turn restrictive and the markets experienced a correction in March
which lasted into April. May began with a positive run which, unlike that in
1996, showed considerable participation from small- and mid-cap shares along
with the rebound in the largest cap stocks.
Financial companies face the prospect of increasingly difficult earnings
comparisons in a more restrictive rate environment; retailers continue to report
erratic and inconsistent same-store sales growth; and semiconductor and
technology pricing power seems to come in fits and starts, despite inventories
and capacities that are coming into better balance than in the second half of
1996. A moderate winter season tempered the upside volatility in energy prices
experienced earlier in the year, though economic growth continues to drive
energy demand.
PORTFOLIO OVERVIEW
The portfolio enjoyed the benefit of a strong transportation market with
positive trends in trucking as the overcapacity of the last two years was
rationalized and a strong economy bolstered demand for trucking services. It
also benefited from a strong domestic economy and a strong dollar. While the
portfolio remains somewhat underweighted in financials, the areas we focused on
(primarily thrifts in consolidating markets) continued to help performance. In
addition, a trend among insurers to convert from mutual to public ownership has
resulted in a number of small cap opportunities for the portfolio.
Technology shares were among the hardest hit during the correction seen in
March and April. While the portfolio was not immune to this phenomenon, the
technology weighting had been cut back since the beginning of the year, thus
reducing the impact. In addition, a number of issues were identified early in
the year which appeared overvalued and susceptible to near-term business
problems. With a focus on business dislocation and negative balance sheet trends
in certain companies, there was an increase in the number of short positions in
the portfolio.
Portfolio exposure to energy service stocks had been reduced through the
second half of 1996, and remained low through April 1997. Many stocks in this
sector suffered due to an increase in orders for rigs. The prospect of new
capacity coming on line has negative implications. While day rate trends remain
strong, it will take many months for the new rigs to come into service. Despite
the corrections in these shares, many issues still do not exhibit the kinds of
compelling valuations that brought us into this area in late 1995. However, the
valuations of exploration and production stocks have improved to levels that
appear compelling since the seasonal softening in gas prices drove these shares
down over recent weeks.
<PAGE>
Volatility in the market, in general, and in the technology sector, in
particular, dictates that we continue to monitor the area for both problems and
opportunities. We enter the May-July quarter somewhat underweighted in
technology, though we see the potential for improved prospects for the second
half of the year. As of this writing, we continue to favor transportation issues
which we believe are well-positioned to respond to improving industry trends,
fleet utilizations and economic activity. Select finance stocks with improving
fundamentals and solid balance sheets also remain a current focus. And, while
energy weighting remains in line, the make-up favors exploration and production
companies over service companies at this time.
In closing, we remain positive though cautious. We continue to find small
capitalization companies with earnings growth at valuations which are compelling
relative to large capitalization firms in similar industries. Yet, we are
cautious with regard to the level of the overall stock market. Risks exist with
the prospect for interest rate volatility and increased inflation, or the
potential of a slowing economy. However, small companies can be found in either
environment which have solid value and the potential to grow, but are
undiscovered by the investment community.
Sincerely,
David Diamond
Portfolio Manager
May 19, 1997
Boston, MA
* 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 may invest in various types of securities and engage in
different investment techniques, the Russell 2000 Index is a widely
accepted unmanaged index of small cap stock performance.
<PAGE>
Dreyfus Small Company Value Fund
- ----------------------------------------------------------------------------
Statement of Investments April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks--90.1% Shares Value
- --------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Basic Industries--9.8% Birmingham Steel......................... 26,000 $ 380,250
Calgon Carbon............................ 42,500 520,625
CalMat................................... 8,000 143,000
Cherry, Cl. B.........................(a) 16,500 181,500
Chicago Bridge & Iron, N.V............(a) 23,000 391,000
Dexter................................... 20,000 597,500
Essex International...................(a) 22,100 397,800
Foamex International..................(a) 18,000 258,750
Gaylord Container, Cl. A..............(a) 65,100 362,118
Geon..................................... 41,000 896,875
RMI Titanium..........................(a) 26,000 555,750
Silgan Holdings.......................(a) 19,200 508,800
Special Metals........................(a) 22,000 310,750
Titanium Metals.......................(a) 8,000 207,000
Wausau Paper Mills....................... 20,000 350,000
----------
6,061,718
----------
Capital Goods--6.1% Avondale Industries...................(a) 38,500 683,375
BW/IP.................................... 28,000 455,000
Cubic ................................... 13,950 292,950
DONCASTERS, A.D.S.....................(a) 36,000 810,000
Excel Industries......................... 12,000 213,000
Global Industrial Technologies........(a) 27,800 507,350
OmniQuip International................(a) 21,000 273,000
TransTechnology.......................... 25,000 506,250
UNR Industries........................... 10,000 61,250
----------
3,802,175
----------
Consumer Durables--2.7% Chris-Craft Industries................... 4,013 163,028
Kaufman & Broad Home..................... 22,200 308,025
Pilgrim's Pride.......................... 42,000 430,500
Special Devices.......................(a) 29,000 460,375
Standard Products........................ 2,000 43,750
TBC...................................(a) 31,500 236,250
----------
1,641,928
----------
Consumer Non-Durables--10.7% Alberto-Culver, Cl. A.................... 16,000 396,000
Ashworth..............................(a) 96,000 726,000
Delta Woodside Industries.............(a) 52,200 300,150
Fuqua Enterprises.....................(a) 5,000 98,125
Graphic Industries....................... 40,000 370,000
Guilford Mills........................... 12,000 339,000
Huffy.................................... 21,900 281,963
MicroAge..............................(a) 26,000 328,250
Oakley................................(a) 15,000 153,750
Perrigo...............................(a) 79,000 928,250
Phillips-Van Heusen...................... 21,600 283,500
Scotts, Cl. A.........................(a) 18,900 484,313
<PAGE>
Dreyfus Small Company Value Fund
- ------------------------------------------------------------------------------
Statement of Investments April 30, 1997 (Unaudited)
Common Stocks (continued) Shares Value
- --------------------------------------------------------------------------------- ----------- ------------
Consumer Non-Durables (continued) Team Rental Group.....................(a) 8,000 $ 180,000
U.S. Industries.......................(a) 17,500 632,188
Westpoint Stevens.....................(a) 9,000 352,125
Young Broadcasting, Cl. A.............(a) 30,000 795,000
----------
6,648,614
----------
Consumer Services--8.8% American Radio Systems, Cl. A.........(a) 9,500 277,875
Chancellor Broadcasting, Cl. A........(a) 15,000 420,000
Cox Radio, Cl. A......................(a) 33,000 668,250
Emmis Broadcasting, Cl. A.............(a) 20,000 700,000
Golf Trust of America.................(a) 16,667 425,009
Ingles Markets, Cl. A.................... 35,000 481,250
International Family Entertainment,
Cl. B...............................(a) 15,000 303,750
Marsh Supermarkets, Cl. B................ 28,100 344,225
Nash Finch............................... 11,300 199,163
Neiman Marcus Group...................(a) 36,500 958,125
Pier 1 Imports........................... 15,000 296,250
Sunglass Hut International............(a) 20,000 145,000
True North Communications................ 13,300 254,362
----------
5,473,259
----------
Energy--5.6% Aquila Gas Pipeline...................... 9,800 138,425
Cabot Oil & Gas, Cl. A................... 26,300 440,525
GeoScience............................(a) 22,300 214,638
Houston Exploration...................(a) 37,900 473,750
Marine Drilling.......................(a) 30,000 472,500
RPC...................................(a) 24,000 303,000
Santa Fe Energy Resources.............(a) 42,700 603,137
Titan Exploration.....................(a) 32,000 240,000
Tuboscope Vetco International.........(a) 40,000 560,000
----------
3,445,975
----------
Financial Services--15.1% ALBANK Financial......................... 20,000 730,000
Allmerica Property & Casualty Cos........ 5,000 158,125
AmerUs Life Holdings, Cl. A...........(a) 10,000 230,000
Astoria Financial........................ 18,000 704,250
Bay View Capital......................... 16,000 777,000
Berkley (W.R.)........................... 9,000 443,250
Citizens................................. 11,500 304,750
City National............................ 45,000 1,029,375
Coast Savings Financial...............(a) 21,000 845,250
Community Bank System.................... 6,000 126,000
Downey Financial......................... 26,067 505,048
FirstFed Financial....................(a) 23,100 539,962
First Savings Bank of Washington Bancorp. 3,000 63,000
Flushing Financial....................... 12,000 222,000
Glendale Federal Bank FSB.............(a) 30,000 746,250
Greater New York Savings Bank............ 50,000 918,750
<PAGE>
Dreyfus Small Company Value Fund
- -------------------------------------------------------------------------------
Statement of Investments April 30, 1997 (Unaudited)
Common Stocks (continued) Shares Value
- --------------------------------------------------------------------------------- ----------- -----------
Financial Services (continued) Guarantee Life Companies................. 24,000 $ 453,000
Klamath First Bancorp.................... 6,000 106,500
SCPIE Holdings........................... 20,000 397,500
Standard Financial....................... 1,000 22,875
----------
9,322,885
----------
Health Care--3.8% Angelica................................. 10,600 166,950
Block Drug, Cl. A ....................... 1,060 44,520
Conmed................................(a) 32,000 476,000
Isomedix..............................(a) 34,000 471,750
SpaceLabs Medical.....................(a) 6,000 126,000
Trigon Healthcare.....................(a) 55,000 1,045,000
----------
2,330,220
----------
Other--9.4% Allwaste..............................(a) 33,200 294,650
Apex PC Solutions.....................(a) 28,000 192,500
BHA Group................................ 17,000 310,250
Boston Beer, Cl. A....................(a) 31,000 282,875
Camco.................................... 18,900 71,693
Continental Circuits..................(a) 27,000 323,578
Crossmann Communities.................(a) 23,500 470,000
Dailey Petroleum Services.............(a) 21,000 147,000
Eagle River Interactive...............(a) 37,000 402,375
Huntco, Cl. A............................ 30,500 396,500
Kitty Hawk............................(a) 59,000 811,250
Lukens................................... 24,000 459,000
MTI Technology........................(a) 40,000 165,000
Pacific Greystone.....................(a) 43,000 634,250
Pluma.................................(a) 23,000 287,500
Progressive Bank......................... 19,000 456,000
Qualix Group..........................(a) 20,000 125,000
----------
5,829,421
----------
Technology--9.9% ADFlex Solutions......................(a) 20,100 296,475
Allen Telecom.........................(a) 26,300 453,675
Applied Magnetics.....................(a) 18,000 452,250
Auspex Systems........................(a) 36,000 288,000
Avid Technology.......................(a) 6,000 116,250
Caere.................................(a) 58,000 377,000
Credence Systems......................(a) 24,500 388,937
Exabyte...............................(a) 28,000 378,000
FSI International.....................(a) 48,000 576,000
HMT Technology........................(a) 33,000 363,000
Micro Warehouse.......................(a) 10,000 172,500
Platinum Technology...................(a) 14,000 168,000
Symantec..............................(a) 70,000 1,006,250
Viewlogic Systems.....................(a) 47,000 658,000
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Investments April 30, 1997 (Unaudited)
Common Stocks (continued) Shares Value
- --------------------------------------------------------------------------------- ----------- ------------
Technology (continued) Vtel..................................(a) 13,500 $ 72,563
Zilog.................................(a) 20,500 379,250
-----------
6,146,150
-----------
Transportation--8.2% American Freightways..................(a) 29,000 409,625
Arnold Industries........................ 33,000 486,750
Caliber System........................... 27,000 803,250
Harper Group............................. 30,800 723,800
Knightsbridge Tankers.................... 25,919 589,657
Landstar System.......................(a) 37,000 948,125
NeoMagic..............................(a) 9,000 105,188
SkyWest.................................. 22,000 280,500
Yellow................................(a) 38,000 731,500
-----------
5,078,395
-----------
TOTAL COMMON STOCKS
(cost $56,097,737)..................... $55,780,740
-----------
-----------
Non-Convertible Preferred Stocks--.0%
- ------------------------------------------------------------------------------
Consumer Non-Durables; Alliance Gaming, Ser. B
(cost $19,428)......................... 269 $ 26,766
-----------
-----------
Principal
Short-Term Investments--13.0% Amount
- ------------------------------------------------------------------------------ ---------
U.S. Treasury Bills: 4.95%, 5/15/1997......................(b) $1,710,000 $ 1,706,888
5.16%, 7/24/1997......................(b) 4,808,000 4,751,265
5.16%, 8/7/1997.......................... 1,039,000 1,024,475
5.24%, 8/14/1997......................... 553,000 544,633
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $8,025,700)...................... $ 8,027,261
-----------
-----------
TOTAL INVESTMENTS (cost $64,142,865)............................................ 103.1% $63,834,767
------- -----------
------- -----------
LIABILITIES, LESS CASH AND RECEIVABLES.......................................... (3.1%) $(1,945,799)
------- -----------
------- -----------
NET ASSETS...................................................................... 100.0% $61,888,968
------- -----------
------- -----------
<FN>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Partially held by broker as collateral for open short positions.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Securities Sold Short April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks Shares Value
- --------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Amati Communications............................................................ 35,000 $ 306,250
Bassett Furniture............................................................... 19,000 429,875
Bowne........................................................................... 12,900 341,850
Brite Voice Systems............................................................. 14,500 114,188
Burlington Coat Factory......................................................... 20,000 380,000
Bush Industries................................................................. 12,000 241,500
CNS............................................................................. 12,000 100,500
Columbia Laboratories........................................................... 35,000 481,250
Cyrix........................................................................... 35,000 726,250
Ethan Allen..................................................................... 14,000 619,500
FPA Medical Management.......................................................... 24,000 390,000
Haverty Furniture............................................................... 20,000 220,000
IKOS Systems.................................................................... 5,500 90,750
LA-Z-Boy........................................................................ 2,200 71,775
Landry's Seafood Restaurant..................................................... 22,000 309,031
MRV Communications.............................................................. 17,000 350,625
Marquette Medical System........................................................ 10,000 201,250
Merrill......................................................................... 12,500 290,625
Multicare....................................................................... 10,200 189,975
PHP Healthcare.................................................................. 27,000 378,000
Philip Environmental............................................................ 20,300 319,725
Piercing Pagoda................................................................. 16,000 384,000
Richfood Holdings............................................................... 23,000 468,625
Sofamor Danek Group............................................................. 7,300 284,700
System Software................................................................. 19,000 102,125
----------
TOTAL SECURITIES SOLD SHORT
(proceeds $8,358,701)......................................................... $7,792,369
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
------------- ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $64,142,865 $63,834,767
Cash............................................. 382,512
Receivable from brokers for proceeds on
securities sold short.......................... 8,358,701
Receivable for shares of Common Stock subscribed. 635,585
Receivable for investment securities sold........ 503,558
Dividends and interest receivable................ 26,915
Prepaid expenses................................. 30,817
-----------
73,772,855
-----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 26,434
Due to Distributor............................... 11,372
Securities sold short, at value
(proceeds $8,358,701)--see statement............ 7,792,369
Payable for investment securities purchased...... 3,982,119
Payable for shares of Common Stock redeemed...... 29,949
Interest payable--Note 2.......................... 2,229
Accrued expenses................................. 39,415
-----------
11,883,887
-----------
NET ASSETS..................................................................... $61,888,968
===========
REPRESENTED BY: Paid-in capital.................................. $60,092,802
Accumulated undistributed investment income--net.. 5,841
Accumulated net realized gain (loss) on investments,
securities sold short and foreign currency transactions 1,532,091
Accumulated net unrealized appreciation (depreciation)
on investments, securities sold short and
foreign currency transactions--Note 4(b)........ 258,234
-----------
NET ASSETS..................................................................... $61,888,968
===========
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized)................ 3,564,533
NET ASSET VALUE, offering and redemption price per share....................... $17.36
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Operations Six Months Ended April 30, 1997 (Unaudited)
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends (net of $49 foreign taxes
withheld at source)............................ $ 136,305
Interest......................................... 107,019
----------
Total Income................................ $ 243,324
EXPENSES: Management fee--Note 3(a)......................... 140,022
Shareholder servicing costs--Note 3(b)............ 68,879
Registration fees................................ 22,560
Custodian fees--Note 3(b)......................... 15,327
Professional fees............................... 9,688
Prospectus and shareholders' reports............. 4,569
Interest--Note 2.................................. 3,934
Directors' fees and expenses--Note 3(c).......... 3,445
Dividends on securities sold short.............. 1,662
Miscellaneous.................................... 3,540
----------
Total Expenses.............................. 273,626
Less--reduction in management fee due to
undertaking--Note 3(a).......................... (34,660)
----------
Net Expenses................................ 238,966
----------
INVESTMENT INCOME--NET.......................................................... 4,358
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments:
Long transactions (including foreign
currency transactions)...................... $1,638,217
Short sale transactions........................ (79,866)
----------
Net Realized Gain (Loss).................... 1,558,351
Net unrealized appreciation (depreciation) on investments,
securities sold short and foreign currency transactions (168,220)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 1,390,131
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $1,394,489
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- ---------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1997 Year Ended
(Unaudited) October 31, 1996
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................ $ 4,358 $ 58,382
Net realized gain (loss) on investments.............................. 1,558,351 2,421,646
Net unrealized appreciation (depreciation) on investments............ (168,220) 180,662
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 1,394,489 2,660,690
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net................................................ (46,432) (41,125)
Net realized gain on investments..................................... (2,431,882) (461,510)
----------- -----------
Total Dividends.................................................. (2,478,314) (502,635)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 93,745,972 12,451,803
Dividends reinvested................................................. 2,423,279 502,014
Cost of shares redeemed.............................................. (50,048,441) (4,663,841)
----------- -----------
Increase (Decrease) in Net Assets from Capital Stock Transactions 46,120,810 8,289,976
----------- -----------
Total Increase (Decrease) in Net Assets........................ 45,036,985 10,448,031
NET ASSETS:
Beginning of Period.................................................. 16,851,983 6,403,952
----------- -----------
End of Period........................................................ $61,888,968 $16,851,983
=========== ===========
Undistributed investment income--net.................................... $ 5,841 $ 47,915
----------- -----------
Shares Shares
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 5,283,865 738,511
Shares issued for dividends reinvested............................... 145,455 35,629
Shares redeemed...................................................... (2,818,853) (277,463)
----------- -----------
Net Increase (Decrease) in Shares Outstanding.................... 2,610,467 496,677
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company 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.
<TABLE>
<CAPTION>
Six Months Ended Year Ended October 31,
April 30, 1997 ______________________________
PER SHARE DATA: (Unaudited) 1996 1995 1994(1)
----------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................. $17.66 $14.00 $12.43 $12.50
------ ------ ------ ------
Investment Operations:
Investment income--net................................ -- .07 .10 .30
Net realized and unrealized gain (loss)
on investments.................................... 1.84(2) 4.69 2.33 (.37)
------ ------ ------ ------
Total from Investment Operations..................... 1.84(2) 4.76 2.43 (.07)
------ ------ ------ ------
Distributions:
Dividends from investment income--net................. (.04) (.09) (.33) --
Dividends from net realized gain on investments...... (2.10) (1.01) (.53) --
------ ------ ------ ------
Total Distributions.................................. (2.14) (1.10) (.86) --
------ ------ ------ ------
Net asset value, end of period....................... $17.36 $17.66 $14.00 $12.43
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN................................. 10.90%(3) 35.99% 21.30% (.56%)(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets.... .62%(3) 1.27% .84% --
Ratio of interest expense and dividends on
securities sold short to average net assets....... .01%(3) .02% .07% .01%(3)
Ratio of net investment income
to average net assets............................. .01%(3) .62% .79% 2.39%(3)
Decrease reflected in above expense ratios
due to undertakings by Dreyfus.................... .09%(3) .41% 1.80% 2.07%(3)
Portfolio Turnover Rate.............................. 58.31%(3) 183.58% 161.01% 219.63%(3)
Average commission rate paid(4)...................... $.0508 $.0509 -- --
Net Assets, end of period (000's Omitted)............ $61,889 $16,582 $6,404 $5,166
<FN>
- --------------------
(1) From December 29, 1993 (commencement of operations) to October 31, 1994.
(2) Based on average shares outstanding.
(3) Not annualized.
(4) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and
sales of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Small Company 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
capital appreciation. The Dreyfus Corporation ("Dreyfus") serves as the
Fund's investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. ("Mellon"). The Boston Company Asset Management, Inc. ("TBC Asset
Management"), an indirect subsidiary of Mellon and an affiliate of Dreyfus,
serves as the Fund's sub-investment adviser. 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
fund's operations; expenses which are applicable to all series 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 the 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 amount
of dividends, interest and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains 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
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
(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 may borrow up to $2 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. At April 30, 1997, there were no
outstanding borrowings under the lines of credit.
The average daily amount of borrowings outstanding under both arrangements
during the period ended April 30, 1997 was approximately $139,000, with a
related weighted average annualized interest rate of 5.70%. The maximum amount
borrowed at any time during the period ended April 30, 1997 was $2.9 million.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(a) Pursuant to a management agreement with Dreyfus, 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. Dreyfus has undertaken from November 1,
1996 through October 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 dividends and interest accrued on
securities sold short) and extraordinary expenses, exceed an annual rate of
1.25% of the value of the Fund's average daily net assets. The reduction in
management fee, pursuant to the undertaking, amounted to $34,660 during the
period ended April 30, 1997.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and TBC
Asset Management, the sub-investment advisory fee is computed at the annual rate
of .375 of 1% of the value of the Fund's average daily net assets and is payable
monthly by Dreyfus.
(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 April 30, 1997, the Fund was charged an aggregate of
$46,674 pursuant to the Shareholder Services Plan.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $12,015 during the period ended April 30, 1997.
The Fund compensates Mellon under a custody agreement to provide custodial
services for the Fund. During the period ended April 30, 1997, $15,327 was
charged by Mellon pursuant to the custody agreement.
(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 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.
NOTE 4--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 April 30, 1997 is summarized as follows:
Purchases Sales
----------- -----------
Long transactions................... $60,518,825 $20,664,916
Short sale transactions............. 1,462,920 8,945,272
----------- -----------
Total........................... $61,981,745 $29,610,188
----------- -----------
----------- -----------
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 liquid securities sufficient to cover its short position. Securities sold
short at April 30, 1997 and their related market values and proceeds are set
forth in the Statement of Securities Sold Short.
(b) At April 30, 1997, accumulated net unrealized appreciation on
investments and securities sold short was $258,234, consisting of $3,677,456
gross unrealized appreciation and $3,419,222 gross unrealized depreciation.
At April 30, 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).
<PAGE>
[LOGO]
Dreyfus Small Company
Value Fund
200 Park Avenue
New York, NY 10166
Investment Advisor
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Advisor
The Boston Company
Asset Management, Inc.
One Boston Place
Boston, MA 02108
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 253SA974
