<PAGE>
Dreyfus
Premier Limited Term
Income Fund
Annual Report
October 31, 1995
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on the Premier Limited
Term Income Fund for its annual reporting period ending October 31, 1995. The
combination of low inflation and the reduction of the Fed funds rate in July
spurred strong gains in the bond market over the past twelve months. For the
annual period ended October 31, 1995, the Fund's Class A and Class R shares
posted total returns of 11.83% and 12.11%,* respectively. For the period from
December 19, 1994 (the inception date of Class B and Class C shares) through
October 31, 1995, the Fund's Class B and Class C shares both posted total
returns of 11.32%.* This compares with a total return of 12.54% for the
Fund's benchmark index, the Lehman Brothers Intermediate Government/Corporate
Bond Index.**
Inflation Low, Growth Slow
Concerns about lagging economic growth prompted the Federal Reserve
to ease the Fed funds rate in July. This was the first indication that the
Fed was moving away from its less accommodative policy since the Fed began
increasing short-term interest rates in February 1994. The bond market has
been well ahead of the Federal Reserve in determining that inflation is, in
fact, under control. Long-term interest rates have fallen for 12 months and,
accordingly, bond investors have enjoyed significant capital gains.
Still . . . Mixed Signals
Economic indicators remain mixed, some causing concern about possible
recession, while others point toward continued expansion. During times of
business uncertainty, attention begins to focus on the ability of businesses
and consumers to increase spending.
The current economic expansion has been primarily productivity
driven. Technology applications have allowed corporations to lower the cost
of doing business and have led to dramatic growth in profits for much of the
corporate sector. Yet little of this prosperity has spilled over into the
consumer sector in the form of wage growth, despite a relatively low
unemployment rate of 5.5% at the end of the reporting period. Thus, in spite
of all the good news for corporations, retail sales reports have been weaker
than expected, causing some concern for retailers that the coming holiday
shopping season will be disappointing.
Yet, there are also signs that the growth cycle is going to continue.
Consumer confidence remains high and today's lower interest rates provide
incentives for interest-sensitive sectors such as home building and sales to
expand. Business investment in durable goods continues to increase in an
effort to make production even more efficient and profitable.
A Big Year for Bonds
The bond market recovered strongly in 1995 as long-term interest
rates fell. If economic conditions remain sluggish and Congress is able to
arrive at an acceptable budget accord, there is a good chance that the Fed
will ease further. We believe this indicates a rather favorable outlook for
the bond market in general, particularly with inflation under control. But
inflation can only go so low and we are wary that the bond market strength
may be counting too much on continued improvement on the price front.
<PAGE>
Thus, while we remain fully invested in this improving market, we are
alert to the stimulatory effects of easing monetary policy and are watchful
for any signs of rekindling inflation.
Portfolio Overview
Given the optimistic view of inflation, strong corporate profits and
higher yields, the Fund held a concentration of corporate securities up to
two times that of its benchmark, the Lehman Brothers Intermediate
Government/Corporate Bond Index, throughout the reporting period. Extensive
growth in corporate earnings that supported the equity market to new heights
were also responsible for corporate bonds outperforming Government securities
most of the year. Additionally, the Fund held a position in asset-backed
securities and mortgage-backed securities in order to take advantage of the
good quality and relative yield advantages these securities offered.
As the theme of sustained economic growth and controlled inflation
began to develop, the average maturity of the Fund was extended to structure
the portfolio to seek to perform better in a declining rate environment. As
fiscal year 1996 begins, these same themes are still driving the market.
We appreciate your participation in the Fund and look forward to
continuing to serve your investment needs.
Sincerely,
Laurie Carroll
Portfolio Manager
November 15, 1995
New York, N.Y.
* Total return includes reinvestment of dividends and capital gains paid,
without taking into account the maximum initial sales charge in the case of
Class A shares, or the applicable contingent deferred sales charge imposed on
redemptions in the case of Class B and C shares.
**Source: Lipper Analytical Services, Inc. The Lehman Brothers Intermediate
Government/Corporate Bond Index is a widely accepted, unmanaged index of
Government and Corporate bond market performance composed of U.S. Government,
Treasury and agency securities, fixed-income securities and nonconvertible
investment grade corporate debt with an average maturity of 1-10 years.
<PAGE>
Premier Limited Term Income Fund October 31, 1995
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER LIMITED TERM
INCOME FUND CLASS R SHARES AND THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX
Premier Limited Lehman Brothers
Term Income Fund Intermediate Government/
(Class R Shares) Corporate Bond Index *
7/11/91 10,000 10,000
10/31/91 10,550 10,601
10/31/92 11,511 11,662
10/31/93 12,584 12,821
10/31/94 12,275 12,573
10/31/95 13,761 14,150
*Source: Lehman Brothers
<TABLE>
<CAPTION>
Average Annual Total Returns
- ------------------------------------------------------------------------------------------------------------------------------
Class A Shares Class R Shares
- ------------------------------------------------------------ ------------------------------------------------------------
% Return
Reflecting
% Return Without Maximum Initial
Period Ended 10/31/95 Sales Charge Sales Charge (3.0%) Period Ended 10/31/95
- --------------------- ------------ ------------------ ---------------------
<S> <C> <C> <C> <C>
1 Year 11.83% 8.44% 1 Year 12.11%
From Inception (4/7/94) 7.46 5.42 From Inception (7/11/91) 7.69
</TABLE>
<TABLE>
<CAPTION>
Actual Aggregate Total Returns
- ------------------------------------------------------------------------------------------------------------------------------
Class B Shares Class C Shares
- ------------------------------------------------------------ ------------------------------------------------------------
% Return Reflecting % Return Reflecting
Applicable Contingent Applicable Contingent
% Return Deferred Sales % Return Deferred Sales
Assuming No Charge Upon Assuming No Charge Upon
Period Ended 10/31/95 Redemption Redemption * Period Ended 10/31/95 Redemption Redemption**
- --------------------- ------------- -------------------- --------------------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
From Inception (12/19/94) 11.32% 8.32% From Inception (12/19/94) 11.32% 10.57%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class R shares of
Premier Limited Term Income Fund on 7/11/91 (Inception Date) to a $10,000
investment made in the Lehman Brothers Intermediate Government/Corporate Bond
Index on that date. For comparative purposes, the value of the Index on
6/30/91 is used as the beginning value on 7/11/91. All dividends and capital
gain distributions are reinvested. Performance for Class A shares, Class B
shares and Class C shares will vary from the performance of Class R shares
shown above due to differences in charges and expenses.
The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Lehman Brothers Intermediate
Government/Corporate Bond Index is a widely accepted, unmanaged index of
Government and corporate bond market performance composed of U.S. Government,
Treasury and agency securities, fixed-income securities and nonconvertible
investment grade corporate debt with an average maturity of 1-10 years. 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.
*Maximum contingent deferred sales charge for Class B shares is 3% and is
reduced to 0% after five years.
**Maximum contingent deferred sales charge for Class C shares is .75% within
one year of the date of purchase.
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
Principal
Amount CORPORATE BONDS AND NOTES-51.2% Value
--------- -------------
<S> <C> <C>
Banking and Finance- 6.9%
$ 500,000 Associates Corporation of North America
6% due 12/1/1995........................................................ $ 500,069
1,100,000 BankAmerica Corporation
6% due 7/15/1997........................................................ 1,100,000
500,000 International Lease Finance Corporation
6.625% due 6/1/1996..................................................... 502,335
2,500,000 International Lease Finance Corporation
5.75% due 3/15/1998..................................................... 2,481,250
-------------
4,583,654
-------------
Consumer Non-Durables-4.9%
2,000,000 McDonald's Corporation
8.375% due 10/29/1999................................................... 2,170,000
1,000,000 Warner-Lambert Company
8% due 9/1/1998......................................................... 1,052,500
-------------
3,222,500
-------------
Consumer Services-3.5%
2,100,000 Wal-Mart Stores, Inc.
8.625% due 4/1/2001..................................................... 2,331,000
-------------
Energy-4.1%
2,500,000 Exxon Capital Corporation
8.25% due 11/1/1999..................................................... 2,684,375
-------------
Financial Services-18.0%
2,500,000 ADVANTA Corporation
5.125% due 11/15/1996................................................... 2,475,000
500,000 American Express Company
8.50% due 08/15/2001.................................................... 553,125
2,100,000 Commercial Credit Group
7.375% due 11/15/1996................................................... 2,129,484
1,500,000 Dayton Hudson Credit Card Master Trust
Ser. 1995-1, Cl. A, 6.10% due 2/25/2002................................. 1,505,100
250,000 Ford Motor Credit Company
8.875% due 8/1/1996..................................................... 255,317
1,000,000 Ford Motor Credit Company
7.125% due 12/1/1997.................................................... 1,020,000
1,500,000 General Motors Acceptance Corporation
7.875% due 2/28/1997.................................................... 1,535,625
425,834 General Motors Acceptance Corporation Grantor Trust
Ser. 1992-F, Cl. A, 4.50% due 9/15/1997................................. 422,342
2,000,000 U.S. Leasing International Corporation
7% due 11/1/1997........................................................ 2,037,500
-------------
11,933,493
-------------
Technology-5.0%
3,000,000 Rockwell International Corporation
8.375% due 2/15/2001.................................................... 3,296,250
-------------
Utilities-3.0%
2,000,000 Texas Utilities Electric Company
6.375% due 8/1/1997..................................................... 2,007,500
-------------
</TABLE>
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Principal
Amount CORPORATE BONDS AND NOTES (continued) Value
--------- -------------
<S> <C> <C>
Other-5.8%
$3,000,000 American Home Products Corporation
7.90% due 2/15/2005..................................................... $ 3,285,000
500,000 BP America, Inc.
7.875% due 5/15/2002.................................................... 540,625
-------------
3,825,625
-------------
TOTAL CORPORATE BONDS AND NOTES
(Cost $33,973,815).................................................... 33,884,397
-------------
U.S. TREASURY BONDS AND NOTES-35.1%
1,060,000 U.S. Treasury Bonds
12.375% due 5/15/2004................................................... 1,503,907
1,000,000 U.S. Treasury Bonds
12% due 5/15/2005....................................................... 1,423,970
3,200,000 U.S. Treasury Bonds
10.75% due 8/15/2005.................................................... 4,287,711
2,000,000 U.S. Treasury Notes
7.875% due 1/15/1998.................................................... 2,090,380
1,500,000 U.S. Treasury Notes
8.875% due 11/15/1998................................................... 1,630,665
3,000,000 U.S. Treasury Notes
8.875% due 2/15/1999.................................................... 3,277,800
1,700,000 U.S. Treasury Notes
8.75% due 8/15/2000 .................................................... 1,905,003
700,000 U.S. Treasury Notes
6.25% due 2/15/2003..................................................... 712,166
4,000,000 U.S. Treasury Notes
7.25% due 5/15/2004..................................................... 4,327,599
1,800,000 U.S. Treasury Notes
7.875% due 11/15/2004................................................... 2,027,610
-------------
TOTAL U.S. TREASURY BONDS AND NOTES
(Cost $22,073,955).................................................... 23,186,811
-------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION-5.6%
1,269,575 Government National Mortgage Association
7% due 11/15/2023....................................................... 1,262,037
1,361,740 Government National Mortgage Association
7% due 3/15/2024........................................................ 1,353,655
1,106,185 Government National Mortgage Association
7.50% due 3/15/2024..................................................... 1,121,741
-------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (Cost $3,827,874) ...................................... 3,737,433
-------------
U.S. GOVERNEMENT AGENCY-1.2%
800,000 Tennessee Valley Authority
6% due 1/15/1997
(Cost $797,730)......................................................... 802,000
-------------
</TABLE>
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Principal
Amount Short-Term Investment Value
--------- -------------
<S> <C> <C>
REPURCHASE AGREEMENT-5.2%
$3,423,792 Agreement with Goldman Sachs & Company
dated 10/31/95 bearing 5.88% to be
repurchased at $3,424,351 on 11/1/95,
collateralized by $3,424,263 U.S. Treasury Notes,
5.875% due 7/31/97
(Cost $3,423,792)....................................................... $ 3,423,792
-------------
TOTAL INVESTMENTS
(Cost $64,097,166)........................................... 98.3% 65,034,433
CASH AND RECEIVABLES (NET)...................................... 1.7 1,117,286
------- -------------
NET ASSETS...................................................... 100.0% $66,151,719
------- -------------
------- -------------
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $64,097,166)-see Statement of
Investments (including repurchase agreement of $3,423,792)............ $65,034,433
Receivable for Capital Stock sold....................................... 213,795
Interest receivable..................................................... 1,288,045
-----------
66,536,273
LIABILITIES:
Due to the Dreyfus Corporation-Note 2(a)................................ $ 50,108
Due to Distributor-Note 2(b)............................................ 285
Dividends payable....................................................... 304,660
Directors' fees payable-Note 2(c)....................................... 19,465
Payable for Capital Stock redeemed...................................... 10,036 384,554
--------- -----------
NET ASSETS.................................................................. $66,151,719
-----------
-----------
REPRESENTED BY:
Paid-in capital......................................................... $67,394,335
Accumulated distributions in excess of investment income-net............ (22,636)
Accumulated net realized (loss) on investments.......................... (2,157,247)
Accumulated net unrealized appreciation on investments-Note 3........... 937,267
-----------
NET ASSETS at value......................................................... $66,151,719
-----------
NET ASSET VALUE, per share:
Class A Shares
(50 million shares of $.001 par value Capital Stock authorized)
($1,149,999 3 106,095 shares of Capital Stock outstanding)............ $10.84
------
------
Class B Shares
(50 million shares of $.001 par value Capital Stock authorized)
($77,501 37,150 shares of Capital Stock outstanding).................. $10.84
------
------
Class C Shares
(50 million shares of $.001 par value Capital Stock authorized)
($16 31.476 shares of capital stock outstanding)...................... $10.84
------
------
Class R Shares
(100 million shares of $.001 par value Capital Stock authorized)
($64,924,203 35,989,689 shares of Capital Stock outstanding).......... $10.84
------
------
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Statement of Operations Year ended October 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest Income:........................................................ $4,735,190
Expenses:
Investment management fee--Note 2(a).................................. $ 446,781
Directors' fees and expenses-Note 2(c)................................ 13,700
Distribution fee-Note 2(b)............................................ 2,830
Service fee-Note 2(b)................................................. 64
------------
Total Expenses.................................................... 463,375
------------
INVESTMENT INCOME--NET............................................ 4,271,815
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized (loss) on investments...................................... $ (302,901)
Net unrealized appreciation on investments.............................. 4,840,620
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 4,537,719
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $8,809,534
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
------------------------------
1995 1994(1)
------------ -----------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 4,271,815 $ 4,266,712
Net realized loss on investments..................................... (302,901) (1,876,669)
Net unrealized appreciation (depreciation) on investments for the year 4,840,620 (4,583,309)
------------ -----------
Net Increase (Decrease) In Net Assets Resulting From Operations.... 8,809,534 (2,193,266)
------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A Shares..................................................... (58,159) (10,352)
Class B Shares..................................................... (1,637) -
Class R Shares..................................................... (4,212,019) (4,462,330)
Net realized gain on investments;
Class R Shares..................................................... - (490,042)
------------ -----------
Total Dividends.................................................. (4,271,815) (4,962,724)
------------ -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A Shares..................................................... 999,504 950,058
Class B Shares..................................................... 74,448 -
Class C Shares..................................................... 15 -
Class R Shares..................................................... 41,024,884 65,415,979
Dividends reinvested:
Class A Shares..................................................... 20,894 4,011
Class B Shares..................................................... 1,026 -
Class R Shares..................................................... 2,845,297 3,726,095
Cost of shares redeemed:
Class A Shares..................................................... (865,359) (9,504)
Class R Shares..................................................... (65,824,826) (39,126,060)
------------ -----------
Increase (Decrease) In Net Assets From Capital Stock Transactions (21,724,117) 30,960,579
------------ -----------
Total Increase In Net Assets................................... (17,186,398) 23,804,589
NET ASSETS:
Beginning of year.................................................... 83,338,117 59,533,528
------------ -----------
End of year (including accumulated distributions in excess of
investment income-net: $22,636 in 1995 and $22,636 in 1994)....... $66,151,719 $83,338,117
------------ -----------
------------ -----------
</TABLE>
<TABLE>
<CAPTION>
Shares
----------------------------------------------------------------------------
Class A Class B Class C Class R
---------------------- ---------- -------- ------------------------
Year Ended Year Ended
Year Ended October 31, October 31, October 31, Year Ended October 31,
---------------------- ---------- -------- ------------------------
1995 1994(1) 1995(2) 1995(3) 1995 1994(1)
-------- ------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 97,702 91,768 7,054 2 4,035,604 6,051,387
Shares issued for dividends
reinvested........... 1,985 390 96 - 271,316 352,406
Shares redeemed........ (84,833) (917) - - (6,382,003) (3,716,619)
-------- ------- -------- -------- ---------- ----------
Net Increase (Decrease) in
Shares Outstanding. 14,854 91,241 7,150 2 (2,075,083) 2,687,174
-------- ------- -------- -------- ---------- ----------
-------- ------- -------- -------- ---------- ----------
<FN>
- ----------------
(1) The Fund commenced selling Class A shares on April 7, 1994. Any shares outstanding prior to April 4, 1994 were designated
Trust shares. On October 17, 1994, Trust shares were redesignated as Class R shares.
(2) The Fund commenced selling B shares on December 19, 1994.
(3) The Fund commenced selling C shares on April 30, 1995.
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Financial Highlights
Contained below is per share performance data for a share of
Capital 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>
Class A Shares Class B Shares
--------------------- ---------------------
Year Ended October 31, Year Ended October 31,
--------------------- ---------------------
<S> <C> <C> <C>
PER SHARE DATA: 1995 1994(1)(2) 1995(3)
------ ------ ------
Net asset value, beginning of year.............. $10.22 $10.49 $10.15
------ ------ ------
Investment Operations:
Investment income-net........................... .56 .28 .47
Net realized and unrealized gain (loss) on investments .62 (.27) .69
------ ------ ------
Total from Investment Operations.............. 1.18 .01 1.16
------ ------ ------
Distributions;
Dividends from investment income-net............ (.56) (.28) (.47)
------ ------ ------
Net asset value, end of year.................... $10.84 $10.22 $10.84
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN............................. 11.83% .11% 11.32%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... .85% .83%(4) 1.35%(4)
Ratio of net investment income to average net assets5.33% 4.47%(4) 4.85%(4)
Portfolio Turnover Rate......................... 73.00% 117.00% 73.00%
Net Assets, end of year (000's Omitted)......... $1,150 $932 $78
<FN>
(1) The Fund commenced selling Investor shares on April 7, 1994. Effective
October 17, 1994, the Fund's Investor shares were redesignated Class A
shares.
(2) Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager.
(3) The Fund commenced selling Class B shares on December 19, 1994.
(4) Annualized.
</TABLE>
See notes to financial statments.
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C Shares Class R Shares
-------------- --------------------------------------------------------
Year Ended
October 31, Year Ended October 31,
-------------- --------------------------------------------------------
PER SHARE DATA: 1995(1) 1995 1994(2) 1993 1992 1991(3)
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year.............. $10.15 $10.22 $11.07 $10.71 $10.41 $10.00
------ ------ ------ ------ ------ ------
Investment Operations
Investment income-net.. .48 .58 .49(4) .51 .62 .19
Net realized and unrealized gain
(loss) on investments .69 .62 (.75) .46 .30 .36
------ ------ ------ ------ ------ ------
Total from Investment
Operations....... 1.17 1.20 (.26) .97 .92 .55
------ ------ ------ ------ ------ ------
Distributions;
Dividends from investment
income--net.......... (.48) (.58) (.53) (.52) (.62) (.14)
Dividends from net realized gain
on investments....... - - (.06) (.09) - -
------ ------ ------ ------ ------ ------
Total Distributions.. (.48) (.58) (.59) (.61) (.62) (.14)
------ ------ ------ ------ ------ ------
Net asset value, end of year $10.84 $10.84 $10.22 $11.07 $10.71 $10.41
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN.... 11.32% 12.11% (2.46%) 9.33% 9.11% 5.49%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets........... - .60% .60%(5) .60% .51% .02%(6)
Ratio of net investment income
to average net assets - 5.58% 4.70% 4.81%(7) 5.91%(7) 7.16%(6)(7)
Portfolio Turnover Rate 73.00% 73.00% 117.00% 112.00% 67.00% 23.00%
Net Assets, end of year
(000's Omitted)...... - $69,924 $82,406 $59,534 $20,619 $9,608
<FN>
(1) The Fund commenced selling C shares on December 19, 1994.
(2) Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager.
(3) The Fund commenced operations on July 11, 1991. The Fund commenced
selling Class A shares on April 7, 1994. Those shares outstanding prior to
April 4, 1994 were designated as Trust shares. On October 17, 1994, Trust
shares were redesignated as Class R shares.
(4) Net investment income before reimbursement of expenses by the investment
adviser was $.49 for the year ended October 31, 1994.
(5) Expense ratio before reimbursement of expenses by the investment adviser
was .60% for the year ended October 31, 1994.
(6) Annualized.
(7) For the year ended October 31, 1992 and the period ended October 31,
1991, the investment adviser waived all or a portion of its advisory fee
amounting to $.0064 and $.0107 per share, respectively. For the years ended
October 31, 1993 and 1992 and the period ended October 31, 1991, the
investment adviser reimbursed expenses of the Fund amounting to $.0509,
$.1147 and $.0732 per share, respectively.
</TABLE>
See notes to financial statements
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1-Significant Accounting Policies:
The Dreyfus/Laurel Funds, Inc. (the "Company") 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
sixteen Series including the Premier Limited Term Income Fund (the "Fund").
The Dreyfus Corporation ("Manager") serves as the Fund's investment adviser.
The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
The Fund currently offers four classes of shares: Class A, Class B, Class
C and Class R shares. 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, while Class B and Class C shares are subject to a contingent deferred
sales charge ("CDSC") and a 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 fee or service fee. 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 fees and voting
rights on matters affecting a single class. The Company has the authority to
issue 25 billion shares of capital stock with a par value of $.001.
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.
(a) Portfolio Valuation: The Fund's investments (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
Directors. 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 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 dire
ction of the Board of Directors. Investments in U.S. Government obligations
are valued at the mean between quoted bid and asked prices. Short-term
investments are carried at amortized cost, which approximates value.
(b) Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Interest income, adjusted
for amortization of premiums and discounts on investments, is recognized on
the accrual basis. Realized gain and loss from securities transactions are
recorded on the identified cost basis.
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(c) Repurchase Agreements: The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund,
through its custodian, and sub-custodian, takes possession of an underlying
debt obligation subject to an obligation of the seller to repurchase, and the
Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Fund's holding period. The value of the collateral is at least
equal, at all times, to the total amount of the repurchase obligation,
including interest. In the event of a counterparty default, the Fund has the
right to use the collateral to offset losses incurred. There is potential
loss to the Fund in the event the Fund is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during
the period while the Fund seeks to assert its rights. The Fund's manager,
acting under the supervision of the Board of Directors, reviews the value of
the collateral and the creditworthiness of those banks and dealers with which
the Fund enters into repurchase agreements to evaluate potential risks.
(d) Distributions to Shareholders: It is the policy of the Fund to
declare and pay dividends from investment income-net on each business day.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comp
ly with the distribution requirements of the Internal Revenue Code. To the
extent that net realized capital gain can be offset by capital loss
carryovers, it the policy of the Fund not to distribute such gain.
(e) Federal Income Taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $2,147,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1995. If not
applied, $1,854,000 of the carryover expires in fiscal 2002 and $293,000 of
the carryover expires in fiscal 2003.
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 .60% 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, 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).
(b) Distribution and Service Plan: The Fund has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Class A, B and C shares. Under the Plan, the Fund may pay
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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% of the value of the average daily net assets of
Class B and Class C shares. Class B and Class C shares are also subject to a
service plan adopted pursuant to Rule 12b-1, pursuant to 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 service or distribution fee. For the year ended
October 31, 1995, the service fee for Class B shares was $64. For the year
ended October 31, 1995, the distribution fee for Class A and Class B shares
was $2,638 and $192, respectively.
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
Directors who are not "interested persons" of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
(c) Directors' Fees: Each director who is not an "interested person" as
defined in the Act receives $27,000 per year, $1,000 for each Board meeting
attended and $750 for each Audit Committee attended and is reimbursed for
travel and out-of-pocket expenses. These expenses are paid in total by the
following funds: the Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and the Dreyfus/Laurel Funds Trust. In addition the Chairman
of the Board receives an annual fee of $75,000 per year. These fees and expens
es are charged and allocated to each series based on net assets.
NOTE 3-Securities Transactions:
The aggregate amount of purchase and sales of investment securities,
other than short-term securities, during the year ended October 31, 1995,
amounted to $51,296,718 and $67,753,570, respectively.
At October 31, 1995, accumulated net unrealized appreciation on
investments was $937,267, consisting of $1,324,143 gross unrealized
appreciation and $386,876 gross unrealized depreciation.
At October 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
Premier Limited Term Income Fund
- --------------------------------------------------------------------------------
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 Premier Limited Term Income Fund of The Dreyfus/Laurel Funds, Inc.,
including the statement of investments, as of October 31, 1995, 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
the financial highlights for each of the periods indicated herein. 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. Our procedures included confirmation of
securities owned as of October 31, 1995, 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 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 the Premier Limited Term Income Fund of The Dreyfus/Laurel Funds,
Inc., as of October 31, 1995, 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 periods indicated
herein, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 15, 1995
<PAGE>
Premier Limited Term
Income Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Transfer Agent &
Dividend Disbursing Agent
First Data Investor Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. PLIAR9510
