<PAGE>
Dreyfus
Small Company
Value Fund
Annual Report
October 31, 1997
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this annual report for Dreyfus Small
Company Value Fund for the 12-month period ended October 31, 1997. Over this
period, your Fund produced a total return of 40.22%* which compares with a total
return of 29.33% for the Russell 2000 Index over the same period.**
ECONOMIC REVIEW
The U.S. economy has registered a step-up in growth thus far in 1997 and the
evidence coming in suggests that momentum is still building. Stronger growth
this year has helped keep corporate profits buoyant despite a substantially
tighter labor market. This is because nationwide shortages of labor have so far
not generated much wage inflation. Moreover, price inflation has decelerated
markedly during the year, suppressed by the strong dollar, import competition
and continued disinflation in health care.
Although the Federal Reserve Board (the "Fed") has held a tightening bias
since mid-1996, the central bank has raised interest rates only once this year.
Expectations for further hikes have been continually postponed. They were first
dampened by the surprising drop in this year's price inflation, and more
recently by unfolding crises in foreign economies. Both events have helped to
cap short-term rates and to pull long-term interest rates lower since the
spring.
Real Gross Domestic Product growth accelerated to about 4% this year from 3%
in 1996. Virtually all economic sectors have been strong so far. Consumer
spending has been supported by rising real incomes. Capital spending has been
very robust and new orders imply continued strength. Even housing demand,
typically slowing at this phase of the business cycle, has reached new highs.
Most incoming signals support sustained fast growth. The exception is that
exporters' new orders have marginally slowed in recent months, indicating that
economic turmoil overseas may be impacting this sector. By contrast, imports
have been very robust and, if their growth is sustained, could help mitigate the
economic weakness abroad.
Overall corporate profits have continued to trend higher, although some
companies have been hurt by events overseas and the stronger dollar.
Domestically generated profits have typically remained solid, helped by strong
growth and contained wages.
MARKET OVERVIEW
Even though the equity markets stumbled badly in late October, the 12-month
period ended October 31, 1997 saw solid gains. Measured by price changes alone,
excluding income, the Dow Jones Industrial Average gained 23.58% for the 12
months, the Standard & Poor's Composite 500 Stock Price Index 29.96%, the Nasdaq
Composite 30.43% and the Russell 2000, 27.52%. These were the gains after the
drop of the last week in October, and before counting the rebounds that occurred
in the first week of November.
In retrospect, it is apparent that stock valuations had been riding for a
fall. There was weakness in March when the Federal Reserve raised interest rates
for the first time in two years. By early summer, equity prices recovered and
soared to new highs. Then, however, some nervousness set in, related mainly to
concern about high stock valuations and fears of another Fed move to cool off
the bubbling economy. Weakness was apparent mainly in companies with large
capitalization, while smaller companies, such as those listed in the Russell
2000 Index, gained ground.
As autumn leaves began to turn, the stock market as a whole regained its
wind--but not for long. The relatively high valuations that had prevailed were
vulnerable to any major unpleasant surprise. That came in late October from an
<PAGE>
unexpected source--the Far East. Severe market setbacks in Hong Kong and
Southeast Asia, together with drops in their foreign exchange rates, triggered
the fall in the U.S. market.
Richard Hoey, Chief Economist for the Dreyfus Corporation, reviewing the
recent events, said that the U.S. stock market had a selling panic, followed by
a buying panic. The underlying logic of it all was valuation, he observed.
When the Dow Jones Index peaked at above 8200 in early August, the stock
market was simply discounting favorable U.S. fundamentals into high stock
prices, said Hoey. The financial crisis in Asia was the trigger for a
correction of the major problem for the U.S. stock market: high valuation.
The market drop in Asia was caused by serious fundamental problems of excess
productive capacity, overvalued real estate and a banking system crisis.
European markets, of course, reacted to the Asian weakness, but fell less
severely because their economies are more stable. In the U.S., the sharp price
drop, followed by a vigorous rebound, reflected an economy with much greater
underlying strength.
The influx of investors into stocks when prices dipped was a good augury for
the future. The American investing public appears to be convinced that
equities are a good place to put money for the long range, when their prices
are attractive, despite the recent volatility of the market averages.
PORTFOLIO FOCUS
The portfolio benefited from an overweight position in transportation. The
trucking market was particularly strong, as the excess supply conditions of the
past few years came into better balance due to more tempered capital spending
and rising demand. The strong economy led to better pricing and capacity
utilization, causing a surge in operating margins. While we remain quite
optimistic about our transportation holdings, we have reduced them modestly
following strong performance during the past year.
The portfolio continues to be underweight in financials as bank and thrift
price-to-book ratios have expanded over the past year. Even so, we benefited
this past year by focusing on thrifts in consolidating markets. Our positions in
California thrifts were especially rewarding this year due to both consolidation
and improving local economy. We continue to find thrift valuations more
compelling than bank valuations.
The position in energy stocks has been reduced throughout the year. Our
exposure to energy service firms, particularly drillers, added significantly to
performance over the past year. The sector benefited from rising capital
spending budgets by the major oil companies, as technological advances made it
more economical to search for oil and gas. While business conditions remain
vibrant, we have reduced our exposure to this sector as valuations have risen to
ten-year highs.
Technology weighting was reduced in the middle of this past year as we took
advantage of full valuations. More recently, however, the sharp and broad based
sell-off in many technology names has led us to rebuild our technology weighting
as valuations have become much more compelling.
Consumer services and consumer nondurables remain two sectors where we
continued to find considerable opportunity. Radio broadcasters, for example,
have performed particularly well due to industry consolidation and strong demand
trends. We find restaurant stocks, which have lagged the broader market for
several years, represent compelling value. Comparable restaurant sales, which
are the key driver of operating leverage, have recently begun to improve.
We continue to underweight health care because valuations are not compelling,
and our underweight in utilities is due * to regulatory uncertainties and modest
earnings growth prospects.
<PAGE>
In closing, we remain positive yet cautious. We continue to seek small
capitalization companies with strong earnings growth at valuations which are
compelling relative to large capitalization firms in similar industries. Even
so, the market is at record high valuations. We believe that our diligent focus
on cheap stocks that have improving momentum positions the portfolio well for
the future.
Sincerely,
The Dreyfus Corporation
Administrator
November 18, 1997
Boston, MA
* Total return includes reinvestment of dividends and any capital gains paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. Unlike the Fund
which may invest in various types of securities and engage in different
investment techniques, the Russell 2000 Index is a widely accepted unmanaged
index of small cap stock performance.
<PAGE>
Dreyfus Small Company Value Fund October 31, 1997
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS SMALL COMPANY
VALUE FUND AND THE RUSSELL 2000 INDEX
$23,000
Dreyfus Small Company
Value Fund
Dollars
$17,782
Russell 2000 Index*
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- --------------------------------------------------------------------------------
One Year Ended From Inception (12/29/93)
October 31, 1997 to October 31, 1997
-------------------- -------------------------
40.22% 24.22%
- --------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Small Company
Value Fund on 12/29/93 (Inception Date) to a $10,000 investment made in the
Russell 2000 Index on that date. For comparative purposes, the value of the
Index on 12/31/93 is used as the beginning value on 12/29/93. All dividends
and capital gain distributions are reinvested.
The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Russell 2000 Index is an unmanaged index
and is composed of the 2,000 smallest companies in the Russell 3000 Index.
The Russell 3000 Index is composed of 3,000 of the largest U.S. companies
by market capitalization. The Index does not take into account charges,
fees and other expenses. Further information relating to Fund performance,
including expense reimbursements, if applicable, is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Investments October 31, 1997
<TABLE>
<CAPTION>
Common Stocks--97.9% Shares Value
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Basic Industries--8.3% Birmingham Steel.............................. 150,500 $ 2,502,062
Burlington Industries......................... 193,400 2,888,912
Calgon Carbon................................. 112,700 1,331,269
CalMat........................................ 204,900 5,160,919
Cherry, Cl. B..............................(a) 73,100 1,105,637
Commercial Intertech.......................... 144,000 2,340,000
Detroit Diesel.............................(a) 17,500 360,937
Dexter.....................................(b) 30,600 1,201,050
Essex International........................... 64,200 2,126,625
Gaylord Container, Cl. A...................(a) 274,500 1,818,562
Geon.......................................... 134,700 2,921,306
IMCO Recycling................................ 53,000 963,937
Keystone Consolidated Industries...........(a) 88,000 1,144,000
Lukens........................................ 90,600 1,630,800
Patrick Industries............................ 41,300 598,850
RMI Titanium...............................(a) 31,700 752,875
Special Metals................................ 46,700 963,187
Wausau Paper Mills............................ 51,400 1,037,637
Wolverine Tube.............................(a) 8,800 272,800
------------
31,121,365
------------
Capital Goods--8.6% Amcast Industrial............................. 100,300 2,545,112
American Buildings.........................(a) 35,000 980,000
Archer Resources.............................. 103,592 478,026
Avondale Industries......................(a,b) 134,400 3,628,800
Brown & Sharpe, Cl. A......................(a) 151,100 1,784,869
Chicago Bridge & Iron N.V..................... 94,000 1,662,625
Cubic......................................... 13,900 448,275
Denison International A.D.R. ................. 111,500 2,104,563
DONCASTERS A.D.R.............................. 16,300 439,081
Elsag Baily Process Automation, N.V........(a) 152,000 2,840,500
Excel Industries.............................. 149,300 2,659,406
Flowserve..................................... 26,400 785,400
Friede Goldman International.................. 35,600 1,417,325
Global Industrial Technologies.............(a) 100,500 1,714,781
Intermet...................................... 6,600 127,050
Jacobs Engineering Group...................(a) 28,900 780,300
Newport News Shipbuilding..................... 191,800 4,123,700
Richardson Electronics........................ 60,000 735,000
Stewart & Stevenson Services.................. 6,400 139,200
TransTechnology............................... 32,000 892,000
Wabash National............................(b) 70,600 2,109,175
------------
32,395,188
------------
Consumer Durables--4.4% Continental Homes Holding..................... 14,100 424,763
Donnelly, Cl. A............................... 96,300 1,733,400
Insurance Auto Auction.....................(a) 252,000 2,961,000
Juno Lighting................................. 22,000 396,000
</TABLE>
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Consumer Durables (continued) Kaufman & Broad Home.......................... 133,100 $ 2,836,694
LADD Furniture.............................(a) 146,900 2,221,863
MascoTech..................................... 96,200 1,827,800
Special Devices............................(a) 103,200 2,386,500
Standard Products............................. 64,900 1,744,188
------------
16,532,208
------------
Consumer Non-Durables--9.6% Alberto-Culver, Cl. A......................... 42,900 1,112,719
Alexandria R.E. Equities...................... 62,600 1,717,588
Ashworth...................................(a) 159,100 1,581,056
Borg-Warner Security.......................(a) 73,300 1,241,519
Boston Beer, Cl. A.........................(a) 169,300 1,682,419
Delta Woodside Industries..................... 4,800 30,300
Department 56..............................(a) 73,300 2,212,744
Fuqua Enterprises..........................(a) 79,600 2,487,500
Galoob Toys................................(a) 229,700 3,029,169
Graphic Industries............................ 166,600 3,602,725
Guilford Mills................................ 141,700 3,383,088
Hudson Foods, Cl. A........................(b) 56,400 1,057,500
Huffy......................................... 81,300 1,285,556
Lance......................................... 35,200 752,400
Oakley.....................................(a) 171,300 1,691,588
Ocular Sciences............................... 22,100 486,200
Phillips-Van Heusen........................... 148,500 2,116,125
Scotts, Cl. A..............................(a) 40,600 1,086,050
Smucker (J.M.), Cl. A......................... 69,300 1,749,825
Stride Rite................................... 99,900 1,173,825
Vans.......................................(a) 159,500 2,691,562
------------
36,171,458
------------
Consumer Services--20.6% American Media, Cl. A......................(a) 234,100 1,858,169
American Radio Systems, Cl. A..............(a) 7,400 360,750
Ann Taylor Stores..........................(a) 121,500 1,738,969
Apple South................................... 195,500 3,641,188
Bob Evans Farms............................... 230,000 4,355,625
Boyd Gaming................................(a) 245,200 2,022,900
Buffets....................................(a) 246,800 2,591,400
Cadmus Communication.......................... 105,400 2,213,400
Carmike Cinemas, Cl. A.....................(a) 55,000 1,787,500
Chancellor Media, Cl. A..................(a,b) 14,136 775,713
Chris-Craft Industries.....................(a) 29,613 1,530,622
CMP Media, Cl. A.............................. 64,400 1,191,400
Comcast UK Cable Partners, Cl. A...........(a) 138,500 1,575,438
Cox Radio, Cl. A...........................(a) 55,200 1,880,250
Damark International, Cl. A................(a) 7,700 89,512
Dravo......................................(a) 118,300 1,242,150
Emmis Broadcasting, Cl. A..................(a) 103,800 4,593,150
Finish Line, Cl. A.........................(a) 241,700 4,078,688
</TABLE>
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Consumer Services (continued) Gymboree...................................(a) 209,400 $ 5,077,950
Hall, Kinion & Associates..................... 35,100 548,438
Ingles Markets................................ 21,900 287,438
J & J Snack Foods..........................(a) 178,900 3,041,300
Lone Star Steakhouse/Saloon................(a) 141,700 3,276,812
Marsh Supermarkets, Cl. A..................... 44,100 694,575
MAXIMUS....................................... 17,900 501,200
Micro Warehouse............................(a) 173,300 2,599,500
Nash Finch.................................... 6,800 136,850
Neiman Marcus Group........................(a) 14,000 464,625
Paxson Communications......................(a) 72,500 815,625
Pierce Leahy.................................. 8,200 229,600
Pittston Burlington Group..................... 60,000 1,631,250
Primadonna Resorts.........................(a) 154,800 2,709,000
Provigo....................................... 78,619 418,601
Sapiens International......................... 329,400 2,696,962
Sunglass Hut International.................(a) 275,200 2,201,600
Talbots....................................... 152,100 3,650,400
Travel Services International................. 18,200 407,225
True North Communications..................... 149,700 3,405,675
Young Broadcasting, Cl. A..................(a) 145,700 5,281,625
------------
77,603,075
------------
Energy--3.7% Aquila Gas Pipeline........................... 37,800 491,400
Cabot Oil & Gas, Cl. A........................ 49,000 1,176,000
Cal Dive International........................ 9,900 309,375
Eagle Geophysical............................. 91,100 1,594,250
Houston Exploration........................(a) 147,700 3,581,725
Marine Drilling............................(a) 37,300 1,105,013
Monterey Resources............................ 64,062 1,277,236
RPC........................................... 42,700 1,281,000
Santa Fe Energy Resources..................(a) 116,900 1,527,006
Titan Exploration............................. 142,400 1,797,800
------------
14,140,805
------------
Financial Services--7.3% Albank Financial.............................. 22,300 1,031,375
Allmerica Financial........................... 4,936 231,375
American Residential Investment Trust......... 28,000 428,750
Astoria Financial............................. 77,588 4,053,973
Bank Plus..................................(a) 85,000 1,020,000
Bay View Capital.............................. 61,300 1,869,650
Citizens...................................... 14,100 413,306
City National................................. 119,400 3,589,463
Coast Savings Financial....................(a) 28,000 1,643,250
Community Bank System......................... 7,400 216,450
Downey Financial.............................. 49,145 1,290,056
FirstFed Financial.........................(a) 89,100 3,118,500
First Savings Bank of Washington Bancorp...... 12,600 299,250
</TABLE>
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Financial Services (continued) Flushing Financial............................ 19,600 $ 426,300
Golden State Bancorp.......................(a) 74,500 2,477,125
Guarantee Life Cos............................ 49,200 1,359,150
Klamath First Bancorp......................... 7,400 165,575
LaSalle Partners.............................. 6,400 234,000
PFF Bancorp................................(a) 103,400 1,990,450
SCPIE Holdings................................ 62,700 1,779,113
------------
27,637,111
------------
Health Care--3.6% Angelica...................................... 8,200 159,900
BioReliance................................... 21,300 473,925
Conmed.....................................(a) 56,700 1,162,350
Haemonetics................................(a) 73,700 1,114,712
Hologic....................................(a) 153,100 3,923,188
Millennium Pharmaceuticals.................(a) 46,400 925,100
Quest Diagnostics............................. 137,900 2,301,206
SpaceLabs Medical..........................(a) 82,600 1,827,525
Superior Surgical............................. 108,900 1,524,600
------------
13,412,506
------------
Other--6.2% Alamo Group................................... 78,300 1,644,300
Camco ........................................ 23,176 77,330
Casella Waste Systems, Cl. A.................. 27,500 608,438
CCA Prison Realty Trust....................... 5,700 196,650
Continental Circuits.......................(a) 50,300 899,113
Crossmann Communities......................(a) 62,750 1,364,813
Finlay Enterprises.........................(a) 26,400 554,400
Huntco, Cl. A................................. 109,000 1,526,000
Kitty Hawk.................................... 159,100 3,241,663
MTI Technology.............................(a) 42,200 590,800
Pacific Greystone..........................(a) 69,700 1,289,450
Philip Services............................(a) 20,285 354,987
Pilgrim's Pride............................... 270,700 3,552,937
Progressive Bank.............................. 23,300 806,762
Qualix Group.................................. 208,400 924,775
Rainbow Technologies.......................(a) 60,000 1,477,500
Standard Motor Product........................ 151,900 3,322,812
Three-Five Systems.........................(a) 36,700 761,525
------------
23,194,255
------------
Technology--18.6% ADFlex Solutions...........................(a) 32,100 714,225
ANTEC......................................(a) 114,400 1,801,800
Brooktrout Technology......................(a) 22,300 317,775
C-Cor Electronics..........................(a) 25,100 401,600
Caere .....................................(a) 58,700 498,950
Commscope..................................(a) 131,400 1,445,400
Electroglas................................(a) 94,400 1,793,600
Exabyte....................................(a) 115,400 1,218,913
------------
</TABLE>
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Technology (continued) FSI International..........................(a) 100,800 $ 1,738,800
Galileo Technology............................ 16,500 567,188
General Semiconductor......................(a) 50,600 575,575
Great Plains Software......................... 7,200 171,900
Inso.......................................(a) 258,200 3,130,675
Integrated Process Equipment...............(a) 75,600 1,677,375
International Rectifier....................(a) 171,400 2,346,037
Intersolv..................................(a) 108,900 1,388,475
Learning Company...........................(a) 281,400 5,311,425
LTX........................................(a) 282,600 1,518,975
Mastering..................................(a) 35,400 325,238
Mattson Technology.........................(a) 266,300 2,912,656
MEMC Electronic Materials................(a,b) 67,600 1,356,225
Micro Linear...............................(a) 255,200 2,073,500
Mosaix.....................................(a) 85,700 792,725
Oak Industries.............................(a) 159,000 4,561,313
Ortel......................................(a) 63,800 1,491,325
Peritus Software Services..................... 5,100 94,350
Planar Systems.............................(a) 107,900 1,200,388
Progress Software..........................(a) 109,600 2,342,700
Quality Semiconductor......................(a) 140,900 968,687
Quickturn Design System....................(a) 19,500 255,937
Read-Rite..................................(a) 107,000 2,126,625
RWD Technologies.............................. 2,400 54,000
S3.........................................(a) 84,000 745,500
Sequent Computer Systems...................(a) 124,100 2,598,344
Silicon Storage Technology.................(a) 208,000 1,014,000
Silicon Valley Group.......................(a) 64,400 1,851,500
Symantec...................................(a) 223,100 4,880,312
Trident Microsystems.......................(a) 21,600 272,700
Trimble Navigation.........................(a) 244,600 4,953,150
Viewlogic Systems........................(a,b) 87,800 2,129,150
Watkins-Johnson............................... 107,300 3,326,300
Zilog......................................(a) 60,400 1,151,375
------------
70,096,688
------------
Transportation--7.0% Arkansas Best..............................(a) 318,500 3,662,750
Arnold Industries............................. 146,600 3,115,250
Atlas Air..................................(a) 124,200 3,446,550
Caliber System................................ 61,300 3,195,262
Knightsbridge Tankers......................... 62,819 1,884,570
Mullen Transportation......................... 78,089 1,579,963
Old Dominion Freight Line..................(a) 88,000 1,364,000
SkyWest....................................... 188,100 4,561,425
Varlen........................................ 40,900 1,543,975
Yellow.....................................(a) 79,500 2,181,281
------------
26,535,026
------------
TOTAL COMMON STOCKS
(cost $350,401,855)........................ $368,839,685
------------
------------
</TABLE>
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Principal
Short-Term Investments--6.6% Amount Value
- ------------------------------------------------------------------------------ -------------- -------------
<S> <C> <C> <C>
U.S. Treasury Bills: 4.95%, 11/13/1997............................. $ 25,000 $ 24,959
4.95%, 12/11/1997..........................(c) 14,025,000 13,948,984
4.92%, 1/8/1998............................... 4,925,000 4,877,868
4.91%, 1/15/1998.............................. 3,922,000 3,880,584
4.97%, 1/22/1998.............................. 2,276,000 2,249,166
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $24,984,254)......................... $ 24,981,561
------------
------------
TOTAL INVESTMENTS (cost $375,386,109).......................................... 104.5% $393,821,246
------ ------------
------ ------------
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (4.5%) $(17,083,154)
------ ------------
------ ------------
NET ASSETS..................................................................... 100.0% $376,738,092
------ ------------
------ ------------
<FN>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Securities held in whole or in part in escrow for call options written.
(c) Partially held by broker as collateral for open short positions.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Call Options Written October 31, 1997
<TABLE>
<CAPTION>
Strike
Issuer Contracts Expiration Price Value
- ------ ----------- ------------ ------ ---------
<S> <C> <C> <C> <C>
Avondale Industries.............................. 100 December '97 $30 $ 6,250
Chancellor Media, Cl. A.......................... 141 November '97 60 7,050
Dexter........................................... 306 December '97 40 32,513
Hudson Foods, Cl. A.............................. 10 December '97 23 250
MEMC Electronic Materials........................ 676 January '98 20 147,875
Viewlogic Systems................................ 550 December '97 25 68,750
Viewlogic Systems................................ 328 December '97 30 6,150
Wabash National.................................. 180 December '97 30 30,375
Wabash National.................................. 180 December '97 35 5,625
--------
TOTAL CALL OPTIONS WRITTEN
(premiums received $533,444).................. $304,838
--------
--------
</TABLE>
Notes to Statement of Call Options Written:
- --------------------------------------------------------------------------------
The above options were written against portfolio securities with an aggregate
market value of $12,257,613.
Statement of Securities Sold Short October 31, 1997
<TABLE>
<CAPTION>
Common Stocks Shares Value
- ------------- ---------- -----------
<S> <C> <C>
American Oilfield Divers............................................ 40,000 $ 680,000
Bassett Furniture................................................... 14,000 392,000
Chromcraft Revington................................................ 35,300 1,116,362
Innovex............................................................. 10,000 258,125
Merrill............................................................. 7,500 167,813
O'Sullivan Industries............................................... 7,000 97,125
Philip Services..................................................... 20,300 355,250
Polaris Industries.................................................. 10,000 304,375
Richfood Holdings................................................... 23,000 554,875
Sofamor Danek Group................................................. 9,300 640,538
----------
TOTAL SECURITIES SOLD SHORT
(proceeds $4,054,264)........................................... $4,566,463
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1997
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $375,386,109 $393,821,246
Cash............................................. 3,904,626
Receivable from brokers for proceeds on securities sold short 4,054,264
Receivable for shares of Common Stock subscribed. 2,755,435
Receivable for investment securities sold........ 1,319,899
Dividends and interest receivable................ 141,735
Prepaid expenses................................. 75,764
------------
406,072,969
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 235,480
Due to Distributor............................... 75,718
Payable for investment securities purchased...... 23,556,328
Securities sold short, at value
(proceeds $4,054,264)--see statement........... 4,566,463
Payable for shares of Common Stock redeemed...... 459,470
Outstanding call options written, at value
(premiums received $533,444)--see statement.... 304,838
Accrued expenses................................. 136,580
------------
29,334,877
------------
NET ASSETS..................................................................... $376,738,092
------------
------------
REPRESENTED BY: Paid-in capital.................................. $351,722,180
Accumulated undistributed investment income--net. 259,232
Accumulated net realized gain (loss) on investments,
securities sold short and foreign currency transactions 6,605,136
Accumulated net unrealized appreciation(depreciation)
on investments, options written and securities
sold short--Note 4(b).......................... 18,151,544
------------
NET ASSETS..................................................................... $376,738,092
------------
------------
SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized)................ 17,162,067
NET ASSET VALUE, offering and redemption price per share--Note 3(d)............ $21.95
------
------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Operations Year Ended October 31, 1997
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends (net of $1,489 foreign taxes
withheld at source)...................... $ 903,602
Interest................................... 788,798
----------
Total Income............................. $ 1,692,400
EXPENSES: Management fee--Note 3(a).................. 860,360
Shareholder servicing costs--Note 3(b)..... 381,724
Registration fees.......................... 135,423
Custodian fees--Note 3(b).................. 32,940
Professional fees.......................... 21,403
Dividends on securities sold short......... 16,416
Prospectus and shareholders' reports....... 15,297
Directors' fees and expenses--Note 3(c).... 12,194
Interest expense--Note 2................... 3,934
Miscellaneous.............................. 6,734
----------
Total Expenses........................... 1,486,425
Less--reduction in management fee due to
undertaking--Note 3(a)................... (51,774)
-----------
Net Expenses............................. 1,434,651
-----------
INVESTMENT INCOME--NET................................................... 257,749
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments:
Long transactions (including foreign currency
transactions)......................... $ 8,182,326
Short sale transactions.................. (1,550,930)
-----------
Net Realized Gain (Loss)................. 6,631,396
Net unrealized appreciation (depreciation) on
investments, options written and
securities sold short.................... 17,725,090
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 24,356,486
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $24,614,235
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
---------------- ----------------
OPERATIONS:
<S> <C> <C>
Investment income--net...................................................... $ 257,749 $ 58,382
Net realized gain (loss) on investments..................................... 6,631,396 2,421,646
Net unrealized appreciation (depreciation) on investments................... 17,725,090 180,662
------------ -----------
Net Increase (Decrease) in Net Assets Resulting from Operations........... 24,614,235 2,660,690
------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net...................................................... (46,432) (41,125)
Net realized gain on investments............................................ (2,431,882) (461,510)
------------ -----------
Total Dividends........................................................... (2,478,314) (502,635)
------------ -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................... 460,227,849 12,451,803
Dividends reinvested........................................................ 2,423,279 502,014
Cost of shares redeemed..................................................... (124,900,940) (4,663,841)
------------ -----------
Increase (Decrease) in Net Assets from Capital Stock Transactions......... 337,750,188 8,289,976
------------ -----------
Total Increase (Decrease) in Net Assets................................. 359,886,109 10,448,031
NET ASSETS:
Beginning of Period......................................................... 16,851,983 6,403,952
------------ -----------
End of Period............................................................... $376,738,092 $16,851,983
------------ -----------
------------ -----------
Undistributed investment income--net.......................................... $ 259,232 $ 47,915
------------ -----------
Shares Shares
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................. 22,290,239 738,511
Shares issued for dividends reinvested...................................... 145,455 35,629
Shares redeemed............................................................. (6,227,693) (277,463)
------------ -----------
Net Increase (Decrease) in Shares Outstanding............................. 16,208,001 496,677
------------ -----------
------------ -----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of Common
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994(1)
------ ------ ------ -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................... $17.66 $14.00 $12.43 $12.50
------ ------ ------ ------
Investment Operations:
Investment income--net..................................... -- .07 .10 .30
Net realized and unrealized gain (loss) on investments..... 6.43 4.69 2.33 (.37)
------ ------ ------ ------
Total from Investment Operations........................... 6.43 4.76 2.43 (.07)
------ ------ ------ ------
Distributions:
Dividends from investment income--net...................... (.04) (.09) (.33) --
Dividends from net realized gain on investments............ (2.10) (1.01) (.53) --
------ ------ ------ ------
Total Distributions........................................ (2.14) (1.10) (.86) --
------ ------ ------ ------
Net asset value, end of period............................. $21.95 $17.66 $14.00 $12.43
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN....................................... 40.22% 35.99% 21.30% (.56%)(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets.......... 1.23% 1.27% .84% --
Ratio of interest expense and dividends on securities sold
short to average net assets............................. .02% .02% .07% .01%(2)
Ratio of net investment income to average net assets....... .22% .62% .79% 2.39%(2)
Decrease reflected in above expense ratios due to
undertakings by Dreyfus.................................. .05% .41% 1.80% 2.07%(2)
Portfolio Turnover Rate.................................... 76.11% 183.58% 161.01% 219.63%(2)
Average commission rate paid(3)............................ $.0522 $.0509 -- --
Net Assets, end of period (000's Omitted).................. $376,738 $16,582 $6,404 $5,166
<FN>
- ------------
(1) From December 29, 1993 (commencement of operations) to October 31, 1994.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases
and sales of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Small Company Value Fund (the "Fund") is a series of Dreyfus Growth
and Value Funds, Inc. (the "Company") which is registered under the Investment
Company Act of 1940 ("Act") as a diversified open-end management investment
company and operates as a series company currently offering nine series
including the Fund. The Fund's investment objective is capital appreciation.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment adviser.
Dreyfus is a direct subsidiary of Mellon Bank, N.A. ("Mellon"). The Boston
Company Asset Management, Inc. ("TBC Asset Management"), an indirect
subsidiary of Mellon and an affiliate of Dreyfus, serves as the Fund's
sub-investment adviser. Premier Mutual Fund Services, Inc. (the "Distributor")
is the distributor of the Fund's shares, which are sold to the public without a
sales charge.
The Company accounts separately for the assets, liabilities and operations of
each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion of
the results of 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 amount of
dividends, interest and foreign withholding taxes recorded on the Fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund 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
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Revenue Code, and to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and excise taxes.
NOTE 2--Bank Line of Credit:
The Fund may borrow up to $2 million for leveraging purposes under a
short-term unsecured line of credit and participates with other Dreyfus-managed
funds in a $100 million unsecured line of credit primarily to be utilized for
temporary or emergency purposes, including the financing of redemptions.
Interest is charged to the Fund at rates which are related to the Federal Funds
rate in effect at the time of borrowings. At October 31, 1997, there were no
outstanding borrowings under the lines of credit.
The average daily amount of borrowings outstanding under both arrangements
during the period ended October 31, 1997 was approximately $69,000, with a
related weighted average annualized interest rate of 5.70%. The maximum amount
borrowed at any time during the period ended October 31, 1997 was $2.9 million.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(A) Pursuant to a management agreement with Dreyfus, the management fee is
computed at the annual rate of .75 of 1% of the value of the Fund's average
daily net assets and is payable monthly. Dreyfus has undertaken from November
1, 1996 through October 31, 1997 to reduce the management fee paid by the Fund,
to the extent that the Fund's aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings (which, in the view of Stroock & Stroock &
Lavan LLP, counsel to the Fund, also contemplates dividends and interest
accrued on securities sold short) and extraordinary expenses, exceed an annual
rate of 1.25% of the value of the Fund's average daily net assets. The
reduction in management fee, pursuant to the undertaking, amounted to $51,774
during the period ended October 31, 1997.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and TBC Asset
Management, the sub-investment advisory fee is computed at the annual rate of
.375 of 1% of the value of the Fund's average daily net assets and is payable
monthly by Dreyfus.
(B) Under the Shareholder Services Plan, the Fund pays the Distributor at an
annual rate of .25 of 1% of the value of the Fund's average daily net assets for
the provision of certain services. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. The Distributor may
make payments to Service Agents (a securities dealer, financial institution or
other industry professional) in respect of these services. The Distributor
determines the amounts to be paid to Service Agents. During the period ended
October 31, 1997, the Fund was charged $286,787 pursuant to the Shareholder
Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended October 31, 1997, the Fund was charged $58,629 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 October 31, 1997, the Fund was
charged $32,940 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.
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(D) Effective March 3, 1997, 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 and option transactions,
during the period ended October 31, 1997 is summarized as follows:
Purchases Sales
------------ -----------
Long transactions............. $410,874,676 $83,012,907
Short sale transactions....... 10,264,619 11,971,470
------------ -----------
TOTAL..................... $421,139,295 $94,984,377
------------ -----------
------------ -----------
The Fund is engaged in short-selling which obligates the Fund to replace the
security borrowed by purchasing the security at current market value. The Fund
would incur a loss if the price of the security increases between the date of
the short sale and the date on which the Fund replaces the borrowed security.
The Fund would realize a gain if the price of the security declines between
those dates. Until the Fund replaces the borrowed security, the Fund will
maintain daily, a segregated account with a broker and/or custodian, of cash
and/or liquid securities sufficient to cover its short position. Securities sold
short at October 31, 1997 and their related market values and proceeds are set
forth in the Statement of Securities Sold Short.
In addition, the following table summarizes the Fund's call options written
for the period ended October 31, 1997:
Number of Premiums
Contracts Received
----------- ----------
OPTIONS WRITTEN:
- ----------------
Contracts outstanding October 31, 1996.. -- --
Contracts written....................... 2,471 $533,444
----- --------
Contracts outstanding October 31, 1997.. 2,471 $533,444
----- --------
----- --------
The Fund may purchase and write (sell) put and call options in order to gain
exposure to or protect against changes in the market.
As a writer of call options, the Fund receives a premium at the outset and
then bears the market risk of unfavorable changes in the price of the financial
instruments underlying the options. Generally, the Fund would incur a gain, to
the extent of the premium, if the price of the underlying financial instrument
decreases between the date the option is written and the date on which the
option is terminated. Generally, the Fund would realize a loss, if the price of
the financial instrument increases between those dates. Contracts open at
October 31, 1997 are set forth in the Statement of Call Options Written.
(B) At October 31, 1997, accumulated net unrealized appreciation on
investments, options written and securities sold short was $18,151,544,
consisting of $32,806,722 gross unrealized appreciation and $14,655,178 gross
unrealized depreciation.
At October 31, 1997, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
<PAGE>
Dreyfus Small Company Value Fund
- --------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Directors
Dreyfus Small Company Value Fund
We have audited the accompanying statement of assets and liabilities,
including the statements of investments, call options written and securities
sold short, of Dreyfus Small Company Value Fund, one of the series constituting
Dreyfus Growth and Value Funds, Inc., as of October 31, 1997, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and financial
highlights for each of the years indicated therein. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of October 31, 1997 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Small Company Value Fund at October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated years, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
New York, New York
December 12, 1997
Important Tax Information (Unaudited)
For Federal tax purposes, the Fund hereby designates $.185 per share as a
long-term capital gain distribution of the $2.135 per share paid on December
16, 1996.
The Fund also designates 3.78% of the ordinary dividends paid during the
fiscal year ended October 31, 1997 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1998 of
the percentage applicable to the preparation of their 1997 income tax return.
<PAGE>
Dreyfus Small Company
Value Fund
200 Park Avenue
New York, NY 10166
Investment Advisor
The Dreyfus Corporation
200 Park Avenue New York, NY 10166
Sub-Investment Advisor
The Boston Company
Asset Management, Inc.
One Boston Place
Boston, MA 02108
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A.
253AR9710
