Dreyfus International Equity Allocation Fund
DESCRIPTION OF ART WORK ON COVER
Small box above fund name showing a lions face.
Dear Shareholder,
We are please to provide you with certain portfolio information for the
Dreyfus International Equity Allocation Fund for the period ended
October 31, 1994.
As you know from recent correspondence, The Laurel Family of Funds is
integrating with The Dreyfus Family of Funds. As part of this integration,
the Laurel International Equity Allocation Fund is now known, and
publicly listed, as the Dreyfus International Equity Allocation Fund.
Please be assured that the new name does not affect the value of your
account or the investment objective or strategy of your Fund. The
integration is discussed in greater detail in the notes to the financial
statements of this report.
In the pages that follow, we have provided detailed financial statements
for the reporting period.
We would like to extend our appreciation for your support and hope that
you will find that the Fund, which is now part of The Dreyfus Family of
Funds, will continue to satisfy your investment needs. As always, we
welcome your thoughts and suggestions.
Sincerely,
Marie E. Connolly
President
Dreyfus International Equity Allocation Fund
December 9, 1994
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
TABLE OF CONTENTS
Shareholder Letter 1
Economic Review 3
Portfolio of Investments 4
Statement of Assets and Liabilities 9
Statement of Operations 10
Statement of Changes in Net Assets 11
Financial Highlights 12
Notes to Financial Statements 14
Independent Auditors' Report 19
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES
INVOLVE CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE FUND IS DISTRIBUTED BY PREMIER MUTUAL
FUND SERVICES, INC.
ECONOMIC REVIEW
POSITIVE PERFORMANCE AMID DIMINISHING VOLATILITY
European economies are recovering quickly--and ahead of
forecasts--from their worst recession since the oil crisis of the late 1970's.
For the period August 12 to October 31, 1994, the world's stock markets
achieved aggregate performance exceeding returns tallied by the broad
U.S. stock market averages.
This growth was accompanied by a fair amount of volatility,
particularly in the first quarter of 1994. Overseas markets throughout
Southeast Asia and Europe followed the lead of U.S. securities markets,
which dropped sharply in February and March in response to the Federal
Reserve Board's early interest rate hikes. International markets worried
that their own interest rates would soon climb, too. Some rates did rise,
although not as sharply as investors had feared. Hong Kong, New Zealand and
United Kingdom posted the most significant price declines of the period, while
markets in France and Switzerland also came under strong pressure. Italy was
a clear and positive exception. Its stock market rose 27% between March and
May on expectations that a recent election would soon produce major economic
reform.
As the reporting period drew to a close, much of this early
volatility began to subside. A certain amount of rebalancing occurred,
with some of the sharpest first quarter market swings correcting
themselves.
STRENGTH BUILDS IN EUROPE AND EMERGING MARKETS
Despite the performance-dampening effects of rising U.S.
interest rates on international markets, underlying economic
considerations remained positive in many countries. Once the U.S.
clarified its policies on interest rates and the dollar, many of the issues
that had been causing upheaval in these markets were finally settled. Investors
could once again return to decision-making based on fundamentals.
In Europe, many economies are either on the brink of recovery
or in its early stages. While its economy seems to have turned the corner,
the UK still lags the U.S. economic cycle by approximately six months,
giving investors ample opportunity to seek to profit from the economic
expansion. Germany is another promising European market. Among the
emerging markets, Thailand offers particularly good value in an economy
that continues to grow well. The recent election in Mexico removed much
of the uncertainty that had been plaguing its stock market, and the
government now seems set on a conservative economic course that bodes
well for investors.
THE OUTLOOK: GROWTH AND OPPORTUNITY
Looking ahead, we see growth opportunities in select markets
around the globe. We believe that European markets offer solid
investment potential, particularly in the pharmaceutical industry where
stock values have become exceptionally attractive. Japan seems to have
reached the bottom of its economic cycle and should begin to offer better
value as the economy begins to recover. We believe that in Latin
America, consumer goods stocks are well- positioned for good
performance as falling interest rates and controlled inflation give people
more disposable income.
THE DREYFUS/LAUREL FUNDS, INC.
PORTFOLIO OF INVESTMENTS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
COMMON STOCKS - 99.4%
Japan - 24.5%
2,000 Advantest $ 70,175
7,000 Ajinomoto Company 96,079
4,000 Dai-Ichi Kango Bank 73,065
4,000 Fuji Bank Ltd. 88,751
7,000 Fuji Photo Film Ltd. 166,873
13,000 Furukawa Electric 89,752
1,000 Hirose Electronics 59,340
3,000 House Food Industrial Company 63,467
2,000 Industrial Bank of Japan 61,920
5,000 Kansai Electric Power 125,903
13,000 Komatsu Ltd. 123,426
45,000 Konica Corporation 349,226
22,000 Kubota Corporation 168,916
3,000 Marui Company 54,799
16,000 Mitsubishi Heavy Industries 130,279
10,000 Nomura Securities Company 209,494
7,000 Sakura Bank 96,078
2,000 Sega Enterprises 103,818
4,000 Shimachu Company 136,223
3,000 Sumitomo Bank Ltd. 56,347
6,000 Sumitomo Marine & Fire 54,303
3,000 Taisho Pharmaceutical Company 55,108
6,000 Tokai Bank 74,303
1,000 Tokyo Electric Power Company 29,309
5,000 Toto 78,431
20,000 Toyo Kanetsu 123,426
6,000 Toyota Motor Company 132,508
5,000 Yasuda Trust and Banking Company Ltd. 44,530
2,915,849
Germany - 21.9%
650 Agiv AG 227,119
450 Allianz Worldwide AG 690,282
50 Bilfinger & Berger Bau AG 28,226
50 Brau und Brunnen 12,461
100 Colonia Konzern AG 84,777
100 Continental AG 14,708
200 Dyckerhoff AG 91,093
100 Heidelberg Zement AG 83,646
100 Herlitz AG 21,477
200 Hochtief AG 122,610
900 Industrie-Werlke Karl Augsburg 201,669
100 Karstadt AG $41,291
350 Kaufhof AG 118,687
700 Linde AG 418,664
150 Munchener Ruckversicherungs 276,272
50 Sap AG 32,215
100 Schering AG 66,791
110 Wella AG 79,723
2,611,711
France - 16.3%
650 Accor 77,124
1,100 Alcatel Alsthom Cie Generale d'Electricite 100,825
2,500 AXA Company 115,885
1,500 Banque Nationale de Paris 74,250
800 Cie Bancaire SA 77,988
3,600 Cie De Suez 172,188
600 Compagnie de Saint Gobain 76,085
1,300 Compagnie Financiere de Suez 86,465
400 Credit Foncier de France 60,744
3,000 C.S.F.+ 81,387
400 Eiffage 67,968
400 L'Oreal Group 86,843
500 LVHM Moet Hennessey 80,590
800 Pechiney International + 60,977
900 Peugeot SA 134,751
800 Pinault-Printemps Redoute 144,325
3,900 Rhone-Poulenc SA 96,184
200 Sagem 99,311
1,800 Societe National Elf Aquitaine 133,003
400 Saint Louis - Bouchon 112,632
1,939,525
Great Britian - 13.1%
25,000 Allied Irish Banks 102,203
14,000 Barclays Bank 133,927
18,000 British Petroleum Company 128,335
21,000 British Telecommunications 134,957
24,000 BTR 120,289
20,000 Caradon 86,341
3,700 Glaxo Holdings 36,182
20,000 Grand Metropolitan 135,726
33,000 Hanson Trust Plc $124,385
22,000 Marks & Spencer 148,579
9,000 Reed International 110,674
20,000 Smithkline Beecham Group, Series A 133,600
16,000 Williams Holdings 90,528
6,000 Wolseley 76,137
1,561,863
Switzerland - 3.6%
200 Brown Boveri & Cie AG, Series A 171,800
100 Ciba - Geigy AG 59,046
200 CS Holdings 87,494
90 Nestle SA 84,195
50 Sandoz Group AG 26,097
428,632
Hong Kong - 2.7%
37,000 Cheung Kong (Holdings) 178,117
48,000 Hong Kong & China Gas 91,000
90,000 South China Morning Post Holdings 56,196
325,313
Malaysia - 2.7%
7,000 Malayan Banking Berhad 47,671
23,000 Resorts World Berhad 145,832
16,000 Telekom Malaysia Berhad 129,628
323,131
Netherlands - 2.5%
20,000 Elsevier NV 204,057
1,000 Internationale Nederlanden Groep NV 46,803
1,000 Oce-Van Der Grinten NV 44,430
295,290
Australia - 2.3%
9,000 Ampolex Limited 27,268
9,000 Amcor Limited 59,883
2,700 Broken Hill Properties 41,424
30,000 Pacific Dunlop Ltd. 91,117
17,000 Westpac Banking Corporation 57,188
276,880
Italy - 1.9%
20,000 Fiat SpA + $81,643
17,000 Mediobanca SpA 141,225
222,868
Spain - 1.8%
3,000 Empresa Nacional De Elec 137,633
6,000 Telefonica Nacional d'Espana 81,285
218,918
Belgium - 1.6%
600 Petrofina SA NPV 184,103
Denmark - 1.2%
4,000 Danisco 142,044
Singapore - 1.1%
14,000 Keppel Corporation 128,703
Norway - 0.8%
8,500 Aker AS 99,457
New Zealand - 0.5%
23,000 Fisher & Paykel 60,873
Finland - 0.5%
4,000 Pohjola Insurance Co., Series B 58,931
Austria - 0.4%
300 Oesterreichische Landerbank 46,656
TOTAL COMMON STOCKS (Cost $11,802,968) 11,840,747
TOTAL INVESTMENTS (Cost $11,802,968*) 99.4% 11,840,747
OTHER ASSETS AND LIABILITIES (NET) 0.6 74,010
NET ASSETS 100.0% $11,914,757
<FN>
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements.
AT OCTOBER 31, 1994, SECTOR DIVERSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
<TABLE>
% OF NET VALUE
ASSETS (NOTE 1)
<S> <C> <C>
COMMON STOCKS:
Financial Services 23.9% $ 2,850,692
Capital Goods 14.2 1,696,465
Basic Industries 10.9 1,292,783
Consumer Services 7.7 913,539
Energy 7.1 842,508
Consumer Non-Durables 6.9 827,652
Consumer Durables 5.6 672,200
Manufacturing 5.4 646,812
Utilities 4.4 522,210
Healthcare 4.1 476,255
Technology 3.2 385,434
Telecommunications 3.0 360,226
Transportation 3.0 353,971
TOTAL COMMON STOCKS 99.4% 11,840,747
TOTAL INVESTMENTS 99.4 11,840,747
OTHER ASSETS AND LIABILITIES (Net) 0.6 74,010
NET ASSETS 100.0% $11,914,757
</TABLE>
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND OCTOBER 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Cost $11,802,968) (Note 1)
See accompanying schedule $11,840,747
Cash and foreign currency (Cost $109,195) 109,546
Dividends receivable 23,308
Receivable from investment adviser (Note 2) 130
TOTAL ASSETS 11,973,731
LIABILITIES
Investment management fee payable (Note 2) $ 29,370
Payable for investment securities purchased 29,205
Accrued Directors' fees and expenses (Note 2) 396
Distribution fee payable (Note 3) 3
TOTAL LIABILITIES 58,974
NET ASSETS $11,914,757
NET ASSETS consist of:
Undistributed net investment income $ 27,084
Net unrealized appreciation of investments, foreign
currency transactions and net other assets 38,721
Par value 1,185
Paid-in capital in excess of par value $11,847,767
TOTAL NET ASSETS 11,914,757
NET ASSET VALUE
INVESTOR SHARES
Net asset value, offering and redemption price per
share ($70,750 / 7,035 shares of capital stock
outstanding) $ 10.06
CLASS R SHARES
Net asset value, offering and redemption price per
share ($11,844,007 / 1,177,712 shares of capital
stock outstanding) $ 10.06
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF OPERATIONS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FOR THE PERIOD ENDED OCTOBER 31, 1994*
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $4,994) $ 38,636
Interest 35,101
TOTAL INVESTMENT INCOME 73,737
EXPENSES:
Investment management fee (Note 2) $29,370
Directors' fees and expenses (Note 2) 396
Distribution fee (Note 3) 11
TOTAL EXPENSES 29,777
NET INVESTMENT INCOME 43,960
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 4):
Net realized gain/(loss) on:
Forward foreign exchange contracts 1,713
Foreign currencies (18,589)
Net realized loss on investments during the period (16,876)
Net change in unrealized appreciation/(depreciation) of:
Securities 37,779
Currencies and net other assets 942
Net unrealized appreciation of investments during
the period 38,721
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 21,845
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 65,805
<FN>
* The Fund commenced operations on August 12, 1994.
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/94*
<S> <C>
Net investment income $ 43,960
Net realized loss on forward foreign exchange contracts and
currency transactions during the period (16,876)
Net unrealized appreciation on investments,
currencies and net other assets during the period 38,721
Net increase in net assets resulting from operations 65,805
Net increase in net assets from Fund share transactions
(Note 5)
Investor Shares 69,582
Class R Shares 11,779,370
Net increase in net assets 11,914,757
NET ASSETS:
Beginning of period -
End of period (including undistributed net investment
income of $27,084 at October 31, 1994) $11,914,757
<FN>
* The Fund commenced operations on August 12, 1994.
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/94*
<S> <C>
Net asset value, beginning of period $10.00
Income from investment operations:
Net investment income 0.01
Net realized and unrealized gain on investments 0.05
Total from investment operations 0.06
Net asset value, end of period $10.06
Total return++ 0.60%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 71
Ratio of operating expenses to average
net assets 1.74%+
Ratio of net investment income to average net assets 1.98%+
Portfolio turnover rate 0%
<FN>
* The Fund commenced operations on August 12, 1994.
+ Annualized.
++ Total return represents aggregate total return for the period
indicated.
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/94*
<S> <C>
Net asset value, beginning of period $ 10.00
Income from investment operations:
Net investment income 0.02
Net realized and unrealized gain on investments 0.04
Total from investment operations 0.06
Net asset value, end of period $ 10.06
Total return++ 0.60%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $11,844
Ratio of operating expenses to average
net assets 1.50%+
Ratio of net investment income to average net assets 2.22%+
Portfolio turnover rate 0%
<FN>
* The Fund commenced operations on August 12, 1994. Effective October 17,
1994, the Fund's Trust Shares were redesignated as Class R Shares.
+ Annualized.
++ Total return represents aggregate total return for the period indicated.
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds, Inc. (the "Investment Company"), The
Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Municipal
Funds and The Dreyfus/Laurel Investment Series are all registered
open-end management investment companies that are now part of The
Dreyfus Family of Funds. The Investment Company is a series mutual
fund with 19 separate investment portfolios. This report contains
financial statements for the Dreyfus International Equity Allocation
Fund (the "Fund"). The Investment Company was incorporated on
August 6, 1987 as a Maryland corporation and is registered with the
Securities and Exchange Commission under the Investment Company Act
of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund commenced operations on
August 12, 1994. The Fund offers two classes of shares: Investor
Shares and Class R Shares (effective October 17, 1994, the Trust
Shares were redesignated as Class R Shares). Investor Shares are
sold primarily to retail investors and bear a distribution fee.
Class R Shares are sold primarily to bank trust departments and
other financial service providers acting on behalf of customers
having a qualified trust or investment account or relationship at
such institution, and bear no distribution fee. Each class of
shares has identical rights and privileges, except with respect to
the distribution fee and voting rights on matters affecting a single
class. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements in accordance with generally accepted
accounting principles.
(A) PORTFOLIO VALUATION
Investments in securities traded on a national securities exchange
are valued at the last reported sales price or, in the absence of a
recorded sale, at the last current bid quotation. Over-the-counter
securities are valued on the basis of the last sale price. When
market quotations are not readily available, securities are valued
at fair value as determined in good faith by the Board of Directors.
Debt securities with maturities of 60 days or less from the
valuation day are valued on the basis of amortized cost. Foreign
securities are generally valued at the proceeding closing values of
such securities on their respective exchanges, except that when an
occurrence subsequent to the time a value was so established is
likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by
or under the direction of the Board of Directors or its delegates.
(B) FORWARD FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in forward foreign currency contracts. Forward
foreign currency contracts are valued at the forward rate and are
markedto-market daily. The change in market value is recorded by
the Fund as an unrealized gain or loss. When the contract is
closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was
opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's investment
securities, but it does establish a rate of exchange that can be
achieved in the future. Although forward foreign currency contracts
limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result
should the value of the currency increase. In addition, the Fund
could be exposed to risks if the counterparties to the contracts are
unable to meet the terms of their contracts.
(C) FOREIGN CURRENCY
The books and records of the Fund are maintained in United States
(U.S.) dollars. Any foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the
exchange rates prevailing at the end of the period. Purchases and
sales of investment securities, income and expenses are translated
on the respective dates of such transactions. Unrealized gains and
losses which result from changes in foreign currency exchange rates
have been included in the unrealized appreciation/(depreciation) of
investments and net other assets. Net realized foreign currency
gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement
date on investment security transactions, foreign currency
transactions and the difference between the amounts of interest and
dividends recorded on the books and the amount actually received.
The portion of foreign currency gains and losses related to
fluctuation in exchange rates between the initial purchase trade
date and subsequent sale trade date is included in realized gains
and losses on investment securities sold.
(D) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. Realized gains and losses from
securities sold are recorded on the identified cost basis.
Investment income and realized and unrealized gains and losses are
allocated based upon relative average daily net assets of each
class.
(E) EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the operations of
any class of shares are prorated between the classes based upon the
relative average daily net assets of each class. Distribution
expense is directly attributable to a particular class of shares and
is charged only to that class's operations.
(F) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are determined on a
class level and are declared and paid annually. Distributions from
net realized capital gains, if any, are determined on a Fund level
and are declared and paid annually. Additional distributions of net
investment income and capital gains for the Fund may be made at the
discretion of the Board of Directors in order to avoid the 4%
nondeductible federal excise tax. Income distributions and capital
gain distributions on a Fund level are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment
securities held by the Fund, timing differences and differing
characterization of distributions made by the Fund as a whole.
Permanent differences incurred during the year ended October 31,
1994, resulted from different book and tax accounting for certain
investment securities.
(G) FEDERAL INCOME TAXES
The Fund intends to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code
applicable to regulated investment companies and by distributing
substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
2. INVESTMENT MANAGEMENT FEE, DIRECTORS' FEES AND OTHER
RELATED PARTY TRANSACTIONS
Effective as of October 17, 1994, the Investment Company's investment
management agreement with Mellon Bank, N.A.("Mellon Bank"), a wholly-
owned subsidiary of Mellon Bank Corporation, was transferred to The
Dreyfus Corporation (the "Manager"), a wholly-owned subsidiary of
Mellon Bank. The Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody,
fund accounting and transfer agency services to the Investment
Company. The Manager also directs the investments of the Fund in
accordance with its investment objective, policies and limitations.
For these services, the Fund pays the Manager a fee, calculated daily
and paid monthly, at the annual rate of 1.50% 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, taxes, interest,
Rule 12b-1 distribution fees and expenses, fees and expenses of non-
interested Directors (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 Directors (including counsel).
For the period from August 12, 1994 (commencement of operations) to
October 16, 1994, Mellon Bank served as the Fund's investment manager
pursuant to the investment management agreement described above.
S.A.M. Finance, S.A. ("Sub-Advisor"), a wholly-owned subsidiary of
Credit Commercial de France, serves as the Fund's Sub-Advisor
pursuant to a subadvisory agreement among the Fund, the Sub-Advisor
and the Manager. For its services, the Sub-Advisor is paid an annual
fee of 0.25% of the value of the Fund's average daily net assets and
is paid by the Manager out of its fee.
Prior to September 23, 1994, Frank Russell Investment Management
Company (the "Administrator") served as the Fund's administrator and
provided, pursuant to an administration agreement, various
administrative and corporate secretarial services to the Fund. For
the period from August 12, 1994 (commencement of operations) to
September 23, 1994, Mellon Bank, as investment manager, paid the
Administrator's fee out of the management fee described above.
For the period from August 12, 1994 (commencement of operations)
through October 16, 1994, Funds Distributor, Inc. served as
distributor of the Investment Company's shares. Effective as of
October 17, 1994, Premier Mutual Fund Services, Inc. ("Premier")
serves as the Investment Company's distributor. Premier also serves
as the Investment Company's sub-administrator and, pursuant to a
sub-administration agreement with the Manager, provides various
administrative and corporate secretarial services to the Investment
Company.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate thereof) receives any compensation from The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-
Free Municipal Funds or The Dreyfus/Laurel Investment Series
(collectively, "The Dreyfus/Laurel Funds") for serving as an officer
or Director/Trustee of The Dreyfus/Laurel Funds. In addition, no
officer or employee of the Manager (or of any parent, subsidiary or
affiliate thereof) serves as an officer or Director/Trustee of The
Dreyfus/Laurel Funds. The Dreyfus/Laurel Funds pay each
Director/Trustee who is not an officer or employee of Premier (or
any parent, subsidiary or affiliate thereof), $27,000 per annum,
$1,000 for each Board meeting attended and $750 for each Audit Committee
meeting attended, and reimburse each Director/Trustee for travel and
out-of-pocket expenses.
3. DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act relating to its Investor Shares.
Under the Plan, the Fund may pay annually up to 0.25% of the value
of the average daily net assets attributable to its Investor Shares
to compensate Premier and Dreyfus Service Corporation, an affiliate
of the Manager, for shareholder servicing activities and Premier for
activities primarily intended to result in the sale of Investor
Shares. Class R Shares bear no distribution fee.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a
majority of those Directors who are not "interested persons" of the
Investment Company and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan.
4. SECURITIES TRANSACTIONS
The cost of purchases of securities, excluding short-term
investments and U.S. government securities, for the period ended
October 31, 1994 was $11,802,968. There were no proceeds from sales
of securities for the period ended October 31, 1994.
At October 31, 1994, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost
amounted to $274,767 and aggregate gross unrealized depreciation for
all securities in which there was an excess of tax cost over value
amounted to $236,988.
5. SHARES OF CAPITAL STOCK
The Investment Company has authority to issue 25 billion of capital
stock with a par value of $.001. The Fund has authority to issue
two classes of shares. The table below summarizes transactions in
Fund shares for the period indicated:
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
SHARES AMOUNT
<S> <C> <C>
INVESTOR SHARES:
Sold 7,045 $69,682
Redeemed (10) (100)
Net increase 7,035 $69,582
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
SHARES AMOUNT
<S> <C> <C>
CLASS R SHARES:
Sold 1,181,714 $11,819,150
Redeemed (4,002) (39,780)
Net increase 1,177,712 $11,779,370
<FN>
* The Fund commenced operations on August 12, 1994. Effective as of
October 17, 1994, the Fund's Trust Shares were redesignated as Class
R Shares.
</TABLE>
6. FOREIGN SECURITIES
The Fund purchases securities of foreign issuers. Investing in
securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with
investing in U.S. companies and the U.S. government. These risks
include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of many foreign
companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of
comparable U.S. companies and the U.S. government.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.
We have audited the accompanying statement of assets and liabilities
of the Dreyfus International Equity Allocation Fund of The
Dreyfus/Laurel Funds, Inc., including the portfolio of investments,
as of October 31, 1994, and the related statement of operations,
statement of changes in net assets, and the financial highlights for
the period from August 12, 1994 (commencement of operations) to
October 31, 1994. 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 audit.
We conducted our audit 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.
Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian and brokers.
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 audit
provides 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 the Dreyfus International Equity Allocation
Fund of The Dreyfus/Laurel Funds, Inc., as of October 31, 1994, and
the results of its operations, changes in its net assets, and the
financial highlights for the period referred to above, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 9, 1994
