<PAGE>
Dreyfus
Disciplined Midcap
Stock Fund
Annual Report
October 31, 1995
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ----------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to send you this annual report for Dreyfus Disciplined
Midcap Stock Fund. It covers the twelve months ended October 31, 1995.
As you will see in this letter, the Fund outperformed its benchmark index
during the period. In the sections that follow, we report the detailed
results and describe the portfolio makeup. In addition, to place the Fund's
performance in its broader setting, we discuss economic and market
developments during the period.
Economic Environment
The much-desired soft landing for the U.S. economy that the Federal
Reserve Board has been striving to attain appears to have occurred. This is
the result of more than a year of moves by the Fed to tighten interest rates,
followed by a token loosening of the reins last summer.
Now that the economy has settled down a bit, the central bank must
concern itself with the possibility that the economy might slow down more
than would be desirable. However, the latest economic statistics do not
contain convincing evidence of that happening. The housing industry is doing
well, industrial orders continue to expand and gross domestic product keeps
on growing, albeit at a reduced rate.
In the meantime, the rate of inflation appears to be under firm control.
Consumer prices have advanced only at a very moderate pace, and average wages
have barely inched ahead. Unemployment is not getting out of hand, and
hovers near the so-called full employment level.
Retail spending has settled down, in part because consumers are carrying
large debit balances in mortgage and credit card debts. To what extent this
will affect holiday shopping remains to be seen.
Market Environment
As your Fund reached the end of its fiscal year, October 31, 1995, stocks
were not far below the record levels they had reached earlier in the fall.
Among the factors accounting for this market strength were good corporate
profits and low interest rates. Third quarter profit reports from leading
corporations, while not universally favorable, were better than earlier
quarters. The extensive lean and mean corporate reorganizations of the past
few years appear to be paying off. Even though the pricing environment for
most corporate products is extremely competitive, manufacturers and service
providers appear able to squeeze out improved profits.
How long that continuing improvement will last is an open question. Many
economists think that profit levels may flatten out over the coming months.
The recent record on that score, however, has been encouraging.
Interest rates also have buoyed stock prices and sustained the bond
market. As the cost of borrowing has steadily decreased, many corporations
have benefited. This advantage has been particularly notable with public
utilities.
Another factor in market strength has been the relentless advance of
technology, which has virtually forced corporations -- and now individual
households as well -- to reequip in order to keep up with technical progress.
The obvious result has been seen in record prices commanded during the year
by high technology stocks. While some disillusionment may set in, the market
clearly takes a very optimistic view of the long-range outlook for these
companies.
In addition, equities have been favorably affected by the very large
inflow of investment money, on a regular basis, from 401(k) and other
retirement plans. To be sure, money managers could at some point
<PAGE>
turn off the spigot, and divert this cash flow into bonds or money market
instruments. During the past year, however, equity purchases by pension
funds and other retirement investors have provided a supportive background
for stock prices.
Of course, there are some concerns. Perhaps the biggest has been the
struggle between Congress and the White House over how to reduce Government
spending and cut the burden of the Government's perennial deficit.
Hopefully, this impasse will be settled soon. In the meantime, the
uncertainties in Washington have been a source of worry to investors.
The fading value of the U.S. dollar has also been a question mark. Yet,
after hitting a low last spring, the dollar has gradually recovered some lost
ground. This dollar rebound reflects weakness in the economies of Western
Europe and Japan, but also the strengthening of economic activity here at
home.
Portfolio Overview
For the fiscal year that ended October 31, 1995, Dreyfus Disciplined
Midcap Stock Fund achieved a total return of 23.39% for its Investor shares,
and 23.57% for its Class R shares.* This compares with a total return of
21.21% for the Fund's benchmark, the Standard & Poor's 400 MidCap Index.**
In late 1994 and early 1995, the Fund was adversely affected by a number
of factors, not the least of which was the tight money policy that the
Federal Reserve was pursuing at that time. By last spring, however, the
market for the types of equities held by the Fund began to improve. In
particular, our technology holdings started to show considerable strength.
Since then, the Fund has benefited from a rising equity market, plus
stock selection for the portfolio. Of course, the Federal Reserve Board's
easing of interest rates in July was a helpful factor for equities in
general. The portfolio also benefited from the fact that many issues in the
portfolio were purchased at attractive price-to-earnings ratios.
A wide range of holdings contributed to the Fund's positive performance,
including some Health Care stocks, Financial issues and Technology.
As the fiscal year ended, the principal sectors in which we held
investments were Capital Spending; Interest Sensitive/Regulated issues;
Utilities; Consumer Cyclical/Discretionary stocks; and Health Care.
Your investment in this Fund is appreciated. We will continue our best
efforts to help you achieve your investment goals.
Sincerely,
John R. O'Toole
Portfolio Manager
November 16, 1995
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income individends and, where applicable, capital gain distributions. The
Standard & Poor's 400 MidCap Index is a broad-based index of 400 companies
and is a widely accepted, unmanaged index of medium-cap stock market
performance.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund October 31, 1995
- ----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS DISCIPLINED
MIDCAP STOCK FUND CLASS R SHARES AND THE STANDARD & POOR'S
MIDCAP 400 INDEX
Disciplined Midcap
Stock Fund Standard & Poor's
(Class R Shares) Midcap 400 Index *
11/12/93 10,000 10,000
1/31/94 10,282 10,471
4/30/94 9,992 9,917
7/31/94 9,628 9,806
10/31/94 9,823 10,237
1/31/95 9,434 9,968
4/30/95 10,264 10,887
7/31/95 11,746 12,207
10/31/95 12,139 12,410
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- ----------------------------------------------------------------------------
Investor Class Shares Class R Shares
- ---------------------------------- -----------------------------------
Period ended 10/31/95 Period ended 10/31/95
- ---------------------------------- -----------------------------------
1 Year 23.39% 1 Year 23.57%
From Inception (4/6/94) 12.79 From Inception (11/12/93 10.34
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class R shares of
Dreyfus Disciplined Midcap Stock Fund on 11/12/93 (Inception Date) to a
$10,000 investment made in the Standard & Poor's MidCap 400 Index on that
date. For comparative purposes, the value of the Index on 10/31/93 is used as
the beginning value on 11/12/93. All dividends and capital gain distributions
are reinvested. Performance for Investor Class shares will vary from the
performance of Class R shares shown above due to differences in charges and
expenses.
The Dreyfus Disciplined Midcap Stock Fund seeks investment returns (including
capital appreciation and income) consistently superior to the Standard &
Poor's MidCap 400 Index. While the midcap market is the Fund's main focus,
the Fund can also invest in other areas, such as stocks of smaller and larger
corporations. The Fund's performance shown in the line graph takes into
account all applicable fees and expenses. The Standard & Poor's MidCap 400
Index is a broad-based Index of 400 companies with market capitalizations
generally ranging from $50 million to $10 billion and is a widely accepted,
unmanaged index of overall midcap stock market performance which does not
take into account charges, fees and other expenses. Further information
relating to Fund performance, including expense reimbursements, if
applicable, is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- -----------------------------------------------------------------------------
Statement of Investments October 31, 1995
Shares Common Stocks--94.8% Value
---------- ------------
Basic Industries--8.5%
900 Alumax, Inc.+ ................... $00,026,550
3,400 Arco Chemical Company ........... 166,600
900 Cleveland-Cliffs, Inc. .......... 33,638
1,400 Cyprus Minerals ................. 36,575
2,000 Eastman Chemical ................ 119,000
1,500 Fleetwood Enterpirses, Inc. ..... 30,750
2,700 First Mississippi Corporation.... 55,350
1,912 Firstmiss Gold Inc. + ........... 34,416
2,500 Greenfield Industries, Inc. ..... 75,000
1,600 Rayonier, Inc. .................. 60,000
4,900 Smith International, Inc.+....... 78,400
1,500 Temple Inland, Inc. ............. 68,250
2,200 Varian Associates ............... 113,025
2,100 Vigoro Corporation .............. 91,087
2,000 Viking Office Products, Inc.+.... 89,000
3,500 Wellman, Inc. ................... 82,250
-----------
1,159,891
-----------
Business Machines--.8%
2,400 3 Com Corp. + ................... 112,800
-----------
Capital Spending--2.1%
2,700 Case Corporation ................ 102,937
1,500 DSC Communications +............. 55,500
1,600 Danaher Corp. ................... 49,600
4,100 INDRESCO Inc. +.................. 70,213
-----------
278,250
-----------
Communications--3.8%
9,200 Frontier Corp. .................. 248,400
2,200 Scripps (E.W.) Company, Cl. A.... 83,050
2,500 Tellabs, Inc.+................... 85,000
2,700 United States Cellular
Corporation+................... 93,150
-----------
509,600
-----------
Construction--.2%
1,800 Centex Construction
Product Inc. +................. 22,725
-----------
Consumer Basics--1.4%
1,700 Alberto-Culver Company, Cl. B.... 53,338
1,600 Nine West Group Inc. +........... 71,200
2,900 Whitman Corporation ............. 61,625
-----------
186,163
-----------
Consumer Durables--3.4%
3,900 Brunswick Corporation ........... 76,050
2,400 Cummins Engine
Company, Inc................... 84,300
2,100 First Brands Corp. .............. 96,075
Consumer Durables (continued)
2,400 Harley Davidson, Inc. ........... $ 64,200
5,800 Leggett & Platt, Inc. ........... 139,200
-----------
459,825
-----------
Consumer Non-Durables--.5%
1,400 V. F. Corporation ............... 67,025
-----------
Consumer Services--12.2%
2,300 Applebees International Inc. .... 64,688
2,200 BMC Software Inc + .............. 78,375
3,700 Carson Pirie Scott & Company+ ... 62,437
4,900 Circuit City Stores, Inc. ....... 163,538
3,000 Dole Food, Inc. ................. 112,875
4,500 Gartner Group Inc. + ............ 196,312
4,300 Hannaford Brothers .............. 112,338
2,700 Heritage Media Corporation +..... 74,925
3,600 Hormel Foods .................... 82,800
1,400 IBP ............................. 83,825
2,700 IHOP Corp. +..................... 58,050
2,200 Lin Television +................. 62,975
3,100 Manpower, Inc. .................. 84,087
4,100 Morrison Restaurants, Inc. ...... 64,063
2,600 Pittston Services Group ......... 71,500
3,800 Players International, Inc.+..... 40,850
800 Ralston Purina Company .......... 47,500
2,700 Scientific Games Holdings
Corporation+................... 88,425
2,100 Smuckers (J.M.), Cl. A........... 41,212
1,200 Tandy Corporation ............... 59,250
-----------
1,650,025
-----------
Energy--5.3%
1,300 Ashland Coal, Inc. .............. 30,875
5,100 Brooklyn Union Gas Company ...... 128,137
2,200 Chesapeake Energy
Corporation +.................. 64,350
2,300 Diamond Shamrock Inc. ........... 59,225
5,900 Peco Energy Company.............. 172,575
5,100 Union Texas Petroleum
Holdings, Inc. ................ 91,800
4,300 Williams Companies Inc. ......... 166,088
-----------
713,050
-----------
Financial Services--16.1%
1,200 Advanta Corporation ............. 46,500
2,400 Allied Group, Inc. .............. 78,000
1,800 American Bankers Insurance
Group Inc...................... 64,575
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- -----------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
Shares Common Stocks (continued) Value
---------- ------------
Financial Services (continued)
1,300 American General Corporation .... $ 42,737
1,989 American National Insurance
Company ....................... 113,373
4,100 Bank of New York
Company, Inc................... 172,200
1,800 BayBanks, Inc. .................. 145,800
2,300 Bear Stearns Company, Inc. ...... 45,713
2,500 Bergen Brunswig Corporation ..... 51,875
2,900 Commercial Federal .............. 95,337
2,000 Crestar Financial Corporation ... 114,000
4,400 Cullen Frost Bankers ............ 224,400
2,400 Dean Witter, Discover
& Company ..................... 119,400
3,300 Equifax, Inc. ................... 128,700
3,300 First Bank System, Inc. ......... 164,175
1,400 First Chicago Corporation ....... 95,025
800 First Interstate Bancorp ........ 103,200
2,400 Old Republic Intl Corp........... 68,700
1,600 Price T Rowe .................... 79,600
2,300 RCSB Financial .................. 51,175
2,600 Standard Financial +............. 35,750
3,600 Vesta Insurance Group ........... 145,350
-----------
2,185,585
-----------
Forest Products--.3%
1,000 Bowater Inc. .................... 44,250
-----------
General Business--3.6%
3,300 Central Newspapers, Inc.,
Cl. A.......................... 97,350
3,800 Chesapeake Corporation .......... 116,375
2,200 HFS Inc. +..................... 134,750
1,900 King World Productions, Inc.+.... 66,263
1,500 Royal Caribbean Cruises ......... 34,500
1,900 Sport Authority (The) +.......... 41,325
-----------
490,563
-----------
Health Care/Pharmaceuticals--7.8%
1,500 Becton, Dickinson & Company ..... 97,500
2,500 Cardinal Health, Inc. ........... 128,437
2,400 Columbia/HCA Healthcare
Corporation.................... 117,900
1,400 Elan Corp. PLC ADS + ............ 56,175
3,700 HealthCare COMPARE
Corporation+ .................. 136,900
3,700 MediSense + ..................... 79,088
2,000 Medtronic, Inc. ................. 115,500
2,300 Mylan Labs, Inc. ................ 43,700
2,700 OrNda Healthcorp + .............. 47,587
Health Care/Pharmaceuticals
(continued)
2,600 Rite Aid Corp. .................. $ 70,200
1,028 Vencor Inc. + ................... 28,527
2,900 Watson Pharmeceutical + ......... 129,775
-----------
1,051,289
-----------
Technology--17.8%
2,800 Applied Material, Inc.+.......... 140,350
2,300 Autodesk, Inc. .................. 78,200
2,000 Cabletron Systems Inc.+ ......... 157,250
6,600 Cadence Design Systems, Inc.+.... 212,850
3,200 Cypress Semiconductor
Corporation+ .................. 112,800
3,600 Dell Computer+................... 167,850
3,600 Informix Corporation+ ........... 104,850
2,000 Komag, Inc.+ .................... 114,000
4,600 Loral Corporation ............... 136,275
1,700 Micron Technology, Inc. ......... 120,063
3,700 Millipore Corporation ........... 130,887
3,200 NetManage Inc.+ ................. 65,200
1,500 Novellus Systems, Inc.+ ......... 103,313
3,100 Seagate Technology+ ............. 138,725
1,600 Smith (A.O) Corp................. 33,200
2,400 StrataCom, Inc.+ ................ 147,600
2,300 Sun Microsystems, Inc.+.......... 179,400
3,300 Teradyne, Inc. +................. 110,137
4,800 Worldcom Inc. + ................. 156,600
-----------
2,409,550
-----------
Transportation--1.6%
1,000 Conrail, Inc. ................... 68,750
2,600 Illinois Central Corporation .... 99,450
1,800 Landstar System, Inc.+ .......... 47,250
-----------
215,450
-----------
Utilities--9.5%
8,200 Baltimore Gas & Electric
Company ....................... 219,350
5,900 Boston Edison Company ........... 161,513
5,500 Commonwealth Energy
Systems ....................... 233,062
7,100 DQE, Inc. ....................... 195,250
6,200 General Public Utilities
Corporation.................... 193,750
3,300 MCN Corporation ................. 71,775
7,900 Portland General Corporation .... 214,288
-----------
1,288,988
-----------
TOTAL COMMON STOCKS
(cost $10,535,774)............. 12,845,029
-----------
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- -----------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
Principal REPURCHASE
Amount AGREEMENT--4.6% Value
---------- ------------
$619,806 Goldman Sachs & Company
Tri-Party Repo Agreement with
Goldman Sachs, 5.88% dated
10/31/95, to be repurchased
at $619,907 on 11/1/95,
collateralized by $620,142
U.S. Treasury Notes, 5.875%
due 7/31/97 (cost $619,806)..... $ 619,806
-----------
TOTAL INVESTMENTS
(cost $11,155,580).......................... 99.4% $13,464,835
CASH AND RECVEIVABLES
(NET)....................................... .6% $ 81,040
------ -----------
NET ASSETS ................................... 100.0% $13,545,875
------ -----------
------ -----------
Note to Statement of Investments;
- ----------------------------------------------------------------------------
+ Non-income producing security.
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ----------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $11,155,580)--see Statement of
Investments (including repurchase agreement of $619,806).............. $13,464,835
Cash.................................................................... 667
Receivable for investment securities sold............................... 94,764
Dividends and interest receivable....................................... 17,792
-----------
13,578,058
LIABILITIES:
Due to The Dreyfus Corporation-Note 2(a)................................ $ 4,477
Due to Distributor-Note 2(b)............................................ 266
Payable for investment securities purchased............................. 23,610
Directors' fees payable-Note 2(c)....................................... 3,830 32,183
-------- -----------
NET ASSETS.................................................................. $13,545,875
-----------
-----------
REPRESENTED BY:
Paid-in capital......................................................... $10,613,155
Accumulated undistributed investment income--net........................ 29,477
Accumulated undistributed net realized gain on investments.............. 593,988
Accumulated net unrealized appreciation on investments--Note 3.......... 2,309,255
-----------
NET ASSETS at value......................................................... $13,545,875
-----------
-----------
NET ASSET VALUE, offering and redemption price per share:
Investor Shares
(22 million shares of $.001 par value Capital Stock authorized)
($1,416,688 / 118,891 shares of Capital Stock outstanding)............ $11.92
------
------
Class R Shares
(60 million shares of $.001 par value Capital Stock authorized)
($12,129,187 / 1,017,827 shares of Capital Stock outstanding)......... $11.92
------
------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- -----------------------------------------------------------------------------
Statement of Operations Year ended October 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Cash dividends........................................................ $ 314,515
Interest.............................................................. 44,045
-----------
Total Income...................................................... $ 358,560
Expenses:
Management fee--Note 2(a)............................................. 175,864
Directors' fees and expenses-Note 2(c)................................ 2,907
Distribution fee (Investor shares)-Note 2(b).......................... 1,422
-----------
Total Expenses.................................................... 180,193
----------
INVESTMENT INCOME--NET............................................ 178,367
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $1,347,713
Net realized gain on financial futures.................................. 10,196
-----------
Net Realized Gain..................................................... 1,357,909
Net unrealized appreciation on investments.............................. 1,977,353
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 3,335,262
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $3,513,629
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- -----------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
------------ ------------
1995 1994(1)
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................... $ 178,367 $ 159,637
Net realized gain (loss) on investments.............................. 1,357,909 (763,921)
Net unrealized appreciation on investments for the year.............. 1,977,353 331,902
------------ ------------
Net Increase (Decrease) In Net Assets Resulting From Operations.... 3,513,629 (272,382)
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Investor Shares.................................................... (4,227) (94)
Class R Shares..................................................... (194,302) (109,904)
------------ ------------
Total Dividends.................................................. (198,529) (109,998)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor Shares.................................................... 1,469,329 59,087
Class R Shares..................................................... 7,089,344 21,172,051
Dividends reinvested:
Investor Shares.................................................... 3,676 66
Class R Shares..................................................... 187,481 109,104
Cost of shares redeemed:
Investor Shares.................................................... (252,161) (5,216)
Class R Shares..................................................... (16,489,889) (2,729,717)
------------ ------------
Increase (Decrease) In Net Assets From Capital Stock Transactions (7,992,220) 18,605,375
------------ ------------
Total Increase (Decrease) In Net Assets........................ (4,677,120) 18,222,995
NET ASSETS:
Beginning of year.................................................... 18,222,995 --
------------ ------------
End of year (including undistributed investment income--net:
$29,477 in 1995 and $49,639 in 1994)............................... $ 13,545,875 $ 18,222,995
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Shares
--------------------------------------------------------------
Investor Shares Class R Shares
--------------------------- ----------------------------
Year Ended October 31, Year Ended October 31,
--------------------------- ----------------------------
1995 1994(1)(2) 1995 1994(1)(2)
-------- --------- ---------- ----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................... 137,173 6,048 692,632 2,122,927
Shares issued for dividends reinvested 343 7 18,799 11,107
Shares redeemed..................... (24,144) (536) (1,554,326) (273,312)
-------- ------- ---------- ---------
Net Increase (Decrease) In Shares
Outstanding..................... 113,372 5,519 (842,895) 1,860,722
-------- ------- ---------- ---------
-------- ------- ---------- ---------
<FN>
- ----------------
(1) The Fund commenced operations on November 12, 1993.
(2) The Fund commenced selling Investor shares on April 6, 1994. Any shares
outstanding prior to April 4, 1994 were designated Trust shares.
Effective October 17, 1994, the Fund's Trust shares were redesignated
Class R shares.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- -----------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating 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>
Investor Shares Class R Shares
------------------------ -----------------------
Year Ended October 31, Year Ended October 31,
------------------------ -----------------------
PER SHARE DATA: 1995 1994(1)(2)(3) 1995 1994(2)(3)
------ ------------ ------ ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of year........ $ 9.75 $10.00 $ 9.76 $10.00
------ ------ ------ ------
Investment Operations:
Investment income--net.................... .09 .05 .12 .09(4)
Net realized and unrealized gain (loss) on
investments............................. 2.17 (.26) 2.16 (.27)
------ ------ ------ ------
Total from Investment Operations.... 2.26 (.21) 2.28 (.18)
------ ------ ------ ------
Distributions;
Dividends from investment income--net..... (.09) (.04) (.12) (.06)
------ ------ ------ ------
Net asset value, end of year.............. $11.92 $ 9.75 $11.92 $ 9.76
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN....................... 23.39% (2.06)% 23.57% (1.77)%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.35% 1.40%(5) 1.10% 1.16%(5)(6)
Ratio of net investment income to average
net assets.............................. .86% .73%(5) 1.11% .98%(5)
Portfolio Turnover Rate................... 71.00% 83.00% 71.00% 83.00%
Net Asset, end of year (000's Omitted).... $1,417 $54 $12,129 $18,169
<FN>
- -----------------
(1) The Fund commenced selling Investor shares on April 6, 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 November 12, 1993. Any shares
outstanding prior to April 4, 1994 were designated as Trust Shares.
Effective October 17, 1994, the fund's Trust Shares were redesignated as
Class R Shares.
(4) Net investment income before reimbursement of expenses by investment
adviser for the period ended October 31, 1994 was $.06.
(5) Annualized.
(6) Annualized expense ratio before voluntary reimbursement of expenses by
the investment adviser for the period ended October 31, 1994 was 1.53%.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock 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 Dreyfus Disciplined Midcap Stock 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 is currently authorized to issue two classes of shares: Investor
shares and 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 (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. 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 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: Investments in securities are valued at the last
sales price on the securities exchange on which such securities are primarily
traded or at the last sales price on the national securities market.
Securities not listed on an exchange or the national securities market, or
securities for which there were no transactions, are valued at the average of
the most recent bid and asked prices. Bid price is used when no asked price
is available. Securities for which there are no such valuations are valued at
fair value as determined in good faith under the direction of the Board of
Directors.
(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) 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 obligations,
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
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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) Financial Futures: The Fund may invest in trading financial futures
contracts in order to gain exposure to or protect against changes in the
market. The Fund is exposed to market risk as a result of changes in the
value of the underlying financial instruments. Investments in financial
futures require the Fund to "mark to market" on a daily basis, which reflects
the change in the market value of the contract at the close of each day's
trading. Accordingly, variation margin payments are made or received to
reflect daily unrealized gains or losses. When the contracts are closed, the
Fund recognizes a realized gain or loss. These investments require initial
margin deposits with a custodian, which consist of cash or cash equivalents,
up to approximately 10% of the contract amount. The amount of these deposits
is determined by the exchange or Board of Trade on which the contract is
traded and is subject to change. At October 31, 1995, there were no financial
futures contracts outstanding.
(e) Distributions to Shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net are declared and paid
on a quarterly basis. Dividends from net realized capital gain are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
On November 2, 1995, the Board of Directors declared dividends from net
investment income for the Investor shares and ClassR shares in the amount of
$0.0189 per share and $0.0263 per share, respectively, payable on November 3,
1995 to shareholders of record onNovember 2, 1995.
(f) 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.
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 1.10% 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
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 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 .25% of the value of
the average daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation, an affiliate of
the Manager, for shareholder servicing activities and the Distributor for
activities primarily intended to result in the sale of Investor shares. The
Class R shares bear no distribution fee. For the year ended October 31, 1995,
the distribution fee for the Investor shares was $1,422.
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 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.
(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
expenses 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 $10,996,070 and $18,527,076, respectively.
At October 31, 1995, accumulated net unrealized appreciation on
investments was $2,309,255, consisting of $2,628,442 gross unrealized
appreciation and $319,187 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>
Dreyfus Disciplined Midcap Stock 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 Dreyfus Disciplined Midcap Stock 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, and the statement of
changes in net assets 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 audits 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 we 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 Dreyfus Disciplined Midcap Stock Fund of The Dreyfus/Laurel
Funds, Inc., as of October 31, 1995, and the results of its operations for
the year then ended, and the changes in its net assets 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>
Dreyfus Disciplined Midcap Stock 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. 330/730AR9510
