DREYFUS AGGRESSIVE VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report for Dreyfus
Aggressive Value Fund for the year ended August 31, 1997. Over this period,
your Fund produced a total return of 43.57%,* which compares with a total
return of 40.62% for the Standard and Poor's 500 Composite Stock Price Index
(the "S&P 500")** and 37.14% for the Standard and Poor's Barra Value
Index.***
Once again, the stock market focused on the mega caps, the very largest
publicly traded companies, during most of this fiscal year. One of our
strategies with the Fund is to diversify risk in order to control it. One of
the ways that we accomplish this goal is by buying companies of various
sizes. While recently the market may have favored the mega caps, tomorrow is
another day. With the valuations of many of these huge companies stretched
well beyond historic levels, we believe that a more diversified strategy
continues to be prudent. Despite the market's recent preference, the
performance results of the Fund during the measurement period were better
than those of the S&P 500, better than the S&P Barra Value Index, and
outperformed the vast majority of mutual funds in the Lipper Capital
Appreciation Funds category.
Economic Review
The economy has maintained a strong growth trend since last fall,
gradually eroding expectations for a natural slowdown "just around the
corner." Inflation has held steady, even in the face of a substantially
tighter labor market. Corporate profits have continued to surprise on the
upside. Market interest rates have held within a now long-established trading
range. In this setting, monetary policy has remained benign: the Federal
budget is close to being in balance and the Federal Reserve Board (the "Fed")
has kept policy rates unchanged since March.
Real GDP grew at above a 4% rate in the nine months from the third
quarter of 1996 to midyear. Indeed, the initial estimate of near 2% growth in
this year's second quarter was raised to 3.6%, erasing the record of even a
temporarily slow period. Virtually all major economic sectors have
contributed to the economy's growth. In turn, the economy has provided
personal income that, in the prevailing low-inflation environment, has
translated into strong real purchasing power. The strength in demand has begun
to raise imports, bolstering foreign economies. Inventories have also
started to accumulate at a faster pace, although inventory levels are
currently still quite lean in relation to sales.
The labor market has tightened substantially in recent months as the
pace of new hiring has consistently exceeded the increase in the labor force.
Despite this, wage growth has been moderate while overall compensation growth
has accelerated only modestly. In their determination to hold the line on
prices, companies have resorted to unconventional hiring methods that, so
far, have avoided the need for higher wage offers.
Consensus expectations for corporate profits have been ratcheted
upwards virtually every month for the last several months. So far, positive
surprises in reported profits have justified the market's higher estimates.
However, the strength of the dollar overseas and other factors could affect
future profits.
Market interest rates have been stable since early 1996, oscillating
within a fairly narrow range. Several factors have kept rates steady: the
absence of faster inflation, positive Federal budget developments and an
accommodating Federal Reserve. Although the Fed has not changed policy rates
since March, they have held a bias towards tightening since last summer.
Therefore a move to tighten interest rates should not come as a surprise.
Market Overview
After acting like a high-speed elevator for most of the past 12 months,
the stock markets performed more like a roller-coaster as the fiscal year
drew to a close on August 31.
After a brief sinking spell in March caused by higher interest rates,
the equity markets climbed to one record after another until stopped by
another retreat in August. The Dow Jones Industrial Average, which started
the 12-month period at 5616.21, ended it at 7622.42, a gain of 2006.21
points. However, along the way, the 30 Dow Industrials broke through three
thousand-point milestones, reaching a high of 8259.31 in early August. In
spite of the drop in the last three weeks of August, the DJIA registered a
gain of 35.72% (excluding income) for the year ended August 31.
Again, with income excluded, the broader S&P 500 gained 37.96% for the
12 months even after dropping 60.85 points from its high, and the Nasdaq
Composite showed a year's gain of 39.06% even though it stood 43.12 points
below the year's high at the end of August.
While the market was rising, investors appeared to favor the larger
capitalized stocks, which enjoyed the sharpest rise, and subsequently gave up
the most in prices. The smallest stocks, as measured by the Russell 2000
small cap index, finished August at their high for the year.
Interest rates, and the anticipation of where they might go in the
future, were the dominant influences on the market. The rising elevator
effect came to a halt in March when investors were shaken by the Federal
Reserve's action raising interest rates by a quarter-point, the first such
action in two years. Once that had been absorbed, however, the market resumed
its upward ride until fears of higher interest rates and their companion,
higher inflation, took hold again in August.
The August decline was prompted by several factors, including the
Teamsters strike against United Parcel Service, resulting in a settlement
considered favorable to the labor union. This revived all the dormant fears
that national wage levels might rise, thus reviving inflation, and giving the
Fed reason to step on the monetary brakes once again.
Yet the economic environment for the equity market remained favorable.
Many commentators used the phrase "Goldilocks economy" - not too hot and not
too cold - to describe the economy's performance.
Stock price volatility, much of it on the down side, took over
especially in the last three weeks of August. From the start of the calendar
year through the end of August, 30% of stock trading sessions ended with the
Dow rising or falling 1% or more. Much to the relief of investors, the
volatility on September 2, the day after Labor Day, was all on the up side
with the Dow rising 3.38% for the day, the S&P 500 up 3.13%, the Nasdaq
Composite up 1.94% and the Russell 2000 gaining 1.09%.
Some of the August selling, no doubt, was prompted by the reduction in
the capital gains tax for securities held more than 18 months. How long that
will continue to impact the market is an open question.
Until now, the porridge on which the equity markets have been feeding
has been not too hot and not too cold. At these levels, of course, any
unexpected development can bring sharp reactions, particularly in view of the
market's spectacular gains since August, 1996. Looking ahead, much depends on
whether the economy can maintain its "Goldilocks" condition, and not bring on
another dose of anti-inflation actions from the monetary authorities.
VALUE INVESTING
We believe value stocks can be an important part of an investment
portfolio for a number of reasons.
First, stocks with low valuations theoretically have by definition more
upside potential than downside risk. Buying value stocks is akin to buying
clothes at wholesale prices or on sale instead of paying full retail.
Second, many analysts have low expectations for the earnings growth
rate of value stocks, resulting in the low valuations assigned to these
securities. Low growth expectations tend to be easier for management to meet
or even exceed than high expectations. A company expected to grow at only
5%, usually a value stock, can often exceed this forecast. It is harder
for a company which is expected to grow at 30% to continue to grow 30%
year after year. Additionally, our experience is that analysts'
forecasts are all too often incorrect. They tend to be overly pessimistic
on low-expectation stocks and overly optimistic on high-expectation stocks.
Third, value investors tend to work more with actual data and with
near-term projections when analyzing companies. Obviously, this type of data
is more accurate than long-term forecasts.
Fourth, value stocks possess a number of favorable characteristics:
higher dividends, more stock repurchases, more takeovers and more
restructurings. Dividends are cash, usually paid out quarterly to common
stock shareholders. Dividends are the only actual tangible return to the
common stock shareholder from the company. To realize more value than the
dividend, the stock must be sold to another investor. Theoretically, if
shareholders could not sell a stock (which of course they can), investors
would only buy stocks that paid a cash dividend. Next, companies selling at
low valuations usually have the option to repurchase their own stock with any
available cash and add to earnings in the process. Management repurchasing
stock provides demand for that stock, forcing the price higher, everything
else being equal. Regarding another advantage, takeovers tend to happen to
inexpensively priced companies, in whatever way a potential buyer might
define this value. Obviously, a buyer prefers not to pay a premium price when
buying a company. Finally, restructurings tend to occur with value stocks
because these companies often tend to have a problem which needs to be fixed.
It is in the process of fixing this problem, and usually through some sort of
restructuring of the company in this process, that value is realized.
Value stocks are often ignored by Wall Street analysts. Because these
companies may be in a relatively dull business or may well have a problem,
explaining their stories through a report to the general investing public and
making it seem interesting can be difficult. It is much easier for analysts
to promote a glamour stock with a simple story, even if that story is already
universally known and recognized in the stock price. This lack of attention
and focus by Wall Street provides a decided advantage for relatively
undiscovered or underfollowed value stocks.
As human beings, we are fascinated about "what's hot" and the latest
trends. We are intrigued by the latest products and what the future of our
world may hold. These topics make for interesting reading and discussion, but
the companies involved with the newest technology and with developments well
out into the future also attract competitors, and the future holds many
uncertainties. In this sense, value stocks make less complicated investment
stories. Many of us are also attracted to glamorous things, whether material
goods or stocks. Value stocks are usually not glamorous. The businesses are
often relatively mundane, which does not make for good conversation but can
make for good investment performance. Most of us fear any problems, and value
stocks usually have a problem that needs to be fixed. Generally, we are
comforted by stocks that are already winners. If a stock has done well, we
usually feel more comfortable investing in it. Good historic performance,
however, is probably not a rational reason to invest in a company. Real money
in the stock market is not made by following the herd of other investors,
copying what they have already done and where money has already been made.
Real money is made leading this herd. As the herd follows, demand for the
security is increased, resulting in higher prices.
PORTFOLIO STRATEGY
In order to identify value, I generally select securities for the Fund
based on a three-pronged approach. First, a computer screening model is used
to identify companies with a forward earnings yield (next 12 months' earnings
divided by current market price) that is greater than the current yield of
the five-year U.S. Treasury bond. Second, another computer model seeks to
identify those companies that offer the best exposure to the current market
and economic environment. Third, I review potential investments with the
team of Dreyfus security analysts to identify a catalyst that could realize
the value inherent in the security and increase the price of the stock,
such as:
* new or unappreciated growth opportunities, including new products
* expanding market share opportunities
* increasingly effective corporate management
* positive changes in corporate structure or market perception
The Fund generally avoids significant overweighting or underweighting
of any given economic sector relative to the exposure of the S&P 500 Index to
that sector.
The Fund typically sells a stock when its earnings yield falls below
the 90-day U.S. Treasury yield, when the stock appears to be poorly exposed
to the current market or economic environment, when the manager, working with
our analysts, believes it represents a potentially deteriorating investment
based on fundamental research, or when the market emphatically indicates that
our investment thesis is incorrect.
Investment results during this annual period benefited from holdings
such as Reebok International, Intel, Pennzoil, Tosco, Great Western
Financial, Equitable Cos., BankAmerica, McKesson, Watson Pharmaceuticals,
Cooper Cameron, Lone Star Industries, Xerox, MagneTek, Ciba Specialty
Chemicals, Pier 1 Imports, Yellow, Airborne Freight, and Telecomunicacoes
Brasileirs-Telebras A.D.R., the Brazilian telephone company. Relative
performance results were penalized by holdings including La Quinta Inns,
Amdahl, 3Com, Biogen, Olin, PMI Group, General Signal, Coastal, and Sabesp,
the Brazilian water utility.
Thank you for entrusting Dreyfus with the management of your
investments.
Sincerely,
[Timothy M. Ghriskey Signature Logo]
Timothy M. Ghriskey
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. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
***The Standard & Poor's Barra Value Index is a capitalization-weighted index
of all the stocks in the Standard & Poor's 500 Composite Stock Price Index
that have low price-to-book ratios. It is designed so that approximately 50%
of the S&P 500's market capitalization is in the Value Index.
DREYFUS AGGRESSIVE VALUE FUND AUGUST 31, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS AGGRESSIVE
VALUE FUND AND
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
Dollars
$23,114
Dreyfus Aggressive
Value Fund
$16,019
Standard & Poor's 500
Composite Stock
Price 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>
43.57% 54.71%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Aggressive
Value Fund on 9/29/95 (Inception Date) to a $10,000 investment made in the
Standard & Poor's 500 Composite Stock Price Index on that date. All dividends
and capital gain distributions are reinvested.
The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Standard & Poor's 500 Composite Stock Price
Index is a widely accepted, unmanaged index of overall stock market
performance which 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 AGGRESSIVE VALUE FUND
STATEMENT OF INVESTMENTS AUGUST 31, 1997
Common Stocks-97.3% Shares Value
------- -------
<S> <C> <C> <C>
Consumer Durables-1.9% Grupo Carso, Ser. A1................... 428,000 $ 2,980,548
-------
Consumer Non-Durables-5.6% Kimberly-Clark......................... 64,100 3,040,744
NIKE, Cl. B............................ 53,200 2,839,550
Philip Morris.......................... 70,700 3,084,287
-------
8,964,581
-------
Consumer Services-4.1% Circus Circus Enterprises...........(a) 138,000 3,303,375
Paxson Communications, Cl. A........(a) 265,500 3,219,188
-------
6,522,563
-------
Electronic Technology-9.9% Cabletron Systems...................(a) 98,300 2,973,575
International Business Machines........ 31,100 3,137,213
Micron Technology...................(a) 74,500 3,319,906
Storage Technology..................(a) 65,400 3,331,312
3Com................................(a) 60,000 2,996,250
-------
15,758,256
-------
Energy Minerals-8.2% Mobil.................................. 43,600 3,171,900
Pennzoil............................... 40,700 3,141,531
Phillips Petroleum..................... 68,700 3,267,544
Tosco.................................. 103,700 3,428,581
-------
13,009,556
-------
Finance-14.0% BankAmerica............................ 47,200 3,106,350
Bankers Trust New York................. 32,600 3,382,250
Chase Manhattan........................ 29,800 3,313,387
Equitable.............................. 83,900 3,649,650
Grupo Financiero Banamex Accival, Cl. B .(a) 1,075,400 2,880,906
NationsBank............................ 50,000 2,968,750
Travelers Group........................ 48,700 3,092,450
-------
22,393,743
-------
Health Services-5.6% Aetna.................................. 33,900 3,235,331
Allegiance............................. 82,920 2,601,615
PacifiCare Health Systems, Cl. B....(a) 46,000 3,145,250
-------
8,982,196
-------
Health Technology-4.3% Biogen..............................(a) 86,300 3,398,063
Watson Pharmaceuticals..............(a) 65,700 3,453,356
-------
6,851,419
-------
Industrial Services-2.2% Cooper Cameron......................(a) 55,300 3,587,588
-------
Non-Energy Minerals-7.2% Georgia-Pacific........................ 34,700 3,166,375
ISPAT International, Cl. A............. 75,200 2,016,300
Lone Star Industries................... 61,000 3,240,625
Weyerhaeuser........................... 52,000 3,003,000
-------
11,426,300
-------
Process Industries-7.8% Chesapeake............................. 94,600 3,251,875
Owens-Illinois......................(a) 91,700 3,192,306
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997
Common Stocks (continued) Shares Value
------- -------
Process Industries (continued) Premark International.................. 101,000 $ 3,004,750
Temple-Inland.......................... 47,200 3,044,400
-------
12,493,331
-------
Producer Manufacturing-12.7% Caterpillar............................ 75,000 4,354,688
General Signal......................... 52,900 2,294,537
Ingersoll-Rand......................... 66,900 4,022,363
MagneTek............................(a) 148,600 3,129,887
Raychem................................ 35,100 3,266,494
Xerox.................................. 42,200 3,186,100
-------
20,254,069
-------
Retail Trade-1.6% Pier 1 Imports......................... 149,550 2,542,350
-------
Transportation-4.7% Airborne Freight....................... 65,900 3,245,575
Ryanair Holdings, A.D.R. .............. 16,800 462,000
Yellow..............................(a) 119,600 3,752,450
-------
7,460,025
-------
Utilities-7.5% China Light & Power.................... 575,000 2,663,548
Coastal................................ 59,000 3,407,250
Companhia de Saneamento Basico do
Estado de Sao Paulo.................. 10,500,000 2,741,640
Empresa Nacional de Electricidad, A.D.R. 140,000 3,115,000
-------
11,927,438
-------
TOTAL COMMON STOCKS
(cost $137,791,352).................. $155,153,963
========
Preferred Stocks-1.8%
Energy Minerals; Petroleo Brasileiro
(cost $2,799,129)....................... 11,900,000 $ 2,900,046
========
Principal
Short-Term Investments-1.3% Amount
-------
U.S.Treasury Bills: 5.20%, 9/18/1997....................... $ 320,000 $ 319,091
5.02%, 10/16/1997...................... 1,734,000 1,722,573
-------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,042,333).................... $ 2,041,664
=======
TOTAL INVESTMENTS (cost $142,632,814)....................................... 100.4% $160,095,673
======= ===========
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (.4%) $ (567,122)
======= =======
NET ASSETS.................................................................. 100.0% $159,528,551
======= =======
Notes to Statement of Investments:
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1997
Cost Value
-------- --------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $142,632,814 $160,095,673
Cash................................................... 379,071
Receivable for investment securities sold and forward
currency exchange contracts........................ 1,110,602
Receivable for shares of Common Stock subscribed....... 169,477
Dividends and interest receivable...................... 138,557
Prepaid expenses....................................... 45,008
--------
161,938,388
--------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.......... 109,119
Due to Distributor..................................... 34,466
Payable for shares of Common Stock redeemed............ 2,174,914
Accrued expenses....................................... 91,338
--------
2,409,837
--------
NET ASSETS.............................................................................. $159,528,551
========
REPRESENTED BY: Paid-in capital........................................ $134,958,443
Accumulated undistributed investment income-net........ 101,760
Accumulated net realized gain (loss) on investments,
foreign currency transactions and forward currency
exchange contracts................................. 7,006,968
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 17,461,380
--------
NET ASSETS.............................................................................. $159,528,551
========
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized)......................... 6,041,804
NET ASSET VALUE, offering and redemption price per share-Note 3(d)...................... $26.40
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends (net of $5,696 foreign taxes
withheld at source).................... $ 880,612
Interest................................... 162,038
-------
Total Income......................... $ 1,042,650
EXPENSES: Management fee-Note 3(a)................... 550,479
Shareholder servicing costs-Note 3(b)...... 307,458
Registration fees.......................... 69,464
Professional fees.......................... 27,552
Custodian fees-Note 3(b)................... 22,592
Prospectus and shareholders' reports....... 18,156
Directors' fees and expenses-Note 3(c)..... 9,465
Miscellaneous.............................. 1,576
-------
Total Expenses....................... 1,006,742
Less-reduction in management fee due to
undertaking-Note 3(a).................. (99,236)
-------
Net Expenses......................... 907,506
-------
INVESTMENT INCOME-NET....................................................... 135,144
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments and
foreign currency transactions.......... $ 7,191,987
Net realized gain (loss) on forward currency
exchange contracts
Short transactions..................... 152,713
-------
Net Realized Gain (Loss)............. 7,344,700
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions...... 16,986,330
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 24,331,030
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $24,466,174
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS AGGRESSIVE 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..................................................... $ 135,144 $ 34,585
Net realized gain (loss) on investments................................... 7,344,700 1,835,188
Net unrealized appreciation (depreciation) on investments................. 16,986,330 475,050
------- -------
Net Increase (Decrease) in Net Assets Resulting from Operations......... 24,466,174 2,344,823
------- -------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net..................................................... (58,255) (9,714)
Net realized gain on investments.......................................... (2,172,920) ----
------- -------
Total Dividends......................................................... (2,231,175) (9,714)
======= =======
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................. 173,439,634 13,366,799
Dividends reinvested...................................................... 2,079,421 9,197
Cost of shares redeemed................................................... (47,936,230) (6,000,378)
------- -------
Increase (Decrease) in Net Assets from Capital Stock Transactions....... 127,582,825 7,375,618
------- -------
Total Increase (Decrease) in Net Assets............................... 149,817,824 9,710,727
NET ASSETS:
Beginning of Period....................................................... 9,710,727 ----
------- -------
End of Period............................................................. $159,528,551 $ 9,710,727
======= =======
Undistributed investment income-net......................................... $ 101,760 $ 24,871
------- -------
Shares Shares
------- -------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................... 7,516,158 795,837
Shares issued for dividends reinvested.................................... 99,876 588
Shares redeemed........................................................... (2,057,922) (312,733)
------- -------
Net Increase (Decrease) in Shares Outstanding........................... 5,558,112 483,692
======= =======
*From September 29, 1995 (commencement of operations) to August 31, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS AGGRESSIVE 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,
-------------
1997 1996(1)
---- ----
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period.................................... $20.08 $12.50
---- ----
Investment Operations:
Investment income-net................................................... .02 .09
Net realized and unrealized gain (loss)
on investments........................................................ 8.22 7.53
---- ----
Total from Investment Operations........................................ 8.24 7.62
---- ----
Distributions:
Dividends from investment income-net.................................... (.05) (.04)
Dividends from net realized gain on investments......................... (1.87) -
---- ----
Total Distributions..................................................... (1.92) (.04)
---- ----
Net asset value, end of period.......................................... $26.40 $20.08
==== =====
TOTAL INVESTMENT RETURN..................................................... 43.57% 61.00%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. 1.24% 1.17%(2)
Ratio of net investment income
to average net assets................................................. .18% .55%(2)
Decrease reflected in above expense ratios
due to undertaking by the Manager..................................... .14% .63%(2)
Portfolio Turnover Rate................................................. 120.71% 260.98%(2)
Average commission rate paid (3)........................................ $.0463 $.0508
Net Assets, end of period (000's Omitted)............................... $159,529 $9,711
(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 AGGRESSIVE VALUE FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Aggressive 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 ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon"). Premier Mutual Fund Services, Inc. (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 funds
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 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.
(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
DREYFUS AGGRESSIVE VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $5 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. For the period
ended August 31, 1997, the Fund did not borrow under either line of credit.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .75 of 1% of the value of the Fund's
average daily net assets and is payable monthly. The Manager had undertaken
from September 1, 1996 through August 31, 1997 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 taxes, brokerage, interest on
borrowings (which, in the view of Stroock & Stroock & Lavan, LLP, counsel to
the Fund, also contemplates loan commitment fees and 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 $99,236
for 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 $183,493 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 $65,516 during the period ended August 31, 1997.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended August 31, 1997,
$22,592 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.
(e) Brokerage Commissions: During the period ended August 31, 1997, the
Fund incurred total brokerage commissions of $435,354 of which $39,084 was
paid to Dreyfus Investment Services Corporation, an affiliate of Mellon.
DREYFUS AGGRESSIVE 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, during the period ended August 31, 1997,
amounted to $211,688,973 and $87,289,331, respectively.
The Fund enters into forward currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. When executing forward currency exchange
contracts, the Fund is obligated to buy or sell a foreign currency at a
specified rate on a certain date in the future. With respect to sales of
forward currency exchange contracts, the Fund would incur a loss if the value
of the contract increases between the date the forward contract is opened and
the date the forward contract is closed. The Fund realizes a gain if the
value of the contract decreases between those dates. With respect to
purchases of forward currency exchange contracts, the Fund would incur a loss
if the value of the contract decreases between the date the forward contract
is opened and the date the forward contract is closed. The Fund realizes a
gain if the value of the contract increases between those dates. The Fund is
also exposed to credit risk associated with counter party nonperformance on
these forward currency exchange contracts which is typically limited to the
unrealized gain on each open contract. At August 31, 1997, there were no open
forward currency exchange contracts.
(b) At August 31, 1997, accumulated net unrealized appreciation on
investments was $17,462,859, consisting of $20,693,761 gross unrealized
appreciation and $3,230,902 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 AGGRESSIVE VALUE FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Directors
Dreyfus Aggressive Value Fund
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Aggressive 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
verification by examination of securities held as of August 31, 1997 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Aggressive 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)
For Federal tax purposes the Fund hereby designates $.005 per share as
long-term capital gain distribution of the $1.915 per share paid on December
11, 1996.
The Fund also designates 4.81% of the ordinary dividends paid during the
fiscal year ended August 31, 1997 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1998 of
the percentage applicable to the preparation of their 1997 income tax
returns.
Registration Mark
[DREYFUS LION "D" LOGO]
DREYFUS AGGRESSIVE VALUE FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 257AR978
[Dreyfus Logo]
Aggressive Value
Fund
Annual Report
August 31, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS AGGRESSIVE VALUE FUND AND THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
STANDARD
& POOR'S 500 DREYFUS
COMPOSITE AGGRESSIVE
PERIOD STOCK VALUE
PRICE INDEX* FUND
9/29/95 10,000 10,000
11/30/95 10,401 11,680
2/29/96 11,064 14,224
5/31/96 11,627 16,164
8/31/96 11,391 16,100
11/30/96 13,298 18,112
2/28/97 13,957 19,437
5/31/97 15,050 21,232
8/31/97 16,019 23,114
*Source: Lipper Analytical Services, Inc.
