DREYFUS INTERNATIONAL VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
For the six-month period ended February 28, 1998, the Dreyfus
International Value Fund performed in line with the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFERegistration Mark) Index.
Your Fund produced a total return of 8.02%,* compared to a total return of
8.32% for the EAFE Index.**
Japan continued to depress returns from abroad, with its stock market now
entering the ninth year of a bear market. On February 27, the Nikkei index
closed more than 50% below its peak of December 1989. In contrast, during
this eight-year period the U.S. market has tripled.
During the most recent fiscal period, the Japanese component of the EAFE
index declined 13.5%. The other Asian markets fared even worse, with Hong
Kong down 22% and Malaysia down 23%. Your Fund was underweighted in the
region and weathered the storm well. The Japanese market actually reached its
low on January 12, and by the end of February, the market recovered 15%.
However, the recovery was concentrated in the more speculative sectors. Value
stocks had a limited participation in the rally.
European markets were strong and in most cases even outperformed the U.S.
The United Kingdom, the largest market in Europe, was up 22% and Spain was up
more than 30%. France, Germany and the Netherlands all posted returns of near
20%. With the market rally in the U.K. and continuing attrition in Japan, the
U.K. stock market is now nearly the size of Japan's. Japan now is 24.9% of
the EAFE index and the U.K. is 21.6%. In terms of its Gross Domestic Product
("GDP"), Japan is more than twice the size of the U.K.
Our strategy for the first half of the fiscal year was to be well
diversified and to focus on value stocks. The Fund was primarily invested in
the major industrialized countries, and exposure to emerging markets was
under 2%.
Economic and Market Environment
Economic growth worldwide, with the exception of Asia, continued at a
moderate pace. Inflation in the industrialized countries remained under
control, interest rates were declining and the environment was favorable for
stock prices. The most significant negative development for the last six
months was the sharp economic reversal in Asia. The "Asian Tigers," portrayed
for years as the models for economic development, fell victim to
overexpansion. Currencies depreciated and stock markets suffered sharp reversa
ls. As mentioned earlier, your Fund had a very limited exposure in the area
and was not seriously impacted.
The European economies continued to improve, with GDP growth improving
from 2.5% to the 2.7%-3.0% range. In anticipation of the European Monetary
Union, interest-rate differentials continued to narrow and inflation
continued to trend down.
The fiscal tightening needed to reach the Maastricht agreement guidelines
has now run its course. Monetary policy is now more accommodating to
encourage growth. European economies at this point are lagging the U.S.
economic cycle. The exception is the U.K., which is much closer to the U.S.
cycle.
In terms of the stock markets, we believe the environment in Europe is
favorable for investment. Although valuations are not cheap relative to the
historical norm, they compare favorably with the U.S. In terms of book value
and price-to-cash flow, Europe is at a significant discount to the U.S. In
terms of price-to-earnings ratios, the case is less compelling, but if the
numbers are adjusted to reflect the more conservative accounting practices of
German and Swiss companies, price-
to-earnings ratios are also lower. We also believe that there is a great deal
of potential for improved profitability in Europe at the corporate level.
Restructuring and share buybacks are just now beginning in Europe, whereas in
the U.S., the process has been under way for several years.
The biggest challenge today is to minimize the impact of turmoil in Asia
on the rest of the world. We believe the "Asian Tigers," accustomed to
generating economic growth of 7%-8%, could experience significantly lower
growth rates for a while. Currencies remain under pressure and major firms
are struggling under the burden of heavy dollar-based debt. Until now, these
problems have not impacted developed countries to any significant extent, and
we are optimistic that future impact will be minimal. One reason for the
severity of the situation in the emerging markets of Asia is that the major
industrial power in the region, Japan, is still struggling to solve its own
economic problems.
Early last year, Japan appeared on its way to economic recovery when the
consumption tax was raised from 3% to 5%. The increase in the tax had much
more adverse impact on the consumer than anticipated. Retail sales and
housing were impacted negatively and the economy stagnated. Politicians now
realize that measures are needed to stimulate the economy, but because of
scandals and political maneuverings, the measures have not yet been
implemented. We believe that over the next few months, new programs will be
put in place to shore up the economy. Another positive is that, beginning in
April, comparisons will be more favorable, as data will be compared with
numbers of a year ago, which were depressed due to the increase in the
consumption tax.
In terms of valuations, Japan now appears cheap relative to the rest of
the world. The price-to-book value of the Japanese market is 1.9 compared
with the U.S. of 4.5. The price-to-cash-flow ratio is 9.9 compared with 15.2
in the U.S. In terms of price-to-earnings ratios, Japan is still expensive
because profits are depressed at the bottom of the economic cycle.
Portfolio Focus
Our strategy is to continue to seek undervalued securities with sound
fundamentals and improving earnings momentum. We intend to remain well
diversified within the value universe, both in terms of country exposure and
economic sectors. As of February 28, 1998, the Fund was invested in 21
countries, including the small exposure to emerging markets.
Emerging market exposure has been kept low due to the turmoil and
volatility in Asian markets. The severe decline in those markets has brought
valuations down, and as we begin to see evidence of stabilization we will
search for opportunities. However, the objective of the Fund is to invest
primarily in the major established stock markets. While exposure to emerging
markets may rise somewhat because the severe decline will provide more
opportunities in the value sector, over 90% of the Fund will continue to be
invested in the major industrialized economies.
Although stock market returns abroad lagged those of the U.S. in recent
years, we are optimistic about the long-term outlook abroad and will continue
to search for opportunities within the value sector.
We appreciate your investment in the Fund and will continue exerting our
best efforts to bring you rewarding returns from international value stocks.
Sincerely,
[Sandor Oseh signature logo]
Sandor Cseh
Portfolio Manager
March 24, 1998
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 (EAFERegistration Mark) Index 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 is the property of Morgan Stanley & Co.
Incorporated.
<TABLE>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks-89.7% Shares Value
_____________ _____________
<S> <C> <C>
Argentina-.7% YPF Sociedad Anonima, ADS..................... 28,000 $ 885,500
_____________
Australia-1.7% Australia and New Zealand Banking............. 184,499 1,265,463
Boral......................................... 381,227 921,652
_____________
2,187,115
Austria-.2% _____________
Bank Austria.................................. 5,320 (a) 309,239
Creditanstalt-Bankverein...................... 2 705
_____________
309,944
_____________
Brazil-.2% Telecomunicacoes Brasileiras, ADR............. 2,000 244,875
_____________
France-10.6% Alcatel Alsthom, ADS.......................... 61,992 1,623,415
Bongrain...................................... 1,228 554,789
C.S.F. (Thompson)............................. 28,104 969,582
Danone........................................ 8,526 1,722,849
Dexia France.................................. 4,800 612,715
Elf Aquitaine, ADS............................ 36,000 2,058,750
Guyenne et Gascogne........................... 1,888 620,339
L'Air Liquide................................. 7,500 1,212,420
Michelin...................................... 19,087 1,182,159
Pechiney...................................... 13,000 576,638
Societe Generale.............................. 8,925 1,346,008
Societe Television Francaise 1................ 3,248 352,173
Usinor........................................ 58,000 870,429
_____________
13,702,266
_____________
Germany-8.8% Bayer......................................... 35,100 1,479,830
Deutsche Bank................................. 20,000 1,373,933
Deutsche Lufthansa ........................... 65,000 1,251,997
GEA........................................... 3,500 1,292,368
Hoechst....................................... 10,000 (a) 387,434
Siemens....................................... 29,400 1,809,044
Tarkett....................................... 34,000 876,935
VEBA.......................................... 23,300 1,563,393
Viag.......................................... 820 443,780
Volkswagen.................................... 1,400 921,631
_____________
11,400,345
_____________
Greece-.4% Hellenic Telecommunication Organization, GDR.. 50,000 (a,b) 487,500
_____________
Hong Kong-1.9% Guoco Group................................... 155,000 394,407
HSBC.......................................... 16,921 489,577
Henderson Investment.......................... 400,000 335,830
HongKong Electric............................. 231,500 822,301
Swire Pacific................................. 419,500 422,643
_____________
2,464,758
_____________
Italy-3.3% ENI, ADS...................................... 26,000 1,527,500
Istituto Mobiliare Italiano, ADS.............. 10,800 448,200
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
_____________ _____________
Italy (continued) Montedison.......................... 750,000 $ 777,482
Telecom Italia...................... 305,000 1,477,310
_____________
4,230,492
_____________
Japan-23.6% Canon............................... 68,000 1,558,446
Credit Saison....................... 73,200 1,712,451
Dai-Tokyo Fire & Marine Insurance... 250,000 1,147,899
Fuji Machine Manufacturing.......... 32,000 858,065
Hitachi............................. 131,000 984,837
Honda Motor......................... 32,000 1,108,962
Ito-Yokado.......................... 30,000 1,641,555
Kao................................. 110,000 1,491,674
Mabuchi Motor....................... 28,000 1,498,811
Matsumotokiyoshi.................... 21,000 789,373
Mikuni Coca Cola Bottling........... 53,000 722,918
Minebea............................. 158,000 1,754,164
Mitsubishi Heavy Industries......... 220,000 959,555
Murata Manufacturing................ 45,000 1,431,008
NAMCO............................... 26,500 640,959
Nichiei............................. 16,600 1,724,505
Nishimatsu Construction............. 105,000 542,069
Rinnai.............................. 62,800 1,020,935
Rohm................................ 12,000 1,189,532
Sankyo.............................. 32,000 672,482
Sekisui Chemica..................... 145,000 923,354
Sekisui Hous........................ 35,000 276,169
Sony................................ 22,000 1,988,898
Toshiba............................. 174,000 780,999
Toyota Motor........................ 31,000 857,969
Yamanouchi Pharmaceutical........... 55,000 1,339,017
Yamato Transport.................... 79,000 996,114
_____________
30,612,720
_____________
Netherlands-6.8% ABN-Amro............................ 62,497 1,387,124
Akzo Nobel, ADR..................... 12,000 1,218,000
Hollandsche Beton Groep............. 39,600 805,358
Hunter Douglas...................... 34,732 1,502,705
Koninklijke KNP..................... 50,000 1,334,637
Philips Electronics, ADR............ 14,000 1,090,250
Royal PTT Nederland, ADS............ 29,066 1,467,833
_____________
8,805,907
_____________
New Zealand-.2% Air New Zealand..................... 184,000 274,247
_____________
Norway-.5% Orkla AS-B.......................... 8,500 733,261
_____________
Peru-.4% Telefonica del Peru, ADS............ 27,000 511,313
_____________
Portugal-1.0% Banco Totta & Acores................ 47,000 1,304,010
_____________
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
_____________ _____________
Singapore-1.0% Development Bank of Singapore....... 160,000 $ 1,255,096
_____________
Spain-5.0% Corporacion Bancaria de Espana, ADS. 44,500 1,660,406
Endesa.............................. 66,000 1,459,608
Gas Y Electridad.................... 18,000 1,337,062
Repsol, ADR......................... 46,000 2,047,000
_____________
6,504,076
_____________
Sweden-2.4% Autoliv............................. 51,200 1,565,388
Marieberg Tidnings.................. 44,400 1,027,136
Scania AB 'A'....................... 23,250 502,969
Scania AB 'B'....................... 1,250 27,275
_____________
3,122,768
_____________
Switzerland-3.9% Forbo Holding....................... 2,770 1,260,122
Nestle.............................. 830 1,457,036
Sulzer.............................. 1,000 778,688
Union Bank of Switzerland........... 1,040 1,623,935
_____________
5,119,781
_____________
United Kingdom-15.7% BTR................................. 484,129 1,282,621
Bunzl............................... 332,779 1,350,487
Cable & Wireless, ADS............... 12,000 399,000
Laird Group..................... 169,000 1,215,348
LucasVarity......................... 460,004 1,768,541
Medeva.............................. 230,000 595,441
National Westminster Bank........... 89,488 1,645,252
PowerGen............................ 132,631 1,848,990
Rio Tinto........................... 105,554 1,422,086
Royal & Sun Alliance Insurance...... 202,104 2,568,460
Safeway............................. 276,933 1,628,904
Stakis.............................. 560,000 975,284
Storehouse.......................... 324,000 1,376,717
Tomkins............................. 405,000 2,335,607
_____________
20,412,738
_____________
United States-1.4% Pharmacia & Upjohn.................. 45,200 1,788,225
_____________
TOTAL COMMON STOCKS.................
(cost $106,776,834)................. $116,356,937
=============
Preferred Stocks-1.8%
Austria-.8% Bank Austria........................ 16,800 $ 1,096,311
_____________
Germany-1.0% Hugo Boss........................... 400 633,783
Rheinmetall......................... 34,200 603,141
_____________
1,236,924
_____________
TOTAL PREFERRED STOCKS
(cost $1,642,708).................. $ 2,333,235
=============
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998 (UNAUDITED)
Principal
Short-Term Investments-4.7% Amount Value
_____________ _____________
U.S. Treasury Bills; 5.17%, 4/23/98
(cost $6,108,111) $ 6,155,000 $ 6,106,437
=============
TOTAL INVESTMENTS (cost $114,527,653)..................................... 96.2% $124,796,609
========= =============
CASH AND RECEIVABLES (NET)................................................ 3.8% $ 4,900,403
========= =============
NET ASSETS................................................................ 100.0% $129,697,012
========= =============
Notes to Statement of Investments:
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the
Securities Act of 1933. This security may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At February
28, 1998, this security amounted to $487,500 or approximately .4% of net
assets.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998 (UNAUDITED)
Cost Value
_____________ ____________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $114,527,653 $124,796,609
Cash denominated in foreign currencies..... 6,454,512 6,366,309
Cash....................................... 382,225
Receivable for investment securities sold.. 293,958
Dividends receivable....................... 132,900
Receivable for shares of Common Stock subscribed 21,439
Prepaid expenses........................... 10,097
_____________
132,003,537
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 97,507
Due to Distributor......................... 23,901
Payable for shares of Common Stock redeemed 1,606,230
Payable for investment securities purchased 523,903
Accrued expenses........................... 54,984
_____________
2,306,525
_____________
NET ASSETS.................................................................. $129,697,012
=============
REPRESENTED BY: Paid-in capital............................ $117,966,030
Accumulated investment (loss).............. (138,695)
Accumulated net realized gain (loss) on investments and
foreign currency transactions............... 1,694,869
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 10,174,808
_____________
NET ASSETS.................................................................. $129,697,012
=============
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized)............. 8,233,375
NET ASSET VALUE, offering and redemption price per share-Note 3(d).......... $15.75
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $40,925 foreign taxes
<S> <C> <C>
withheld at source).................... $ 518,512
Interest................................... 218,342
___________
Total Income......................... $ 736,854
EXPENSES: Management fee-Note 3(a)................... 563,417
Shareholder servicing costs-Note 3(b)...... 155,204
Custodian fees............................. 46,038
Registration fees.......................... 26,805
Professional fees.......................... 15,998
Prospectus and shareholders' reports....... 6,031
Directors' fees and expenses-Note 3(c)..... 3,191
Loan commitment fees-Note 2................ 249
Miscellaneous.............................. 1,060
___________
Total Expenses....................... 817,993
___________
INVESTMENT (LOSS)........................................................... (81,139)
___________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments and foreign
currency transactions.................. $2,822,758
Net realized gain (loss) on forward currency
exchange contracts..................... (87,061)
___________
Net Realized Gain (Loss)............. 2,735,697
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions...... 6,440,987
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 9,176,684
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $9,095,545
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INTERNATIONAL VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
_________________ ________________
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net............................................. $ (81,139) $ 620,027
Net realized gain (loss) on investments.................................. 2,735,697 2,131,982
Net unrealized appreciation (depreciation) on investments................ 6,440,987 3,810,469
_________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations........ 9,095,545 6,562,478
================= ================
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.................................................... (605,725) (290,696)
Net realized gain on investments......................................... (2,990,766) (376,194)
_________________ ________________
Total Dividends........................................................ (3,596,491) (666,890)
_________________ ________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................ 84,732,114 89,144,565
Dividends reinvested..................................................... 2,744,488 522,275
Cost of shares redeemed.................................................. (60,174,593) (24,304,311)
_________________ ________________
Increase (Decrease) in Net Assets from Capital Stock Transactions...... 27,302,009 65,362,529
_________________ ________________
Total Increase (Decrease) in Net Assets.............................. 32,801,063 71,258,117
NET ASSETS:
Beginning of Period...................................................... 96,895,949 25,637,832
_________________ ________________
End of Period............................................................ $129,697,012 $ 96,895,949
================= ================
Undistributed investment income (loss)-net................................. $ (138,695) $ 548,169
_________________ ________________
Shares Shares
_________________ ________________
CAPITAL SHARE TRANSACTIONS:
Shares sold.............................................................. 5,563,196 6,171,987
Shares issued for dividends reinvested................................... 185,941 38,601
Shares redeemed.......................................................... (3,952,681) (1,712,155)
_________________ ________________
Net Increase (Decrease) in Shares Outstanding.......................... 1,796,456 4,498,433
================= ================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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.
Six Months Ended
February 28, 1998 Year Ended August 31,
_____________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
__________ ______ ______
<S> <C> <C> <C>
Net asset value, beginning of period....................... $15.05 $13.23 $12.50
______ ______ ______
Investment Operations:
Investment income (loss)-net............................... (.02) .07 .15
Net realized and unrealized gain (loss)
on investments........................................... 1.20 1.98 .65
______ ______ ______
Total from Investment Operations........................... 1.18 2.05 .80
______ ______ ______
Distributions:
Dividends from investment income-net....................... (.08) (.10) (.04)
Dividends from net realized gain on investments............ (.40) (.13) (.03)
______ ______ ______
Total Distributions........................................ (.48) (.23) (.07)
______ ______ ______
Net asset value, end of period............................. $15.75 $15.05 $13.23
====== ====== ======
TOTAL INVESTMENT RETURN........................................ 8.02%(2) 15.72% 6.43%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... .72%(2) 1.49% 1.39%(2)
Ratio of net investment income (loss)
to average net assets.................................... (.07%)(2) 1.09% 1.78%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager....................... -(2) .03% .51%(2)
Portfolio Turnover Rate.................................... 19.18%(2) 25.35% 19.14%(2)
Average commission rate paid (3)........................... $.0303 $.0315 $.0348
Net Assets, end of period (000's Omitted).................. $129,697 $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 (UNAUDITED)
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 nine
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, 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.
(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.
DREYFUS INTERNATIONAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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. During the period ended
February 28, 1998, 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.
(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 February 28, 1998, the Fund was charged
$140,854 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. During the
period ended February 28, 1998, the Fund was charged $10,846 pursuant to the
transfer agency 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) A 1% redemption fee is charged and retained by the Fund 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.
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 February 28, 1998, amounted to $36,874,074 and
$20,087,709, 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 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 gains on each
open contract. At February 28, 1998, there were no open forward currency
exchange contracts.
DREYFUS INTERNATIONAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(b) At February 28, 1998, accumulated net unrealized appreciation on
investments was $10,268,956, consisting of $16,779,543
gross unrealized appreciation and $6,510,587 gross unrealized depreciation.
At February 28, 1998, 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).
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. 254SA982
Registration Mark
[Dreyfus logo]
International Value
Fund
Semi-Annual
Report
February 28, 1998
DREYFUS TECHNOLOGY GROWTH FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
It is my pleasure to introduce to you the comanagers of one of our newest
and most exciting mutual funds - the Dreyfus Technology Growth Fund.
Responsibilities for managing this Fund, which began operations last fall,
are shared by Richard D. Wallman and Mark Herskovitz.
Richard Wallman, who joined Dreyfus in 1995, is a senior sector manager
for the technology industry in our Equity Research Department. His industry
specialties include data communications, voice processing, software, computer
services and the Internet.
Before joining Dreyfus, Richard comanaged $1.3 billion of growth
investments at Desai Capital Management. Earlier, he had experience in
analyzing and selecting stock investments at Bankers Trust Company and
managing consulting assignments in the financial services industry at Price
Waterhouse. He earned his M.B.A. at New York University's Stern School of
Business.
Mark Herskovitz, also a senior sector manager in the Equity Research
Department, came to Dreyfus in 1996. His responsibilities include coverage of
companies engaged in the manufacture of computer hardware, semiconductors and
semiconductor equipment, telecom equipment and services, and satellite
companies. He previously worked as a senior technology analyst for National
City Corporation. He has an A.B. degree from the University of Chicago, where
he studied economics and history.
Dreyfus Technology Growth Fund is the first of our mutual funds to
concentrate on a single industry sector. We believe that Richard and Mark are
highly qualified to manage the assets invested in this Fund.
Sincerely,
[Stephen E. Canter signature logo]
Stephen E. Canter
Chief Investment Officer
The Dreyfus Corporation
March 23, 1998
New York, N.Y.
DREYFUS TECHNOLOGY GROWTH FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this, our first semi-annual report for
the Dreyfus Technology Growth Fund, for the period ended February 28, 1998.
Over this period, your Fund generated relatively strong results during a very
difficult time for technology stocks. The Fund produced a total return of
5.60% from its inception on October 13, 1997 through February 28, 1998,*
compared to a loss of -.03% for the Morgan Stanley High Technology 35 Index
(the "Tech 35")** and a gain of 9.18% for the Standard and Poor's 500
Composite Stock Price Index (the "S&P 500").***
Economic Review
Accumulating evidence indicates that the economy may have started a shift
toward slower growth this winter. Unlike the late phases of other postwar
business cycles, this year's shift to slower real economic growth is
occurring in tandem with decelerating price inflation. Hence, growth in the
nominal dollar economy (before adjusting for inflation), which determines
overall corporate revenues, could slow considerably. Meanwhile, wage growth
began to accelerate last fall. Slower revenue growth and rising costs have
begun to squeeze profit margins in some sectors, although overall corporate
profit growth has stayed positive. Earlier this year, the Federal Reserve
Board (the "Fed") shifted to a neutral policy stance, abandoning last year's
tightening bias. This stable policy has kept short-term rates steady,
thwarting market expectations for a sustained drop in long-term rates.
The shift to slower economic growth is not broad-based. Rather, the
available evidence shows that it predominantly affects manufacturers. This is
indicated by falling export orders, sluggish capital goods orders, weak
automobile production and a shorter manufacturing workweek. By contrast,
strength in the service-producing sector persists unabated. While employment
costs seem well controlled in the manufacturing sector, wages and benefits
paid to service sector workers began to accelerate last fall. The picture
emerging is of late-cycle inflation pressures developing for services in the
domestic economy alongside deterioration in the traded goods economy.
Overall corporate profits posted positive surprises throughout 1997. For
manufacturers, profits were boosted by strong demand as well as higher
productivity and lower unit labor costs. This year, many manufacturers face a
deterioration of their gross revenues. For service sector companies, last
year's profits were boosted by strong demand growth. This year, some service
companies may enjoy a window of opportunity to raise prices, but the risk to
profit growth is that power to counteract rising labor costs by raising
prices may be diminished.
The above hot and cold mix to slower economic growth has kept the Fed's
policy neutral, at least for now. Although long-term bond yields are below
levels of a year ago, substantially lower yields have proven difficult to
attain in the absence of lower short-term rates.
This kind of environment can foster a healthy economic outlook for the
long run, but may be vulnerable to short-term surprises.
Market Overview
Only four months after enduring the largest-ever one-day drop in the Dow
Jones Industrial Average, the stock market was back again setting new records
by the end of February.
The widely followed Dow Jones Industrials had broken new ground, and the
more widely based S&P 500 had also achieved a new record. Smaller stocks as
represented by the Russell 2000 average had not recouped the ground lost last
fall, and the NASDAQ Composite, while close to its previous high, had not
climbed all the way back. Yet signs of market strength continued into early
March, especially for the largest stocks.
How solid was this recovery from last October's lows? One lesson to be
learned was that the market was highly sensitive to any bad news, especially
about corporate profits. Despite the market's resilience, a number of stocks
- - particularly in the electronic sector - suffered reverses when companies
forecast lower earnings for the early months of 1998.
In late 1997, large stocks, particularly heavily capitalized global
corporations, had been depressed in price by the so-called "Asian flu" - the
severe financial problems affecting Japan, Korea, Singapore, Thailand,
Indonesia and the Philippines. In the new year, however, these companies
appeared to make an adjustment to the Asian problems. In addition, very large
companies were sought out by investors as offering a better refuge in
uncertain times than small and medium-size companies.
And the weapons-inspection crisis with Iraq, though it eased with an
agreement at the close of the fiscal period, provided more reasons for
investors to seek out the large, well-established stocks.
As the stock market approached its spring quarter, there was no shortage
of reasons to worry whether the recent strength could be maintained. For one,
there was the ever-present fear that the Fed might try to curb ebullience in
the market - and the U.S. economy - by raising interest rates again. Also,
there were predictions that the Asian flu had yet to make its full force felt
in the American economy. Then there were the uncertainties brought on by the
White House scandals, continued defiance by Iraq's Saddam Hussein, and the
advance shadow of the approaching midterm elections.
Even though interest rates have crept up in early 1998, the average price
of stocks in the S&P 500 stood at 26 times operating earnings at the end of
February, compared to 20.7 a year earlier. And the dividend yield of stocks
in the S&P 500 was at an all-time low of 1.51%.
Nonetheless, the resilience of the stock market was supported by a number
of impressive factors. Inflation is lower than at any time in a generation.
Interest rates, though edging higher, are low by most recent standards. And
corporate profits, though likely to be lower than last year, have still been
growing at double-digit rates. In addition, cash flows into mutual funds and
into stocks have been setting new records.
Market bears interpret these developments as signs that a market "top" is
close at hand. However, recent swings in stock prices indicate that many
investors still regard drops in the market as a good opportunity to acquire
more shares at reasonable prices.
Portfolio Focus
In 1997, technology stocks had performed very well up until the week your
Fund was launched. The day after your Fund commenced operations, Intel issued
cautionary comments during an earnings conference call and suddenly
technology stocks were out of favor.
Then, beginning on October 20th, the Hong Kong stock market became the
most important victim yet of what we now call the "Asian Contagion." Over a
four-day period, the Hong Kong market lost nearly 25% of its value for its
worst loss ever. In response, the Dow Jones Industrial Average plunged 554.26
points on October 27th, which set a record for the Dow's single-largest
one-day point loss. Late in November, South Korea's currency collapsed,
dragging down both its stock market and those of its neighbors.
The effect of the Asian crisis on technology stocks during the time when
your Fund came into existence through the end of February 1998, was negative.
Investors showed considerable concern over the prospect that the weakness in
the currencies of southeast Asian countries would result in a big drop in
demand for such high tech products as computers, semiconductors and
semiconductor capital equipment. It was these concerns that caused the poor
performance of technology stocks during the period in question and is why our
benchmark, the Tech 35, showed a modest decline in value.
In spite of these general challenges, your Fund showed positive results.
The key to the Fund's strong performance was the decision we took in response
to the Asian crisis to overweight companies in the computer software and
services segments. This proved to be the right course, since the companies we
invested in, like PeopleSoft, Compuware and Intuit, continued to enjoy strong
fundamental growth and rising share valuations.
Your Fund also benefitted from overweighting computer service companies
that participate in the development of the Internet and the continued
expansion of corporate data networks. Large positions that did well include
Cambridge Technology Partners, Cisco Systems and USWeb.
There are a number of other areas where the Fund had meaningful
investments that produced very strong performance. One of the most important
was in the area of telecommunications services and equipment. As countries
deregulate their telecommunications services industries, opportunities are
being created for new service providers and for the equipment companies that
are building their new networks.
At the close of the fiscal period, we had significant positions in a
number of new phone companies like Metromedia Fiber Network, Cl.A, MetroNet
Communications and NEXTLINK Communications, Cl.A that showed exceptionally
strong growth. Holdings in AT&T, WorldCom and MCI Communications have also
done very well.
Investments in telecom equipment companies such as Tellabs, Lucent
Technologies and Northern Telecom Communications benefitted from the
build-out of telephone networks for local, long distance and wireless service
providers.
We maintained a moderate level of investment in semiconductor and
semiconductor equipment companies for their long-term potential, and they
managed to show gains even though companies in these sectors have been
directly affected by the events in Asia. Some of the Fund's larger positions
during the period included Level One Communications, a maker of
semiconductors for the networking industry, ASM Lithography Holding, N.V., a
leader in the photolithography part of the semiconductor equipment industry
and PRI Automation, the dominant supplier of automation equipment to the
semiconductor industry.
As can be expected when investing in equities, some companies reported
disappointing results and saw a drop in the value of their shares. One big
disappointment for the period was the hardware component vendor Adaptec,
which was affected by reduced demand for some of its products. The Fund
experienced losses in several investments in the telecommunications equipment
and networking areas as orders for a number of companies materialized more
slowly than expected. These include Electromagnetic Sciences, a maker of
specialized antennas for the wireless telephone service industry; Allen
Telecom, a maker of infrastructure equipment for the wireless telephone
service industry; Adtran, a maker of high speed access equipment, and Applied
Digital Access, whose software products are used by phone companies to
monitor the performance of their networks.
We nevertheless remain very confident in the outlook for technology
stocks and continue to believe they may offer the potential for superior
long-term investment performance.
Sincerely, Sincerely,
[Richard D. Wallman signature logo] [Mark Herkowitz signature logo]
Richard D. Wallman Mark Herkowitz
Portfolio Manager Portfolio Manager
March 23, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
** SOURCE: MORGAN STANLEY & CO. - The Morgan Stanley High Technology 35 Index
(the "Tech 35") is an equal weighted index and is the first listed
broad-market technology barometer composed only of electronics-based
technology companies. The 35 bellwether stocks include many of the most
highly capitalized companies, both large and small, in the diverse
technology industry with market capitalizations ranging from about $1
billion to more than $100 billion.
*** 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.
<TABLE>
DREYFUS TECHNOLOGY GROWTH FUND
Statement of Investments February 28, 1998 (Unaudited)
Common Stocks-105.3% Shares Value
___________ ___________
<S> <C> <C> <C> <C>
Commercial Services-2.0% Gartner Group, Cl. A................. (a) 4,000 $ 159,500
___________
Computer Hardware-4.4% Gateway 2000......................... (a) 5,500 242,000
Silicon Graphics..................... (a) 7,500 112,969
___________
354,969
___________
Computer Software-21.7% Compuware............................ (a) 8,500 358,062
Intuit............................... (a) 6,000 279,000
Legato Systems....................... (a) 4,000 196,000
Logic Works.......................... (a) 12,000 121,500
Network Associates................... (a) 4,000 258,500
PeopleSoft........................... (a) 8,500 379,844
Siebel Systems....................... (a) 2,500 153,750
___________
1,746,656
___________
Electronic Components-.9% Adaptec.............................. (a) 2,800 74,025
___________
Electronic Data Processing-14.2% Cambridge Technology Partners........ (a) 4,100 186,550
Checkfree Holdings................... (a) 4,300 92,450
First Data........................... 4,400 149,600
Fiserv............................... (a) 2,000 109,500
Keane................................ (a) 3,000 139,500
Paychex.............................. 4,000 206,500
Technology Solutions................. (a) 2,800 91,000
USWeb................................ 9,000 168,750
___________
1,143,850
___________
Internet-3.6% CDnow................................ 4,000 91,500
Onsale............................... 7,000 200,813
___________
292,313
___________
Networking-5.4% Ascend Communications................ (a) 5,500 205,906
Cisco Systems........................ (a) 3,500 230,563
___________
436,469
___________
Semiconductor Capital
Equipment-13.3% ASM Lithography Holding, N.V......... (a) 2,200 205,425
Applied Materials.................... (a) 2,500 92,031
Cymer................................ (a) 7,700 173,731
Etec Systems......................... (a) 3,300 173,044
KLA-Tencor........................... (a) 3,000 138,469
PRI Automation....................... (a) 5,000 173,906
Teradyne............................. (a) 2,300 108,531
___________
1,065,137
___________
Semiconductors-10.0% Intel................................ 1,600 143,500
Level One Communications............. (a) 4,700 211,206
Micron Technology.................... (a) 5,600 185,850
Texas Instruments.................... 2,000 115,750
Xilinx............................... (a) 3,300 144,788
___________
801,094
___________
DREYFUS TECHNOLOGY GROWTH FUND
Statement of Investments (continued) February 28, 1998 (Unaudited)
Common Stocks (continued) Shares Value
___________ ___________
Telecommunications-17.7% AT&T................................. 2,900 $ 176,538
ICG Communications................... (a) 4,400 147,950
MCI Communications................... 3,600 172,125
Metromedia Fiber Network, Cl. A...... 7,700 282,975
MetroNet Communications, Cl. B....... 7,900 188,612
NEXTLINK Communications, Cl. A....... 5,500 165,687
Qwest Communications................. 3,400 119,425
WorldCom............................. (a) 4,500 171,844
___________
1,425,156
___________
Telecommunications
Equipment-12.1% Applied Voice Technology (a) 6,000 208,500
Aspect Telecommunications............ (a) 6,500 171,438
Lucent Technologies.................. 1,500 162,562
Nokia, Cl. A, A.D.R.................. 900 90,675
Northern Telecommunications.......... 2,700 143,944
Tellabs.............................. (a) 3,300 199,237
___________
976,356
___________
TOTAL INVESTMENTS (cost $7,108,595)....................................... 105.3% $ 8,475,525
======= ===========
LIABILITIES, LESS CASH AND RECEIVABLES.................................... (5.3%) $ (425,726)
======= ===========
NET ASSETS................................................................ 100.0% $ 8,049,799
======= ===========
Notes to Statement of Investments:
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS TECHNOLOGY GROWTH FUND
Statement of Assets and Liabilities February 28, 1998 (Unaudited)
Cost Value
___________ ___________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $7,108,595 $8,475,525
Cash..................................... 106,712
Receivable for investment securities sold 137,487
Receivable for shares of Common Stock subscribed 51,500
Dividends and interest receivable........ 2,829
Prepaid expenses......................... 1,169
___________
8,775,222
___________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 6,155
Due to Distributor......................... 1,503
Payable for investment securities purchased 257,325
Bank loan payable-Note 2................... 450,000
Interest payable-Note 2.................... 1,065
Accrued expenses........................... 9,375
___________
725,423
___________
NET ASSETS.................................................................. $8,049,799
===========
REPRESENTED BY: Paid-in capital............................ $7,201,072
Accumulated investment (loss).............. (11,702)
Accumulated net realized gain (loss) on investments (506,501)
Accumulated net unrealized appreciation (depreciation)
on investments-Note 4 1,366,930
___________
NET ASSETS.................................................................. $8,049,799
===========
SHARES OUTSTANDING
(100 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............. 609,740
NET ASSET VALUE, offering and redemption price per share-Note 3(d).......... $13.20
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS TECHNOLOGY GROWTH FUND
Statement of Operations
From October 13, 1997 (commencement of operations) to February 28, 1998 (Unaudited)
INVESTMENT INCOME
<S> <C> <C>
INCOME: Interest................................... $ 13,611
Cash dividends (net of $29 foreign taxes
withheld at source).................... 1,804
___________
Total Income......................... $ 15,415
EXPENSES: Management fee-Note 3(a)................... 15,325
Legal fees................................. 36,831
Shareholder servicing costs-Note 3(b)...... 7,076
Auditing fees.............................. 6,400
Custodian fees-Note 3(b)................... 3,809
Registration fees.......................... 2,681
Interest expense-Note 2.................... 1,065
Prospectus and shareholders' reports....... 167
Directors' fees and expenses-Note 3(c)..... 162
Miscellaneous.............................. 1,346
___________
Total Expenses....................... 74,862
Less-expense reimbursement from Manager
due to undertaking-Note 3(a)........... (47,745)
___________
Net Expenses......................... 27,117
_________
INVESTMENT (LOSS)........................................................... (11,702)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments.... $ (506,501)
Net unrealized appreciation (depreciation) on investments 1,366,930
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 860,429
_________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $848,727
=========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS TECHNOLOGY GROWTH FUND
Statement of Changes in Net Assets
From October 13, 1997 (commencement of operations) to February 28, 1998 (Unaudited)
OPERATIONS:
<S> <C> <C>
Investment (loss)........................................................ $ (11,702)
Net realized gain (loss) on investments.................................. (506,501)
Net unrealized appreciation (depreciation) on investments................ 1,366,930
___________
Net Increase (Decrease) in Net Assets Resulting from Operations........ 848,727
___________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................ 9,356,026
Cost of shares redeemed.................................................. (2,154,954)
___________
Increase (Decrease) in Net Assets from Capital Stock Transactions...... 7,201,072
___________
Total Increase (Decrease) in Net Assets.............................. 8,049,799
NET ASSETS:
Beginning of Period...................................................... ---
___________
End of Period............................................................ $ 8,049,799
===========
INVESTMENT (LOSS).......................................................... $ (11,702)
___________
Shares
___________
CAPITAL SHARE TRANSACTIONS:
Shares sold.............................................................. 794,552
Shares redeemed.......................................................... (184,812)
___________
Net Increase (Decrease) in Shares Outstanding.......................... 609,740
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS TECHNOLOGY GROWTH 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 the period from October 13, 1997
(commencement of operations) to February 28, 1998. This information has been
derived from the Fund's financial statements.
PER SHARE DATA:
Net asset value, beginning of period $12.50
______
Investment Operations:
Investment (loss).................................. (.02)
Net realized and unrealized gain (loss)
on investments................................... .72
______
Total from Investment Operations................... .70
______
Net asset value, end of period..................... $13.20
______
______
TOTAL INVESTMENT RETURN................................ 5.60%(1,2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets.. .49%(1)
Ratio of interest expense
to average net assets............................ .02%(1)
Ratio of net investment income (loss)
to average net assets............................ (.22%)(1)
Decrease reflected in above expense ratios
due to undertaking by the Manager................ .89%(1)
Portfolio Turnover Rate............................ 88.09%(1)
Average commission rate paid(3).................... $.0533
Net Assets, end of period (000's Omitted).......... $8,050
(1) Not annualized.
(2) Calculated based on net asset value on the close of business on October
14, 1997 (commencement of initial offering) to February 28, 1998.
(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.
DREYFUS TECHNOLOGY GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Technology Growth 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 nine
series, including the Fund, which commenced operations on October 13, 1997.
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") which is a
wholly-owned subsidiary of Mellon Bank Corporation. 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.
As of February 28, 1998, MBIC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 160,000 shares of the Fund.
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 and losses
arise from changes in the value of assets and liabilities other than investments
in securities, resulting from changes in exchange rates. Such gains and
losses are included with net realized and unrealized gain or loss on
investments.
(c) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(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 TECHNOLOGY GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(e) Federal income taxes: It is the policy of the Fund to qualify as a
regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from substantially all Federal income and excise taxes.
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.
The average daily amount of borrowings outstanding under both
arrangements during the period ended February 28, 1998 was approximately
$46,800, with a related weighted average annualized interest rate of 5.98%.
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 has undertaken
from October 13, 1997 through February 28, 1998 to reduce the management fee
paid by or reimburse such excess expenses of 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 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 expense
reimbursement, pursuant to the undertaking, amounted to $47,745 for the period
ended February 28, 1998.
(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 February 28, 1998, the Fund was charged
$5,108 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. During the
period ended February 28, 1998, the Fund was charged $1,619 pursuant to the
transfer agency agreement.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended February 28, 1998,
the Fund was charged $3,809 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) A 1% redemption fee is charged and retained by the Fund 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.
DREYFUS TECHNOLOGY GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended February 28, 1998
amounted to $11,532,012 and $3,917,691, respectively.
At February 28, 1998, accumulated net unrealized appreciation on
investments was $1,366,930, consisting of $1,457,255 gross unrealized
appreciation and $90,325 gross unrealized depreciation.
At February 28, 1998, 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).
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS TECHNOLOGY GROWTH 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. 255SA982
Registration Mark
[Dreyfus logo]
Technology Growth
Fund
Semi-Annual
Report
February 28, 1998
DREYFUS AGGRESSIVE GROWTH FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
Dreyfus Aggressive Growth Fund completed the first half of its current
fiscal year February 28, 1998. The total return for the six-month period
lagged the general stock market. The Fund's total return was -15.05%,*
compared to 17.61% for the Standard & Poor's 500 Composite Stock Price Index
and 9.64% for the Russell 2000 Index.***
The Fund's underperformance of the last six months resulted from a number
of the Fund's holdings that experienced fundamental disappointments, such as
negative earnings surprises and delayed new product introductions, or
specific market trading pressures, including secondary share offerings and
year-end tax-loss selling.
Economic Review
Accumulating evidence indicates that the economy may have started a shift
toward slower growth this winter. Unlike the late phases of other postwar
business cycles, this year's shift to slower real economic growth is
occurring in tandem with decelerating price inflation. Hence, growth in the
nominal dollar economy (before adjusting for inflation), which determines
overall corporate revenues, could slow considerably. Meanwhile, wage growth
began to accelerate last fall. Slower revenue growth and rising costs have
begun to squeeze profit margins in some sectors, although overall corporate
profit growth has stayed positive. Earlier this year, the Federal Reserve
Board (the "Fed") shifted to a neutral policy stance, abandoning last year's
tightening bias. This stable policy has kept short-term rates steady,
thwarting market expectations for a sustained drop in long-term rates.
The shift to slower economic growth is not broad-based. Rather, the
available evidence shows that it predominantly affects manufacturers. This is
indicated by falling export orders, sluggish capital goods orders, weak
automobile production and a shorter manufacturing workweek. By contrast,
strength in the service-producing sector persists unabated. While employment
costs seem well controlled in the manufacturing sector, wages and benefits
paid to service sector workers began to accelerate last fall. The picture
emerging is of late-cycle inflation pressures developing for services in the
domestic economy alongside deterioration in the traded goods economy.
Overall corporate profits posted positive surprises throughout 1997. For
manufacturers, profits were boosted by strong demand as well as higher
productivity and lower unit labor costs. This year, many manufacturers face a
deterioration of their gross revenues. For service sector companies, last
year's profits were boosted by strong demand growth. This year, some service
companies may enjoy a window of opportunity to raise prices, but the risk to
profit growth is that power to counteract rising labor costs by raising
prices may be diminished.
The above hot and cold mix to slower economic growth has kept the Fed's
policy neutral, at least for now. Although long-term bond yields are below
year ago levels, substantially lower yields have proven difficult to attain
in the absence of lower short-term rates.
This kind of environment can foster a healthy economic outlook for the
long run, but may be vulnerable to short-term surprises.
Market Overview
The equity market experienced several sharp swings over the last
twelve-month and six-month periods. Following a downward market correction
during February-April 1997, coinciding with a rise in long-term bond rates to
over 7.1%, stocks rallied from the April low to new high levels in the
August-October period, boosted by a combination of strong corporate earnings
growth and declining interest rates. Larger-capitalization shares reached
record highs in early August, over 8200 on the Dow Jones Industrial Average.
Smaller-capitalization shares, as represented by the Russell 2000 Index,
climbed until mid-October to a record 465 index level.
In mid-October, however, the Asian economic problems became the focus for
all equity markets, raising fears of depression in parts of Asia and a
potential global recession in 1998. Stock markets broadly dropped for two
weeks from mid to late October, with most U.S. market indices declining 10%
or more during that time. While share prices recovered during November and
early December, the lower overall investor confidence levels contributed to
outperformance by larger-capitalization shares, which rallied to near
previous record-high levels. Smaller-capitalization shares lagged in the
recovery, hurt by excessive recession fears and pressured by continued
year-end tax-loss selling, as many stocks remained well below trading levels
of earlier in 1997. Stocks that had made recent disappointing earnings
announcements were severely hurt during the market decline and often failed
to recover much at all during the fourth quarter.
In 1998, equity markets got off to a poor start as increased fear of
earnings disappointments caused another market drop in early January. From
the mid-January lows for most stocks, share prices began to rally as severe
U.S. recession fears moderated and U.S. corporate earnings reports and 1998
outlook comments provided positive news for equities. By the end of February,
many stock market indices had reached new record-high levels reflecting the
positive combination of low inflation and interest rates and still-positive
prospects for earnings growth in 1998 as domestic economic activity remained
strong, led by the consumer sector.
Portfolio Focus
The Fund's primary overweightings remained in health care, technology and
process industries, emphasizing smaller-capitalization companies. Many of the
stock holdings had market capitalizations of less than $250 million.
The eight largest portfolio holdings as of February 28 represented over
35% of the Fund's assets and reflect the growth emphasis on health care
(ONCOR, Macrochem, OncorMed), technology (Ultralife Batteries, Level 8
Systems), process industries (Chromatics Color Science International, Eco
Soil Systems), and niche transportation (American Classic Voyages) companies.
These are corporations with strong above-average growth prospects through
important new business introductions in 1998 and 1999.
Earnings disappointments in late 1997 occurred at Sheldahl (technology),
TriTeal (technology), Ultrafem (consumer products), Famous Dave's of America
(restaurants) and Larson-Davis (process technology). Secondary share
offerings pressured Complete Management (medical services), Crystal Systems
Solutions (technology), Imaging Technologies (technology) and Eco Soil
Systems (process industries).
A number of actions have been taken in an effort to enhance the potential
return prospects of the Fund. Several poor performing stocks were eliminated
from the Fund as were stocks where the risk of future disappointment was
deemed to be high. More specifically, we sold securities where we believe (1)
the timing of expected positive developments is unclear for the near term
(generally, six months); and (2) performance and/or earnings have been strong
but volatile, and valuation levels have reached a level where the near-term
upside potential looks limited, even though the long-term outlook may remain
bright. Additionally, we have added positions to the Fund that (1) we believe
have greater likelihood of near-term positive developments plus strong long-te
rm prospects or (2) are larger holdings with high liquidity and the potential
for greater near-term Wall Street coverage.
In due course, we believe, patient investors will be rewarded for their
investment in this Fund.
Sincerely, Sincerely,
[Paul A. LaRocco signature logo] [Michael Schonberg signature logo]
Paul A. LaRocco Michael Schonberg
April 15, 1998
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.
**SOURCE: FRANK RUSSELL COMPANY - Reflects the reinvestment if income
dividends and, where applicable, capital gain distributions. The Russell 2000
Index is a widely accepted unmanaged index of small cap stock performance.
<TABLE>
DREYFUS AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS FEBRUARY 28,1998 (UNAUDITED)
Common Stocks-95.8% Shares Value
____________ ____________
<S> <C> <C>
Commercial Services-3.1% Four Media.............................. 100,000 (a) $ 850,000
Intellicell............................ 132,500 (a) 629,375
Intellicell (Warrants)................. 76,250 (a) ----
Wiztec Solutions....................... 135,000 (a) 1,265,625
____________
2,745,000
____________
Consumer Non-durables-.8% Famous Dave's of America................ 35,000 (a) 245,000
Ultrafem............................... 400,000 (a) 462,500
Vista 2000............................. 271,575 (a) 16,973
____________
724,473
____________
Consumer Services-3.5% Alma International....................... 1,300,000 (a) 286,000
Home Security International............ 125,000 (a) 1,328,125
Hotel Discovery........................ 37,500 (a) 103,125
Hotel Discovery (Warrants)............. 37,500 (a) 28,125
Network Event Theater.................. 210,000 (a) 918,750
Response USA........................... 75,000 (a) 459,375
____________
3,123,500
____________
Electronic Technology-14.9% Advanced Photonix, Cl. A.................. 520,000 (a) 682,500
Celerity Systems....................... 100,000 (a) 337,500
FieldWorks............................. 122,500 (a) 551,250
Image Processing Systems............... 575,000 (a) 868,763
Imaging Technologies................... 540,000 (a) 1,805,625
iMall.................................. 191,000 (a) 1,337,000
Larson-Davis........................... 100,000 (a) 300,000
Sheldahl............................... 155,000 (a) 2,615,625
TAVA Technologies...................... 100,000 (a) 843,750
TSL Holdings........................... 10 (a) ----
Ultralife Batteries.................... 250,000 (a) 3,843,750
____________
13,185,763
____________
Finance-2.4% Downey Financial 15,000 438,750
Preferred Employers Holdings........... 214,600 (a) 1,716,800
____________
2,155,550
____________
Health Services-8.9% Complete Management 123,700 (a) 1,368,431
Comprehensive Care..................... 65,000 (a) 674,375
HemaCare............................... 350,000 (a) 175,000
OMEGA Health Systems................... 65,000 (a) 479,375
OncorMed............................... 520,000 (a,b) 3,380,000
OnGard Systems......................... 320,000 (a) ----
Pace Health Management Systems......... 180,000 (a) 78,750
Patient Infosystems.................... 330,000 (a) 1,062,188
ProxyMed Inc........................... 90,000 (a) 680,625
Substance Abuse Technologies........... 1,400,000 (a) 14,000
____________
7,912,744
____________
Health Technology-19.2% Alpha 1 Biomedicals 22,646 (a) 1,132
Atlantic Pharmaceuticals............... 140,000 (a) 805,000
DREYFUS AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28,1998 (UNAUDITED)
Common Stocks (continued) Shares Value
____________ ____________
Health Technology (continued) Bentley Pharmaceuticals 230,000 (a) $ 690,000
HEMISPHERx BIOPHARMA................... 525,000 (a) 1,935,938
MacroChem.............................. 355,000 (a) 4,082,500
NeoPharm............................... 60,000 (a) 262,500
ONCOR.................................. 1,525,000 (a,b) 6,481,250
Omega Orthodontics..................... 90,000 (a) 270,000
Omega Orthodontics (Warrants).......... 90,000 (a) 78,750
Pacific Pharmaceuticals................ 370,000 (a) 346,875
Transcend Therapeutics................. 100,000 (a) 750,000
VIMRx Pharmaceuticals.................. 750,000 (a) 1,242,187
____________
16,946,132
____________
Industrial Services-3.6% Commodore Applied Technologies 613,000 (a) 2,490,313
Commodore Applied Technologies (Warrants) 350,000 (a) 350,000
Commodore Environmental Services....... 647,000 (a) 363,937
____________
3,204,250
____________
Process Industries-14.6% Chromatics Color Science International 495,000 (a) 6,930,000
Eco Soil Systems....................... 400,000 (a) 2,800,000
Ocal................................... 38,500 (a) 91,438
STELAX Industries...................... 1,550,000 (a) 1,333,000
TST / Impreso.......................... 145,000 (a) 1,740,000
____________
12,894,438
____________
Producer Manufacturing-3.1% CCA Companies 335,000 (a) 2,763,750
____________
Retail Trade-1.0% Pacific Sunwear of California 25,000 (a) 865,625
____________
Technology Services-15.7% A.C.S. Electronics 125,000 (a) 500,000
Crystal Systems Solutions.............. 115,000 (a) 1,926,250
EA Industries.......................... 225,000 (a) 1,209,375
Image Guided Technologies.............. 150,000 (a) 375,000
Level 8 Systems........................ 230,000 (a) 2,875,000
Microvision............................ 140,000 (a) 1,837,500
Microvision (Warrants)................. 140,000 (a) 883,750
NewCom................................. 165,000 (a) 2,330,625
NewCom (Warrants)...................... 210,000 (a) 984,375
Tidel Technologies..................... 350,000 (a) 831,250
TriTeal................................ 127,900 (a) 127,900
____________
13,881,025
____________
Transportation-5.0% American Classic Voyages 192,700 (a) 4,432,100
____________
TOTAL COMMON STOCKS
(cost $104,429,904).................. $ 84,834,350
============
DREYFUS AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28,1998 (UNAUDITED)
Principal
Short-Term Investments-4.6% Amount Value
____________ ____________
U.S. Treasury Bills: 5.03%, 4/2/98........................... $.....929,000 $ 924,689
5.23%, 4/23/98......................... 2,924,000 2,900,930
4.97%, 4/30/98......................... 215,000 213,095
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $4,039,551).................... $ 4,038,714
============
TOTAL INVESTMENTS (cost $108,469,455)....................................... 100.4% $ 88,873,064
======= ============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (.4%) $ (332,214)
======= ============
NET ASSETS.................................................................. 100.0% $ 88,540,850
======= ============
Notes to Statement of Investments:
(a) Non-income producing.
(b) Investment in non-controlled affiliates (cost $10,794,119)-see
Note 1(c).
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $108,469,455 $ 88,873,064
Cash....................................... 389,388
Receivable for investment securities sold.. 1,714,650
Prepaid expenses........................... 45,957
_____________
91,023,059
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 46,795
Due to Distributor......................... 18,032
Payable for shares of Common Stock redeemed 2,290,955
Payable for investment securities purchased 72,815
Accrued expenses and other liabilities..... 53,612
_____________
2,482,209
_____________
NET ASSETS.................................................................. $ 88,540,850
=============
REPRESENTED BY: Paid-in capital............................ $ 125,810,055
Accumulated investment (loss).............. (2,423,218)
Accumulated net realized gain (loss) on investments (15,249,596)
Accumulated net unrealized appreciation
(depreciation) on investments-Note 4........ (19,596,391)
_____________
NET ASSETS.................................................................. $ 88,540,850
=============
SHARES OUTSTANDING
(100 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............. 5,191,938
NET ASSET VALUE, offering and redemption price per share-Note 3(d).......... $17.05
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS AGGRESSIVE GROWTH FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C>
INCOME: Interest .................................. $ 76,817
Cash dividends............................. 2,400
____________
Total Income......................... $ 79,217
EXPENSES: Management fee-Note 3(a)................... 408,214
Shareholder servicing costs-Note 3(b)...... 262,405
Professional fees.......................... 45,276
Registration fees.......................... 37,264
Prospectus and shareholders' reports....... 25,167
Custodian fees-Note 3(b)................... 8,840
Directors' fees and expenses-Note 3(c)..... 2,652
Interest expense-Note 2.................... 1,290
Miscellaneous.............................. 333
____________
Total Expenses....................... 791,441
Less-reduction in management fee due to
undertaking-Note 3(a).................. (128,508)
____________
Net Expenses......................... 662,933
____________
INVESTMENT (LOSS)........................................................... (583,716)
____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments.... (5,752,813)
Net unrealized appreciation (depreciation)
on investments:
Unaffiliated issuers................... $(10,843,664)
Affiliated issuers..................... (932,869) (11,776,533)
____________ ____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (17,529,346)
____________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(18,113,062)
============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS AGGRESSIVE GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
_________________ ________________
<S> <C> <C>
OPERATIONS:
Investment (loss)...................................................... $ (583,716) $ (1,839,502)
Net realized gain (loss) on investments................................ (5,752,813) (7,342,197)
Net unrealized appreciation (depreciation) on investments.............. (11,776,533) 1,493,689
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations...... (18,113,062) (7,688,010)
_____________ _____________
CAPITAL STOCK TRANSACTIONS :
Net proceeds from shares sold.......................................... 23,815,450 158,318,662
Net assets received in connection with reorganization-Note 1........... ---- 44,129,796
Cost of shares redeemed................................................ (48,765,111) (182,497,411)
_____________ _____________
Increase( Decrease) in Net Assets from Capital Stock Transactions.... (24,949,661) 19,951,047
_____________ _____________
Total Increase (Decrease) in Net Assets............................ (43,062,723) 12,263,037
NET ASSETS:
Beginning of Period.................................................... 131,603,573 119,340,536
_____________ _____________
End of Period.......................................................... $ 88,540,850 $ 131,603,573
============= =============
INVESTMENT (LOSS)........................................................ $ (2,423,218) $ (1,839,502)
_____________ _____________
CAPITAL SHARE TRANSACTIONS: Shares Shares
_____________ _____________
Shares sold............................................................ 1,340,099 7,696,328
Shares issued in connection with reorganization-Note 1................. ---- 2,636,188
Shares redeemed........................................................ (2,706,732) (9,030,023)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding........................ (1,366,633) 1,302,493
============= =============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS AGGRESSIVE GROWTH 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.
Six Months Ended
February 28, 1998 Year Ended August 31,
_____________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
_________________ _______ _______
<S> <C> <C> <C>
Net asset value, beginning of period................. $20.07 $22.71 $12.50
_______ _______ _______
Investment Operations:
Investment (loss).................................... (.19) (.26) (.10)
Net realized and unrealized gain (loss)
on investments..................................... (2.83) (2.38) 10.31
_______ _______ _______
Total from Investment Operations..................... (3.02) (2.64) 10.21
_______ _______ _______
Net asset value, end of period....................... $17.05 $20.07 $22.71
======= ======= =======
TOTAL INVESTMENT RETURN.................................. (15.05%)(2) (11.63%) 81.68%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets.... .60%(2) 1.34% 1.16%(2)
Ratio of interest expense and loan commitment fees
to average net assets.............................. .00%(2,3) .39% .24%(2)
Ratio of net investment (loss)
to average net assets.............................. (.53%)(2) (1.62%) (1.04%)(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager................. .12%(2) .09% .17%(2)
Portfolio Turnover Rate.............................. 22.95%(2) 76.45% 125.17%(2)
Average commission rate paid(4)...................... $.0436 $.0430 $.0543
Net Assets, end of period (000's Omitted)............ $88,541 $131,604 $119,341
(1) From September 29, 1995 (commencement of operations) to August 31, 1996.
(2) Not annualized.
(3) Amount represents less than .01%.
(4) 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 GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Aggressive Growth 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 nine
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.
On November 6, 1996 the Board of Directors of the Fund approved, subject
to approval by the shareholders of the Dreyfus Special Growth Fund ("DSGF"),
an Agreement and Plan of Reorganization providing for the transfer of all or
substantially all of the DSGF's assets and liabilities to the Fund in a tax
free exchange for shares of Common Stock of the Fund at net asset value and
the assumption of stated liabilities (the "Exchange"). The Exchange was
approved by the shareholders of DSGF on April 7, 1997, and was consummated
after the close of business on April 18, 1997 at which time 2,965,625
Institutional shares valued at $13.60 per share, and 274,371 Retail shares
valued at $13.84 per share, representing combined net assets of $44,129,796
[including ($1,260,489) net unrealized (depreciation) on investments] were
exchanged by DSGF for the respective number of shares of the Fund.
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.
(b) 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.
(c) Affiliated issuers: Issuers in which the Fund held 5% or more of the
outstanding voting securities are defined as "affiliated" in the Act. The
following summarizes affiliated issuers during the period ended February 28,
1998:
<TABLE>
Shares
_____________________________________________________
Beginning End of Dividend Market
Name of issuer of Period Purchases Sales Period Income Value
_____________ __________ __________ ___________ _________ __________ __________
<S> <C> <C> <C> <C> <C> <C>
ONCOR.............. 1,525,000 --- --- 1,525,000 --- $6,481,250
OncorMed........... 475,000 45,000 --- 520,000 --- 3,380,000
</TABLE>
DREYFUS AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and
dividends from net realized capital gain, if any, 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, 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.
The Fund has an unused capital loss carryover of approximately $5,827,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through August 31, 1997 which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, $33,000 of the carryover
expires in fiscal 2004 and $5,794,000 expires in fiscal 2005.
NOTE 2-BANK LINE OF CREDIT:
The Fund 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.
The average daily amount of borrowings outstanding during the period
ended February 28, 1998 was approximately $44,000 with a related weighted
average annualized interest rate of 5.89%.
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 has undertaken
from September 1, 1997 through April 18, 1999 to reduce the management fee
paid by the Fund, to the extent that the Fund's aggregate expenses, exclusive
of taxes, brokerage, and extraordinary expenses, exceed an annual rate of
1.20% of the value of the Fund's average daily net assets. The reduction in
management fee, pursuant to the undertaking, amounted to $128,508 during the
period ended February 28, 1998.
(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 professionals) in respect of these
services. The Distributor determines the amounts to be paid to Service
Agents. During the period ended February 28, 1998, the Fund was charged
$136,071 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. During the
period ended February 28, 1998, the Fund was charged $85,217 pursuant to the
transfer agency agreement.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended February 28, 1998,
the Fund was charged $8,840 pursuant to the custody agreement.
DREYFUS AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(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) A 1% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemption 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:
The following summarizes the aggregate amount of purchases and sales of
investment securities, excluding short-term securities, during the period
ended February 28, 1998:
<TABLE>
Purchases Sales
____________ ____________
<S> <C> <C>
Unaffiliated issuers............................................. $24,021,666 $50,278,943
Affiliated issuers............................................... 314,356 ---
____________ ____________
Total.......................................................... $24,336,022 $50,278,943
============ ============
</TABLE>
At February 28, 1998, accumulated net unrealized depreciation on
investments was $19,596,391, consisting of $13,770,399 gross unrealized
appreciation and $33,366,790 gross unrealized depreciation.
At February 28, 1998, 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).
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS AGGRESSIVE GROWTH 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.
Registration Mark
[Dreyfus logo]
Aggressive Growth
Fund
Semi-Annual
Report
February 28, 1998
DREYFUS AGGRESSIVE VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
The Dreyfus Aggressive Value Fund completed its semi-annual reporting
period for the six months ended February 28, 1998. Over this period, your
Fund produced a total return of 1.16%,* compared to a total return of 17.61%
for the Standard and Poor's 500 Composite Stock Price Index (the "S&P 500")**
and 14.89% for the Standard and Poor's Barra Value Index.***
The performance results of the Fund during this measurement period were
certainly below our expectations relative to these indices. Given that we
position the Fund for where we believe the market is going and not where it
has been, it can occasionally take some time for the market to realize the
value of our investments. Value investing can require some patience.
Regardless, we have made changes to the holdings, and hope to look back on
this period as one of abnormality.
Economic Review
Accumulating evidence indicates that the economy may have started a shift
toward slower growth this winter. Unlike the late phases of other postwar
business cycles, this year's shift to slower real economic growth is
occurring in tandem with decelerating price inflation. Hence, growth in the
nominal dollar economy (before adjusting for inflation), which determines
overall corporate revenues, could slow considerably. Meanwhile, wage growth
began to accelerate last fall. Slower revenue growth and rising costs have
begun to squeeze profit margins in some sectors, although overall corporate
profit growth has stayed positive. Earlier this year, the Federal Reserve
Board (the "Fed") shifted to a neutral policy stance, abandoning last year's
tightening bias. This stable policy has kept short-term rates steady,
thwarting market expectations for a sustained drop in long-term rates.
The shift to slower economic growth is not broad-based. Rather, the
available evidence shows that it predominantly affects manufacturers. This is
indicated by falling export orders, sluggish capital goods orders, weak
automobile production and a shorter manufacturing workweek. By contrast,
strength in the service-producing sector persists unabated. While employment
costs seem well controlled in the manufacturing sector, wages and benefits
paid to service sector workers began to accelerate last fall. The picture
emerging is of late-cycle inflation pressures developing for services in the
domestic economy alongside deterioration in the traded goods economy.
Overall corporate profits posted positive surprises throughout 1997. For
manufacturers, profits were boosted by strong demand as well as higher
productivity and lower unit labor costs. This year, many manufacturers face a
deterioration of their gross revenues. For service sector companies, last
year's profits were boosted by strong demand growth. This year, some service
companies may enjoy a window of opportunity to raise prices, but the risk to
profit growth is that power to counteract rising labor costs by raising
prices may be diminished.
The above hot and cold mix to slower economic growth has kept the Fed's
policy neutral, at least for now. Although long-term bond yields are below
year-ago levels, substantially lower yields have proven difficult to attain
in the absence of lower short-term rates.
This kind of environment can foster a healthy economic outlook for the
long run, but may be vulnerable to short-term surprises.
Market Overview
Only four months after enduring the largest-ever one-day drop in the Dow
Jones Industrial Average, the stock market was back again setting new records
by the end of February.
The widely followed Dow Jones Industrials had broken new ground, and the
more widely based S&P 500 had also achieved a new record. Smaller stocks, as
represented by the Russell 2000 Index, had not recouped the ground lost last
fall, and the NASDAQ Composite, while close to its previous high, had not
climbed all the way back. Yet signs of market strength continued into early
March, especially for the largest stocks.
How solid was this recovery from last October's lows? One lesson to be
learned was that the market was highly sensitive to any bad news, especially
about corporate profits. Despite the market's resilience, a number of stocks
- - particularly in the electronics sector - suffered reverses when companies
forecast lower earnings for the early months of 1998.
In late 1997, large stocks, particularly heavily capitalized global
corporations, had been depressed in price by the so-called "Asian flu" - the
severe financial problems affecting Japan, Korea, Singapore, Thailand,
Indonesia and the Philippines. In the new year, however, these companies
appeared to make an adjustment to the Asian problems. In addition, very large
companies were sought out by investors as offering a better refuge in
uncertain times than small and medium-size companies.
And the weapons-inspection crisis with Iraq, though it eased with an
agreement at the close of the fiscal period, provided more reasons for
investors to seek out the large, well-established stocks.
As the stock market approached its spring quarter, there was no shortage
of reasons to worry whether the recent strength could be maintained. For one,
there was the ever-present fear that the Fed might try to curb ebullience in
the market - and the U.S. economy - by raising interest rates again. Also,
there were predictions that the Asian flu had yet to make its full force felt
in the American economy. Then there were the uncertainties brought on by the
White House scandals, continued defiance by Iraq's Saddam Hussein, and the
advance shadow of the approaching midterm elections.
Even though interest rates have crept up in early 1998, the average price
of stocks in the S&P 500 stood at 26 times operating earnings at the end of
February compared to 20.7 a year earlier. And the dividend yield of stocks in
the S&P 500 was at an all-time low of 1.51%.
Nonetheless, the resilience of the stock market was supported by a number
of impressive factors. Inflation is lower than at any time in a generation.
Interest rates are low by most recent standards. And corporate profits,
though likely to be lower than last year, have still been growing at
double-digit rates. In addition, cash flows into mutual funds and into stocks
have been setting new records.
Market bears interpret these developments as signs that a market "top" is
close at hand. However, recent swings in stock prices indicate that many
investors still regard drops in the market as a good opportunity to acquire
more shares at reasonable prices.
Portfolio Focus
Performance during these past six months was somewhat restrained by our
disciplined value investing approach. As the period began, we believed that
the valuation of most major market benchmarks (including the S&P 500) and
many of the largest securities had become excessive, and we constructed an
investment portfolio of value-priced securities with a relatively low
correlation to the S&P 500 Index. In doing so, we sought to reduce the Fund's
risk level, and believed that the values we uncovered would eventually be
realized. During the fall months, however, the Fund was negatively impacted
by the Asian economic crisis. Many of the same companies and sectors,
electronic technology for example, that had done so well earlier in 1997 were
penalized during the fourth calendar quarter due to either export exposure to
Asian countries or commodity exposure that might hurt selling prices in a
weaker global marketplace. Late in the calendar year, we restructured the
Fund's holdings for this new economic environment, favoring domestically
oriented companies and businesses with less economic cyclicality, such as
Sears, Roebuck & Co., American Stores and Texas Utilities.
Value Investing and Our Investment Process
To briefly review our investment philosophy, while there are other
investment disciplines practiced at Dreyfus, we are passionate believers in
value investing. Paying attention to the value of securities has proven in
numerous industry and academic studies to result in superior and more
consistent long-term investment returns. As value investors, we want to buy
growing companies, but we want to pay as little for them as we have to. In
this sense, it is a lower-risk, more conservative style of equity investing.
Our approach to the selection of securities starts and ends with our
analysts, who are an integral part of our investment team. Our Dreyfus
analysts contribute their proprietary forecasts to our computer models, their
analyses and opinions to our decision-making process, and their constant flow
of information to our ongoing assessment of owned securities. We screen the
universe of stocks by computer according to two principal methods. The first
computer screen determines value by calculating each security's earnings
yield (our forecast for earnings divided by the security price) which, to
justify purchase, generally must be greater than the risk-free yield
available on reasonably long-term U.S. Treasury securities. Being paid more
than this risk-free rate for the risk inherent in equity investing is central
to our value discipline. The second computer screen looks at 19 other factors
that have historically influenced stock returns. We input into this model the
current economic and stock market trends, and the computer calculates each
security's exposure to this environment. Combining all of this data with our
analysts' in-depth knowledge of the individual companies, we then construct a
portfolio of approximately 50 securities. We use the same disciplined
criteria and several other factors to determine when selling a security is in
our shareholders' best interest.
Examples of Our Investment Process
While discussing all the detail that goes into the decision-making and
implementation process of buying, owning and eventually selling a security in
the Fund is not possible in this short report, provided below are several
brief examples of securities actually owned by your Fund at the end of the
fiscal period.
One of the securities in the Fund that appreciated significantly during
the semi-annual period was Owens-Illinois, primarily a manufacturer of glass
containers for consumable items like food and beverages. We originally bought
the stock in February of 1997, added to our position at various times
throughout the year, and continued to own it at the end of the semi-annual
period.
When we evaluated Owens-Illinois, our computer model showed it to be a
competitively priced value stock. We were going to be paid in total earnings
power more than the risk-free interest rate that we could have received from
a fairly long-term U.S. Treasury investment. Additionally, our multifactor
computer model calculated an overall score for Owens-Illinois of +3, with
zero being the average security score. Various factors in the model
demonstrated that the security's growth was being offered for sale at a
discount, that its reported earnings would likely be above consensus
expectations, and that the company was well positioned for the current
economic and market environment. The glass container industry had
consolidated from about sixteen North American manufacturers in 1981 to only
three major players today, and this oligopoly was expected to lead to higher
selling prices. Further, the trend away from glass containers appeared to be
stabilizing, if not reversing, as glass gives a perception of quality.
International markets were the primary future growth engines for the company,
since by offering to share its proprietary manufacturing technology,
Owens-Illinois had the inside track on making acquisitions of foreign
companies. Finally, management itself owned 20% of the company, and we
believe it to be an advantage when management's financial interests are the
same as those of our shareholders.
Owens-Illinois remained an attractive investment for the Fund at the end
of February 1998. Operations remained fundamentally strong. During 1997, the
company delivered earnings per share more than ten cents greater than Wall
Street analysts had been forecasting a year before when we had first started
our in-depth analysis of the company.
During the period, Digital Equipment was a Fund holding that initially
did not perform well but had its inherent value realized via a takeover by
Compaq Computer. Digital is a computer hardware and services company that
became tarnished by the Asian economic crisis, given its significant exposure
to those foreign markets. When we purchased the stock in November 1997, we
believed that the impact of Asia was already factored into the stock price.
Evidently it was not, and in early December the stock price declined
significantly, triggering one of our security sale rules which attempts to
protect the Fund from large losses. After carefully reconsidering the
investment thesis behind our holding and all available fundamental data, we
decided to retain ownership at least temporarily. Digital's stock price
subsequently stopped declining, appreciated sharply in mid-January of 1998,
and the company received a takeover proposal from Compaq Computer later that
month. The result was that Digital became a solid winner for the Fund.
AT&T, the long distance telephone company, was also purchased for the
Fund during November 1997. According to our computer valuation model, AT&T
was a value stock given an earnings yield greater than the 5-year U.S.
Treasury Bond yield. Our multifactor computer model score was a solid +6 for
the security. Until recently, the stock had been a significant laggard in
price appreciation relative to the overall stock market. Concern over growing
competition and changing technology had weighed heavily on the stock for some
time. Further, senior management was unsettled, with lack of clear succession
plans and a seeming lack of strategic direction for dealing with the changing
industry environment. In all of this pessimism and concern over what we
believed were issues that would soon be addressed if not resolved, we saw
opportunity. Finally, with the advent of the Asian economic crisis, a
defensive investment like AT&T with a largely domestic orientation and little
economic sensitivity was well suited to the current environment, as reflected
in our multifactor computer model.
AT&T remained in the Fund at the end of February. Despite substantial
appreciation in the stock price, AT&T's earnings yield was still greater than
the minimum risk-free interest rate, that of the 90-day U.S. Treasury Bill,
our valuation sell point. Additionally, new senior management had been
appointed, and dramatic steps to improve the company for the future had
already been taken. During the relatively short period that we owned the
stock, it made a significant contribution to the Fund's total return.
This type of detailed fundamental analysis is performed every day for
your Fund. Obviously, not all Fund holdings will be rewarding, but every
current and potential new holding is subjected to the same rigorous standards
on a regular basis.
Plus and Minus
In addition to Owens-Illinois, Digital Equipment, and AT&T, investment
results during this semi-annual period benefited from holdings such as
Airborne Freight, Storage Technology, Travelers, American Stores, Watson
Pharmaceuticals, Avis Rent A Car, and Equitable Companies. Holdings including
Applied Materials, Raychem, Cabletron Systems, Micron Technology, Yellow, and
3Com penalized relative performance results during the fiscal year.
We will continue to manage your investments with dedication and
discipline.
Sincerely,
[Timothy M. Ghriskey signature logo]
Timothy M. Ghriskey
Portfolio Manager
March 25, 1998
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.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - 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.
The views expressed herein do not constitute investment advise or
recommendations by Mr. Ghriskey, The Dreyfus Corporation, Dreyfus Service
Corporation or Dreyfus Aggressive Value Fund. The companies described herein
do not necessarily reflect the current portfolios of Dreyfus Aggressive Value
Fund and the performance results of the companies discussed herein do not
reflect the performance of Dreyfus Aggressive Value Fund.
<TABLE>
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks-98.6% Shares Value
_____________ _____________
<S> <C> <C>
Commercial Services-2.2% Ikon Office Solutions 104,000 $ 3,399,500
_____________
Consumer Non-Durables-6.9% Kimberly-Clark......................... 68,100 3,792,319
Philip Morris.......................... 91,400 3,970,187
RJR Nabisco Holdings................... 90,000 3,110,625
_____________
10,873,131
_____________
Consumer Services-2.4% La Quinta Inns......................... 175,000 3,718,750
_____________
Electronic Technology-12.4% Ceridian...............................(a) 85,000 3,957,813
Digital Equipment......................(a) 69,000 3,928,687
International Business Machines 31,100 3,248,006
Lockheed Martin........................ 33,000 3,850,688
Storage Technology.....................(a) 65,400 4,463,550
_____________
19,448,744
_____________
Energy Minerals-8.6% British Petroleum, A.D.R............... 38,000 3,142,125
Phillips Petroleum..................... 68,700 3,366,300
Tosco.................................. 103,700 3,849,863
USX-Marathon Group..................... 92,000 3,179,750
_____________
13,538,038
_____________
Finance-16.3% BankAmerica............................ 47,200 3,658,000
Bankers Trust New York................. 29,000 3,429,250
Chase Manhattan........................ 29,800 3,697,063
Citicorp............................... 23,400 3,100,500
Equitable.............................. 80,000 4,185,000
NationsBank............................ 56,500 3,870,250
Travelers Group........................ 65,050 3,626,537
_____________
25,566,600
_____________
Health Technology-8.9% American Home Products 33,500 3,140,625
Amgen............................ (a) 58,600 3,113,125
Biogen........................... (a) 94,000 4,147,750
Genzyme-General Division......... (a) 121,800 3,600,713
_____________
14,002,213
_____________
Non-Energy Minerals-2.3% Lone Star Industries............. 61,000 3,675,250
_____________
Process Industries-6.2% Great Lakes...................... 63,500 3,087,687
Owens-Illinois................... (a) 91,700 3,518,988
Premark International............ 101,000 3,143,625
_____________
9,750,300
_____________
Producer Manufacturing-7.6%. General Electric................. 60,000 4,665,000
MagneTek......................... (a) 174,000 3,088,500
Steelcase, Cl.A.................. 18,800 677,975
Xerox ........................... 40,000 3,547,500
_____________
11,978,975
_____________
Retail Trade-8.0% American Stores.................. 160,000 4,030,000
Federated Department Stores...... (a) 74,000 3,468,750
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
_____________ _____________
Retail Trade (continued) Sears, Roebuck & Co.............. 95,000 $ 5,040,937
_____________
12,539,687
_____________
Transportation-5.9% Airborne Freight................. 106,000 3,835,875
CNF Transportation............... 74,000 2,895,250
Yellow ........................ (a) 118,600 2,498,012
_____________
9,229,137
_____________
Utilities-10.9% AT&T............................. 64,000 3,896,000
Coastal ......................... 59,000 3,753,875
Empresa Nacional de Electricidad, A.D.R. 156,700 2,889,156
Telefonos de Mexico, Cl. L, A.D.R. 59,000 2,990,563
Texas Utilities.................. 90,000 3,639,375
_____________
17,168,969
_____________
TOTAL COMMON STOCKS
(cost $130,995,209)............ $154,889,294
=============
Convertible Preferred Stocks-2.0%
Finance; Sanwa International Finance
(cost $3,103,119) (b) 390,000,000 $ 3,177,835
=============
Principal
Bonds-1.9% Amount
_____________
Sumitomo Bank Treasury,
9.4%, 12/29/2049
(cost $3,027,000) (b,c) $ 3,000,000 $ 3,066,036
=============
Short-Term Investments-2.8%
U.S.Treasury Bills: 5.16%, 4/23/98................... $ 3,839,000 $ 3,808,710
5.01%, 4/30/98 545,000 540,171
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $4,350,264) $ 4,348,881
=============
TOTAL INVESTMENTS (cost $141,475,592)....................................... 105.3% $165,482,046
=============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (5.3%) $ (8,396,668)
=============
NET ASSETS.................................................................. 100.0% $157,085,378
=============
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 February 28, 1998, these securities amounted to $6,243,871 or 4.0%
of net assets.
(c) Scheduled variable interest rate.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $141,475,592 $165,482,046
Cash....................................... 293,299
Receivable for investment securities sold.. 1,545,060
Dividends and interest receivable.......... 158,241
Receivable for shares of Common Stock subscribed 8,580
Prepaid expenses........................... 36,684
_____________
167,523,910
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 116,821
Due to Distributor......................... 30,309
Payable for investment securities purchased 9,405,738
Payable for shares of Common Stock redeemed 815,074
Interest payable-Note 2.................... 501
Accrued expenses........................... 70,089
_____________
10,438,532
_____________
NET ASSETS.................................................................. $ 157,085,378
=============
REPRESENTED BY: Paid-in capital............................ $ 142,568,745
Accumulated investment (loss).............. (109,221)
Accumulated net realized gain (loss) on investments
and foreign currency transactions (9,378,919)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 24,004,773
_____________
NET ASSETS.................................................................. $ 157,085,378
=============
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized)............. 6,299,806
NET ASSET VALUE, offering and redemption price per share-Note 3(d).......... $24.93
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $18,999 foreign taxes
<S> <C> <C>
withheld at source).................... $ 896,745
Interest................................... 81,937
___________
Total Income......................... $ 978,682
EXPENSES: Management fee-Note 3(a)................... 596,649
Shareholder servicing costs-Note 3(b)...... 329,509
Custodian fees-Note 3(b)................... 32,234
Registration fees.......................... 32,050
Prospectus and shareholders' reports....... 17,283
Professional fees.......................... 15,586
Directors' fees and expenses-Note 3(c)..... 4,233
Interest expense-Note 2.................... 2,213
Miscellaneous.............................. 958
___________
Total Expenses....................... 1,030,715
___________
INVESTMENT (LOSS)........................................................... (52,033)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments and foreign
currency transactions.................. $(5,609,225)
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions...... 6,543,393
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 934,168
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 882,135
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS AGGRESSIVE VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31,1997
_________________ _________________
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net............................................. $ (52,033) $ 135,144
Net realized gain (loss) on investments.................................. (5,609,225) 7,344,700
Net unrealized appreciation (depreciation) on investments................ 6,543,393 16,986,330
_________________ _________________
Net Increase (Decrease) in Net Assets Resulting from Operations........ 882,135 24,466,174
_________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.................................................... (158,948) (58,255)
Net realized gain on investments......................................... (10,776,662) (2,172,920)
_________________ _________________
Total Dividends........................................................ (10,935,610) (2,231,175)
_________________ _________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................ 49,599,944 173,439,634
Dividends reinvested..................................................... 10,406,757 2,079,421
Cost of shares redeemed.................................................. (52,396,399) (47,936,230)
_________________ _________________
Increase (Decrease) in Net Assets from Capital Stock Transactions...... 7,610,302 127,582,825
_________________ _________________
Total Increase (Decrease) in Net Assets.............................. (2,443,173) 149,817,824
NET ASSETS:
Beginning of Period...................................................... 159,528,551 9,710,727
_________________ _________________
End of Period............................................................ $ 157,085,378 $ 159,528,551
================= =================
Undistributed investment income (loss)-net................................. $ (109,221) $ 101,760
_________________ _________________
Shares Shares
_________________ _________________
CAPITAL SHARE TRANSACTIONS:
Shares sold.............................................................. 1,931,471 7,516,158
Shares issued for dividends reinvested................................... 430,921 99,876
Shares redeemed.......................................................... (2,104,390) (2,057,922)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding.......................... 258,002 5,558,112
================= =================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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.
Six Months Ended
February 28, 1998 Year Ended August 31,
_____________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
__________ ______ ______
<S> <C> <C> <C>
Net asset value, beginning of period....................... $26.40 $20.08 $12.50
______ ______ ______
Investment Operations:
Investment income (loss)-net............................... (.01) .02 .09
Net realized and unrealized gain (loss)
on investments........................................... .27 8.22 7.53
______ ______ ______
Total from Investment Operations........................... .26 8.24 7.62
______ ______ ______
Distributions:
Dividends from investment income-net....................... (.03) (.05) (.04)
Dividends from net realized gain on investments............ (1.70) (1.87) .-
______ ______ ______
Total Distributions........................................ (1.73) (1.92) (.04)
______ ______ ______
Net asset value, end of period............................. $24.93 $26.40 $20.08
====== ====== ======
TOTAL INVESTMENT RETURN........................................ 1.16%(2) 43.57% 61.00%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... .64%(2) 1.24% 1.17%(2)
Ratio of net investment income (loss)
to average net assets.................................... (.03%)(2) .18% .55%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager....................... - .14% .63%(2)
Portfolio Turnover Rate.................................... 85.72%(2) 120.71% 260.98%(2)
Average commission rate paid(3)............................ $.0472 $.0463 $.0508
Net Assets, end of period (000's Omitted).................. $157,085 $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 (UNAUDITED)
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 nine
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 Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
DREYFUS AGGRESSIVE VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
The average daily amount of borrowings outstanding under both
arrangements during the period ended February 28, 1998 was approximately
$73,500 with a related weighted average interest rate of 6.07%.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .75 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
(b) Under the Shareholder Services Plan, the Fund 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 February 28, 1998, the Fund was charged
$198,883 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. During the
period ended February 28, 1998, the Fund was charged $69,249 pursuant to the
transfer agency agreement.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended February 28, 1998,
the Fund was charged $32,234 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) A 1% redemption fee is charged and retained by the Fund 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:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended February 28, 1998,
amounted to $137,335,438 and $135,196,242, respectively.
At February 28, 1998, accumulated net unrealized appreciation on
investments was $24,006,454, consisting of $25,935,254 gross unrealized
appreciation and $1,928,800 gross unrealized depreciation.
At February 28, 1998, 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).
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.
Registration Mark
[Dreyfus logo]
Aggressive Value
Fund
Semi-Annual
Report
February 28, 1998
DREYFUS MIDCAP VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
For the six months ended February 28, 1998, the Dreyfus Midcap Value Fund
produced a total return of 4.56%.* This was significantly behind the total
return of 13.06% for the Russell Midcap Index, which serves as your Fund's
benchmark index.**
The Fund's performance was adversely impacted by our underweight in
utilities and financials and our premature rotation to an overweight position
in technology. We boosted our technology weighting from close to a
market-weight position to a significant overweight early in the fourth
quarter following steep declines in many high quality technology companies.
Unfortunately, the problems in Asia have continued to accelerate, and
technology companies have a higher proportion of Asian exposure, leading to co
ntinued pressures on the group. Finance and utilities, on the other hand,
were viewed as safe havens with modest foreign exposure and a favorable
interest rate environment. We believe that many technology companies have
been oversold by the market. Energy stocks are becoming more intriguing to us
following a broad sell-off by the market.
Economic Review
Accumulating evidence indicates that the economy may have started a shift
toward slower growth this winter. Unlike the late phases of other postwar
business cycles, this year's shift to slower real economic growth is
occurring in tandem with decelerating price inflation. Hence, growth in the
nominal dollar economy (before adjusting for inflation), which determines
overall corporate revenues, could slow considerably. Meanwhile, wage growth
began to accelerate last fall. Slower revenue growth and rising costs have
begun to squeeze profit margins in some sectors, although overall corporate
profit growth has stayed positive. Earlier this year, the Federal Reserve
Board (the "Fed") shifted to a neutral policy stance, abandoning last year's
tightening bias. This stable policy has kept short-term rates steady,
thwarting market expectations for a sustained drop in long-term rates.
The shift to slower economic growth is not broad-based. Rather, the
available evidence shows that it predominantly affects manufacturers. This is
indicated by falling export orders, sluggish capital goods orders, weak
automobile production and a shorter manufacturing workweek. By contrast,
strength in the service-producing sector persists unabated. While employment
costs seem well controlled in the manufacturing sector, wages and benefits
paid to service sector workers began to accelerate last fall. The picture
emerging is of late-cycle inflation pressures developing for services in the
domestic economy alongside deterioration in the traded goods economy.
Overall corporate profits posted positive surprises throughout 1997. For
manufacturers, profits were boosted by strong demand as well as higher
productivity and lower unit labor costs. This year, many manufacturers face a
deterioration of their gross revenues. For service sector companies, last
year's profits were boosted by strong demand growth. This year, some service
companies may enjoy a window of opportunity to raise prices, but the risk to
profit growth is that power to counteract rising labor costs by raising
prices may be diminished.
The above hot and cold mix to slower economic growth has kept the Fed's
policy neutral, at least for now. Although long-term bond yields are below
year ago levels, substantially lower yields have proven difficult to attain
in the absence of lower short-term rates.
This kind of environment can foster a healthy economic outlook for the
long run, but may be vulnerable to short-term surprises.
Market Overview
Only four months after enduring the largest-ever one-day drop in the Dow
Jones Industrial Average, the stock market was back again setting new records
by the end of February.
The widely followed Dow Jones Industrials had broken new ground, and the
more widely based Standard & Poor's 500 Composite Stock Price Index had also
achieved a new record. Smaller stocks as represented by the Russell 2000 had
not recouped the ground lost last fall, and the NASDAQ Composite, while close
to its previous high, had not climbed all the way back. Yet signs of market
strength continued into early March, especially for the largest stocks.
How solid was this recovery from last October's lows? One lesson to be
learned was that the market was highly sensitive to any bad news, especially
about corporate profits. Despite the market's resilience, a number of stocks
- - particularly in the electronic sector - suffered reverses when companies
forecast lower earnings for the early months of 1998.
In late 1997, large stocks, particularly heavily capitalized global
corporations, had been depressed in price by the so-called "Asian flu" - the
severe financial problems affecting Japan, Korea, Singapore, Thailand,
Indonesia and the Philippines. In the new year, however, these companies
appeared to make an adjustment to the Asian problems. In addition, very large
companies were sought out by investors as offering a better refuge in
uncertain times than small and medium-sized companies.
And the weapons-inspection crisis with Iraq, though it eased with an
agreement at the close of the fiscal period, provided more reasons for
investors to seek out the large, well-established stocks.
As the stock market approached its spring quarter, there was no shortage
of reasons to worry whether the recent strength could be maintained. For one,
there was the ever-present fear that the Federal Reserve Board (the "Fed")
might try to curb ebullience in the market - and the U.S. economy - by
raising interest rates again. Also, there were predictions that the Asian flu
had yet to make its full force felt in the American economy. Then there were
the uncertainties brought on by the White House scandals, continued defiance
by Iraq's Saddam Hussein, and the advance shadow of the approaching midterm
elections.
Even though interest rates have crept up in early 1998, the average price
of stocks in the S&P 500 stood at 26 times operating earnings at the end of
February compared to 20.7 a year earlier. And the dividend yield of stocks in
the S&P 500 was at an all-time low of 1.51%.
Nonetheless, the resilience of the stock market was supported by a number
of impressive factors. Inflation is lower than at any time in a generation.
Interest rates, though edging higher, are low by most recent standards. And
corporate profits, though likely to be lower than last year, have still been
growing at double-digit rates. In addition, cash flows into mutual funds and
into stocks have been setting new records.
Market bears interpret these developments as signs that a market "top" is
close at hand. However, recent swings in stock prices indicate that many
investors still regard drops in the market as a good opportunity to acquire
more shares at reasonable prices.
Portfolio Focus
Our investment philosophy for the Dreyfus Midcap Value Fund (the "Fund")
focuses on identifying cheap stocks with positive short-term business trends
and solid long-term fundamentals. We examine many measures to identify cheap
stocks: Price/Earnings, Price/Book, Price/Sales, Enterprise Value/EBITDA and
Breakup Value are the most prevalent. We also pay close attention to
normalized earnings for cyclical industries. Our focus is on stocks that are
cheap compared to their own historical valuation ranges and against the
market as a whole.
While cheap stocks tend to offer less downside risk than the market as a
whole, our primary focus is on those stocks where business is getting better
and there is good potential for positive earnings surprises. We spend a lot
of time talking to managements of out-of-favor companies and industries in
order to identify positive turns in business trends before the
improvements become widely known by Wall Street. As holdings appreciate to
fair value, we sell them even if business conditions remain very favorable.
Our dedication to the "value" style of investing is of paramount importance.
In addition, our analysis is done on a stock-by-stock basis. Our sector
weightings result from detailed bottom-up analysis of individual securities.
To help control risk, generally we limit investments in individual securities
to 3% of the Fund, limit sector weightings to no more than 30% or 3 times the
weight in the Russell Midcap Index, and run a highly diversified portfolio
with over 100 names. We believe that this value-oriented and risk- averse
strategy is particularly well suited to today's expensive market environment.
We continue to identify numerous midcap stocks that we believe to be
attractively valued in the market, despite the broader market indices trading
at all-time highs. This is due to the considerable volatility in the prices
of individual securities. As investors become increasingly focused on the
short-term outlook for companies (i.e., next quarter's earnings
sustainability), they may be missing the long-term picture in the business
analysis. With a perspective that is both short- and long-term, value-oriented
, and research driven, we try to capitalize on the volatility in the current
stock market.
Sector Analysis
With a long held belief in a turnaround in the trucking/transport sector,
we are steadfast in our ownership of various truckload and
less-than-truckload carriers. Currently, this sector continues to have some
of the best earnings dynamics of any. We have held a large position in Yellow
for some time. While Yellow faces some short-term operating pressures, its
long-term outlook is very favorable due to material restructuring of its
operations and its balance sheet.
We continue to find promising earnings prospects in those companies with
economic exposure to an upturn in the California economy. Kaufman & Broad
Home, a California home builder, has benefited from a positive turn in orders
for new homes and improving profit margins. In addition, the Fund contains
several California savings and loan institutions which are seeing an
improvement in asset quality and loan demand.
We also continue to find many attractively valued stocks within the
consumer services and consumer nondurables sectors. There are numerous
examples of stocks that used to trade at very rich price/earnings multiples
that have been severely penalized by the market because of short-term
challenges or a modest deceleration of growth. Yet many of these companies
are high quality, consistent long-term growers. We have taken advantage of
market overreactions to add stocks such as Gymboree and Tommy Hilfiger to the
Fund. More recently, Tommy Hilfiger's stock has reacted very favorably to
improving business trends and a corporate restructuring.
For several years, financial stocks have benefited from a very favorable
interest rate environment and a consolidation trend in the banking sector.
However, valuation levels for many companies are extremely high when compared
to historical valuation metrics. For that reason, we have modestly reduced
our exposure to this group as valuation multiples expand, even though
business momentum remains solid.
Utilities were among the best performing stocks at the end of 1997. This
was driven by falling interest rates and, more importantly, investors seeking
safe havens from the risks of earnings disappointments due to the Asian
crisis. While such defensive tendencies can continue to drive utilities
higher, our investment in the group is minimal because growth prospects are
anemic, business momentum is neutral, and political risk is high.
Technology and Energy
We have substantially raised our weighting in technology following the
severe decline experienced by the sector due to concerns about Asia. While it
is true that many technology companies have a higher concentration of sales
in Asia than most other companies, the decline in the prices of many high
quality, high growth enterprises has been too severe, in our
opinion. Many technology issues are trading at levels close to their all-time
lows on many valuation measures. There are some short-term business risks for
many of these companies, particularly if Asia continues to deteriorate, yet
the upside potential of the stocks is quite considerable once all of the bad
news out of Asia has been fully discounted in the stock prices. It is our
contention that we are getting closer to that point.
Energy stock valuations have become very compelling after significantly
trailing the market in 1997. Most exploration and production (E&P) companies
trade at the low end of historical valuation ranges. For the most part, this
is due to falling energy prices. We do not try to forecast energy prices.
While these fluctuate, we are comforted by the very low valuations and strong
production growth characteristics of the E&P companies recently added to the
Fund.
Until recently, we were underweight in health care, but we took advantage
of the recent sell-off in HMOs and long-term health care companies to buy
franchises that became too cheap to ignore. While questions remain about
HMOs' recent deterioration in medical loss ratios, the fact remains that HMOs
will continue to grow dramatically as they continue to take market share from
traditional indemnity programs. There is also a trend towards consolidation,
which could help mid-sized companies within the sector. Two names that were
added recently are Wellpoint Health Networks and Foundation Health, both of
which were trading near their 52-week lows.
We believe that in due course, the investment philosophy that we follow
will prove itself once again. It is a pleasure and a privilege to serve your
investment needs.
Sincerely,
[Peter I. Higgins signature logo]
Peter I. Higgins
Portfolio Manager
March 20, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Russell Midcap Index
consists of the bottom 800 securities in the Russell 1000 Index as
ranked by total market capitalization and is a widely accepted measure
of medium-cap stock market performance.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks-99.4% Shares Value
____________ ____________
<S> <C> <C> <C>
Basic Industries-5.0% Cyprus Amax Minerals (a) 31,300 $ 512,537
Goodrich (B.F.) 22,300 1,105,244
Guilford Mills 51,700 1,466,988
Inco 48,200 852,537
Mallinckrodt Group (a) 36,300 1,408,894
Stone Container (a) 111,800 1,257,750
_____________
6,603,950
_____________
Capital Goods-8.5% AGCO 59,800 1,681,875
Alliant Techsystems (a) 19,500 1,224,844
CHS Electronics (a) 20,300 418,687
Federal-Mogul 40,000 1,962,500
Fluor 30,800 1,449,525
New Holland (a) 71,200 1,762,200
Newport News Shipbuilding 48,300 1,316,175
York International (a) 34,100 1,498,269
_____________
11,314,075
_____________
Capital Spending-.8% DSC Communications (a) 56,000 1,099,000
_____________
Consumer Cyclical-12.7% ACNielsen (a) 100,800 2,520,000
BJ's Wholesale Club (a) 26,600 901,075
Consolidated Stores (a) 34,200 1,406,475
Lone Star Steakhouse/Saloon (a) 41,700 878,306
Mirage Resorts (a) 64,200 1,468,575
Nine West Group 58,500 1,608,750
OfficeMax (a) 32,000 534,000
Talbots 18,300 325,969
Tommy Hilfiger (a) 61,000 3,267,313
Tricon Global Restaurants (a) 64,000 1,816,000
Woolworth (a) 61,900 1,470,125
Young Broadcasting, Cl. A (a) 14,300 632,775
_____________
16,829,363
_____________
Consumer Durables-5.4% Black & Decker 13,500 680,063
Kaufman & Broad Home 90,600 2,344,275
Lear (a) 22,900 1,210,837
Pulte 37,600 1,710,800
Whirlpool 17,000 1,135,813
_____________
7,081,788
_____________
Consumer Non-Durables-8.0% Ball 77,600 2,531,700
Department 56 (a) 40,000 1,317,500
Furniture Brands International (a) 43,700 1,196,288
Harcourt General 17,800 961,200
Perrigo (a) 41,600 447,200
Phillips-Van Heusen 47,100 612,300
Ralcorp Holdings (a) 31,900 540,306
Dreyfus Midcap Value Fund
Statement of Investments (continued) February 28, 1998 (Unaudited)
Common Stocks (continued) Shares Value
____________ ____________
Consumer Non-Durables
(continued) Unisource Worldwide 137,500 $ 1,873,438
Vitro, A.D.S. (a) 96,900 1,096,181
_____________
10,576,113
_____________
Consumer Services-7.8% Apple South 93,500 1,273,937
Applebee's International (a) 39,400 906,200
Footstar (a) 50,200 1,506,000
Gymboree (a) 62,000 1,666,250
MGM Grand (a) 33,600 1,213,800
Micro Warehouse (a) 37,500 515,625
Saks Holdings (a) 47,100 1,230,488
Sunglass Hut International (a) 133,000 947,625
True North Communications 42,000 1,084,125
_____________
10,344,050
_____________
Energy-6.2% Devon Energy (a) 17,000 579,063
Enron Oil & Gas (a) 38,100 814,387
Newfield Exploration (a) 16,800 403,200
Oryx Energy (a) 48,500 1,233,719
Santa Fe Energy Resources (a) 120,200 1,344,738
Tosco 21,500 798,187
Valero Energy 55,400 1,966,700
Vintage Petroleum (a) 51,700 1,037,231
_____________
8,177,225
_____________
Finance-12.7% Ahmanson (H.F.) & Co. 42,100 2,628,619
Allmerica Financial 63,800 3,923,700
Astoria Financial 27,500 1,536,563
CIT Group, Cl. A (a) 21,100 696,300
City National 17,500 650,781
Dime Bancorp 41,800 1,274,900
Everest Reinsurance Holdings 49,700 1,832,687
Golden State Bancorp (a) 67,500 2,404,687
TIG Holdings 67,800 1,800,938
_____________
16,749,175
_____________
Health Care-7.8% Beckman Instruments (a) 68,400 3,308,850
Foundation Health (a) 38,500 1,065,969
Quest Diagnostics (a) 130,600 2,024,300
Vencor (a) 23,400 671,287
Wellpoint Health Networks (a) 56,000 3,272,500
_____________
10,342,906
_____________
Dreyfus Midcap Value Fund
Statement of Investments (continued) February 28, 1998 (Unaudited)
Common Stocks (continued) Shares Value
_____________ _____________
Technology-21.0% ANTEC (a) 39,700 $ 468,956
AVX 16,600 374,537
Adaptec (a) 46,900 1,239,919
Atmel (a) 24,300 394,875
BancTec (a) 11,000 282,562
Cabletron Systems (a) 34,400 533,200
Commscope (a) 28,200 377,175
Cypress Semiconductor (a) 56,800 536,050
Electroglas (a) 22,500 416,250
General Semiconductor (a) 51,950 724,053
Imation (a) 40,400 679,225
KEMET (a) 62,200 1,321,750
KLA-Tencor (a) 38,800 1,790,863
Lam Research (a) 95,500 2,709,812
Learning Company (a) 140,900 2,395,300
NCR (a) 40,200 1,261,275
Oak Industries (a) 50,200 1,540,513
Quantum (a) 35,400 889,425
Read-Rite (a) 56,100 799,425
Scientific-Atlanta 66,000 1,155,000
Silicon Valley Group (a) 33,100 901,975
Symantec (a) 131,600 3,314,675
Teradyne (a) 26,800 1,264,625
Vishay Intertechnology (a) 83,000 1,691,125
Western Digital (a) 42,200 770,150
_____________
27,832,715
_____________
Transportation-2.9% Atlas Air (a) 38,800 1,154,300
KLM Royal Dutch Air (a) 222 8,131
Yellow (a) 125,400 2,641,237
_____________
3,803,668
_____________
Utilities-.6% CalEnergy (a) 28,300 758,794
_____________
TOTAL COMMON STOCKS
(cost $126,121,241) $131,512,822
=============
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998 (UNAUDITED)
Principal
Short-Term Investments-1.0% Amount Value
_____________ _____________
U.S. Treasury Bills: 5.03%, 3/5/98 (b) $ 81,000 $ 80,945
5.26%, 4/23/98 942,000 934,568
4.96%, 4/30/98 297,000 294,368
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $1,310,203) $ 1,309,881
=============
TOTAL INVESTMENTS
(cost $127,431,444) 100.4% $132,822,703
====== =============
LIABILITIES, LESS CASH & RECEIVABLES (.4%) $ (529,908)
====== =============
NET ASSETS 100.0% $132,292,795
====== =============
Notes to Statement of Investments:
(a) Non-income producing.
(b) Partially held by broker as collateral for open short positions.
STATEMENT OF SECURITIES SOLD SHORT FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks Shares Value
________ ________
Bowne & Co 1,500 $63,563
OEA 800 16,950
Quanex 500 16,562
________
TOTAL SECURITIES SOLD SHORT
(proceeds $82,244) $97,075
========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $127,431,444 $132,822,703
Cash 37,564
Receivable for investment securities sold 2,302,227
Receivable from brokers for proceeds on
securities sold short 82,244
Dividends and interest receivable 81,032
Receivable for shares of Common Stock subscribed 80,809
Prepaid expenses 33,170
_____________
135,439,749
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 96,150
Due to Distributor 24,788
Payable for investment securities purchased 2,471,593
Securities sold short, at value
(proceeds $82,244)-see statement 97,075
Payable for shares of Common Stock redeemed 402,169
Accrued expenses 55,179
_____________
3,146,954
_____________
NET ASSETS $132,292,795
=============
REPRESENTED BY: Paid-in capital $123,001,049
Accumulated investment (loss) (337,839)
Accumulated net realized gain (loss) on investments 4,253,157
Accumulated net unrealized appreciation (depreciation)
on investments and securities sold short-Note 4(b) 5,376,428
_____________
NET ASSETS $132,292,795
=============
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized) 5,976,059
NET ASSET VALUE, offering and redemption price per share-Note 3(d) $22.14
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $3,650 foreign taxes withheld
<S> <C> <C>
at source) $ 415,522
Interest 57,420
___________
Total Income $ 472,942
EXPENSES: Management fee-Note 3(a) 442,353
Shareholder servicing costs-Note 3(b) 240,268
Registration fees 37,792
Professional fees 17,191
Prospectus and shareholders' reports 11,878
Custodian fees-Note 3(b) 10,797
Interest expense-Note 2 5,053
Directors' fees and expenses-Note 3(c) 3,775
Dividends on securities sold short 694
Loan commitment fees-Note 2 108
Miscellaneous 1,630
___________
Total Expenses 771,539
___________
INVESTMENT (LOSS). (298,597)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments $5,527,803
Net unrealized appreciation (depreciation) on investments
and securities sold short (801,139)
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 4,726,664
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,428,067
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
_________________ _______________
<S> <C> <C>
OPERATIONS:
Investment (loss) $ (298,597) $ (34,284)
Net realized gain (loss) on investments 5,527,803 4,862,897
Net unrealized appreciation (depreciation) on investments (801,139) 6,128,925
_________________ _______________
Net Increase (Decrease) in Net Assets Resulting from Operations 4,428,067 10,957,538
_________________ _______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net -- (14,466)
Net realized gain on investments (6,040,421) (632,898)
_________________ _______________
Total Dividends (6,040,421) (647,364)
_________________ _______________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold 97,858,601 87,803,219
Dividends reinvested 5,763,242 637,529
Cost of shares redeemed (51,210,833) (20,848,171)
_________________ _______________
Increase (Decrease) in Net Assets from Capital Stock Transactions 52,411,010 67,592,577
_________________ _______________
Total Increase (Decrease) in Net Assets 50,798,656 77,902,751
NET ASSETS:
Beginning of Period 81,494,139 3,591,388
_________________ _______________
End of Period $ 132,292,795 $ 81,494,139
================= =================
Investment (loss) $ (337,839) $ (39,242)
_________________ _______________
Shares Shares
_________________ _______________
CAPITAL SHARE TRANSACTIONS:
Shares sold 4,402,557 4,544,579
Shares issued for dividends reinvested 274,702 37,348
Shares redeemed. (2,367,484) (1,142,930)
_________________ _______________
Net Increase (Decrease) in Shares Outstanding 2,309,775 3,438,997
================= =================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MIDCAP 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.
Six Months Ended
February 28, 1998 Year Ended August 31,
_____________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
__________ ______ ______
<S> <C> <C> <C>
Net asset value, beginning of period $22.23 $15.80 $12.50
______ ______ ______
Investment Operations:
Investment income (loss)-net (.05) (.01) .08
Net realized and unrealized gain (loss)
on investments 1.01 8.23 3.28
______ ______ ______
Total from Investment Operations .96 8.22 3.36
______ ______ ______
Distributions:
Dividends from investment income-net -- (.04) (.04)
Dividends from net realized gain on investments (1.05) (1.75) (.02)
______ ______ ______
Total Distributions (1.05) (1.79) (.06)
______ ______ ______
Net asset value, end of period $22.14 $22.23 $15.80
====== ====== ======
TOTAL INVESTMENT RETURN 4.56%(2) 55.45% 26.88%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets .64%(2) 1.25% 1.18%(2)
Ratio of interest expense, loan commitment fees
and dividends on securities sold short
to average net assets .01%(2) .01% .01%(2)
Ratio of net investment income (loss)
to average net assets (.25%)(2) (.14%) .56%(2)
Decrease reflected in above expense ratios
due to undertaking by the Manager -- .26% 1.13%(2)
Portfolio Turnover Rate 71.49%(2) 154.92% 266.80%(2)
Average commission rate paid (3) $.0571 $.0502 $.0478
Net Assets, end of period (000's Omitted) $132,293 $81,494 $3,591
(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 ecurities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS MIDCAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-Significant Accounting Policies:
Dreyfus Midcap 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 nine series,
including the Fund. The Fund's investment objective is to provide investment
results that exceed the total return performance of publicly traded common
stocks in the aggregate, as represented by a recognized index of mid cap
stocks. 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 funds' 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.
(b) 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.
(c) 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.
(d) 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 $10 million for leveraging purposes under a
short-term unsecured line of credit and participates with other
Dreyfus-managed funds in a $100 million unsecured line of credit primarily to
be utilized for temporary or emergency purposes, including the financing of
redemptions. Interest is charged to the Fund at rates which are related to
the Federal Funds rate in effect at the time of borrowings.
The average daily amount of borrowings outstanding under both
arrangements during the period ended February 28, 1998 was approximately
$167,000, with a related weighed average annualized interest rate of 6.11%.
Dreyfus Midcap Value Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 3-Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .75 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
(b) Under the Shareholder Services Plan, the Fund 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 February 28, 1998, the Fund was charged
$147,451 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. During the
period ended February 28, 1998, the Fund was charged $42,680 pursuant to the
transfer agency agreement.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended February 28,1998,
the Fund was charged $10,797 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) A 1% redemption fee is charged and retained by the Fund 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,
excluding short-term securities, during the period ended February 28, 1998
amounted to $130,247,043 and $82,855,175, respectively.
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 the custodian, of
cash and/or U.S. Government securities sufficient to cover its short
position. Securities sold short at February 28, 1998 and their related market
values and proceeds are set forth in the Statement of Securities Sold Short.
(b) At February 28,1998, accumulated net unrealized appreciation on
investments and securities sold short was $5,376,428, consisting of
$11,280,090 gross unrealized appreciation and $5,903,662 gross unrealized
depreciation.
At February 28, 1998, 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).
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS MIDCAP 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.
Registration Mark
[Dreyfus logo]
Midcap Value
Fund
Semi-Annual
Report
February 28, 1998
DREYFUS EMERGING LEADERS FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this semi-annual report for Dreyfus
Emerging Leaders Fund for the six-month period ended February 28, 1998. Over
this period, your Fund produced a robust total return of 15.81%,* which
compares with a total return of 9.64% for our benchmark, the Russell 2000
Index.**
Economic Review
Accumulating evidence indicates that the economy may have started a shift
toward slower growth this winter. Unlike the late phases of other postwar
business cycles, this year's shift to slower real economic growth is
occurring in tandem with decelerating price inflation. Hence, growth in the
nominal dollar economy (before adjusting for inflation), which determines
overall corporate revenues, could slow considerably. Meanwhile, wage growth
began to accelerate last fall. Slower revenue growth and rising costs have
begun to squeeze profit margins in some sectors, although overall corporate
profit growth has stayed positive. Earlier this year, the Federal Reserve
Board (the "Fed") shifted to a neutral policy stance, abandoning last year's
tightening bias. This stable policy has kept short-term rates steady,
thwarting market expectations for a sustained drop in long-term rates.
The shift to slower economic growth is not broad-based. Rather, the
available evidence shows that it predominantly affects manufacturers. This is
indicated by falling export orders, sluggish capital goods orders, weak
automobile production and a shorter manufacturing workweek. By contrast,
strength in the service-producing sector persists unabated. While employment
costs seem well controlled in the manufacturing sector, wages and benefits
paid to service sector workers began to accelerate last fall. The picture
emerging is of late-cycle inflation pressures developing for services in the
domestic economy alongside deterioration in the traded goods economy.
Overall corporate profits posted positive surprises throughout 1997. For
manufacturers, profits were boosted by strong demand as well as higher
productivity and lower unit labor costs. This year, many manufacturers face a
deterioration of their gross revenues. For service sector companies, last
year's profits were boosted by strong demand growth. This year, some service
companies may enjoy a window of opportunity to raise prices, but the risk to
profit growth is that power to counteract rising labor costs by raising
prices may be diminished.
The above hot and cold mix to slower economic growth has kept the Fed's
policy neutral, at least for now. Although long-term bond yields are below
year ago levels, substantially lower yields have proven difficult to attain
in the absence of lower short-term rates.
This kind of environment can foster a healthy economic outlook for the
long run, but may be vulnerable to short-term surprises.
Market Overview
Only four months after enduring the largest-ever one-day drop in the Dow
Jones Industrial Average, the stock market was back again setting new records
by the end of February.
The widely followed Dow Jones Industrials had broken new ground, and the
more widely based Standard & Poor's 500 Composite Stock Price Index (the "S&P
500")had also achieved a new record. Smaller stocks as represented by the
Russell 2000 had not recouped the ground lost last fall, and the NASDAQ
Composite, while close to its previous high, had not climbed all the way
back. Yet signs of market strength continued into early March, especially for
the largest stocks.
How solid was this recovery from last October's lows? One lesson to be
learned was that the market was highly sensitive to any bad news, especially
about corporate profits. Despite the market's resilience, a number of stocks
- - particularly in the electronic sector - suffered reverses when companies
forecast lower earnings for the early months of 1998.
In late 1997, large stocks, particularly heavily capitalized global
corporations, had been depressed in price by the so-called "Asian flu" - the
severe financial problems affecting Japan, Korea, Singapore, Thailand,
Indonesia and the Philippines. In the new year, however, these companies
appeared to make an adjustment to the Asian problems. In addition, very large
companies were sought out by investors as offering a better refuge in
uncertain times than small and medium-sized companies.
And the weapons-inspection crisis with Iraq, though it eased with an
agreement at the close of the fiscal period, provided more reasons for
investors to seek out the large, well-established stocks.
As the stock market approached its spring quarter, there was no shortage
of reasons to worry whether the recent strength could be maintained. For one,
there was the ever-present fear that the Fed might try to curb ebullience in
the market - and the U.S. economy - by raising interest rates again. Also,
there were predictions that the Asian flu had yet to make its full force felt
in the American economy. Then there were the uncertainties brought on by the
White House scandals, continued defiance by Iraq's Saddam Hussein, and the
advance shadow of the approaching mid-term elections.
Even though interest rates have crept up in early 1998, the average price
of stocks in the S & P 500 stood at 26 times operating earnings at the end of
February compared to 20.7 a year earlier. And the dividend yield of stocks in
the S & P 500 was at an all-time low of 1.51%.
Nonetheless, the resilience of the stock market was supported by a number
of impressive factors. Inflation is lower than at any time in a generation.
Interest rates, though edging higher, are low by most recent standards. And
corporate profits, though likely to be lower than last year, have still been
growing at double-digit rates. In addition, cash flows into mutual funds and
into stocks have been setting new records.
Market bears interpret these developments as signs that a market "top" is
close at hand. However, recent swings in stock prices indicate that many
investors still regard drops in the market as a good opportunity to acquire
more shares at reasonable prices.
Portfolio Focus
We have now assembled a group of companies that we consider to be truly
emerging leaders. Their performance, combined with favorable market
conditions, have enabled your Fund to once again outperform the Russell 2000,
which is our benchmark.
The Dreyfus Emerging Leaders Fund primarily invests in the equity
securities of domestic and foreign issuers, typically with market
capitalizations of less than $1.0 billion, which we believe will be the
industry leaders of the future. The Fund strives to deliver balanced
performance throughout all market cycles using a blended approach of growth
and value investing. The Fund primarily looks for companies that have
dominant market positions within major product lines, sustained records of
achievement and strong financial conditions, and/or are low-cost producers.
Last, the Fund looks for companies with new or innovative products, services
or processes which we believe will enhance prospects for greater earnings
growth in the future.
1997 was the third year in a row when the smaller stocks of the Russell
2000 Index underperformed the more popular S&P 500. This pattern has
continued into 1998 with the 5.7% return of the Russell 2000 lagging the 8.1%
return posted by the S&P 500 for the first two months of this year. Small-cap
stocks dramatically outperformed the S&P 500 for a period last year when
investors recognized that these younger companies possessed superior profit
growth vis-a-vis larger-cap stocks and that they would have less impact from
a stronger U.S. dollar, considering that multinational companies derive a
greater percentage of their sales from overseas. Unfortunately the Asian
crisis intervened, which caused investors to become more risk-averse and
concerned about the illiquidity of small-cap stocks. We remain optimistic about
small caps, however, because we anticipate that the market will ultimately be
disappointed by the impact that the Asian crisis will have on the earnings of
the large multinationals.
The strong domestic economy made stocks in the consumer group the largest
contributor to your Fund's and the Index's performance during the six-month
period. The performance in this sector was led by billboard companies,
Universal Outdoor Holdings and Lamar Advertising. Universal Outdoor Holdings
is in the process of being acquired by radio and billboard consolidator Clear
Channel Communications. Another holding, Arbor Drugs, was acquired by CVS
during the quarter. Like most retailers, home furnishing retailer Pier 1
Imports benefited from the nation's high consumer confidence and employment.
Disappointing investments were The Bombay Company, a furniture retailer whose
turnaround required market acceptance of a new line which didn't happen, and
Applebee's International, a restaurateur that experienced growing pains.
A benign interest rate scenario combined with rapid industry
consolidation made the financial services sector the second best contributor
to your Fund's performance. Doral Financial, a Puerto Rican specialty finance
company, was the biggest winner in this category, followed by Fremont
General, a leading writer of worker's compensation insurance, and Avis Rent A
Car. The stock of Frontier Insurance Group, your Fund's best performing stock
last year, was a losing position in this period as the company's founder and
chairman passed away and the company had to add to its reserves. Banco
Latinoamericano de Exportaciones, S.A. Cl.E got caught in the cross-currents
of emerging market lending.
Technology was a sector where we enjoyed considerable success, all the
sweeter because this sector was the second worst performer in the Index. U.S.
Web, a provider of internet consulting services, was the standout performer
in this sector and for your Fund. Also aiding the Fund during the period were
Concord Communications, supplier of network analysis software, and MMC
Networks, a semiconductor manufacturer. Our misjudgments along the way
included VIASOFT, a supplier of software to solve the Year 2000 problem; PRI
Automation, a manufacturer of semiconductor capital equipment; and Xylan, a
producer of computer switching systems.
We were pleased that our selections in the health care sector materially
outperformed the benchmark. The winner was Sepracor, where investors
recognized the company's expertise in developing improved versions of
existing drugs. Novoste, a development stage company focusing on the use of
radiation therapy, and IDEC Pharmaceuticals, whose Ritxuxan is a leading
product for the treatment of lymphoma, also captured investors' attention.
Health care stocks which we mistimed were Bone Care International and Magellan
Health Services.
The material and processing segment provided rewarding performance for
both your Fund and the index. Most serendipitous was our timely investment in
Culligan Water Technologies, which U.S. Filter agreed to acquire at a
substantial premium. Casella Waste Systems, Cl.A has been successful as a
rapidly growing consolidator of New England solid waste companies. OM Group
is in the top quintile of volume growth among specialty chemical companies,
and saw its stock price reflect its progress. Linerboard producer Gaylord
Container Cl.A was our only loser in this category. The Asian crisis dampened
cyclical recovery in this global grade of paper.
After two stupendous years of gangbuster investments coming out of the
oil patch, energy investments hit a wall during this period. Seasonal and
macro economic events overwhelmed the efforts exerted by the managements of
our companies to grow shareholder value. Solid gains were achieved by
oilfield service providers Pride International and Coflexip, A.D.R; however,
these stocks were offset by a poorly timed secondary offering in oilfield
services company Superior Energy Services. In addition, investors took
profits in three of our big winners from last year: Ocean Energy, a Louisiana
exploration and production outfit; oilfield-service vessel boat builder
Halter Marine Group and offshore construction producer Global Industries.
Our stock selections in producer durables, autos and transportation, and
utilities generally added to your Fund's performance, but did not outperform
their respective benchmark sectors.
It is incumbent upon us as we progress through 1998 to be somewhat
skeptical. It has escaped neither us nor our shareholders that we have just
completed three record-setting years in the stock market and are off to a
good start this year as well. Selectivity and sticking to our time-tested
money management disciplines will be critical in 1998. We want to assure you
that we have the people and the processes in place that should generate
competitive returns in the coming year.
Sincerely, Sincerely,
[Hilary R. Woods signature} [Paul Kandel signature]
Hilary R. Woods Paul Kandel
Portfolio Manager Portfolio Manager
March 18, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment
if income dividends and, where applicable, capital gain distributions. The
Russell 2000 Index is a widely accepted unmanaged index of small cap stock
performance.
<TABLE>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks-94.6% Shares Value
_____________ _____________
<S> <C> <C>
Commercial Services-3.0% Lamar Advertising, Cl. A...............(a) 42,500 $ 2,143,594
Universal Outdoor Holdings.............(a) 35,000 2,100,000
_____________
4,243,594
_____________
Consumer Durables-5.2% D.R. Horton.............................. 90,000 2,098,125
Helen of Troy..........................(a) 120,000 1,837,500
Mohawk Industries......................(a) 61,700 1,619,625
Sola International.....................(a) 50,000 1,896,875
_____________
7,452,125
_____________
Consumer Non-Durables-1.3% Movado Group.............................. 85,000 1,827,500
_____________
Consumer Services-6.7% Cinar Films, Cl. B.....................(a) 50,000 1,850,000
Guilford Mills............................ 60,000 1,702,500
Harte-Hanks Communications................ 50,000 2,171,875
Rio Hotel & Casino.....................(a) 75,000 2,132,812
Westwood One...........................(a) 55,000 1,705,000
_____________
9,562,187
_____________
Electronic Technology-11.2% CheckFree Holdings.....................(a) 60,000 1,290,000
Concord Communications................ (a) 75,000 2,156,250
Corsair Communications.................(a) 90,000 1,845,000
Esterline Technologies.................(a) 44,500 1,752,187
Gerber Scientific...................... 90,000 1,783,125
Information Storage Devices............(a) 135,000 995,625
Jabil Circuit..........................(a) 35,000 1,841,875
Level One Communications...............(a) 40,000 1,797,500
Thiokol................................... 22,500 2,151,563
Visual Networks........................(a) 20,000 402,500
_____________
16,015,625
_____________
Energy Minerals-2.3% Ocean Energy...........................(a) 35,000 1,636,250
Pride International....................(a) 75,000 1,710,937
_____________
3,347,187
_____________
Finance-19.8% Amerin.................................(a) 60,000 1,755,000
ARM Financial Group....................... 67,000 1,524,250
Banco Latinoamericano de Exportaciones, S.A., Cl. E 42,500 1,734,531
Berkley (W.R.)............................ 42,500 1,939,063
Doral Financial........................... 85,000 2,295,000
Downey Financial.......................... 60,000 1,755,000
Enhance Financial Services Group.......... 31,000 1,923,937
Fremont General........................... 30,000 1,760,625
Hamilton Bancorp.......................(a) 55,000 1,760,000
Haven Bancorp............................. 85,000 2,082,500
NAC Re.................................... 34,000 1,748,875
DREYFUS EMERGING LEADERS FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
_____________ _____________
Finance (continued).... Penn-America Group........................ 87,000 $ 1,990,125
RenaissanceRe Holdings.................... 38,500 1,669,938
SL Green Realty........................... 57,500 1,527,344
Sterling Bancshares....................... 68,400 1,026,000
Terra Nova (Bermuda) Holdings, Cl. A...... 65,000 1,856,563
_____________
28,348,751
_____________
Health Services-1.8% First Consulting Group.................(a) 25,000 468,750
IDX Systems............................(a) 50,000 2,068,750
_____________
2,537,500
_____________
Health Technology-8.8% AXYS Pharmaceuticals...................(a) 180,000 1,530,000
Cygnus.................................(a) 110,000 1,959,375
DUSA Pharmaceuticals...................(a) 145,000 1,803,438
Gilead Sciences........................(a) 52,500 1,880,156
IDEC Pharmaceuticals...................(a) 40,000 1,815,000
Novoste................................(a) 60,000 1,777,500
Pharmacyclics..........................(a) 70,000 1,828,750
_____________
12,594,219
_____________
Industrial Services-3.7% Culligan Water Technologies............(a) 31,000 1,786,375
Global Industries......................(a) 113,500 1,957,875
Marine Drilling........................(a) 87,000 1,560,563
_____________
5,304,813
_____________
Process Industries-7.5% AptarGroup................................ 31,500 1,817,156
Casella Waste Systems, Cl. A...........(a) 75,000 1,828,125
Gaylord Container, Cl. A...............(a) 200,000 1,325,000
Intertape Polymer Group................... 83,000 1,815,625
OM Group.................................. 47,500 2,110,781
Westpoint Stevens......................(a) 35,000 1,868,125
_____________
10,764,812
_____________
Producer Manufacturing-8.9% DeCrane Aircraft Holdings..............(a) 101,000 1,805,375
Halter Marine Group....................(a) 80,000 1,570,000
Reliance Steel & Aluminum................. 52,500 1,850,625
Titan International....................... 90,000 1,687,500
Triumph Group..........................(a) 50,000 2,150,000
Watts Industries, Cl. A................... 62,500 1,878,906
Wyman-Gordon...........................(a) 90,000 1,800,000
_____________
12,742,406
_____________
Retail Trade-2.9% Arbor Drugs............................... 97,500 2,291,250
Pier 1 Imports......................... 70,000 1,872,500
_____________
4,163,750
_____________
DREYFUS EMERGING LEADERS FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
_____________ _____________
Technology Services-8.0% Check Point Software Technologies......(a) 45,000 $ 1,735,312
CNET...................................(a) 50,000 1,812,500
Legato Systems.........................(a) 42,000 2,058,000
Secure Computing.......................(a) 112,500 1,293,750
Software AG Systems....................(a) 100,000 1,937,500
USWeb..................................(a) 135,000 2,531,250
_____________
11,368,312
_____________
Transportation-1.4% Expeditors International of Washington.... 50,000 2,025,000
_____________
Utilities-2.1% Eastern Enterprises....................... 36,500 1,617,406
Sierra Pacific Resources.................. 38,500 1,381,188
_____________
2,998,594
_____________
TOTAL COMMON STOCKS
(cost $108,613,437)..................... $135,296,375
=============
Principal
Short-Term Investments-6.4% Amount
_____________
U.S. Treasury Bills: 5%, 4/9/98................................ $ 1,260,000 $ 1,252,932
5.19%, 4/23/98............................ 7,994,000 7,930,927
4.96%, 4/30/98............................ 35,000 34,690
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $9,220,866)....................... $ 9,218,549
=============
TOTAL INVESTMENTS (cost $117,834,303).......................................... 101.0% $144,514,924
======= =============
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (1.0%) $(1,444,813)
======= =============
NET ASSETS..................................................................... 100.0% $143,070,111
======= =============
Notes to Statement of Investments:
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $117,834,303 $144,514,924
Cash....................................... 339,564
Receivable for investment securities sold.. 2,009,308
Dividends and interest receivable.......... 71,376
Receivable for shares of Common Stock subscribed 57,167
Prepaid expenses........................... 36,321
____________
147,028,660
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 105,213
Due to Distributor......................... 26,130
Payable for investment securities purchased 2,039,586
Payable for shares of Common Stock redeemed 1,736,041
Accrued expenses........................... 51,579
_____________
3,958,549
_____________
NET ASSETS.................................................................. $143,070,111
=============
REPRESENTED BY: Paid-in capital............................ $110,355,572
Accumulated investment (loss).............. (906,484)
Accumulated net realized gain (loss) on investments 6,940,402
Accumulated net unrealized appreciation (depreciation)
on investments-Note 4(b) 26,680,621
_____________
NET ASSETS.................................................................. $143,070,111
=============
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized)............. 5,454,226
NET ASSET VALUE, offering and redemption price per share-Note 3(d).......... $26.23
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $1,700 foreign taxes
<S> <C> <C>
withheld at source).............. $ 272,931
Interest............................. 173,155
____________
Total Income................... $ 446,086
EXPENSES: Management fee-Note 3(a)............. 566,887
Shareholder servicing costs-Note 3(b) 231,424
Registration fees.................... 41,532
Professional fees.................... 17,941
Directors' fees and expenses-Note 3(c) 17,478
Custodian fees-Note 3(b)............. 9,048
Prospectus and shareholders' reports. 5,876
Loan commitment fees-Note 2.......... 374
Miscellaneous........................ 499
____________
Total Expenses................. 891,059
_______
INVESTMENT (LOSS)..................................................... (444,973)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments $11,722,351
Net unrealized appreciation (depreciation)
on investments................... 6,019,229
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................ 17,741,580
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $17,296,607
============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS EMERGING LEADERS FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
_________________ _______________
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net...................................... $ (444,973) $ (461,684)
Net realized gain (loss) on investments........................... 11,722,351 9,623,622
Net unrealized appreciation (depreciation) on investments......... 6,019,229 17,061,108
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations. 17,296,607 26,223,046
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized gain on investments.................................. (12,996,733) (3,665,787)
_____________ _____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold..................................... 74,556,566 121,713,698
Dividends reinvested.............................................. 12,657,352 3,575,813
Cost of shares redeemed........................................... (52,924,758) (80,572,147)
_____________ _____________
Increase (Decrease) in Net Assets from Capital Stock Transactions 34,289,160 44,717,364
_____________ _____________
Total Increase (Decrease) in Net Assets..................... 38,589,034 67,274,623
NET ASSETS:
Beginning of Period............................................... 104,481,077 37,206,454
_____________ _____________
End of Period..................................................... $143,070,111 $104,481,077
============= =============
Investment (loss)..................................................... $ (906,484) $ (461,511)
============= =============
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold....................................................... 2,849,293 5,846,639
Shares issued for dividends reinvested............................ 528,270 181,883
Shares redeemed................................................... (2,074,982) (3,869,328)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding................... 1,302,581 2,159,194
============= =============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS EMERGING LEADERS 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.
Six Months Ended
February 28, 1998 Year Ended August 31,
________________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
__________ _______ _______
<S> <C> <C> <C>
Net asset value, beginning of period............... $25.17 $18.67 $12.50
__________ _______ _______
Investment Operations:
Investment income (loss)-net....................... (.06) (.11) .03
Net realized and unrealized gain (loss) on investments 3.79 8.02 6.17
__________ _______ _______
Total from Investment Operations................... 3.73 7.91 6.20
__________ _______ _______
Distributions:
Dividends from investment income-net............... -- -- (.03)
Dividends from net realized gain on investments.... (2.67) (1.41) --
__________ _______ _______
Total Distributions................................ (2.67) (1.41) (.03)
__________ _______ _______
Net asset value, end of period..................... $26.23 $25.17 $18.67
========== ======= =======
TOTAL INVESTMENT RETURN................................ 15.81%(2) 44.45% 46.09%(2,3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ .70%(2) 1.39% 1.16%(2)
Ratio of net investment income (loss)
to average net assets............................ (.35)%(2) (.62%) .09%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager and earnings credits -- .09% .36%(2)
Portfolio Turnover Rate............................ 92.77%(2) 197.99% 203.66%(2)
Average commission rate paid(4).................... $.0566 $.0586 $.0554
Net Assets, end of period (000's Omitted).......... $143,070 $104,481 $37,206
(1) From September 28, 1995 (commencement of operations) to August 31, 1996.
(2) Not annualized.
(3) Calculated based on net asset value on the close of business on
September 29, 1995 (commencement of initial offering) to August 31, 1996.
(4) 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 EMERGING LEADERS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Emerging Leaders 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 nine
series, including the Fund. The Fund's investment objective is capital
growth. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. ("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.
(B) 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.
(C) 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.
(D) 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. During the period ended
February 28, 1998, the Fund did not borrow under the Facility.
DREYFUS EMERGING LEADERS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 .90 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
(B) Under the Shareholder Services Plan, the Fund 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 February 28, 1998, the Fund was charged of
$157,469 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. During the
period ended February 28, 1998, the Fund was charged $46,863 pursuant to the
transfer agency agreement.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended February 28, 1998,
the Fund was charged $9,048 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) A 1% redemption fee is charged and retained by the Fund 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 February 28, 1998 is summarized as follows:
<TABLE>
Purchases Sales
___________ ___________
<S> <C> <C>
Long transactions................................................ $129,137,034 $111,560,750
Short sale transactions.......................................... 695,727 695,727
___________ ___________
TOTAL.......................................................... $129,832,761 $112,256,477
=========== ===========
</TABLE>
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at current market value.
The Fund would incur a loss if the price of the security increases between
the date of the short sale and the date on which the Fund replaces the
borrowed security. The Fund would realize a gain if the price of the security
declines between those dates. Until the Fund replaces the borrowed security,
the Fund will maintain daily, a segregated account with a broker and the
custodian, of cash and/or U.S. Government securities sufficient to cover
its short position. At February 28, 1998, there were nosecurities sold
short outstanding.
(B) At February 28, 1998, accumulated net unrealized appreciation on
investments was $26,680,621, consisting of $28,329,369 gross unrealized
appreciation and $1,648,748 gross unrealized depreciation.
At February 28, 1998, 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).
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS EMERGING LEADERS FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank
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.
Registration Mark
[Dreyfus logo]
Emerging Leaders
Fund
Semi-Annual
Report
February 28, 1998
