<PAGE>
Annual Report
---------------------
Dreyfus Premier
Limited Term
High Income Fund
---------------------
December 31, 1997
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for the Dreyfus Premier Limited Term
High Income Fund for the period from Fund's launch on June 2, 1997 through
December 31, 1997, as shown in the following table:
Approximate
Total Return* Income Dividends Distribution Rate**
------------- ---------------- -------------------
Class A 5.38% $0.701 9.20%
Class B 5.04% $0.660 9.08%
Class C 4.98% $0.642 8.82%
Class R 5.44% $0.718 9.89%
Merrill Lynch High Yield
Master II Index 8.56%***
ECONOMIC REVIEW
Inflation seems to be under control. Not since the oil price collapse in 1986
has it been so restrained. As the economy approached the end of its seventh
uninterrupted year of expansion, inflation seemed to become even more subdued.
During the last quarter of 1997, the 12-month pace of consumer price increases
fell below the 2% level. Producer prices actually fell at an annual rate of 1.2%
over the first 11 months of the year.
The ongoing fear in the financial markets has been that the Federal Reserve
Board's (the "Fed") unremitting fight against inflation could lead to further
increases in interest rates. Yet the Federal Open Market Committee (F.O.M.C.),
the policy-making arm of the Fed, has raised interest rates just once in over
two years, a period roughly coinciding with the latest surge of economic growth.
The last increase occurred on March 25, 1997 when the F.O.M.C. increased the
Federal Funds rate by a modest one quarter of a percentage point to 5.50%. (The
Federal Funds rate is the rate of interest that banks charge one another for
overnight loans.) Investor concern about additional monetary restraint centers
on the low unemployment rate of just 4.6% as of December 31, 1997, a 24-year
low. In particular, there were fears that wages would rise at a rate that could
rekindle inflation. Over the last year, the gain in wages after adjusting for
inflation was 2%, the sharpest increase in 20 years.
Not surprisingly, an almost ideal economic climate--plentiful jobs, low
interest rates and dwindling inflation--has put consumers in an ebullient mood.
Though holiday retail sales were below expectations, spending in the third
quarter grew at the strongest pace in five years. Since consumer spending
accounts for two thirds of all economic activity, consumer attitudes are
important indicators of future economic conditions. The Conference Board (a
business-sponsored research group) reported in December that its Index of
Consumer Confidence rose to its highest level since 1969. So far, the serious
economic developments in Asia have not had an inhibiting effect on consumer
attitudes.
The Asian financial crisis, while bound to affect the import/export segment
of our economy, may also afford the Fed additional flexibility in implementing
monetary policy. While the Fed is concerned about the potential resurgence of
inflation, lower-priced Asian imports may counteract upward pressure on the rate
of U.S. inflation. Moreover, with our economic expansion mature by any
historical precedent (it's the second longest peacetime expansion in this
century), a slackening in overseas demand for U.S. products, combined with the
lower-priced imports, may help contain economic growth without additional
monetary tightening by the Fed. Regardless, we believe that it is unlikely that
the Fed would raise interest rates and further unsettle the international
financial markets while Asian countries struggle to stabilize their
<PAGE>
currencies in relation to the U.S. dollar. Perhaps the biggest uncertainty
ahead is the extent to which the Asian turmoil will affect the U.S. economy. We
are particularly vigilant for developments abroad that might have either
negative or positive consequences for the portfolio. The trouble in Asia shows
the close and sensitive relationship between our economy and the economies
around the globe.
MARKET ENVIRONMENT
Despite the Asian jolt last October, the high yield market, as measured by
the Merrill Lynch High Yield Master II Index, continues its long march of
profitable quarterly returns going back to 1994. Contributing factors include
steady domestic economic growth combined with low inflation and growing
acceptance of high yields as an investment asset class. Besides continuing
strong cash inflows into high yield mutual funds, growing demand is seen from
pension funds, insurance companies, and other types of investors. This demand,
combined with increased market liquidity, has pushed high yield spreads to
Treasuries to their narrowest historical levels.
Good times generally do not last forever. The meltdown of the Asian economies
during the fourth quarter of 1997 could prove to be a catalyst for worldwide
deflation. If true, it would have negative implications for the high yield
market. Since Asia has been an important source of demand growth and low-cost
manufacturing for all developed economies, lower demand for exports and lower
prices for imports could have a negative effect on the manufacturing sectors of
our domestic economy. Slower economic growth is generally not positive for
riskier investments like high yield bonds. The arguments over the strength of
the Asian impact rage back and forth between economists and emerging market
observers. We believe the key investment concept to take from this for all
investors is to consider a more defensive investment posture.
A defensive posture in high yield is generally considered to be one of
shortened maturity and duration. This has the double effect of lessening
exposure to both interest rate and credit volatility, yet maintaining relatively
higher yields than with short-term investment-grade securities due to the high
coupons of high yield issuers. While this strategy would generally underperform
the broad high yield market in strong markets, it can outperform in down
markets.
PORTFOLIO OVERVIEW
The Fund has maintained its average effective duration and average effective
maturity inside of three years, well below its limits, in a defensive posture.
The average effective duration of the Merrill Lynch High Yield Master II Index
is approximately four years. The Fund's underperfomance during this period
relative to the broad high yield market as measured by this Index is
predominantly due to its shorter effective duration and maturity during a period
of falling interest rates.
Exposure to emerging markets is very limited, and all holdings are
denominated in U.S. dollars. Additionally, by prospectus the Fund cannot enhance
yield through the use of derivatives or leverage. Industry emphasis is centered
on consumer goods, cable television, broadcasting, and telecommunications; all
industries with limited exposure to any Asian impact.
The goals of the Fund are: 1) high current income, 2) a short average
effective duration and maturity to mitigate interest rate and credit risk;
and 3) low exposure to emerging markets. We expect this will provide a
defensive investment for high yield investors while outperforming short-term
investment grade investments.
<PAGE>
We will continue to use intensive credit research to acquire assets
consistent with those goals.
Sincerely,
/s/ Roger King
Roger King
Portfolio Manager
January 20, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares or the contingent deferred sales charge imposed on
redemptions in the case of Class B and Class C shares.
** Distribution rate per share is based upon dividends per share paid from
net investment income during the period, divided by the maximum offering
price per share at the end of the period in the case of Class A shares, or
the net asset value per share in the case of Class B, Class C and Class R
shares.
*** Merrill Lynch, Pierce, Fenner and Smith, Inc. For comparative purposes,
the value of the Index on 5/31/97 is used. All dividends and capital gain
distributions are reinvested. The Merrill Lynch Master II Index is a
market capitalization weighted index including all domestic and Yankee
high yield bonds with at least $100 million par amount outstanding and
greater than or equal to one year to maturity.
<PAGE>
Dreyfus Premier Limited Term High Income Fund December 31, 1997
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER LIMITED
TERM HIGH INCOME FUND
CLASS A SHARES, CLASS B SHARES, CLASS C SHARES AND CLASS R SHARES AND THE
MERRILL LYNCH HIGH YIELD MASTER II INDEX
Dollars
$10,856
Merrill Lynch High Yield
Master II Index*
$10,544
Dreyfus Premier Limited
Term High Income Fund
(Class R Shares)
$10,398
Dreyfus Premier Limited
Term High Income Fund
(Class C Shares)
$10,106
Dreyfus Premier Limited
Term High Income Fund
(Class B Shares)
$10,063
Dreyfus Premier Limited
Term High Income Fund
(Class A Shares)
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
Actual Aggregate Total Returns
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
- ---------------------------------------------------------- -------------------------------------------------------
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
Period Ended 12/31/97 Sales Charge Sales Charge (4.5%) Period Ended 12/31/97 Redemption Redemption*
- --------------------- ---------------- ------------------- --------------------- ---------- ---------------------
<S> <C> <C> <C> <C> <C>
From Inception (6/2/97) 5.38% 0.63% From Inception (6/2/97) 5.04% 1.06%
Class C Shares Class R Shares
- ---------------------------------------------------------- -------------------------------------------------------
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
Period Ended 12/31/97 No Redemption Redemption** Period Ended 12/31/97
- --------------------- ------------- --------------------- ---------------------
From Inception (6/2/97) 4.98% 3.98% From Inception (6/2/97) 5.44%
<FN>
- ------------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A, Class
B, Class C and Class R shares of Dreyfus Premier Limited Term High Income Fund
on 6/2/97 (Inception Date) to a $10,000 investment made in the Merrill Lynch
High Yield Master II Index on that date. For comparative purposes, the value of
the index on 5/31/97 is used as the beginning value on 6/2/97. All dividends and
capital gain distributions are reinvested.
The Fund seeks to achieve its objective by investing in lower rated
fixed-income securities, and by maintaining an effective average portfolio
maturity of 4 years or less and an effective average duration of 3.5 years or
less. The Fund's performance shown in the line graph takes into account the
maximum initial sales charge on Class A shares, the maximum contingent deferred
sales charge on Class B and Class C shares and all other applicable fees and
expenses on all classes. The Merrill Lynch High Yield Master II Index is a
market capitalization weighted index including all domestic and Yankee
high-yield bonds with at least $100 million par amount outstanding and greater
than or equal to one year to maturity. Both interest and price changes are
calculated daily based on an accrued schedule and trader pricing. 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.
* The maximum contingent deferred sales charge for Class B shares is 4% and is
reduced to 0% after six years.
** The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of the date of purchase.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1997
Principal
Bonds and Notes--96.7% Amount Value
- ------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Aircraft & Aerospace--3.9% AM General,
Sr. Notes, 12 7/8%, 2002................... $ 2,500,000 $ 2,700,000
Fairchild,
Sub. Deb., 12%, 2001....................... 710,000 713,550
Rocal, Ltd.,
Collateralized Global Medium Term Notes
(Gtd. by Embraer-Empresa Brasileira de
Aeronautica, S.A.), 10 1/4%, 1998.......... 7,856,000(a) 7,865,820
Sequa,
Sr. Sub. Notes, 9 3/8%, 2003............... 1,500,000 1,556,250
------------
12,835,620
------------
Broadcasting--2.2% Azteca Holdings, S.A de C.V.,
Sr. Secured Notes, 11%, 2002............... 500,000(a) 517,500
Busse Broadcasting,
Sr. Secured Notes, 11 5/8%, 2000........... 1,125,000 1,212,188
Pegasus Media & Communications,
Sr. Sub. Notes, Ser. B, 12 1/2%, 2005...... 3,000,000 3,435,000
Scandinavian Broadcasting System SA,
Conv. Sub. Deb., 7 1/4%, 2005.............. 500,000 502,500
Univision Network Holding, L.P.,
Sub. Notes, 7%, 2002....................... 2,550,575 1,635,000
------------
7,302,188
------------
Building Materials--.5% Associated Materials,
Sr. Sub. Notes, 11 1/2%, 2003.............. 1,000,000 1,075,000
Emcor Group,
Notes, Ser. C, 11%, 2001................... 186,830 195,237
Nortek,
Sr. Sub. Notes, 9 7/8%, 2004............... 500,000 512,500
------------
1,782,737
------------
Cable Television--12.2% Adelphia Communications,
Deb., 11 7/8%, 2004........................ 2,265,000 2,474,513
CCA Holdings,
Sr. Sub. Notes, Zero Coupon, 1999.......... 9,328,405 7,150,000
Diamond Cable Communications, PLC,
Sr. Discount Notes, Zero Coupon, 2000...... 6,950,000(b) 5,403,625
EchoStar Communications,
Sr. Discount Notes, Zero Coupon, 1999...... 1,000,000(c) 920,000
EchoStar DBS,
Gtd. Notes, 12 1/2%, 2002.................. 1,500,000 1,627,500
EchoStar Satellite Broadcast,
Sr. Discount Notes, Zero Coupon, 2000...... 2,750,000(d) 2,340,000
Falcon Holding Group, L.P.,
Sr. Sub Notes, Ser. B, 11%, 2003........... 4,082,500 4,266,156
Galaxy Telecom, L.P.,
Sr. Sub. Notes, 12 3/8%, 2005.............. 3,000,000 3,315,000
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Cable Television (continued) Helicon Group,
Sr. Secured Notes, Ser. B, 11%, 2003....... $ 2,500,000 $ 2,700,000
Marcus Cable, L.P.,
Sr. Deb., 11 7/8%, 2005.................... 1,500,000 1,636,875
Sr. Discount Notes, Zero Coupon, 2000...... 3,000,000(e) 2,610,000
United International Holdings, Sr. Discount Notes:
Ser. B , Zero Coupon, 1999................. 3,600,000 3,006,000
Zero Coupon, 1999.......................... 3,395,000 2,834,825
Zero Coupon, 1999 (Units).................. 100,000(f) 81,000
------------
40,365,494
------------
Casinos & Gaming--2.9% Coast Hotels and Casinos,
First Mortgage Notes, 13%, 2002............ 1,000,000 1,100,000
Griffin Gaming and Entertainment,
First Mortgage Notes, 9.27%, 2000.......... 1,000,000 983,902
Hollywood Casino,
Sr. Notes, 12 3/4%, 2003................... 3,500,000 3,745,000
Majestic Star Casino, LLC,
Sr. Exchange Secured Notes, 12 3/4%, 2003.. 3,500,000 3,797,500
------------
9,626,402
------------
Chemicals--1.9% Harris Chemical,
Sr. Sub. Notes, 10 3/4%, 2003.............. 3,500,000 3,753,750
Trans-Resources,
Sr. Sub. Notes, Ser. B, 11 7/8%, 2002...... 2,500,000 2,637,500
------------
6,391,250
------------
Consumer--6.0% BPC Holding,
Sr. Secured Notes, 12 1/2%, 2006........... 2,750,000 3,038,750
Berry Plastics,
Sr. Sub. Notes, 12 1/4%, 2004.............. 1,000,000 1,107,500
Coleman Holdings,
Sr. Secured First Priority Discount Notes,
Zero Coupon, 2001.......................... 3,500,000 2,336,250
Florist Transworld,
Sr. Sub. Notes, 14%, 2001.................. 4,500,000 5,062,500
Hosiery Corp. of America,
Sr. Sub. Exchange Notes, 13 3/4%, 2002..... 1,000,000 1,085,000
Marcus Cable Operating,
Gtd. Sr. Sub Discount Notes, Zero Coupon, 1999 2,000,000(g) 1,860,000
Revlon Worldwide,
Sr. Secured Discount Notes, Zero Coupon, 2001 7,750,000 5,386,250
------------
19,876,250
------------
Energy--4.7% Clark USA,
Sr. Notes, Ser. B, 10 7/8%, 2005........... 5,386,000 5,897,670
DeepTech International,
Sr. Secured Notes, 12%, 2000............... 4,850,000 5,177,375
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Energy (continued) Kelly Oil & Gas,
Conv. Sub. Notes, 7 7/8%, 1999............. $ 4,581,000 $ 4,397,760
------------
15,472,805
------------
Entertainment--6.6% American Skiing,
Sr. Sub. Notes, 12%, 2006.................. 10,915,000 12,170,225
Intermedia Communications,
Sr. Discount Notes, Zero Coupon, 2001...... 7,500,000(h) 5,925,000
Premier Parks,
Gtd. Sr. Notes, Ser. A, 12%, 2003.......... 1,500,000 1,676,250
Six Flags Theme Parks,
Sr. Sub. Notes, Zero Coupon, 1998.......... 2,000,000(i) 2,140,000
------------
21,911,475
------------
Financial/Asset-Backed--1.5% Commercial Loan Funding Trust I,
Floating Rate Sub. Notes, Cl. D1, 10%, 2005 4,500,000(j) 4,500,000
Imperial Credit Capital Trust I,
Remarketed Par Securities, Ser. A, 10 1/4%, 2002 500,000(a) 508,570
------------
5,008,570
------------
Foods and Beverages--4.5% American Rice,
First Mortgage, 13%, 2002.................. 1,000,000 960,000
Envirodyne Industries:
First Priority Sr. Secured Notes, Ser. B, 12%, 2000 3,600,000 3,865,500
Sr. Notes, 10 1/4%, 2001................... 5,000,000 4,950,000
PM Holdings,
Sub. Discount Deb., Ser. B, Zero Coupon, 2000 500,000(k) 406,250
Pilgrims Pride,
Sr. Sub. Notes, 10 7/8%, 2003.............. 2,000,000 2,110,000
RC/Arbys,
Gtd. Sr. Notes, 9 3/4%, 2000............... 2,485,000 2,544,019
------------
14,835,769
------------
Forest Products--1.5% Maxxam Group Holdings,
Sr. Secured Notes, 12%, 2003............... 4,700,000 5,099,500
------------
Industrial--6.0% Chatwins Group,
Sr. Exchange Notes, 13%, 2003.............. 922,000 981,930
Interlake,
Sr. Sub. Notes, 12 1/8%, 2002.............. 9,000,000 9,360,000
Plastic Specialties & Technologies,
Sr. Secured Notes, 11 1/4%, 2003........... 7,250,000 7,938,750
Tokheim,
Sr. Sub. Notes, Ser. B, 11 1/2%, 2006...... 1,000,000 1,125,000
Vicap, S.A. de C.V.,
Gtd. Sr. Notes, 10 1/4%, 2002.............. 500,000(a) 525,000
------------
19,930,680
------------
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Metals--8.7% Earle M. Jorgensen,
Sr. Notes, 10 3/4%, 2000................... $ 8,500,000 $ 8,691,250
Kaiser Aluminum & Chemical,
Sr. Sub. Notes, 12 3/4%, 2003.............. 1,250,000 1,340,625
NS Group,
Sr. Notes, 13 1/2%, 2003................... 600,000 697,500
Renco Metals,
Sr. Notes, 11 1/2%, 2003................... 1,845,000 1,969,537
Republic Engineered Steels,
First Mortgage Notes, 9 7/8%, 2001......... 7,290,000 7,034,850
Russel Metals,
Sr. Notes, 10 1/4%, 2000................... 8,600,000 8,933,250
------------
28,667,012
------------
Paper and Paper Related--3.2% APP Global Finance III,
Secured Floating Rate Notes, 10.094%, 2002. 4,000,000(j) 2,660,000
Gaylord Container,
Sr. Sub. Discount Deb., 12 3/4%, 2005...... 500,000 537,500
Repap New Brunswick,
Sr. Notes, 9 1/16%, 2000................... 5,000,000(j) 4,950,000
Stone Container :
Sr. Notes, 9 7/8%, 2001.................... 1,000,000 1,003,750
Sr. Sub. Deb., 12 1/4%, 2002............... 1,000,000 1,020,000
Sr. Sub. Notes, 11%, 1999.................. 500,000 512,500
------------
10,683,750
------------
Publishing--1.8% American Media Operations,
Sr. Sub. Notes, 11 5/8%, 2004.............. 5,350,000 5,831,500
------------
Retail--2.8% Duane Reade Holding:
Sr. Notes, 12%, 2002....................... 2,500,000 2,625,000
Sub. Notes, Zero Coupon, 1999.............. 7,850,000(l) 6,574,375
------------
9,199,375
------------
Shipping--2.1% Eletson Holdings,
First Preferred Mortgage Notes,
9 1/4%, 2003............................... 1,500,000 1,541,250
Moran Transportation,
First Preferred Ship Mortgage Notes,
11 3/4%, 2004.............................. 4,335,000 4,855,200
Stena AB,
Sr. Notes, 10 1/2%, 2005................... 500,000 545,000
------------
6,941,450
------------
Supermarkets--1.2% Pathmark Stores,
Sub. Notes, 11 5/8%, 2002.................. 5,000,000 4,075,000
------------
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Technology--6.1% Computervision,
Sr. Sub. Notes, 11 3/8%, 1999.............. $ 6,946,000 $ 7,024,143
The Learning Company,
Conv. Sr. Notes, 5 1/2%, 2000.............. 9,500,000(a) 8,538,125
Unisys, Sr. Notes:
10 5/8%, 1999.............................. 1,545,000 1,583,625
12%, 2003.................................. 2,750,000 3,128,125
------------
20,274,018
------------
Telecommunications--6.8% Call-Net Enterprises,
Sr. Discount Notes, Zero Coupon, 1999...... 1,000,000(m) 916,250
Clearnet Communications,
Sr. Discount Notes, Zero Coupon, 2000...... 2,000,000(n) 1,585,000
Dial Call Communications:
Sr. Discount Notes, Zero Coupon, 1998...... 3,000,000(o) 2,805,000
Sr. Discount Notes, Zero Coupon, 1999 (Units) 5,150,000(f,p) 4,931,125
Microcell Telecommunications,
Sr. Discount Notes, Zero Coupon, 2001...... 9,000,000(q) 6,075,000
Nextel Communications,
Sr. Redeemable Discount Notes, Zero Coupon, 1998 3,250,000(r) 3,250,000
Orion Network Systems,
Sr. Discount Notes, Zero Coupon, 2002...... 2,000,000(s) 1,495,000
Teleport Communications,
Sr. Discount Notes, Zero Coupon, 2001...... 2,000,000(t) 1,635,000
------------
22,692,375
------------
Textiles--2.9% Sassco Fashion,
Notes, 12 3/4%, 2004....................... 4,200,000 4,431,000
Texfi Industries,
Sr. Sub. Deb, 8 3/4%, 1999................. 5,100,000 5,049,000
------------
9,480,000
------------
Transportation--6.7% Aerovias de Mexico S.A.:
Deb., 9 3/4%, 2000......................... 2,511,000 2,435,419
Deb., 9 3/4%, 2000......................... 7,000,000(a) 6,789,300
Atlantic Coast Airlines,
Gtd. Pass Through Ctfs., Ser. 1997-1D, 7.97%, 2000 3,500,000(a) 3,500,000
CHC Helicopter,
Sr. Sub. Notes, 11 1/2%, 2002 (Units)...... 1,500,000(f) 1,608,750
Union Pacific,
Sub. Deb., 5 1/2%, 2033.................... 3,824,000 3,302,836
ValuJet,
Sr. Notes, 10 1/4%, 2001................... 5,025,000 4,673,250
------------
22,309,555
------------
TOTAL BONDS AND NOTES
(cost $323,041,126)........................ $320,592,775
============
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Preferred Stock--1.0% Shares Value
- ------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Broadcasting--.7% Spanish Broadcasting System,
Cum., $142.50.............................. $ 2,000 $ 2,130,000
------------
Consumer--.3% La Petite Holdings,
Cum., $3.03................................ 25,000 1,100,000
------------
TOTAL PREFERRED STOCK
(cost $3,261,250).......................... $ 3,230,000
============
Principal
Short-Term Investments--.2% Amount
- ------------------------------------------------------------------------------- -----------
U.S. Government Agency; Federal Home Loan Banks,
5.40%, 1/2/1998
(cost $563,915)............................ $ 564,000 $ 563,915
============
TOTAL INVESTMENTS (cost $326,866,291).......................................... 97.9% $324,386,690
====== ============
CASH AND RECEIVABLES (NET)..................................................... 2.1% $ 6,997,754
====== ============
NET ASSETS..................................................................... 100.0% $331,384,444
====== ============
<FN>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------
(a) Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1997, these securities amounted to $28,244,315 or 8.5% of net assets.
(b) Zero coupon until 12/15/2000, date on which a stated coupon rate of 11 3/4%
becomes effective; the stated maturity date is 12/15/2005.
(c) Zero coupon until 6/1/1999, date on which a stated coupon rate of 12 7/8%
becomes effective; the stated maturity date is 6/1/2004.
(d) Zero coupon until 3/15/2000, date on which a stated coupon rate of 13 1/8%
becomes effective; the stated maturity date is 3/15/2004.
(e) Zero coupon until 6/15/2000, date on which a stated coupon rate of 14 1/4%
becomes effective; the stated maturity date is 12/15/2005.
(f) With warrants to purchase common stock.
(g) Zero coupon until 8/1/1999, date on which a stated coupon rate of 13 1/2%
becomes effective; the stated maturity date is 8/1/2004.
(h) Zero coupon until 5/15/2001, date on which a stated coupon rate of 12 1/2%
becomes effective; the stated maturity date is 5/15/2006.
(i) Zero coupon until 6/15/1998, date on which a stated coupon rate of 12 1/4%
becomes effective; the stated maturity date is 6/15/2005.
(j) Variable rate security - interest rate subject to periodic change.
(k) Zero coupon until 9/1/2000, date on which a stated coupon rate of 11 1/2%
becomes effective; the stated maturity date is 9/1/2005.
(l) Zero coupon until 9/15/1999, date on which a stated coupon rate of 15%
becomes effective; the stated maturity date is 9/15/2004.
(m) Zero coupon until 12/1/1999, date on which a stated coupon rate of 13 1/4%
becomes effective; the stated maturity date is 12/1/2004.
(n) Zero coupon until 12/15/2000, date on which a stated coupon rate of 14 3/4%
becomes effective; the stated maturity date is 12/15/2005.
(o) Zero coupon until 12/15/1998, date on which a stated coupon rate of 10 1/4%
becomes effective; the stated maturity date is 12/15/2005.
(p) Zero coupon until 4/15/1999, date on which a stated coupon rate of 12 1/4%
becomes effective; the stated maturity date is 4/15/2004.
(q) Zero coupon until 12/1/2001, date on which a stated coupon rate of 14%
becomes effective; the stated maturity date is 6/1/2006.
(r) Zero coupon until 9/1/1998, date on which a stated coupon rate of 11 1/2%
becomes effective; the stated maturity date is 9/1/2003.
(s) Zero coupon until 1/15/2002, date on which a stated coupon rate of 12 1/2%
becomes effective; the stated maturity date is 1/15/2007.
(t) Zero coupon until 7/1/2001, date on which a stated coupon rate of 11 1/8%
becomes effective; the stated maturity date is 7/1/2007.
</FN>
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1997
Cost Value
------------ -------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $326,866,291 $324,386,690
Interest receivable.............................. 6,093,062
Receivable for shares of Beneficial Interest subscribed 5,006,426
------------
335,486,178
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 287,886
Due to Distributor............................... 41,826
Payable for investment securities purchased...... 2,993,742
Cash overdraft due to Custodian.................. 416,424
Payable for shares of Beneficial Interest redeemed 290,978
Interest payable--Note 4......................... 70,878
------------
4,101,734
------------
NET ASSETS..................................................................... $331,384,444
============
REPRESENTED BY: Paid-in capital.................................. $334,007,768
Accumulated undistributed investment income--net. 3,121
Accumulated net realized gain (loss) on investments (146,844)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3......................... (2,479,601)
------------
NET ASSETS..................................................................... $331,384,444
============
</TABLE>
NET ASSET VALUE PER SHARE
-------------------------
<TABLE>
<CAPTION>
Class A Class B Class C Class R
---------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Net Assets..................................... $65,704,859 $198,057,036 $67,495,366 $127,183
Shares Outstanding............................. 5,272,276 15,894,013 5,414,196 10,212
NET ASSET VALUE PER SHARE...................... $12.46 $12.46 $12.47 $12.45
====== ====== ====== ======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Operations
from May 30, 1997 (commencement of operations) to Decenber 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Interest................................... $ 8,176,115
Cash dividend.............................. 666
------------
Total Income............................. $8,176,781
EXPENSES: Management fee--Note 2(a).................. 555,401
Distribution and service fees--Note 2(b)... 562,060
Interest expense--Note 4................... 70,878
------------
Total Expenses........................... 1,188,339
----------
INVESTMENT INCOME--NET................................................... 6,988,442
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments.... $ (146,844)
Net unrealized appreciation (depreciation)
on investments........................... (2,479,601)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... (2,626,445)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $4,361,997
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
from May 30, 1997 (commencement of operations) to Decenber 31, 1997
<TABLE>
<S> <C>
OPERATIONS:
Investment income--net.................................................................... $ 6,988,442
Net realized gain (loss) on investments................................................... (146,844)
Net unrealized appreciation (depreciation) on investments................................. (2,479,601)
------------
Net Increase (Decrease) in Net Assets Resulting from Operations........................ 4,361,997
------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares......................................................................... (1,398,344)
Class B shares......................................................................... (4,057,554)
Class C shares......................................................................... (1,509,642)
Class R shares......................................................................... (19,781)
------------
Total Dividends..................................................................... (6,985,321)
------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................................... 76,591,614
Class B shares......................................................................... 201,321,431
Class C shares......................................................................... 69,859,568
Class R shares......................................................................... 503,000
Dividends reinvested:
Class A shares......................................................................... 814,604
Class B shares......................................................................... 1,172,298
Class C shares......................................................................... 518,369
Class R shares......................................................................... 19,780
Cost of shares redeemed:
Class A shares......................................................................... (11,289,662)
Class B shares......................................................................... (2,850,872)
Class C shares......................................................................... (2,252,352)
Class R shares......................................................................... (400,010)
------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions................ 334,007,768
------------
Total Increase (Decrease) in Net Assets............................................. 331,384,444
NET ASSETS:
Beginning of Period....................................................................... --
------------
End of Period............................................................................. $331,384,444
============
Undistributed investment income--net......................................................... $ 3,121
-------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
from May 30, 1997 (commencement of operations) to December 31, 1997
<TABLE>
<S> <C>
CAPITAL SHARE TRANSACTIONS:
Class A
--------
Shares sold............................................................................... 6,104,546
Shares issued for dividends reinvested.................................................... 65,046
Shares redeemed........................................................................... (897,316)
----------
Net Increase (Decrease) in Shares Outstanding....................................... 5,272,276
==========
Class B
--------
Shares sold............................................................................... 16,027,425
Shares issued for dividends reinvested.................................................... 93,658
Shares redeemed........................................................................... (227,070)
----------
Net Increase (Decrease) in Shares Outstanding....................................... 15,894,013
==========
Class C
--------
Shares sold............................................................................... 5,552,164
Shares issued for dividends reinvested.................................................... 41,378
Shares redeemed........................................................................... (179,346)
----------
Net Increase (Decrease) in Shares Outstanding....................................... 5,414,196
==========
Class R
--------
Shares sold............................................................................... 40,237
Shares issued for dividends reinvested.................................................... 1,571
Shares redeemed........................................................................... (31,596)
----------
Net Increase (Decrease) in Shares Outstanding....................................... 10,212
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from May 30, 1997
(commencement of operations) to December 31, 1997. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class A Class B Class C Class R
PER SHARE DATA: Shares Shares Shares Shares
------ ------ ------ -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........ $12.50 $12.50 $12.50 $12.50
------ ------ ------ ------
Investment Operations:
Investment income--net...................... .71 .66 .65 .81
Net realized and unrealized gain (loss)
on investments........................... (.04) (.04) (.03) (.14)
------ ------ ------ ------
Total from Investment Operations............ .67 .62 .62 .67
------ ------ ------ ------
Distributions:
Dividends from investment income--net....... (.71) (.66) (.65) (.72)
------ ------ ------ ------
Net asset value, end of period.............. $12.46 $12.46 $12.47 $12.45
====== ====== ====== ======
TOTAL INVESTMENT RETURN(1)..................... 9.16% 8.57% 8.47% 9.26%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets(1) .95% 1.45% 1.70% .75%
Ratio of interest expense to average net assets(1) .08% .09% .09% .05%
Ratio of net investment income to average
net assets(1)............................ 9.34% 8.73% 8.54% 10.08%
Portfolio Turnover Rate(2).................. 28.83% 28.83% 28.83% 28.83%
Net Assets, end of period (000's Omitted)... $65,705 $198,057 $67,495 $127
<FN>
- -----------
(1) Annualized.
(2) Not annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Limited Term High Income Fund (the "Fund") is a series of The
Dreyfus/Laurel Funds Trust (the "Trust") which is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company and operates as a series company currently offering three
series including the Fund. The Fund's investment objective is to provide high
current income. The Dreyfus Corporation ("Manager") serves as the Fund's
investment manager. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares. The Fund is authorized to issue an unlimited number of shares
of Beneficial Interest in the following classes of shares: Class A, Class B,
Class C and Class R. Class A, Class B and Class C shares are sold primarily to
retail investors through financial intermediaries and bear a distribution fee
and/or service fee. Class A shares are sold with a front-end sales charge and
bear a distribution fee, while Class B and Class C shares are subject to a
contingent deferred sales charge ("CDSC") and a distribution and service fee.
Class R shares are sold primarily to bank trust departments and other financial
service providers (including Mellon Bank and its affiliates) acting on behalf of
customers having a qualified trust or investment account or relationship at such
institution, and bear no distribution or service fees. Class R shares are
offered without a front-end sales load or CDSC. Each class of shares has
identical rights and privileges, except with respect to distribution and service
fees and voting rights on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
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 (excluding short-term
investments and U.S. Government obligations) are valued each business day by an
independent pricing service ("Service") approved by the Board of Trustees.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions.
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 Trustees.
Investments in U.S. Government obligations, including U.S. Treasury Bills, are
valued at the mean between quoted bid and asked prices. Short-term investments,
excluding U.S. Treasury Bills, are carried at amortized cost, which approximates
value. Investments denominated in foreign currencies are translated into U.S.
dollars at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(C) DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
of the Internal Revenue Code. To the extent that net realized capital gain
can be offset by capital loss carryovers, if any, it is the policy of the
Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company, if such qualification is in the best interests of
its shareholders, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of taxable income sufficient to relieve
it from substantially all Federal income and excise taxes.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. The Manager also directs
the investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .70% of the value of the Fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the Fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
service fees, fees and expenses of non-interested Trustees (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to reduce
its fee in an amount equal to the Fund's allocable portion of fees and expenses
of the non-interested Trustees (including counsel). Each trustee receives
$27,000 per year, $1,000 for each Board meeting attended and $750 for each Audit
Committee meeting attended and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional annual fee of $25,000
per year. These fees pertain to the following funds: The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds
Trust. These fees and expenses are charged and allocated to each series based on
net assets. Amounts required to be paid by the Trust directly to the
non-interested Trustees, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Trustees.
(B) DISTRIBUTION AND SERVICE PLAN: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, the Fund may pay annually up to
.25% of the value of its average daily net assets attributable to its Class A
shares to compensate the Distributor and Dreyfus Service Corporation, an
affiliate of the Manager, for shareholder servicing activities and the
Distributor for activities and expenses primarily intended to result in the sale
of Class A shares. Under the Plan, the Fund may pay the Distributor for
distributing the Fund's Class B and Class C shares at an aggregate annual rate
of .50% and .75% of the value of the average daily net assets of Class B and
Class C shares, respectively. Class B and Class C shares are also subject to a
service plan adopted pursuant to Rule 12b-1, under which the Fund pays Dreyfus
Service Corporation or the Distributor for providing certain services to the
holders of Class B and Class C shares a fee at the annual rate of .25% of the
value of the average daily net assets of Class B and Class C shares. Class R
shares bear no distribution or service fee. During the period ended December 31,
1997, the Fund was charged $37,821, $231,723 and $132,491 for Class A, Class B
and Class C shares, repectively, pursuant to the distribution plan. During the
period ended December 31, 1997, the Fund was charged $115,861 and $44,164 for
Class B and Class C shares, respectively, pursuant to the service plan.
Under its terms, the Plan shall remain in effect from year to year, provided
such continuance is approved annually by a vote of majority of those Trustees
who are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1997
amounted to $355,110,713 and $38,683,218, respectively.
At December 31, 1997, accumulated net unrealized depreciation on investments
was $2,479,601, consisting of $1,577,975 gross unrealized appreciation and
$4,057,576 gross unrealized depreciation.
At December 31, 1997, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
NOTE 4--Bank Line of Credit:
In accordance with an agreement with a bank, the Fund my borrow up to $10
million under a short-term unsecured line of credit. Interest on borrowings is
charged at rates which are related to Federal Funds rates in effect from time to
time.
The average daily amount of borrowings outstanding during the period ended
December 31, 1997 was approximately $1,833,000, with related weighted average
annualized interest rate of 6.53%.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
- --------------------------------------------------------------------------------
Independent Auditors' Report
THE BOARD OF DIRECTORS AND SHAREHOLDERS
THE DREYFUS/LAUREL TRUST FUNDS:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier Limited Term High
Income Fund of The Dreyfus/Laurel Funds Trust as of December 31, 1997, and the
related statement of operations, the statement of changes in net assets, and the
financial highlights for the period then ended. 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 also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of December 31, 1997, by correspondence with the custodian. As to securities
purchased and sold, but not received or delivered, we performed other
appropriate auditing procedures. 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 Premier Limited Term High Income Fund of The Dreyfus/Laurel Funds Trust
as of December 31, 1997, the results of its operations, changes in its net
assets and its financial highlights for the period then ended, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
February 18, 1998
<PAGE>
Dreyfus Premier Limited Term
High Income 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. 029/759AR9712
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
PREMIER LIMITED TERM HIGH INCOME FUND CLASS A SHARES, CLASS B
SHARES, CLASS C SHARES AND CLASS R SHARES AND THE MERRILL LYNCH
HIGH YIELD MASTER II INDEX
EXHIBIT A:
DREYFUS DREYFUS DREYFUS DREYFUS
PREMIER PREMIER PREMIER PREMIER
LIMITED LIMITED LIMITED LIMITED
MERRILL TERM TERM TERM TERM
LYNCH HIGH HIGH HIGH HIGH
HIGH INCOME INCOME INCOME INCOME
YIELD FUND FUND FUND FUND
PERIOD MASTER (CLASS A (CLASS B (CLASS C (CLASS R
II INDEX* SHARES) SHARES) SHARES) SHARES)
6/2/97 10,000 9,549 10,000 10,000 10,000
6/30/97 10,155 9,620 10,069 10,067 10,076
7/31/97 10,424 9,827 10,274 10,278 10,295
8/31/97 10,411 9,806 10,256 10,258 10,284
9/30/97 10,598 9,971 10,422 10,422 10,458
10/31/97 10,653 9,944 10,389 10,378 10,415
11/30/97 10,752 9,993 10,436 10,431 10,477
12/31/97 10,856 10,063 10,106 10,398 10,544
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.