DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Fellow Shareholder:
It is a pleasure to have this opportunity to communicate with my fellow
shareholders of the Dreyfus Large Company Value Fund.
This letter accompanies the annual report of the Dreyfus Large Company Value
Fund for the 12-month period ended October 31, 1998. During this period, your
Fund achieved a total return of 4.83%,* which compares with a total return of
22.01% for the Standard and Poor's 500 Composite Stock Price Index,** and 12.40%
for the Wilshire Large Company Value Index*** over the same period.
As always, the concentrated nature of the Fund, holding approximately 60
securities, will make it more volatile than the diversified indices referred to
above which are both composed of approximately 500 securities. During most
periods, therefore, the performance of the Fund will likely differ significantly
from these indices.
Value stocks underperformed growth stocks during the period. The margin was
among the widest in memory. Any value manager who remained true to his or her
discipline could not hope to have matched the returns of the S&P 500 Index over
the past year. Your Fund remained true to its value discipline, and should be
considered a pure value fund, according to our definition of value. There will
be periods, the past year for example, when value stocks underperform the S&P
500 Index, even when our particular definition of value underperforms certain
value stock indices. Regardless, the Fund provides your investment portfolio
with the benefits of pure value stock exposure.
The performance of the S&P 500 Index was largely driven by a relatively few
so-called "mega cap" growth stocks or the very largest domestically traded
companies. The S& P 500 Index and many of its major security components carry
valuations well above those of any historic period by almost any financial
measure, according to our calculations. This concentrated overvaluation, in our
opinion, is reminiscent of the early 1970s' "nifty fifty" stocks, or oil stocks
in the early 1980s. Both of those markets ended with quick and severe
corrections of the overvalued securities. No one can predict such an occurrence
today, but many market participants may conclude that the risk level of the S&P
500 Index, and many of its major security components, is high by historic
standards. Regardless, at least for the time being, positive price momentum in
this index and in many of these mega cap stocks has continued, despite the
recent stock market correction and subsequent recovery.
As for your Fund, most of the performance shortfall relative to the Wilshire
Value Index occurred during the fourth quarter of 1997, as the portfolio was
positioned for strong worldwide economic growth when the Asian economic problems
surfaced. Several holdings during these months were among the poorest performing
securities in the Fund for the fiscal year. These securities included electronic
technology companies that have significant business in Asia, transportation
issues which suffered from the possibility of a weakening economy, and several
Latin American companies which were penalized simply because they are "emerging
markets." The portfolio was subsequently reworked and performance relative to
large company value indices was stabilized.
Our disciplined investment process kept the Fund largely out of what we
considered were overvalued mega cap securities. Unfortunately, many of these
high-priced mega cap securities were the best performing stocks in the market,
restraining the Fund' s relative performance. Quite often, disciplined value
investment processes will underperform when the overall stock market reaches
speculative overvaluation. There is better potential for outperformance as
security prices settle and as economic change occurs. With the stock market
having corrected and with interest rates having fallen, the universe of
securities available within our investment discipline has broadened somewhat to
include a few more of these mega cap names.
Economic Review
The U.S. entered the year with a strong economy and at near full employment,
which during the spring months led the Federal Reserve Board, our central bank,
to contemplate raising short-term interest rates in order to keep growth and
inflation in check. By mid-year, however, the impact of weak Asian economies on
U.S. economic growth had already done the job, so the Fed left rates unchanged.
More recently, financial system stresses convinced the Fed to lower interest
rates three times: at the end of September, in mid-October, and in mid-November
A significant influence on the U.S. economy this year was slower growth in the
overall world economy and the evolution of a worldwide financial crisis. Both
events caused a drop in inflation, which helped send interest rates lower. The
fall in inflation and lower interest rates benefited companies that sell to the
consumer, as more income was left over after inflation to buy goods and
services, and the cost of debt was reduced. Home mortgages were refinanced at
lower rates, for example, putting more discretionary income in consumers'
pockets.
The negative effect in the U.S. of slower global economies was directed toward
the industrial sector. Corporate profits weakened, especially in Asian-impacted
sectors, such as world-traded commodities (paper producers, for example) and
exporters (computer manufacturers, for example). One result of this industrial
weakness was to cool off a U.S. economy that had been growing perhaps too
rapidly.
A financial crisis developed during the mid-summer months, primarily in Russia
and Brazil. Panic set in as lenders called in outstanding loans and were
reluctant to issue new debt, sharply reducing the economic outlook for these
areas. The effect on European and U.S. companies was to lower profit growth
expectations, given the decline in export opportunities to these geographies.
Proactive steps appear to have been recently taken in attempts to stabilize
the Japanese banks, to design a support package for Brazil, and to generally
make money less expensive to lend. Economic prospects for the major developed
countries will be powerfully impacted by whether foreign financial stresses in
the coming months calm down, as the consensus appears to be currently
concluding, or intensify, as was the fear just weeks ago.
Stock Market Overview
The 12-month period ended October 31, 1998 reflected a number of contrasting
phases in the U.S. stock market. There was strength during the early part of the
period, as stocks recovered from the Asian-induced sell-off that occurred during
the fourth quarter of 1997. By mid-summer, as large company security valuations
neared all-time highs, there was a sharp market decline sparked by the implosion
of the Russian financial markets. The U.S. stock market declined again in late
September, due to the collapse of a major U.S. hedge fund. Finally, there was a
strong rally from mid-October until the end of the fiscal year in response to
the Federal Reserve Board' s lowering of short-term interest rates.
Over the 12-month period, investment returns for mid-sized and small companies
were significantly lower than those for large companies, with the Standard &
Poor's Midcap 400 Index returning 6.71% and the small-company Russell 2000 Index
declining -11.84%.+ The erosion of expectations for corporate profit growth over
the year contributed to an outperformance by a select few mega-cap growth
stocks. Investors had confidence in the more consistent earnings growth from
this small group of stocks that compose the bulk of the S&P 500 Index than for
the broader market. Almost every other capitalization and investment style group
lagged far behind these mega-cap growth stocks.
Value Investing and Our Investment Process
To once again summarize our investment philosophy, while there are other
investment disciplines practiced at Dreyfus, members of the Dreyfus Value Team
are passionate believers in value investing. As value investors, we want to buy
growing companies, but we want to own them at a bargain price. In one sense,
value investing can be a lower risk, more conservative style of equity investing
because the prices of value stocks may decline less in falling markets, due to
their already perceived "underpricing." Of course, they can underperform if
company valuations do not improve as expected.
Our approach to the selection of securities begins and ends with our analysts
who are an integral part of our investment team. Our Dreyfus analysts contribute
their proprietary forecasts on corporate earnings and cash flows to our computer
models, their analysis 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 current
security price) which, to justify purchase, should be greater than the yield
available on reasonably long-term U.S. Treasury securities. Being paid more than
this risk-free rate in order to take 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, including various
growth, valuation and leverage measures. We input into this computer model the
current economic and stock market trends, and the computer calculates each
security' s exposure to this environment. The model is an idea generator, and
further detailed fundamental analysis is conducted on each potential holding to
determine its suitability for the Fund. Combining all of this data with our
analysts' in-depth knowledge of the individual companies, we then construct a
portfolio of approximately 60 or so securities. We use similar disciplined
criteria and several other factors to determine when selling a security is in
our shareholders' best interest.
Examples of Our Investment Process
The detailed fundamental analysis, computer modeling and portfolio strategy
that go into the decision-making process for each security in the Fund is not
possible in this short report. Instead, provided below are several brief
summaries of some of the better and poorer performing securities within the Fund
during the annual period.
Biogen, a biotechnology company, was one of the better performing securities
in your Fund during the annual period. Our earnings estimates for the company
have been well above the Wall Street consensus, qualifying this growth stock as
a value stock. We believe that the company's current products and new product
pipeline, both near term and long term, are particularly promising. The security
remained a holding at the end of the fiscal year.
Xerox has been expanding its core copier business into the computer printer
business with great initial success. The ability to provide quality service can
be a significant competitive advantage. The security was one of the stronger
performers in the Fund, and was sold when our investment discipline indicated
that it was fully valued relative to the risk-free alternative.
RJR Nabisco Holdings and Philip Morris Cos., both largely tobacco companies,
were poor performers during much of the period. Congress could not agree on
tobacco legislation that we believe would have significantly benefited both the
public good and these securities. The tobacco companies recently resolved many
of these same issues directly with the states, benefiting the securities. While
we sold RJR Nabisco Holdings during the Fund's fiscal year in order to reduce
exposure to the industry, we remained attracted to the unusually inexpensive
valuation and high dividend yield of Philip Morris.
Bankers Trust, a major money-center bank, was a poor-performing security in
your Fund. Almost every financial stock was punished during the summer months
when emerging markets and worldwide bond markets ran into difficulties. We
reacted quickly to reduce exposure to the industry, including the sale of this
security.
In almost any Fund there are both strong performing and poor performing
securities. Our job is to maximize the good and minimize the bad, while keeping
risk at tolerable levels. We will not be successful every quarter or every year,
but we work hard to reward our fellow investors over the long term.
Diligent management of your investment is our highest priority. Thank you for
entrusting us with your assets.
Sincerely,
[Timothy M. Ghriskey signature]
Timothy M. Ghriskey
Portfolio Manager
November 30, 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: WILSHIRE ASSOCIATES, INC. -- The Wilshire Large Company Value Index
is constructed by using a blend of price-to-book and forecast price-to-earnings
ratios. The largest 750 stocks in the Wilshire 5000 are ranked based on a style
score that is 75% price-to-earnings ratio and 25% forecast P/E. The universe is
divided so that companies that represent half of the total capitalization fall
into growth and the remainder are placed into value. Beginning with the fiscal
year ended October 31, 1998, this Index will be used as the Fund's primary
benchmark index.
+SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor' s MidCap 400 Index is a broad-based index of 400 companies with market
capitalizations generally ranging from $50 million to $10 billion and is a
widely accepted, unmanaged index of overall mid-cap stock market performance.
The Russell 2000 Index is an unmanaged index and is a leading barometer of the
overall performance of small company stocks.
DREYFUS LARGE COMPANY VALUE FUND OCTOBER 31, 1998
- - -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS LARGE COMPANY
VALUE FUND WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND THE
WILSHIRE LARGE COMPANY VALUE INDEX
Dollars
$26,192
Standard & Poor's 500 Composite Stock Price Index*
$22,564
Wilshire Large Company Value Index**
$22,419
Dreyfus Large Company Value Fund
* Source: Lipper Analytical Services, Inc.
** Source: Wilshire Associates, Inc.
Average Annual Total Returns
- - --------------------------------------------------------------------------------
One Year Ended From Inception (12/29/93)
October 31, 1998 to October 31, 1998
------------------ -------------------------
4.83% 18.15%
- - ---------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Large Company
Value Fund on 12/29/93 (Inception Date) to a $10,000 investment made on that
date in the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500) as
well as to the Wilshire Large Company Value Index which are described below. For
comparative purposes, the value of each 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 Standard & Poor's 500 Composite Stock Price Index, which
was the Fund' s primary benchmark Index since its inception, is a widely
accepted, unmanaged index of overall stock market performance. The Wilshire
Large Company Value Index, composed of the largest 750 stocks in the Wilshire
5000 Index which meet certain statistical criteria for "value," has been
selected as the new primary comparative index because, like the Fund, it focuses
on "value" stocks. It is believed that this Wilshire Index provides a more
accurate comparison with the Fund' s value investment style. Pursuant to
applicable federal regulations, the performance of the S&P 500 will be provided
for this fiscal year, but will not be provided for the fiscal year ended October
31, 1999. The Indices do not take into account charges, fees and other expenses.
Further information relating to Fund performance, including expense
reimbursements, if applicable, is contained in the Financial Highlights section
of the Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1998
Common Stocks--95.8% Shares Value
- - ------------------------------------------------------- ____________ _____________
<S> <C> <C>
Consumer Durables--5.1% Ford Motor . . . . . . . . . . . . . . . . . . . . . . 45,700 $ 2,479,225
General Motors . . . . . . . . . . . . . . . . . . . . 36,500 2,301,781
Shaw Industries . . . . . . . . . . . . . . . . . . . 125,000 2,171,875
_____________
6,952,881
_____________
Consumer Non-Durables--7.6% ConAgra. . . . . . . . . . . . . . . . . . . . . . . . 80,000 2,435,000
Kimberly-Clark . . . . . . . . . . . . . . . . . . . . 57,400 2,769,550
Philip Morris Cos. . . . . . . . . . . . . . . . . . . 50,000 2,556,250
Whitman . . . . . . . . . . . . . . . . . . . . . . . 120,000 2,572,500
_____________
10,333,300
_____________
Consumer Services--2.0% McDonald's . . . . . . . . . . . . . . . . . . . . . . 40,000 2,675,000
_____________
Electronic Technology--11.9% Boeing . . . . . . . . . . . . . . . . . . . . . . 66,000 2,475,000
Compaq Computer . . . . . . . . . . . . . . . . . . . 72,000 2,277,000
Intel . . . . . . . . . . . . . . . . . . . . . . . . 30,000 2,675,625
International Business Machines . . . . . . . . . . . 21,200 3,146,875
Perkin-Elmer . . . . . . . . . . . . . . . . . . . . . 40,000 3,372,500
Storage Technology . . . . . . . . . . . . . . . . (a) 67,500 2,257,031
_____________
16,204,031
_____________
Energy Minerals--9.6% British Petroleum, A.D.R. . . . . . . . . . . . . . . 32,000 2,830,000
Conoco . . . . . . . . . . . . . . . . . . . . . . . . 33,700 838,288
Exxon . . . . . . . . . . . . . . . . . . . . . . . . 31,700 2,258,625
Mobil . . . . . . . . . . . . . . . . . . . . . . . . 29,500 2,232,781
Texaco . . . . . . . . . . . . . . . . . . . . . . . . 39,800 2,360,638
USX-Marathon Group . . . . . . . . . . . . . . . . . . 76,000 2,484,250
_____________
13,004,582
_____________
Finance--24.3% American General . . . . . . . . . . . . . . . . . . . 35,000 2,397,500
BankAmerica . . . . . . . . . . . . . . . . . . . . . 35,000 2,010,313
CIGNA . . . . . . . . . . . . . . . . . . . . . . . . 42,000 3,063,375
EXEL, Cl. A . . . . . . . . . . . . . . . . . . . . . 32,700 2,499,506
Everest Reinsurance Holdings . . . . . . . . . . . . . 70,000 2,410,625
First Union . . . . . . . . . . . . . . . . . . . . . 42,500 2,465,000
Fleet Financial Group . . . . . . . . . . . . . . . . 67,600 2,699,775
Freddie Mac . . . . . . . . . . . . . . . . . . . . . 51,300 2,949,750
KeyCorp . . . . . . . . . . . . . . . . . . . . . . . 73,200 2,218,875
National City . . . . . . . . . . . . . . . . . . (a) 37,700 2,424,581
Norwest . . . . . . . . . . . . . . . . . . . . . . . 73,300 2,725,844
SunAmerica . . . . . . . . . . . . . . . . . . . . . . 34,700 2,446,350
Torchmark . . . . . . . . . . . . . . . . . . . . . . 61,800 2,703,750
_____________
33,015,244
_____________
Health Technology--7.0% Allergan . . . . . . . . . . . . . . . . . . . . . . . 38,000 2,372,625
Amgen . . . . . . . . . . . . . . . . . . . . . . (a) 30,000 2,356,875
Biogen . . . . . . . . . . . . . . . . . . . . . . (a) 35,000 2,432,500
Pharmacia & Upjohn . . . . . . . . . . . . . . . . . . 43,000 2,276,313
_____________
9,438,313
_____________
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998
Common Stocks (continued) Shares Value
- - ------------------------------------------------------- ____________ _____________
Industrial Services--3.3% Schlumberger . . . . . . . . . . . . . . . . . . . . . 42,000 $ 2,205,000
Waste Management . . . . . . . . . . . . . . . . . . . 49,500 2,233,688
_____________
4,438,688
_____________
Non-Energy Minerals--3.9% Aluminum Co. of America . . . . . . . . . . . . . . . 36,300 2,876,775
Lafarge . . . . . . . . . . . . . . . . . . . . . . . 70,000 2,358,125
_____________
5,234,900
_____________
Process Industries--2.8% duPont (E.I.) de Nemours & Co. . . . . . . . . . . . . 36,300 2,087,250
Owens-Illinois . . . . . . . . . . . . . . . . . . (a) 58,000 1,772,625
_____________
3,859,875
_____________
Retail Trade--1.6% Federated Department Stores . . . . . . . . . . . (a) 56,600 2,175,563
_____________
Transportation--3.2% CNF Transportation . . . . . . . . . . . . . . . . . . 60,000 1,815,000
Union Pacific . . . . . . . . . . . . . . . . . . . . 54,400 2,590,800
_____________
4,405,800
_____________
Utilities--13.5% Ameritech . . . . . . . . . . . . . . . . . . . . . . 42,000 2,265,375
Bell Atlantic . . . . . . . . . . . . . . . . . . . . 60,800 3,230,000
Coastal . . . . . . . . . . . . . . . . . . . . . . . 88,000 3,102,000
MCI WorldCom . . . . . . . . . . . . . . . . . . . . . 47,300 2,613,325
Niagara Mohawk Power . . . . . . . . . . . . . . . . . 154,000 2,252,250
Texas Utilities . . . . . . . . . . . . . . . . . . . 60,000 2,625,000
U S West . . . . . . . . . . . . . . . . . . . . . . . 39,500 2,266,311
_____________
18,354,261
_____________
TOTAL COMMON STOCKS
(cost $114,095,671) . . . . . . . . . . . . . . . $130,092,438
_____________
</TABLE>
<TABLE>
<CAPTION>
Principal
Short-Term Investments--2.7% Amount Value
- - ------------------------------------------------------------------------------------------ ____________ _____________
<S> <C> <C>
U.S. Treasury Bills: 4.49%, 12/17/1998 . . . . . . . . . . . . . . . . . . $ 73,000 $ 72,643
4.37%, 12/24/1998 . . . . . . . . . . . . . . . . . . 94,000 93,442
4.11%, 12/31/1998 . . . . . . . . . . . . . . . . . . 35,000 34,765
4.02%, 1/7/1999 . . . . . . . . . . . . . . . . . . . 82,000 81,380
4.11%, 1/28/1999 . . . . . . . . . . . . . . . . . . . 3,382,000 3,347,504
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $3,630,143) . . . . . . . . . . . . . . . . $ 3,629,734
_____________
TOTAL INVESTMENTS (cost $117,725,814). . . . . . . . . . . . . . . . . . . . . . . . . . . 98.5% $133,722,172
_______ _____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5% $ 2,089,682
_______ _____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $135,811,854
_______ _____________
Notes to Statement of Investments:
- - -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1998
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $117,725,814 $133,722,172
Receivable for investment securities sold . . . . . . . . 2,200,092
Dividends receivable . . . . . . . . . . . . . . . . . . 165,153
Receivable for shares of Common Stock subscribed . . . . 35,981
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 41,023
_____________
136,164,421
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 95,742
Due to Distributor . . . . . . . . . . . . . . . . . . . 27,461
Cash overdraft due to Custodian . . . . . . . . . . . . . 136,907
Payable for shares of Common Stock redeemed . . . . . . . 74,632
Interest payable . . . . . . . . . . . . . . . . . . . . 706
Accrued expenses . . . . . . . . . . . . . . . . . . . . 17,119
_____________
352,567
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $135,811,854
_____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $119,719,225
Accumulated undistributed investment income--net . . . . 453,341
Accumulated net realized gain (loss) on investments,
forward currency exchange contracts and
foreign currency transactions . . . . . . . . . . . . . (357,070)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b) . . . . . . . . . . . . . . . 15,996,358
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $135,811,854
_____________
SHARES OUTSTANDING
(100 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED). . . . . . . . . . . . . . 6,397,732
NET ASSET VALUE, offering and redemption price per share--Note 3(d). . . . . . . . . . . . $21.23
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $13,321 foreign taxes
withheld at source) . . . . . . . . . . . . . $2,383,465
Interest . . . . . . . . . . . . . . . . . . . . 176,130
___________
Total Income . . . . . . . . . . . . . . . . . $ 2,559,595
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . 1,196,867
Shareholder servicing costs--Note 3(b) . . . . . 635,709
Registration fees . . . . . . . . . . . . . . . . 49,058
Prospectus and shareholders' reports . . . . . . 33,161
Professional fees . . . . . . . . . . . . . . . . 24,472
Custodian fees--Note 3(b) . . . . . . . . . . . . 20,765
Directors' fees and expenses--Note 3(c) . . . . . 8,729
Interest expense--Note 2 . . . . . . . . . . . . 834
Miscellaneous . . . . . . . . . . . . . . . . . . 8,168
___________
Total Expenses . . . . . . . . . . . . . . . . 1,977,763
___________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581,832
___________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments
and foreign currency transactions . . . . . . $ (431,167)
Net realized gain (loss) on forward currency
exchange contracts . . . . . . . . . . . . . . 145,195
___________
NET REALIZED GAIN (LOSS) . . . . . . . . . (285,972)
Net unrealized appreciation (depreciation) on
investments and foreign currency transactions . 8,199,995
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . 7,914,023
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . $8,495,855
___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1998 October 31, 1997
_______________ _______________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 581,832 $ 408,170
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . (285,972) 7,983,595
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . 8,199,995 5,923,746
______________ ______________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . 8,495,855 14,315,511
______________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (419,872) (262,874)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,053,887) (2,353,920)
______________ ______________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,473,759) (2,616,794)
______________ ______________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,216,392 172,616,707
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,047,136 2,254,119
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (87,433,544) (58,796,553)
______________ ______________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . . . . . (26,170,016) 116, 074,273
______________ ______________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . (26,147,920) 127,772,990
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161,959,774 34,186,784
______________ ______________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $135,811,854 $161,959,774
______________ ______________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . $ 453,341 $ 291,381
______________ ______________
Shares Shares
______________ ______________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,507,151 8,530,858
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . 393,504 121,976
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,087,272) (2,962,260)
______________ ______________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . . . . (1,186,617) 5,690,574
______________ ______________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS LARGE 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: 1998 1997 1996 1995 1994(1)
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $21.35 $18.05 $15.46 $12.63 $12.50
_______ _______ _______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . .09 .07 .12 .22 .26
Net realized and unrealized gain (loss) on investments . .91 4.33 4.68 2.93 (.13)
_______ _______ _______ _______ _______
Total from Investment Operations . . . . . . . . . . 1.00 4.40 4.80 3.15 .13
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.06) (.11) (.21) (.32) --
Dividends from net realized gain on investments . . . . . (1.06) (.99) (2.00) -- --
_______ _______ _______ _______ _______
Total Distributions . . . . . . . . . . . . . . . . . (1.12) (1.10) (2.21) (.32) --
_______ _______ _______ _______ _______
Net asset value, end of period . . . . . . . . . . . . . $21.23 $21.35 $18.05 $15.46 $12.63
_______ _______ _______ _______ _______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 4.83% 25.29% 34.35% 25.73% 1.04%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . 1.24% 1.22% 1.25% .83% --
Ratio of net investment income to average net assets . . .36% .41% .93% 1.64% 2.08%(2)
Decrease reflected in above expense ratios due to
undertakings by the Manager . . . . . . . . . . . . . -- .06% .32% 1.76% 2.01%(2)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 156.72% 110.14% 186.39% 143.61% 48.35%(2)
Net Assets, end of period (000's Omitted) . . . . . . . . $135,812 $161,960 $34,187 $6,687 $5,168
- - ------------------
(1) From December 29, 1993 (commencement of operations) to October 31, 1994.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Large Company Value Fund (the "Fund") is a separate diversified series
of Dreyfus Growth and Value Funds, Inc. (the "Company") which is registered
under the Investment Company Act of 1940, as amended (the "Act") as an open-end
management investment company and operates as a series company currently
offering eight series including the Fund. The Fund's investment objective is
capital appreciation. The Dreyfus Corporation (the "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 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. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors. 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. Under the terms of the custody agreement, the Fund receives net
earnings credits based on available cash balances left on deposit.
(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 of 1986, as amended (the "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 LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the 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 $290,000
available for Federal income tax purposes to be applied against future net
securities profits, if any realized subsequent to October 31, 1998. If not
applied, the carryover expires in fiscal 2006.
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.
The average daily amount of borrowings outstanding under both arrangements
during the period ended October 31, 1998 was approximately $12,900, with a
related weighted average annualized interest rate of 6.47%.
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
October 31, 1998, the Fund was charged $398,956 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 October 31, 1998, the Fund was charged $135,763 pursuant to the transfer
agency agreement.
The Fund compensates Mellon under a custody agreement for providing custodial
services for the Fund. During the period ended October 31, 1998, the Fund was
charged $20,765 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 redemption or exchange occurs less than fifteen
days following the date of issuance. During the period ended October 31, 1998,
redemption fees amounted to $4,087.
(E) During the period ended October 31, 1998, the Fund incurred total
brokerage commissions of $646,593, of which $456 was paid to Dreyfus Investment
Services Corporation, a subsidiary of Mellon.
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts, during
the period ended October 31, 1998, amounted to $241,810,083 and $273,046,428,
respectively.
The Fund enters into forward currency exchange contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings. When executing forward currency exchange contracts, the Fund is
obligated to buy or sell a foreign currency at a specified rate on a certain
date in the future. With respect to sales of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract increases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
decreases between those dates. With respect to purchases of forward currency
exchange contracts, the Fund would incur a loss if the value of the contract
decreases between the date the forward contract is opened and the date the
forward contract is closed. The Fund realizes a gain if the value of the
contract increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency exchange
contracts which is typically limited to the unrealized gain on each open
contract. At October 31, 1998, there were no open forward currency exchange
contracts.
(B) At October 31, 1998, accumulated net unrealized appreciation on
investments was $15,996,358 consisting of $18,536,016 gross unrealized
appreciation and $2,539,658 gross unrealized depreciation.
At October 31, 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).
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Directors
Dreyfus Large Company Value Fund
We have audited the accompanying statement of assets and liabilities,
including the statement of investments,
of Dreyfus Large Company Value Fund (one of the series constituting Dreyfus
Growth and Value Funds, Inc.) as of October 31, 1998, 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, 1998 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 Large Company Value Fund at October 31, 1998, 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.
New York, New York
December 10, 1998
DREYFUS LARGE COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes, the Fund hereby designates $.075 per share as a
long-term capital gain distribution of the $1.110 per share paid on December 10,
1997.
The Fund also designates 15.83% of the ordinary dividends paid during the
fiscal year ended October 31, 1998 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1999 of
the percentage applicable to the preparation of their 1998 income tax returns.
[reg.tm logo]
(reg.tm)
DREYFUS LARGE COMPANY
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. 251AR9810
Large Company
Value
Annual Report
October 31, 1998
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report for Dreyfus Small Company Value
Fund for the 12-month period ended October 31, 1998. Over this period, your
Fund' s total return was -20.83%.* This compares with a total return of -11.84%
for the Russell 2000 Index, which serves as the Fund's benchmark index.*
The Fund's performance was adversely affected by our holdings in capital goods
and basic industries, two of the most economically sensitive sectors of the
market. Further, an early move to an underweight position in energy and
technology hampered performance. A modest exposure in financial stocks and an
underweight position in utilities also hurt results.
ECONOMIC REVIEW
So far in 1998, the main regions of the world have had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year. The U.S. economy cooled enough over the months that the Fed decided to
stand pat. Evidence of economic cooling continued to accumulate and worries
about the world economy intensified. Financial stresses pushed the Fed to ease
credit in both late September and mid-October. After many years of subpar
economic growth, continental Europe moved into a sustained economic expansion.
The overall European economy benefited as interest rates in peripheral countries
such as Spain and Italy fell, approaching the lower levels established by
Germany, on the eve of currency unification. Unlike the U.S., Europe has
substantial excess capacity of productive plant and labor. In Asia, weak
economies were pervasive as a result of the Asian financial crisis. The Latin
American economies weakened as the financial stresses spread throughout that
region.
A main influence on the U.S. economy this year was the foreign financial
crisis and cooling of the world economy. The positive effects hit first. Actual
inflation and expected inflation dropped, causing a decline in long-term
Treasury bond yields and mortgage rates. This caused a boom in housing. The fall
in inflation helped the consumer sector as more of the growth in consumer income
was left over after inflation to buy goods and services. Consumers benefited
from a combination of good growth in income after inflation, a strong labor
market and past increases in the price of assets they owned.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports. One result of this industrial weakness was to cool off a
U.S. economy that had been growing rapidly.
The major change in the economic outlook over recent months has been a
downward shift in expectations for world economic growth. A credit crunch
developed in emerging countries and former communist countries, sharply reducing
the economic outlook for Asia and Latin America as well as for
commodity-exporting countries throughout the world. The effect on Europe and the
U.S. has been to lower expectations of profit growth and drive down bond yields
Evidence of a weaker world economy accumulated as the financial stresses
continued. A worsened financial crisis occurred between the Russian default in
mid-August and the fallout from the Long-Term Capital Management (hedge fund)
crisis through early October. However, proactive steps were taken to stabilize
the Japanese banks, design a support package for Brazil and ease monetary
policy. The prospects for world economic weakness and monetary ease in the major
countries will be powerfully influenced by whether foreign financial stresses
calm down or intensify in the coming months. There appears to be a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.
MARKET OVERVIEW
The 12 months ended October 31, 1998 encompassed some very different market
phases. There was stock market strength during the early part of the period.
Then small-cap indices started to erode in the spring and were joined by
large-cap indices by mid-summer. A sharp decline until the end of August was
followed by a brief rebound and then a renewed decline amid financial fears
until early October. The last few weeks of the fiscal year saw a strong rally in
response to the easing of monetary policy. Over the 12-month period, the total
return on the Standard & Poor's Stock Price Index was 22.01%. Returns on mid-cap
and small-cap stock indices tended to be weaker than on large-caps, with a
negative total return on small-cap indices.
Three key trends influenced stock market behavior during the fiscal year.
First, the Federal Reserve kept the Federal Funds rate flat at 5.5% for nearly
11 months of the fiscal year, but then eased policy twice. Second, weakness in
emerging country economies contributed to declining commodity prices and a drop
in long-term Treasury bond yields to multidecade lows. Third, expectations for
corporate profits dropped, first in the sectors sensitive to Asian developments
such as oil, basic materials and exports and then for a broader list of stocks.
The trigger for the sharp decline in stocks in August appeared to be the
Russian default in the summer of 1998. This resulted in deepening concerns about
weaker economic growth and corporate profits. There was also a global margin
call on risky assets held by hedge funds and financial institutions. This raised
the cost of debt financing for many corporations and many emerging countries.
Expectations for economic activity in emerging countries in Asia and Latin
America shifted down sharply while expectations for U.S. corporate profits
weakened somewhat. Despite the fall in Treasury bond yields, financial stocks
led the summer selloff due to concerns about financial contagion among emerging
countries and potential loan losses by financial institutions. However, in the
last few weeks of the fiscal year, these fears began to ebb and the stock market
rebounded.
The erosion of expectations about average corporate profit growth over the
last year contributed to an outperformance by a small group of super-cap growth
stocks for much of the fiscal year. Investors had more confidence in the
prospect for strong persistent earnings growth for this small group of stocks
than for the broad market. Value stocks, which often have greater cyclical
sensitivity to earnings fluctuations, lagged behind these super-growth stocks.
In addition, many of the financial stocks that fall into the value category fell
sharply following the Russian default and global margin call concerns.
The fiscal year ended October 31, 1998 was characterized by very different
performances of the various market sectors. Super-cap growth stocks did best,
followed by large-cap stocks in general with mid-cap and small-cap stocks
lagging behind. For example, the total return for the fiscal year on the Russell
1000 Index with a heavy large-cap representation was 19.71%, while the Russell
1000 Growth Index returned 24.64% and the Russell 1000 Value Index returned
14.83% . The return on the Russell Midcap Index was 4.46% while the small-cap
Russell 2000 Index return was -11.84%.***
PORTFOLIO FOCUS
Our investment philosophy for 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-to-earnings,
price-to-book, price-to-sales, and breakup value are the most important. We also
pay close attention to normalized earnings for cyclical industries. Our focus is
more on stocks that are cheap versus their own historical valuation ranges
rather than against the market as a whole. There are many stocks that trade well
below historical average valuation measures, such as price-to-book, despite the
popular press's focus on how expensive the overall market is.
While cheap stocks tend to have less downside risk than the overall market,
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. Additionally, our analysis is done on a
stock-by-stock basis. Our sector weightings result from detailed bottom-up
analysis of individual securities. To help manage risk, we run a highly
diversified portfolio, which typically holds more than 150 companies. The
portfolio is diversified by economic sector as well. We believe that this
value-oriented and risk-averse strategy is particularly well suited to today's
market environment.
We believe that the considerable volatility in the prices of individual
securities has presented the opportunity to find attractively valued small
capitalization stocks. 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 will seek to capitalize on the volatility in the current stock
market.
We have invested in a number of companies that we believe to be attractively
valued in the consumer services and consumer nondurables sectors. Some of these
stocks historically have traded at very rich earnings multiples, but recently
have been severely penalized by the market because of short-term challenges or a
modest deceleration of growth. Yet we believe that these companies can continue
to be high quality, consistent long-term growers. One area where we believe
there is considerable value is in shoe manufacturing and retailing. Companies
such as Wolverine World Wide and Maxwell Shoe have continued to do very well
despite a tough retail environment for shoes. When industry-wide inventory
excesses are corrected, we expect the shares to respond favorably.
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 declines in the prices of many high quality, high
growth enterprises have been too severe, in our opinion. Many technology issues
are trading at levels close to their all-time lows on several valuation
measures. Recent order trends indicate a strong pickup in demand for computers
and computer equipment. Excess inventories have been reduced and a period of
improved sales and earnings may be at hand. Recent stock performance seems to
confirm a more positive market environment for the group. Symantec, which we
have owned for some time, was severely punished by the market for a recent
earnings disappointment. Having substantially reduced our position in
anticipation of such a risk, we subsequently raised the holding to among the
largest in the portfolio because we believe it was hit way too hard by the
market. The shares have recently rebounded considerably.
We believe that energy stock valuations have become very compelling after
significantly trailing the market for most of the year. Most exploration and
production 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 energy prices fluctuate, we are comforted by the very low
valuations and strong production growth characteristics of the companies
recently added to the Fund. We have also added energy services stocks, which
until recently were not cheap enough, given our valuation criteria.
Utilities were among the best performing stocks in the recent market decline.
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. We don' t own stocks in the group because, in our opinion, growth
prospects are anemic, business momentum is neutral and political risk is high.
We remain overweighted in transportation, particularly truckers, because in
our opinion valuations assume a "worst case" economic environment, yet business
fundamentals are relatively sound.
We continue to de-emphasize financial stocks because valuations are not
compelling. Financials are trading well above historical multiple ranges on such
measures as price-to-earnings and price-to-book. In part, this is due to the
consolidation trend within the banking sector, as the potential takeover
premiums are built into many stocks. We are disciplined about valuation,
however, and won' t buy stocks in hope of a takeover. Much of the highly
publicized drop in financials this fall was concentrated on the large money
center banks and brokers. Small cap financial stocks did not get cheap enough to
meet our valuation hurdles.
In recent weeks the overall markets seem to have stabilized as a result of
actions by the Federal Reserve to reduce interest rates and restore confidence
in the economy. This has been particularly beneficial for small cap stocks,
given a significant improvement in liquidity of smaller issuers.
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]
Peter I. Higgins
Portfolio Manager
November 16, 1998
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. The Russell
2000 Index is a widely accepted, unmanaged index 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.
***SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- The Russell 1000 Index measures
the performance of the 1,000 largest companies in the Russell 3000 Index, which
represent approximately 89% of the total market capitalization of the Russell
3000 Index. The Russell 1000 Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 1000 Value Index measures the performance of those
Russell 1000 companies with lower price-to-book ratios and lower forecasted
growth values. 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. All indices are
unmanaged and include reinvested dividends.
DREYFUS SMALL COMPANY VALUE FUND OCTOBER 31, 1998
- - -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS SMALL COMPANY
VALUE FUND AND THE RUSSELL 2000 INDEX
Dollars
$18,210
Dreyfus Small Company Value Fund
$15,676
Russell 2000 Index*
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- - --------------------------------------------------------------------------------
One Year Ended From Inception (12/29/93)
October 31, 1998 to October 31, 1998
(20.83)% 13.18%
- - ---------------
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.
<TABLE>
<CAPTION>
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1998
Common Stocks--97.1% Shares Value
- - ------------------------------------------------------- ____________ _____________
<S> <C> <C>
Basic Industries--4.2% CalMat . . . . . . . . . . . . . . . . . . . . . . . . 268,200 $ 6,285,938
Cherry, Cl. B . . . . . . . . . . . . . . . . . . . . (a) 57,900 709,275
Gaylord Container, Cl. A . . . . . . . . . . . . . . . (a) 527,600 1,582,800
IMCO Recycling . . . . . . . . . . . . . . . . . . . . 106,300 1,468,269
Philip Services . . . . . . . . . . . . . . . . . . . (a) 94,285 47,143
Safety-Kleen . . . . . . . . . . . . . . . . . . . . . (a) 536,700 1,643,644
Structural Dynamics Research . . . . . . . . . . . . . (a) 30,000 431,250
Wausau-Mosinee Paper . . . . . . . . . . . . . . . . . 36,400 634,725
_____________
12,803,044
_____________
Capital Goods--6.8% Aviall . . . . . . . . . . . . . . . . . . . . . . . . (a) 190,400 2,058,700
Avondale Industries . . . . . . . . . . . . . . . . . (a) 142,400 3,711,300
Building Material Holdings . . . . . . . . . . . . . . (a) 6,200 68,975
Chicago Bridge & Iron N.V. . . . . . . . . . . . . . . 158,800 1,617,775
DONCASTERS, A.D.S. . . . . . . . . . . . . . . . . . . (a) 221,400 3,099,600
Fairchild, Cl. A . . . . . . . . . . . . . . . . . . . (a) 161,100 2,174,850
Genlyte Group . . . . . . . . . . . . . . . . . . . . (a) 75,400 1,493,863
Hawk, Cl. A . . . . . . . . . . . . . . . . . . . . . (a) 49,600 496,000
Intermet . . . . . . . . . . . . . . . . . . . . . . . 5,200 84,500
OmniQuip International . . . . . . . . . . . . . . . . 100,300 1,341,513
Vivid Technologies . . . . . . . . . . . . . . . . . . (a) 15,000 88,125
Wabash National . . . . . . . . . . . . . . . . . . . 205,200 3,642,300
Wolverine Tube . . . . . . . . . . . . . . . . . . . . (a) 23,500 497,906
_____________
20,375,407
_____________
Computer Software--6.8% ARDENT Software . . . . . . . . . . . . . . . . . . . (a) 292,500 4,387,500
Learning Company . . . . . . . . . . . . . . . . . . . (a) 253,400 6,540,888
Sybase . . . . . . . . . . . . . . . . . . . . . . . . (a) 157,400 934,563
Symantec . . . . . . . . . . . . . . . . . . . . . . . (a) 531,700 8,507,200
_____________
20,370,151
_____________
Consumer Durables--4.4% BE Aerospace . . . . . . . . . . . . . . . . . . . . . (a) 190,500 4,095,750
Beazer Homes USA . . . . . . . . . . . . . . . . . . . (a) 94,600 1,673,238
Dura Automotive System, Cl. A . . . . . . . . . . . . (a) 96,400 2,301,550
LADD Furniture . . . . . . . . . . . . . . . . . . . . (a) 81,400 1,475,375
Midway Games . . . . . . . . . . . . . . . . . . . . . (a) 97,600 957,700
Newmark Homes . . . . . . . . . . . . . . . . . . . . 42,500 345,313
Tristar Aerospace . . . . . . . . . . . . . . . . . . 239,800 2,457,950
_____________
13,306,876
_____________
Consumer Non-Durables--9.4% Ashworth . . . . . . . . . . . . . . . . . . . . . . . (a) 218,400 1,392,300
Authentic Fitness . . . . . . . . . . . . . . . . . . 30,400 419,900
Ball . . . . . . . . . . . . . . . . . . . . . . . . . 88,400 3,729,375
Crown Crafts . . . . . . . . . . . . . . . . . . . . . 208,200 1,171,125
Delta Woodside Industries . . . . . . . . . . . . . . 70,800 398,250
Fruit of The Loom, Cl. A . . . . . . . . . . . . . . . (a) 56,300 858,575
Houghton Mifflin . . . . . . . . . . . . . . . . . . . 55,600 2,168,400
Maxwell Shoe, Cl. A . . . . . . . . . . . . . . . . . (a) 160,000 1,880,000
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998
Common Stocks (continued) Shares Value
- - ------------------------------------------------------- ____________ _____________
Consumer Non-Durables (continued) Phillips-Van Heusen . . . . . . . . . . . . . . . . . 251,600 $ 2,311,575
Pilgrim's Pride . . . . . . . . . . . . . . . . . . . 52,100 1,201,556
Pillowtex . . . . . . . . . . . . . . . . . . . . . . 54,000 1,755,000
SLI . . . . . . . . . . . . . . . . . . . . . . . . . (a) 59,400 994,950
Saint John Knits . . . . . . . . . . . . . . . . . . . 234,000 4,723,875
Vans . . . . . . . . . . . . . . . . . . . . . . . . . (a) 282,400 2,329,800
Warnaco Group, Cl. A . . . . . . . . . . . . . . . . . 27,500 702,969
Wolverine World Wide . . . . . . . . . . . . . . . . . 180,100 2,352,556
_____________
28,390,206
_____________
Consumer Services--18.0% ACNielsen . . . . . . . . . . . . . . . . . . . . . . (a) 37,600 1,005,800
Bon-Ton Stores . . . . . . . . . . . . . . . . . . . . (a) 172,700 1,133,344
Boyd Gaming . . . . . . . . . . . . . . . . . . . . . (a) 274,400 823,200
Brown Group . . . . . . . . . . . . . . . . . . . . . 242,000 3,856,875
Brylane . . . . . . . . . . . . . . . . . . . . . . . (a) 68,100 1,098,113
Buffets . . . . . . . . . . . . . . . . . . . . . . . (a) 217,900 2,356,044
Building One Services . . . . . . . . . . . . . . . . (a) 116,500 1,441,688
CEC Entertainment . . . . . . . . . . . . . . . . . . (a) 137,000 3,870,250
Cadmus Communication . . . . . . . . . . . . . . . . . 85,000 1,476,875
Claire's Stores . . . . . . . . . . . . . . . . . . . 238,000 4,031,125
Discount Auto Parts . . . . . . . . . . . . . . . . . (a) 119,600 2,885,350
Dress Barn . . . . . . . . . . . . . . . . . . . . . . (a) 81,100 1,145,538
Elder-Beerman Stores . . . . . . . . . . . . . . . . . (a) 133,900 1,564,956
Emmis Communications, Cl. A . . . . . . . . . . . . . (a) 144,600 4,735,650
Finish Line, Cl. A . . . . . . . . . . . . . . . . . . (a) 182,900 1,943,313
Finley Enterprises . . . . . . . . . . . . . . . . . . (a) 149,700 1,061,934
J & J Snack Foods . . . . . . . . . . . . . . . . . . (a) 119,300 2,684,250
Lithia Motors, Cl. A . . . . . . . . . . . . . . . . . (a) 126,600 1,899,000
Micro Warehouse . . . . . . . . . . . . . . . . . . . (a) 102,300 2,231,419
Miller Industries . . . . . . . . . . . . . . . . . . (a) 297,400 1,561,350
OfficeMax . . . . . . . . . . . . . . . . . . . . . . (a) 379,100 3,459,288
Sapiens International . . . . . . . . . . . . . . . . (a) 220,000 1,498,750
Stage Stores . . . . . . . . . . . . . . . . . . . . . (a) 84,400 1,118,300
Station Casinos . . . . . . . . . . . . . . . . . . . (a) 107,500 645,000
Sunglass Hut International . . . . . . . . . . . . . . (a) 143,900 665,538
Sykes Enterprises . . . . . . . . . . . . . . . . . . (a) 85,500 1,677,938
Timberland, Cl. A . . . . . . . . . . . . . . . . . . (a) 16,800 672,000
Young Broadcasting, Cl. A . . . . . . . . . . . . . . (a) 47,700 1,505,531
_____________
54,048,419
_____________
Energy--7.6% Barrett Resources . . . . . . . . . . . . . . . . . . (a) 11,200 263,900
Devon Energy . . . . . . . . . . . . . . . . . . . . . 67,000 2,269,625
EEX . . . . . . . . . . . . . . . . . . . . . . . . . (a) 505,400 1,958,425
Forecenergy . . . . . . . . . . . . . . . . . . . . . (a) 80,300 476,781
Giant Industries . . . . . . . . . . . . . . . . . . . 161,300 1,885,194
Houston Exploration . . . . . . . . . . . . . . . . . (a) 169,400 3,006,850
Marine Drilling . . . . . . . . . . . . . . . . . . . (a) 143,800 1,608,763
Newfield Exploration . . . . . . . . . . . . . . . . . (a) 60,400 1,468,475
Newpark Resources . . . . . . . . . . . . . . . . . . (a) 308,400 2,910,525
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998
Common Stocks (continued) Shares Value
- - ------------------------------------------------------- ____________ _____________
Energy (continued) Range Resources . . . . . . . . . . . . . . . . . . . 513,700 $ 2,921,669
Santa Fe Energy Resources . . . . . . . . . . . . . . (a) 369,200 2,999,750
Titan Exploration . . . . . . . . . . . . . . . . . . (a) 195,600 1,149,150
_____________
22,919,107
_____________
Financial Services--7.9% ARM Financial Group, Cl. A . . . . . . . . . . . . . . 143,000 2,743,813
Astoria Financial . . . . . . . . . . . . . . . . . . 137,313 5,904,459
Bay View Capital . . . . . . . . . . . . . . . . . . . 52,600 907,350
CNA Surety . . . . . . . . . . . . . . . . . . . . . . (a) 132,800 1,867,500
FirstFed Financial . . . . . . . . . . . . . . . . . . (a) 9,300 152,288
Golden State Bancorp . . . . . . . . . . . . . . . . . (a) 163,060 3,128,714
Guarantee Life Cos. . . . . . . . . . . . . . . . . . 66,300 1,276,275
Klamath First Bancorp . . . . . . . . . . . . . . . . 73,400 1,339,550
PFF Bancorp . . . . . . . . . . . . . . . . . . . . . (a) 201,700 2,962,469
Resource Bancshares Mortgage Group . . . . . . . . . . 50,600 746,350
SCPIE Holdings . . . . . . . . . . . . . . . . . . . . 89,700 2,814,338
_____________
23,843,106
_____________
Health Care--7.4% CONMED . . . . . . . . . . . . . . . . . . . . . . . . (a) 229,300 6,076,434
Elscint . . . . . . . . . . . . . . . . . . . . . . . 81,200 913,500
ESC Medical Systems . . . . . . . . . . . . . . . . . (a) 310,800 2,525,250
Hologic Inc. . . . . . . . . . . . . . . . . . . . . . (a) 194,300 2,659,481
King Pharmaceuticals . . . . . . . . . . . . . . . . . 161,400 2,511,788
PharMerica . . . . . . . . . . . . . . . . . . . . . . (a) 471,900 1,592,663
Quest Diagnostics . . . . . . . . . . . . . . . . . . 231,500 3,848,688
Rural/Metro Corp. . . . . . . . . . . . . . . . . . . (a) 68,500 719,250
SpaceLabs Medical . . . . . . . . . . . . . . . . . . (a) 102,200 1,481,900
_____________
22,328,954
_____________
Technology--20.1% CFM Technologies . . . . . . . . . . . . . . . . . . . (a) 10,800 97,200
CHS Electronics . . . . . . . . . . . . . . . . . . . (a) 443,200 4,321,200
Credence Systems . . . . . . . . . . . . . . . . . . . (a) 217,000 3,227,875
DSP Group . . . . . . . . . . . . . . . . . . . . . . (a) 83,300 1,332,800
Diamond Multimedia Systems . . . . . . . . . . . . . . (a) 82,100 472,075
Electroglas . . . . . . . . . . . . . . . . . . . . . (a) 104,100 1,307,756
FSI International . . . . . . . . . . . . . . . . . . (a) 56,300 365,950
GT Interactive Software . . . . . . . . . . . . . . . (a) 250,700 1,707,894
Hadco . . . . . . . . . . . . . . . . . . . . . . . . (a) 53,700 1,691,550
HMT Technology . . . . . . . . . . . . . . . . . . . . (a) 199,400 1,719,825
Hutchinson Technology . . . . . . . . . . . . . . . . (a) 38,600 750,288
Hypercom . . . . . . . . . . . . . . . . . . . . . . . (a) 242,100 2,299,950
In Focus Systems . . . . . . . . . . . . . . . . . . . (a) 386,100 2,413,125
KEMET . . . . . . . . . . . . . . . . . . . . . . . . (a) 77,900 1,090,600
Kulicke & Soffa Industries . . . . . . . . . . . . . . (a) 149,100 2,432,194
LTX . . . . . . . . . . . . . . . . . . . . . . . . . (a) 276,500 553,000
Lam Research . . . . . . . . . . . . . . . . . . . . . (a) 195,500 2,822,531
Lattice Semiconductor . . . . . . . . . . . . . . . . (a) 30,200 1,026,800
Maxtor . . . . . . . . . . . . . . . . . . . . . . . . (a) 348,700 3,704,938
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998
Common Stocks (continued) Shares Value
- - ------------------------------------------------------- ____________ _____________
Technology (continued) Mosaix . . . . . . . . . . . . . . . . . . . . . . . . (a) 44,200 $ 273,488
Oak Industries . . . . . . . . . . . . . . . . . . . . (a) 102,900 2,784,731
Pioneer Standard Electronics . . . . . . . . . . . . . 127,300 1,137,744
Planar Systems . . . . . . . . . . . . . . . . . . . . (a) 97,400 876,600
Power Integrations . . . . . . . . . . . . . . . . . . 114,000 1,824,000
Praegitzer Industries . . . . . . . . . . . . . . . . (a) 187,600 1,553,563
Read-Rite . . . . . . . . . . . . . . . . . . . . . . (a) 235,500 2,531,625
Silicon Valley Group . . . . . . . . . . . . . . . . . 88,000 1,127,500
Splash Technology Holdings . . . . . . . . . . . . . . (a) 242,500 2,046,094
Trimble Navigation Ltd. . . . . . . . . . . . . . . . (a) 82,500 660,000
Unitrode . . . . . . . . . . . . . . . . . . . . . . . (a) 206,200 2,590,388
Vishay Intertechnology . . . . . . . . . . . . . . . . 111,000 1,678,875
VLSI Technology . . . . . . . . . . . . . . . . . . . (a) 134,400 1,293,600
Vtel . . . . . . . . . . . . . . . . . . . . . . . . . (a) 61,500 280,594
Wang Laboratories . . . . . . . . . . . . . . . . . . (a) 216,200 4,621,275
Watkins-Johnson . . . . . . . . . . . . . . . . . . . 99,900 1,860,638
_____________
60,478,266
_____________
Transportation--4.5% American Freightways . . . . . . . . . . . . . . . . . (a) 265,500 2,256,750
Arkansas Best . . . . . . . . . . . . . . . . . . . . (a) 470,300 2,527,863
Covenant Transport, Cl.A . . . . . . . . . . . . . . . (a) 75,100 1,135,888
Kitty Hawk . . . . . . . . . . . . . . . . . . . . . . (a) 223,600 2,236,000
Knightsbridge Tankers . . . . . . . . . . . . . . . . 30,819 670,313
Old Dominion Freight Line . . . . . . . . . . . . . . (a) 24,600 307,500
USFreightways . . . . . . . . . . . . . . . . . . . . 60,100 1,506,256
Yellow . . . . . . . . . . . . . . . . . . . . . . . . (a) 173,800 2,791,663
_____________
13,432,233
_____________
TOTAL INVESTMENTS (cost $356,335,724). . . . . . . . . . . . . . . . . . . . . . . . . . . 97.1% $292,295,769
_______ _____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9% $ 8,612,641
_______ _____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $300,908,410
_______ _____________
Notes to Statement of Investments:
- - -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1998
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $356,335,724 $292,295,769
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 318,758
Receivable for investment securities sold . . . . . . . . 16,396,836
Dividends and interest receivable . . . . . . . . . . . . 44,653
Receivable for shares of Common Stock subscribed . . . . 43,059
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 86,967
_____________
309,186,042
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 217,707
Due to Distributor . . . . . . . . . . . . . . . . . . . 57,860
Payable for investment securities purchased . . . . . . . 5,842,054
Bank loan payable--Note 2 . . . . . . . . . . . . . . . . 1,900,000
Payable for shares of Common Stock redeemed . . . . . . . 191,862
Accrued expenses . . . . . . . . . . . . . . . . . . . . 68,149
_____________
8,277,632
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,908,410
_____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $370,854,482
Accumulated net realized gain (loss) on investments,
options written and securities sold short . . . . . . . (5,906,117)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b) . . . . . . . . . . . . . . . (64,039,955)
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,908,410
_____________
SHARES OUTSTANDING
(100 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED). . . . . . . . . . . . . . 17,641,449
NET ASSET VALUE, offering and redemption price per share--Note 3(d). . . . . . . . . . . . $17.06
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $15,116 foreign taxes
withheld at source) . . . . . . . . . . . . . $ 2,553,468
Interest . . . . . . . . . . . . . . . . . . . . 644,858
_____________
Total Income . . . . . . . . . . . . . . . . . $ 3,198,326
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . 3,078,535
Shareholder servicing costs--Note 3(b) . . . . . 1,570,727
Registration fees . . . . . . . . . . . . . . . . 89,977
Custodian fees--Note 3(b) . . . . . . . . . . . . 81,585
Prospectus and shareholders' reports . . . . . . 75,155
Professional fees . . . . . . . . . . . . . . . . 52,061
Directors' fees and expenses--Note 3(c) . . . . . 26,551
Interest expense--Note 2 . . . . . . . . . . . . 23,264
Dividends on securities sold short . . . . . . . 7,920
Miscellaneous . . . . . . . . . . . . . . . . . . 17,817
_____________
Total Expenses . . . . . . . . . . . . . . . . 5,023,592
_____________
INVESTMENT (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,825,266)
_____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments:
Long transactions (including options written) . $ (3,155,750)
Short sale transactions . . . . . . . . . . . (1,207,774)
_____________
NET REALIZED GAIN (LOSS) . . . . . . . . . (4,363,524)
Net unrealized appreciation (depreciation) on
investments, options written and securities
sold short . . . . . . . . . . . . . . . . . . (82,191,499)
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . (86,555,023)
_____________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . $(88,380,289)
_____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1998 October 31, 1997
_______________ _______________
<S> <C> <C>
OPERATIONS:
Investment income (loss)--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,825,266) $ 257,749
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . (4,363,524) 6,631,396
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . (82,191,499) 17,725,090
______________ ______________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . (88,380,289) 24,614,235
______________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (275,563) (46,432)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,072,792) (2,431,882)
______________ ______________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,348,355) (2,478,314)
______________ ______________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296,824,006 460,227,849
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,869,046 2,423,279
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (283,794,090) (124,900,940)
______________ ______________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . . . . . 19,898,962 337,750,188
______________ ______________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . . (75,829,682) 359,886,109
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376,738,092 16,851,983
______________ ______________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,908,410 $ 376,738,092
______________ ______________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . ---- $ 259,232
______________ ______________
Shares Shares
______________ ______________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,797,646 22,290,239
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . 320,684 145,455
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,638,948) (6,227,693)
______________ ______________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . . . . 479,382 16,208,001
______________ ______________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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: 1998 1997 1996 1995 1994(1)
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $21.95 $17.66 $14.00 $12.43 $12.50
_______ _______ _______ _______ _______
Investment Operations:
Investment income (loss)--net . . . . . . . . . . . . . . (.09)(2) -- .07 .10 .30
Net realized and unrealized gain (loss) on investments . (4.39) 6.43 4.69 2.33 (.37)
_______ _______ _______ _______ _______
Total from Investment Operations . . . . . . . . . . . . (4.48) 6.43 4.76 2.43 (.07)
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.02) (.04) (.09) (.33) --
Dividends from net realized gain on investments . . . . . (.39) (2.10) (1.01) (.53) --
_______ _______ _______ _______ _______
Total Distributions . . . . . . . . . . . . . . . . . . . (.41) (2.14) (1.10) (.86) --
_______ _______ _______ _______ _______
Net asset value, end of period . . . . . . . . . . . . . $17.06 $21.95 $17.66 $14.00 $12.43
_______ _______ _______ _______ _______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . (20.83%) 40.22% 35.99% 21.30% (.56%)(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets . . . . 1.21% 1.23% 1.27% .84% --
Ratio of interest expense and dividends on
securities sold short to average net assets . . . . . .01% .02% .02% .07% .01%(3)
Ratio of net investment income (loss) to average net assets . . (.44%) .22% .62% .79% 2.39%(3)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation . . . . . . . -- .05% .41% 1.80% 2.07%(3)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 132.38% 76.11% 183.58% 161.01% 219.63%(3)
Net Assets, end of period (000's Omitted) . . . . . . . . $300,908 $376,738 $16,852 $6,404 $5,166
- - ------------
(1) From December 29, 1993 (commencement of operations) to October 31, 1994.
(2) Based on average shares outstanding at each month end.
(3) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Small Company Value Fund (the "Fund") is a separate diversified series
of Dreyfus Growth and Value Funds, Inc. (the "Company") which is registered
under the Investment Company Act of 1940, as amended (the "Act") as an open-end
management investment company and operates as a series company currently
offering eight series including the Fund. The Fund's investment objective is
capital appreciation. The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A.
(" Mellon"). The Boston Company Asset Management, Inc. ("TBC Asset Management"),
an indirect subsidiary of Mellon and an affiliate of Dreyfus, serves as the
Fund' s sub-investment adviser. Premier Mutual Fund Services, Inc. (the
" Distributor" ) is the distributor of the Fund's shares, which are sold to the
public without a sales charge.
The Company accounts separately for the assets, liabilities and operations of
each fund. Expenses directly attributable to each fund are charged to that
fund' s operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors. 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. Under the terms of the custody agreement, the Fund received net
earnings credits of $5,228 during the period ended October 31, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(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 of DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1986, as amended (the "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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
As of October 31, 1998, the Fund reclassified certain components of net
assets. The reclassifications resulted in a net decrease to accumulated
investment loss of $1,841,597, a decrease in accumulated net realized gain
(loss) on investments of $1,074,937 and a decrease in paid-in capital of
$766,660. Net assets were not affected by these reclassifications.
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 October 31, 1998 was approximately $380,700, with a
related weighted average annualized interest rate of 6.11%.
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.
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, 1998, the Fund was charged $1,026,178 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, 1998, the Fund was charged $280,533 pursuant to the transfer
agency agreement.
The Fund compensates Mellon under a custody agreement for providing custodial
services for the Fund. During the period ended October 31, 1998, the Fund was
charged $81,585 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 redemption or exchange occurs less than fifteen
days following the date of issuance.
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 1998 is summarized as follows:
<TABLE>
<CAPTION>
Purchases Sales
_____________ _____________
<S> <C> <C>
Long transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $533,116,172 $523,406,715
Short sale transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,350,848 88,810
___________ ___________
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $538,467,020 $523,495,525
___________ ___________
</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/or custodian, of cash
and/or liquid securities sufficient to cover its short position. At October 31,
1998, there were no securities sold short outstanding.
In addition, the following table summarizes the Fund's call options written
for the period ended October 31, 1998:
<TABLE>
<CAPTION>
Options Terminated
_________________________
Net
Number of Premiums Realized
Contracts Received Cost Gain (Loss)
__________ __________ __________ __________
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding October 31, 1997 . . . . . . . . 2,471 $533,444
Contracts written . . . . . . . . . . . . . . . . . . . 897 159,966
________ _________
3,368 693,410
________ _________
Contracts Terminated:
Closed . . . . . . . . . . . . . . . . . . . . . . 397 53,882 $67,191 $(13,309)
Exercised . . . . . . . . . . . . . . . . . . . . . 447 140,391 -- --
Expired . . . . . . . . . . . . . . . . . . . . . . 2,524 499,137 -- 499,137
________ _________ ________ _________
Total contracts terminated . . . . . . . . . . . 3,368 $693,410 $67,191 $485,828
________ _________ ________ _________
Contracts outstanding October 31, 1998 . . . . . . . . -- --
________ _________
</TABLE>
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. At October 31, 1998,
there were no open options contracts outstanding.
(B) At October 31, 1998, accumulated net unrealized depreciation on
investments was $64,039,955 consisting of $14,589,723 gross unrealized
appreciation and $78,629,678 gross unrealized depreciation.
At October 31, 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).
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
REPORT OF ERNST AND 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 statement of investments, of Dreyfus Small Company Value Fund (one
of the Funds constituting Dreyfus Growth and Value Funds, Inc.) as of October
31, 1998, 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, 1998 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, 1998, 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.
New York, New York
December 10, 1998
DREYFUS SMALL COMPANY VALUE FUND
- - -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes, the Fund hereby designates $.045 per share as a
long-term capital gain distribution of the $.400 per share paid on December 9,
1997.
The Fund also designates 12.54% of the ordinary dividends paid during the
fiscal year ended October 31, 1998 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1999 of
the percentage applicable to the preparation of their 1998 income tax returns.
[reg.tm logo]
(reg.tm)
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. 253AR9810
Small Company
Value Fund
Annual Report
October 31, 1998
