BOND MARKET INDEX FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus Bond Market
Index Fund. For the annual period ended October 31, 1996, the Fund's
Institutional shares and Retail shares had total returns (including bond
price changes and interest income) of 4.36% and 4.69% respectively.* For the
same period, the Fund's benchmark index, the Lehman Brothers
Government/Corporate Bond Index, returned 5.39%.**
Effective July 15, 1996, the Fund's Class R shares were redesignated as
Retail shares and the Fund's Investor shares were redesignated as
Institutional shares. Retail shares are offered to any investor.
Institutional shares are sold primarily through financial intermediaries.
ECONOMIC REVIEW
Recent fears of another round of monetary tightening by the Federal
Reserve Board (the "Fed") to ward off a resurgence in inflation have so far
proven to be unwarranted. Despite solid economic growth resulting in the
creation of new jobs and an overall tightening in the labor market, inflation
has remained subdued. Both the Consumer and Producer Price Indexes remained
in the 3% range. This is the fifth consecutive year of inflation under 3%,
the longest period since the 1960s. Despite the duration of the economic
recovery, most economic reports underscore the tepid nature of the current
inflationary environment.
The increase in long-term interest rates earlier this year may have
contributed to the recently reported slowdown in the rate of economic growth.
During the third quarter, the growth rate of Gross Domestic Product cooled to
2.2%, less than half the second quarter's strong 4.7% pace. Consumers - the
initiators of two-thirds of all economic activity - remained cautious
throughout the year. In the third quarter, the pace of consumer spending was
at its slowest in five years. Consumer borrowing has also declined from
levels of a year ago. Not surprisingly, retail sales growth has also been
modest this year. Consumers may have been restrained by wages not rising as
rapidly as had been previously expected, given the strength in the labor
market. The Employment Cost Index, considered to be an important gauge of
wage inflation by Federal Reserve Chairman Alan Greenspan, rose just 0.6% in
the third quarter, the lowest reading in over a year. This brought the growth
in wages to 2.8% over the past 12 months, slightly less than the rate of
inflation as measured by the Consumer Price Index.
The booming housing market also seems to have cooled with both new
housing starts and existing home sales slackening since midyear. Industrial
production has slowed somewhat from its more rapid pace earlier in the year.
Given the level of capacity utilization, there appears to be no sign of
production bottlenecks that could push prices higher. Anecdotal evidence
still supports the assertion that corporations are reluctant to raise prices.
The report that the 1996 Federal budget deficit had shrunk to $107.3 billion
- - its lowest level in two decades - provided another favorable sign for
inflation. The final reading of the 1996 deficit marks the fourth straight
decline from fiscal 1992's record $290.4 billion.
Despite the relatively benign current environment for inflation, we are
alert for early signs of its potential resurgence. While wage increases so
far have remained modest, workers should eventually expect compensation that
at least matches their cost of living. Furthermore, we are mindful that price
increases in energy and food may not continue to be as restrained as they
were over the past four years.
THE MARKET
After a volatile first four months of 1996, the bond market settled into
a trading range during the summer with yields on ten-year securities varying
within a range of 6.5% to 7.0%. Economic reports began to indicate an economy
not growing as fast as many investors had feared. Employment growth, a shock
to investors earlier in the year, moderated. Additionally, investor fear of
abnormal increases in the rate of inflation subsided as oil and grain prices
fell over the summer. By the end of the reporting period, investor psychology
turned positive and bond yields moved lower as evidence grew that the economy
was growing at a moderate pace. We expect that there could be further gains
in the bond market as long as reports continue to indicate modest economic
growth and continued low inflation.
The Fund seeks to replicate the returns of the domestic bond market's
major benchmark, the Lehman Brothers Government/Corporate Bond Index.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely,
[Laurie Carroll signature logo]
Laurie Carroll
Portfolio Manager
November 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LEHMAN BROTHERS - The Lehman Brothers 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.
DREYFUS BOND MARKET INDEX FUND OCTOBER 31, 1996
[Exhibit A]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS BOND MARKET
INDEX FUND RETAIL SHARES AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND
INDEX
$11,808
Lehman Brothers Government/Corporate
Bond Index*
Dollars
$11,638
Dreyfus Bond Market
Index Fund
(Retail Shares)
[Exhibit A]
*Source: Lehman Brothers
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
INSTITUTIONAL SHARES* RETAIL SHARES*
________________________________________________________ _________________________________________________________
PERIOD ENDED 10/31/96 PERIOD ENDED 10/31/96
_________ _________
<S> <C> <C> <C>
1 Year 4.36% 1 Year 4.69%
From Inception (4/28/94) 7.34 From Inception (11/30/93)5.34
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Retail shares of
Dreyfus Bond Market Index Fund on 11/30/93 (Inception Date) to a $10,000
investment made in the Lehman Brothers Government/Corporate Bond Index on
that date. All dividends and capital gain distributions are reinvested.
Performance for Institutional shares will vary from the performance of Retail
shares shown above due to differences in charges and expenses.
The Fund seeks to replicate the total return of the Lehman Brothers
Government/Corporate Bond Index. The Fund's performance shown in the line
graph takes into account all applicable fees and expenses. The Lehman
Brothers Government/Corporate Bond Index is intended to measure the
performance of the domestic fixed-rate, investment grade debt market and 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.
* Effective July 15, 1996, the Fund's Investor shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Principal
Bonds and Notes-96.7% Amount Value
________ ________
<S> <C> <C>
AeROSPACE AND
AVIATION-.5% Boeing, Deb.,
8.10%, 2006.......................... $ 25,000 $ 27,469
8 5/8%, 2031......................... 10,000 11,709
Lockheed,
Notes, 6 3/4%, 2003.................. 25,000 25,182
Lockheed Martin,
Unsecured Deb.(Gtd. by Lockheed Martin
Tactical Systems), 7.65%, 2016....... 40,000 41,498
Raytheon,
Notes, 6 1/2%, 2005.................. 25,000 24,579
Rockwell International:
Deb., 8 7/8%, 1999................... 15,000 16,092
Notes, 6 3/4%, 2002.................. 30,000 30,401
__________
176,930
__________
AUTOMOTIVE-.4% Ford Motor,
Deb., 8 7/8%, 2022................... 20,000 23,267
General Motors:
Deb:
9 1/8%, 2001..................... 15,000 16,547
8 7/8%, 2003..................... 25,000 27,829
7.40%, 2025....................... 10,000 9,925
Notes, 7%, 2003...................... 40,000 40,658
__________
118,226
__________
BANKING-2.6% Banc One,
Sub. Notes, 9 7/8%, 2009............. 5,000 6,121
BankAmerica, Sub. Notes:
7 3/4%, 2002......................... 25,000 26,303
6 3/4%, 2005......................... 15,000 14,786
6.20%, 2006.......................... 15,000 14,184
Bankers Trust New York,
Sub. Notes, 7 3/8%, 2008............. 75,000 76,136
Chase Manhattan
Sub. Deb.:
7 1/8%, 2005..................... 35,000 35,299
6 1/2%, 2009..................... 10,000 9,493
Sub. Notes, 7 3/4%, 1999............. 40,000 41,617
Chemical,
Sub. Notes, 6 1/8%, 2008............. 15,000 13,832
Citicorp,
Sub. Notes, 7 1/8%, 2003............. 20,000 20,436
First Bank System,
Sub. Notes, 7 5/8%, 2005............. 55,000 57,318
First Chicago,
Sub. Notes, 9 7/8%, 2000............. 20,000 22,282
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
BANKING (CONTINUED) First Union, Sub. Notes:
8%, 2002............................. $ 15,000 $ 15,978
7%, 2006............................. 75,000 74,906
Fleet Financial Group,
Sr. Notes, 7 1/8%, 2000.............. 40,000 40,921
Morgan (J.P.),
Sub. Notes, 6 1/4%, 2009............. 20,000 18,734
NCNB,
Deb., 9 3/8%, 2009................... 20,000 23,677
NationsBank:
Sr. Notes, 6 5/8%, 1998.............. 25,000 25,161
Sub Notes:
6 7/8%, 2005.................... 10,000 9,960
7 5/8%, 2005.................... 30,000 31,280
Norwest Corp.,
Sub. Deb., 6.65%, 2023............... 15,000 13,688
Republic New York Corp., Sub. Notes:
7 1/4%, 2002......................... 100,000 103,239
5 7/8%, 2008......................... 25,000 22,708
SunTrust,
Deb., 8 7/8%, 1998................... 15,000 15,508
Wachovia,
Sub. Notes, 6 3/8%, 2003............. 15,000 14,843
Wells Fargo,
Deb., 8.20%, 1996.................... 115,000 115,000
__________
863,410
__________
CHEMICALS-.4% Air Products & Chemical,
Deb., 8 3/4%, 2021................... 5,000 5,775
duPont, Deb:
8.65%, 1997.......................... 15,000 15,453
6%, 2001............................. 15,000 14,725
duPont (E.I.) de Nemours,
Notes, 6 3/4%, 2002.................. 40,000 40,571
Eastman Chemical,
Notes, 6 3/8%, 2004.................. 30,000 29,422
Monsanto,
Deb., 8.20%, 2025.................... 20,000 21,219
Morton International,
Deb., 9 1/4%, 2020................... 5,000 6,127
__________
133,292
__________
CONSUMER-.8% Clorox,
Deb., 8.80%, 2001.................... 10,000 10,953
IBM:
Deb., 7%, 2025....................... 20,000 19,300
Notes, 6 3/8%, 2000.................. 150,000 150,480
Kimberly-Clark,
Deb., 6 7/8%, 2014................... 5,000 4,831
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
CONSUMER (CONTINUED) Maytag,
Deb., 9 3/4%, 2002................... $ 5,000 $ 5,704
Procter & Gamble, Deb.:
8.70%, 2001.......................... 30,000 32,861
6.45%, 2026.......................... 15,000 13,781
The Employee Stock
Ownership Trust of the Procter & Gamble
Profit Sharing Trust and Employee Stock
Ownership Plan, Deb.
(Gtd. by Procter & Gamble),
9.36%, 2021.......................... 10,000 12,236
Whirlpool,
Deb., 9%, 2003....................... 10,000 11,245
__________
261,391
__________
ENTERTAINMENT/MEDIA-1.1%. Cox Communications,
Notes, 6 3/8%, 2000.................. 100,000 99,866
Disney (Walt):
Global Bonds, 6 3/4%, 2006........... 20,000 19,882
Medium-Term Notes, 5.80%, 2008....... 15,000 13,803
News America Holdings (Gtd. by The News):
Deb., 7 3/4%, 2024................... 15,000 14,564
Sr. Notes, 9 1/8%, 1999.............. 200,000 214,317
__________
362,432
__________
FINANCIAL SERVICES-4.6% Aetna Services,
Notes (Gtd. by Aetna), 7 5/8%, 2026.. 50,000 50,865
American Express Credit,
Sr. Notes, 6 1/8%, 2001.............. 40,000 39,474
American General Finance, Sr. Notes:
6 5/8%, 1997......................... 20,000 20,107
8 1/8%, 2009......................... 10,000 10,824
Associates Corp. of North America:
Deb., 7.95%, 1998.................... 10,000 (a) 10,957
Sr. Notes:
7 1/2%, 1999................... 50,000 51,552
9 1/8%, 2000................... 15,000 (b) 16,278
6 5/8%, 2005................... 10,000 9,833
Avco Financial Services,
Sr. Notes, 7 1/2%, 1996.............. 50,000 50,027
Bear Stearns, Sr. Notes:
8 3/4%, 2004......................... 10,000 11,000
7 1/4%, 2006......................... 75,000 75,740
Beneficial:
Deb.:
8.40%, 1996...................... 5,000 (c) 5,701
9 1/8%, 1998..................... 70,000 72,672
Medium-Term Notes, 9 1/8%, 2001...... 5,000 5,522
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
FINANCIAL SERVICES (CONTINUED) CIT Group Holdings,
Medium-Term Sr. Notes, 6 1/8%, 1998.. $ 40,000 $ 40,146
Chrysler Financial, Notes:
5 3/8%, 1998......................... 50,000 49,369
6 1/2%, 1998......................... 20,000 20,149
Commercial Credit Group, Notes:
6.70%, 1999.......................... 25,000 25,311
6 3/8%, 2002......................... 45,000 44,548
10%, 2008............................ 5,000 6,154
Dean Witter Discovery,
Notes, 6 1/4%, 2000.................. 30,000 29,915
FINOVA Capital,
Notes, 9 1/8%, 2002.................. 20,000 22,125
Ford Capital B.V.,
Deb., 9 7/8%, 2002................... 25,000 28,665
Ford Motor Credit:
Deb.:
9 3/8%, 1997...................... 20,000 20,731
9 1/4%, 1998...................... 5,000 5,243
Notes:
8%, 2002.......................... 65,000 69,058
6 3/4%, 2008...................... 20,000 19,445
GMAC:
Deb.:
8.40%, 1999....................... 30,000 31,695
6%, 2011.......................... 10,000 8,833
Notes, 6 5/8%, 2005.................. 20,000 19,491
General Electric Capital:
Deb., 8.30%, 1998.................... 15,000 16,963
Medium-Term Notes, 7 1/2%, 1998...... 70,000 71,529
General Electric Credit,
Deb., 5 1/2%, 2001................... 10,000 9,596
Household Finance,
Notes, 8%, 2004...................... 15,000 16,037
Integra Financial,
Sub. Notes, 6 1/2%, 2000............. 15,000 15,063
International Lease Finance:
Medium-Term Notes, 6 1/4%, 2000...... 40,000 39,854
Notes, 4 3/4%, 1997.................. 50,000 49,916
Lehman Brothers Holdings,
Notes, 5 3/4%, 1998.................. 200,000 199,113
Merrill Lynch,
Notes, 8.30%, 2002................... 15,000 16,182
Norwest Financial, Sr. Notes:
5 1/2%, 1998......................... 25,000 24,868
7%, 2003............................. 15,000 15,297
Pitney Bowes Credit,
Deb., 9 1/4%, 1998................... 15,000 (d) 17,572
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
FINANCIAL SERVICES (CONTINUED) Salomon Brothers,
Sr. Notes, 7 1/4%, 2000.............. $ 10,000 $ 10,171
Sears, Roebuck Acceptance,
Notes, 6 1/8%, 2006.................. 35,000 32,983
Transamerica Financial,
Deb., 6 1/2%, 2011................... 5,000 4,640
Travelers/Aetna Property & Casualty,
Notes, 6 3/4%, 2001.................. 60,000 60,591
U.S. Leasing International,
Sr. Notes, 6 5/8%, 2003.............. 30,000 29,796
U.S. West Capital Funding,
Notes (Gtd. by U.S. West), 6.31%, 2000. 10,000 (e) 10,049
Xerox Credit,
Deb., 10%, 1999...................... 10,000 10,853
__________
1,522,503
__________
FOOD AND BEVERAGES-1.4%. Anheuser-Busch, Deb:
8 3/4%, 1999......................... 5,000 5,346
9%, 2009............................. 5,000 5,925
Archer-Daniels-Midland, Deb.:
Zero Coupon, 2002.................... 5,000 3,523
8 1/8%, 2012......................... 40,000 44,806
Campbell Soup,
Deb., 8 7/8%, 2021................... 5,000 5,891
Coca-Cola,
Notes, 6 5/8%, 2002.................. 35,000 35,287
Coca-Cola Enterprises:
Deb., 8 1/2%, 2022................... 10,000 11,356
Notes, 7 7/8%, 2002.................. 15,000 15,948
Dole Food,
Notes, 6 3/4%, 2000.................. 15,000 15,093
Hershey Foods,
Deb., 8.80%, 2021.................... 30,000 35,340
McDonald's,
Notes, 6 3/4%, 2003.................. 20,000 20,268
Nabisco,
Deb., 7.55%, 2015.................... 40,000 39,523
PepsiCo,
Deb., 7 5/8%, 1998................... 40,000 41,305
Pet,
Notes (Gtd. by Grand Metropolitan plc),
5 3/4%, 1998......................... 20,000 19,918
Ralston-Purina Group,
Deb., 8 5/8%, 2022................... 90,000 99,322
Seagram,
Deb., 8.35%, 2022.................... 10,000 10,981
Supervalu,
Notes, 7.80%, 2002................... 15,000 15,831
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
FOOD AND BEVERAGES (CONTINUED) Sysco,
Sr. Notes, 7%, 2006.................. $ 25,000 $25,338
__________
451,001
__________
HEALTH CARE-.4% Baxter International,
Deb., 9 1/4%, 1999................... 15,000 16,259
Bristol-Myers Squibb,
Deb., 7.15%, 2023.................... 15,000 14,970
Columbia/HCA Healthcare
Notes, 7 1/4%, 2008.................. 75,000 76,622
Lilly (Eli), Notes:
6 3/4%, 1999......................... 15,000 15,259
6.57%, 2016.......................... 30,000 28,434
__________
151,544
__________
INDUSTRIAL-1.6% Aluminum Co. of America,
Notes, 5 3/4%, 2001.................. 50,000 48,809
American Home Products,
Notes, 7.70%, 2000................... 50,000 52,144
Bass America,
Notes, 8 1/8%, 2002.................. 15,000 16,111
Bowater,
Deb., 9 3/8%, 2021................... 10,000 12,049
Browning-Ferris,
Deb., 7.40%, 2035.................... 10,000 9,923
Burlington Resources,
Deb., 6 7/8%, 2026................... 70,000 65,158
Carnival,
Notes, 7.05%, 2005................... 15,000 15,268
Caterpillar, Deb:
9 3/8%, 2000......................... 5,000 5,482
9 3/8%, 2011......................... 10,000 12,214
Eaton,
Deb., 8.10%, 2022.................... 10,000 10,985
Emerson Electric,
Notes, 6.30%, 2005................... 35,000 34,151
Illinois Tool Works,
Notes, 5 7/8%, 2000.................. 20,000 19,839
Motorola,
Notes, 7.60%, 2007................... 100,000 106,044
PPG Industries,
Notes, 7 3/8%, 2016.................. 45,000 45,809
Tenneco,
Deb., 10%, 1998...................... 15,000 (f) 18,338
United Technologies,
Deb., 8 7/8%, 2019................... 5,000 5,919
WMX Technologies,
Notes, 6 3/8%, 2003.................. 30,000 29,507
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
INDUSTRIAL (CONTINUED) Xerox,
Notes, 7.15%, 2004................... $ 15,000 $ 15,371
__________
523,121
__________
OIL AND GAS-.6% Atlantic Richfield,
Deb., 9%, 2021....................... 15,000 17,866
Mobil:
Deb., 8 5/8%, 2021................... 15,000 17,649
Notes, 6 1/2%, 1996.................. 25,000 25,032
Occidental Petroleum,
Sr. Notes, 10 1/8%, 2001............. 15,000 17,233
Pennzoil, Deb.:
9 5/8%, 1999......................... 10,000 10,809
10 1/8%, 2009........................ 5,000 6,191
Phillips Petroleum,
Notes, 6.65%, 2003................... 20,000 19,957
Texaco Capital (Gtd. by Texaco):
Deb.:
9%, 1997.......................... 15,000 15,481
8.65%, 1998....................... 15,000 15,489
6 7/8%, 2023...................... 25,000 23,364
Notes, 9%, 1999...................... 15,000 16,166
__________
185,237
__________
PAPER PRODUCTS-.4% Georgia-Pacific,
Deb., 9 5/8%, 2022................... 25,000 27,927
International Paper,
Notes, 7 5/8%, 2007.................. 10,000 10,594
James River,
Deb., 9 1/4%, 2021................... 50,000 57,825
Weyerhaeuser,
Deb., 7.95%, 2025.................... 20,000 21,427
__________
117,773
__________
PUBLISHING-.2% Gannett, Notes:
5 1/4%, 1998......................... 25,000 24,791
5.85%, 2000.......................... 55,000 54,234
__________
79,025
__________
RETAIL-.9% Dayton Hudson, Deb.:
9 3/4%, 1998......................... 5,000 5,329
9 1/2%, 2016......................... 2,000 2,090
8 1/2%, 2022......................... 20,000 20,557
Dillard Department Stores,
Deb., 8 3/4%, 1998................... 10,000 10,428
Limited,
Deb., 7 1/2%, 2023................... 10,000 9,054
Lowes,
Medium-Term Notes, 8.19%, 2022....... 50,000 53,865
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
RETAIL (CONTINUED) May Department Stores,
Deb., 9 7/8%, 2002................... $ 15,000 $ 17,479
Penney (J.C.), Deb.:
9.05%, 2001.......................... 50,000 54,680
8 1/4%, 2022......................... 15,000 15,521
7 1/8%, 2023......................... 15,000 14,323
Sears, Roebuck,
Deb., 6%, 2000....................... 5,000 4,943
Wal-Mart Stores:
Deb., 9.10%, 2000.................... 10,000 10,923
Notes:
5 1/2%, 1998....................... 50,000 49,870
5 7/8%, 2005....................... 25,000 23,554
__________
292,616
__________
TELEPHONE AND
TELEGRAPH-3.2% AT&T:
Deb.:
5 1/8%, 2001...................... 50,000 47,621
8.35%, 2025....................... 5,000 5,357
Notes, 7%, 2005...................... 15,000 15,274
Airtouch Communications,
Notes, 7 1/8%, 2001.................. 100,000 102,451
Bellsouth Telecommunications,
Deb., 7%, 2025....................... 50,000 49,131
GTE,
Deb., 9.10%, 2003.................... 35,000 39,465
General Telephone of California,
First Mortgage, 6 3/4%, 1997......... 10,000 10,028
Lucent Technologies,
Notes, 6.90%, 2001................... 130,000 132,777
MCI Communications,
Sr. Notes, 6 1/4%, 1999.............. 75,000 75,314
Michigan Bell Telephone,
Deb., 6 3/8%, 2005................... 25,000 24,409
New England Telephone & Telegraph,
Deb., 7 3/8%, 2007................... 10,000 10,151
New Jersey Bell Telephone, Deb.:
6 5/8%, 2008......................... 30,000 29,371
8%, 2022............................. 25,000 27,525
New York Telephone:
Deb., 8 5/8%, 2010................... 5,000 5,715
Mortgage, 7 3/4%, 2006............... 20,000 20,396
Northern Telecom,
Deb., 8 3/4%, 2001................... 200,000 218,356
Pacific Bell Telephone, Deb.:
7 3/8%, 2025......................... 75,000 72,645
7 1/8%, 2026......................... 10,000 9,792
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
TELEPHONE AND
TELEGRAPH (CONTINUED) Pacific Telephone & Telegraph,
Deb., 4 5/8%, 1999................... $ 70,000 $ 67,618
Southwestern Bell Telephone Deb.:
4 1/2%, 1997......................... 50,000 49,563
7 3/4%, 2009......................... 10,000 10,199
7 5/8%, 2013......................... 10,000 10,135
U.S. West Communications,
Deb., 6 7/8%, 2033................... 25,000 22,719
__________
1,056,012
__________
TOBACCO-.3% American Brands,
Deb., 8 5/8%, 2021................... 5,000 5,705
Philip Morris,
Deb.:
9 1/4%, 2000...................... 40,000 43,275
6%, 2001.......................... 20,000 19,400
8 3/8%, 2017...................... 15,000 15,395
Notes, 9 1/4%, 1997.................. 30,000 31,000
__________
114,775
__________
TRANSPORTATION-.2% Federal Express,
Notes, 9 7/8%, 2002.................. 15,000 17,151
Norfolk Southern,
Deb., 9%, 2021....................... 10,000 12,044
Ryder System,
Deb., 8 3/4%, 2017................... 10,000 10,314
Seariver Maritime,
Deb. (Gtd. by Exxon), Zero Coupon, 2012 5,000 1,733
United Parcel Service,
Deb., 8 3/8%, 2020................... 10,000 11,441
__________
52,683
__________
UTILITIES-2.4% Alabama Power,
First Mortgage, 6%, 2000............. 50,000 49,575
Baltimore Gas & Electric,
First and Refunding Mortgage:
7 1/2%, 2007...................... 10,000 10,485
7 1/2%, 2023...................... 40,000 39,329
Carolina Power & Light, First Mortgage:
5 3/8%, 1998......................... 50,000 49,531
8.20%, 2022.......................... 15,000 15,727
Commonwealth Edison,
Mortgage, 8 1/8%, 2007............... 10,000 10,045
Consolidated Edison Co. of New York,
Deb., 6 1/4%, 1998................... 25,000 25,086
Consolidated Natural Gas,
Deb., 5 7/8%, 1998................... 40,000 39,979
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
UTILITIES (CONTINUED) Duke Power, First and Refunding Mortgage:
7 1/2%, 1999......................... $ 50,000 $ 51,501
7 3/8%, 2023......................... 15,000 14,784
Florida Power & Light, First Mortgage:
6 5/8%, 2003......................... 30,000 29,766
7 3/4%, 2023......................... 25,000 25,645
Gulf State Utilities,
First Mortgage, 6.41%, 2001.......... 45,000 44,194
Illinois Power,
First Mortgage, 8 3/4%, 2021......... 15,000 16,203
New York State Electric & Gas,
First Mortgage, 9 7/8%, 2020......... 10,000 10,816
Pacific Gas & Electric,
Notes, 7.45%, 1998................... 40,000 41,003
Pennsylvania Power & Light, First Mortgage:
7 1/2%, 2003......................... 10,000 10,069
6 1/2%, 2005......................... 20,000 19,405
6.55%, 2006.......................... 25,000 24,211
Potomac Electric & Power,
First Mortgage, 5 7/8%, 2002......... 10,000 9,648
Public Service Electric & Gas,
First and Refunding Mortgage:
8 3/4%, 1999..................... 25,000 26,487
6 1/8%, 2002..................... 20,000 19,491
6 1/2%, 2004..................... 25,000 24,418
South Carolina Electric & Gas,
Mortgage, 9%, 2006................... 20,000 22,612
Southern California Gas,
First Mortgage, 7 3/8%, 2023......... 20,000 19,472
Texas Utilities,
First Mortgage, 8 3/4%, 2023......... 35,000 37,756
Union Electric, First Mortgage:
5 1/2%, 1997......................... 50,000 49,977
6 3/4%, 2008......................... 25,000 24,880
Virginia Electric & Power,
First Mortgage, 7 5/8%, 2007......... 25,000 26,371
Wisconsin Electric & Power,
First Mortgage, 7.70%, 2027.......... 20,000 20,524
__________
808,990
__________
OTHER-.1% Private Export Funding:
Deb., 9.45%, 12/31/1999.............. 5,000 5,482
Secured Notes (Gtd. by the Export-Import
Bank of the U.S.), 8.40%, 7/31/2001 30,000 32,600
__________
38,082
__________
FOREIGN-3.5% African Development Bank, Sub. Notes:
7 3/4%, 2001......................... 15,000 15,883
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
FOREIGN (CONTINUED) African Development Bank, Sub. Notes (continued):
6 7/8%, 2015......................... $ 85,000 $ 82,333
Canada Government Bonds,
6 3/8%, 2005......................... 30,000 29,588
Daimler-Benz of North America,
Medium-Term Notes (Gtd. by Daimler-Benz AG),
7 3/8%, 2006......................... 120,000 124,101
Dresdner Bank-New York,
Sub. Deb., 7 1/4%, 2015.............. 40,000 39,794
European Investment Bank,
Deb., 10 1/8%, 2000.................. 20,000 22,629
Hydro-Quebec, Bonds,
(Gtd. by the Province of Quebec):
8 1/2%, 2029.................... 10,000 11,073
9 3/8%, 2030.................... 20,000 24,202
9 1/2%, 2030.................... 10,000 12,260
KFW International Finance, Deb.:
(Gtd. by the Federal Republic of Germany),
9 1/8%, 2001.................... 10,000 11,081
(Gtd. by KFW),
8%, 2010........................ 35,000 38,629
(Gtd. by Kreditansalt Fuer Wiederaufbau),
9 3/8%, 1998.................... 5,000 5,261
Kingdom of Sweden,
Notes, 6 1/2%, 2003.................. 20,000 20,039
InterAmerican Development Bank,
Deb., 9 1/2%, 1997................... 15,000 15,514
International Bank for Reconstruction &
Development, Deb., 9 7/8%, 1997...... 15,000 15,545
Italy Government Bonds,
6 7/8%, 2023......................... 70,000 66,196
Province of Alberta,
Notes, 9.20%, 1997................... 20,000 20,716
Province of British Columbia:
Bonds, 6 1/2%, 2026.................. 25,000 23,218
Deb., 7%, 2003....................... 20,000 20,611
Province of Manitoba, Bonds:
9 1/2%, 1998......................... 5,000 5,321
8.80%, 2020.......................... 10,000 11,787
Province of New Brunswick,
Deb., 6 3/4%, 2013................... 30,000 29,103
Province of Ontario:
Sr. Deb., 7%, 2005................... 40,000 40,784
Sr. Unsub. Deb., 7 3/8%, 2003........ 30,000 31,210
Province of Quebec,
Bonds, 9 1/8%, 2000.................. 30,000 32,514
Republic of Finland,
Notes, 6 3/4%, 1997.................. 30,000 30,304
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
FOREIGN (CONTINUED) Republic of Finland (continued),
Bonds, 6.95%, 2026................... $ 25,000 $ 24,267
Royal Bank of Scotland,
Sub. Notes, 6 3/8%, 2011............. 60,000 55,725
Santander Finance Issuances,
Unsecured Sub. Notes
(Gtd. by Banco Santander, S.A.),
7 1/4%, 2006......................... 100,000 101,218
Saskatchewan C.D.A.,
Bonds, 9 1/8%, 2021.................. 10,000 12,056
Swiss Bank-New York,
Sub. Deb., 7%, 2015.................. 70,000 67,670
Tokyo,
Bonds, 10 3/8%, 1997................. 20,000 20,880
Union Bank of Switzerland-New York,
Sub. Notes, 7 1/4%, 2006............. 80,000 82,165
__________
1,143,677
__________
U.S. GOVERNMENT AND
AGENCIES-71.1% Federal Farm Credit Banks,
11.90%, 10/20/1997................... 10,000 10,572
Federal Home Loan Banks:
5.85%, 9/13/1999..................... 700,000 695,950
8.60%, 1/25/2000..................... 15,000 16,096
Federal Home Loan Mortgage Corp.:
6.09%, 3/1/2000...................... 40,000 39,781
5.90%, 2/14/2006..................... 600,000 569,686
Federal National Mortgage Association:
8.20%, 3/10/1998..................... 30,000 30,946
5.23%, 11/25/1998.................... 205,000 202,533
5.30%, 12/10/1998.................... 200,000 197,767
9.55%, 3/10/1999..................... 30,000 32,355
8.70%, 6/10/1999..................... 15,000 15,975
8.45%, 7/12/1999..................... 15,000 15,907
8.35%, 11/10/1999.................... 25,000 26,578
6.20%, 7/10/2003..................... 90,000 87,831
6.85%, 4/5/2004...................... 145,000 147,883
7.40%, 7/1/2004...................... 450,000 473,282
5.875%, 2/2/2006..................... 125,000 118,493
Financing Corp., Bonds:
9.65%, 11/2/2018..................... 10,000 12,889
8.60%, 9/26/2019..................... 40,000 47,119
Resolution Funding, Bonds:
8 1/8%, 10/15/2019................... 75,000 85,600
8 7/8%, 7/15/2020.................... 75,000 91,707
8 5/8%, 1/15/2030.................... 15,000 17,979
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
U.S. GOVERNMENT AND
AGENCIES (CONTINUED) Tennessee Valley Authority:
Deb.:
8 3/8%, 10/1/1999................. $ 15,000 $ 15,932
7.85%, 6/15/2044................... 10,000 10,139
Global Bonds, 6 3/4%, 11/1/2025...... 60,000 57,932
U.S. Treasury Bonds:
11 3/4%, 2/15/2001................... 155,000 187,816
15 3/4%, 11/15/2001.................. 15,000 21,213
14 1/4%, 2/15/2002................... 70,000 95,473
10 3/4%, 2/15/2003................... 30,000 37,027
10 3/4%, 5/15/2003................... 115,000 142,636
11 1/8%, 8/15/2003................... 135,000 171,028
11 7/8%, 11/15/2003.................. 10,000 13,158
12 3/8%, 5/15/2004................... 135,000 183,727
10 3/4%, 8/15/2005................... 465,000 600,867
7 5/8%, 2/15/2007.................... 60,000 63,244
8 3/8%, 8/15/2008.................... 75,000 83,227
8 3/4%, 11/15/2008................... 150,000 169,547
12 3/4%, 11/15/2010.................. 75,000 107,057
14%, 11/15/2011...................... 30,000 46,528
12%, 8/15/2013....................... 45,000 64,807
12 1/2%, 8/15/2014................... 40,000 60,194
11 1/4%, 2/15/2015................... 25,000 37,074
7 1/4%, 5/15/2016.................... 110,000 116,428
8 3/4%, 5/15/2017.................... 300,000 367,219
8 7/8%, 8/15/2017.................... 215,000 266,331
8 7/8%, 2/15/2019.................... 140,000 174,212
8 1/8%, 8/15/2019.................... 175,000 202,808
8 1/2%, 2/15/2020.................... 225,000 270,809
8 3/4%, 5/15/2020.................... 630,000 777,361
8 3/4%, 8/15/2020.................... 410,000 506,286
7 7/8%, 2/15/2021.................... 130,000 147,266
8 1/8%, 8/15/2021.................... 150,000 174,539
8%, 11/15/2021....................... 180,000 206,859
7 1/8%, 2/15/2023.................... 1,750,000 1,830,938
6 1/4%, 8/15/2023.................... 315,000 296,002
U.S. Treasury Notes:
8 7/8%, 11/15/1997................... 1,250,000 1,291,406
6%, 12/31/1997....................... 20,000 20,097
8 1/8%, 2/15/1998.................... 275,000 283,335
5 1/8%, 2/28/1998.................... 325,000 322,867
5 1/8%, 3/31/1998.................... 150,000 148,992
7 7/8%, 4/15/1998.................... 270,000 278,269
5 1/8%, 4/30/1998.................... 1,280,000 1,270,700
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
U.S. GOVERNMENT AND
AGENCIES (CONTINUED) U.S. Treasury Notes (continued):
5 3/8%, 5/31/1998.................... $ 410,000 $ 408,142
4 3/4%, 8/31/1998.................... 180,000 176,991
8 7/8%, 11/15/1998................... 1,410,000 1,493,058
5 1/8%, 11/30/1998................... 200,000 197,531
5 1/8%, 12/31/1998................... 285,000 281,304
6 3/8%, 1/15/1999.................... 100,000 101,219
5 1/2%, 2/28/1999.................... 30,000 29,798
5 7/8%, 3/31/1999.................... 205,000 205,304
7%, 4/15/1999........................ 200,000 205,359
6 3/4%, 5/31/1999.................... 20,000 20,423
6 7/8%, 7/31/1999.................... 80,000 81,969
8%, 8/15/1999........................ 30,000 31,600
7 1/8%, 9/30/1999.................... 520,000 536,818
7 7/8%, 11/15/1999................... 50,000 52,687
7 3/4%, 12/31/1999................... 20,000 21,028
6 3/8%, 1/15/2000.................... 100,000 101,285
7 3/4%, 1/31/2000.................... 410,000 431,525
5 1/2%, 4/15/2000.................... 20,000 19,709
6 7/8%, 3/31/2000.................... 305,000 313,482
6 1/8%, 7/31/2000.................... 455,000 456,848
8 3/4%, 8/15/2000.................... 80,000 87,325
6 1/4%, 8/31/2000.................... 410,000 413,267
8 1/2%, 11/15/2000................... 5,000 5,438
7 3/4%, 2/15/2001.................... 450,000 478,547
8%, 5/15/2001........................ 160,000 172,200
6 1/2%, 5/31/2001.................... 300,000 305,015
7 7/8%, 8/15/2001.................... 590,000 633,236
7 1/2%, 11/15/2001................... 250,000 264,883
7 1/2%, 5/15/2002.................... 780,000 830,091
6 1/4%, 2/15/2003.................... 30,000 30,117
5 3/4%, 8/15/2003.................... 280,000 272,781
7 1/4%, 5/15/2004.................... 225,000 238,113
7 7/8%, 11/15/2004................... 400,000 439,125
6 1/2%, 8/15/2005.................... 130,000 131,401
__________
23,525,898
__________
TOTAL BONDS AND NOTES
.... (cost $31,340,047) $31,978,618
============
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
PRINCIPAL
SHORT-TERM INVESTMENTS-.9% AMOUNT VALUE
______ ______
REPURCHASE AGREEMENT; Goldman, Sachs & Co. Tri-Party
Repurchase Agreement, 5 1/2%
dated 10/31/1996, due 11/1/1996 in the amount
of $300,913 (fully collateralized by
$306,000 U.S. Treasury Notes, 5%, 1/31/1998,
value $307,530)
(cost $300,868)...................... $ 300,868 $ 300,868
============
TOTAL INVESTMENTS (cost $31,640,915)........................................ 97.6% $32,279,486
======== ============
CASH AND RECIEVABLES (NET).................................................. 2.4% $ 787,177
======== ============
NET ASSETS.................................................................. 100.0% $33,066,663
======== ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Reflects date security can be redeemed at holders' option; the
stated maturity date is 2/15/2010.
(b) Reflects date security can be redeemed at holders' option; the
stated maturity date is 4/1/2000.
(c) Reflects date security can be redeemed at holders' option; the
stated maturity date is 5/15/2008.
(d) Reflects date security can be redeemed at holders' option; the
stated maturity date is 6/15/2008.
(e) Reflects date security can be redeemed at holders' option; the
stated maturity date is 11/1/2005.
(f) Reflects date security can be redeemed at holders' option; the
stated maturity date is 3/15/2008.
SEE NOTES TO FINANCIAL STATMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
COST VALUE
__________ __________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $31,640,915 $32,279,486
Cash....................................... 92,445
Interest receivable........................ 633,884
Receivable for investment securities sold.. 72,337
____________
33,078,152
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 11,043
Other liabilities.......................... 446
____________
11,489
____________
NET ASSETS.................................................................. $33,066,663
=============
REPRESENTED BY: Paid-in capital............................ $32,450,176
Accumulated net realized gain (loss) on investments (22,084)
Accumulated net unrealized appreciation (depreciation)
on investments-Note 3 638,571
____________
NET ASSETS................................................................. $33,066,663
=============
NET ASSET VALUE PER SHARE
___________________________
INSTITUTIONAL RETAIL
SHARES SHARES
_____________ _____________
Net Assets.................................................................. $80,277 $32,986,386
Shares Outstanding.......................................................... 8,205 3,366,385
NET ASSET VALUE PER SHARE................................................... $9.78 $9.80
======= ========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $1,113,865
EXPENSES: Management fee-Note 2(a)................... $ 69,108
Distribution fee (Institutional shares)-Note 2(b) 436
Directors' fees and expenses-Note 2(c)..... 314
___________
TOTAL EXPENSES......................... 69,858
____________
INVESTMENT INCOME-NET....................................................... 1,044,007
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $ 61,620
Net unrealized appreciation (depreciation) on investments 403,761
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 465,381
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,509,388
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996* OCTOBER 31, 1995
__________________ ________________
<S> <C> <C>
OPERATIONS:
Investment income-net..................................... $ 1,044,007 $ 402,998
Net realized gain (loss) on investments............................ 61,620 (14,771)
Net unrealized appreciation (depreciation) on investments.......... 403,761 591,368
__________________ ________________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,509,388 979,595
__________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Institutional shares............................................. (10,116) (8,778)
Retail shares.................................................... (1,033,891) (394,220)
__________________ ________________
TOTAL DIVIDENDS.............................................. (1,044,007) (402,998)
__________________ ________________
CAPITAL STOCK TRANSACTIONS-NOTE 5:
Net proceeds from shares sold:
Institutional shares............................................. 124,870 853,158
Retail shares.................................................... 30,960,062 4,460,744
Dividends reinvested:
Institutional shares............................................. 8,203 6,274
Retail shares.................................................... 966,638 356,355
Cost of shares redeemed:
Institutional shares............................................. (253,704) (705,375)
Retail shares.................................................... (6,235,512) (3,019,117)
__________________ ________________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS 25,570,557 1,952,039
__________________ ________________
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 26,035,938 2,528,636
NET ASSETS:
Beginning of Period................................................ 7,030,725 4,502,089
__________________ ________________
End of Period...................................................... $33,066,663 $ 7,030,725
================= ==================
CAPITAL SHARE TRANSACTIONS-NOTE 5:
SHARES SHARES
__________________ ________________
INSTITUTIONAL SHARES
__________
Shares sold........................................................ 12,838 88,106
Shares issued for dividends reinvested............................. 837 651
Shares redeemed.................................................... (26,266) (72,136)
__________________ ________________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING................ (12,591) 16,621
================= ==================
RETAIL SHARES
_______
Shares sold........................................................ 3,224,629 481,015
Shares issued for dividends reinvested............................. 99,840 37,460
Shares redeemed.................................................... (644,895) (319,718)
__________________ ________________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING................ 2,679,574 198,757
================= ==================
*Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX 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.
INSTITUTIONAL SHARES
___________________________________
YEAR ENDED OCTOBER 31,
___________________________________
PER SHARE DATA: 1996(1) 1995 1994(2)(3)
_______ _______ ______
<S> <C> <C> <C>
Net asset value, beginning of period.................................. $ 9.93 $ 9.15 $ 9.44
_________ _______ ______
INVESTMENT OPERATIONS:
Investment income-net................................................. .57 .55 .24
Net realized and unrealized gain (loss)
on investments...................................................... (.15) .78 (.28)
_________ _______ ______
TOTAL FROM INVESTMENT OPERATIONS...................................... .42 1.33 (.04)
_________ _______ ______
DISTRIBUTIONS:
Dividends from investment income-net.................................. (.57) (.55) (.25)
_________ _______ ______
Net asset value, end of period........................................ $ 9.78 $ 9.93 $ 9.15
========= ======== ========
TOTAL INVESTMENT RETURN................................................... 4.36% 15.01% (.46%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... .65% .65% .65%(4)
Ratio of net investment income
to average net assets............................................... 5.80% 5.77% 4.81%(4)
Portfolio Turnover Rate............................................... 42.65% 40.16% 188.00%
Net Assets, end of period (000's Omitted)............................. $80 $207 $38
(1) Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares.
(2) The Fund commenced selling Investor shares on April 28, 1994.
(3) Effective October 17, 1994, The Dreyfus Corporation served as the
Fund's investment manager. Prior to October 17, 1994,
Mellon Bank, N.A. served as the Fund's investment manager.
(4) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
RETAIL SHARES
___________________________________
YEAR ENDED OCTOBER 31,
___________________________________
PER SHARE DATA: 1996(1) 1995 1994(2)(3)
_______ _______ ______
<S> <C> <C> <C>
Net asset value, beginning of period.................................. $ 9.94 $ 9.15 $10.00
_______ _______ ______
INVESTMENT OPERATIONS:
Investment income-net................................................. .59 .58 .49(4)
Net realized and unrealized gain (loss)
on investments...................................................... (.14) .79 (.85)
_______ _______ ______
TOTAL FROM INVESTMENT OPERATIONS...................................... .45 1.37 (.36)
_______ _______ ______
DISTRIBUTIONS:
Dividends from investment income-net.................................. (.59) (.58) (.49)
_______ _______ ______
Net asset value, end of period........................................ $ 9.80 $ 9.94 $ 9.15
========= ======== ========
TOTAL INVESTMENT RETURN................................................... 4.69% 15.41% (3.68%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... .40% .40% .40%(5)(6)
Ratio of net investment income
to average net assets............................................... 6.02% 6.10% 5.05%(5)
Portfolio Turnover Rate............................................... 42.65% 40.16% 188.00%
Net Assets, end of period (000's Omitted)........................... $32,986 $6,824 $4,464
</TABLE>
(1) Effective July 15, 1996, Class R shares were redesignated as
Retail shares.
(2) Effective October 17, 1994, The Dreyfus Corporation served 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 30, 1993. On April 28, 1994
the Fund began selling Investor shares and the shares
existing prior to April 28, 1994 were designated Trust shares. Effective
October 17, 1994 the Fund's Trust shares were redesignated Class R shares.
(4) Net investment income before reimbursement of expenses by the investment
adviser for the period ended October 31, 1994 was
$.39 per share.
(5) Annualized.
(6) Annualized expense ratio before reimbursement of expenses by investment
adviser for the period ended October 31, 1994 was
1.41%.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BOND MARKET INDEX 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 Bond Market Index Fund (the "Fund"). The
Fund's investment objective is to seek to replicate the total return of the
Lehman Brothers Government/Corporate Bond Index. 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. Effective July 15, 1996, Investor shares
were redesignated as Institutional shares and Class R shares were
redesignated as Retail shares. The Fund is authorized to issue 150 million of
$.001 par value Capital Stock. The Fund is currently authorized to issue two
classes of shares: Institutional (50 million shares authorized) and Retail
(100 million shares authorized). Institutional shares are offered only to
clients of banks, securities brokers or dealers and other financial
institutions (collectively, Service Agents) that have entered into selling
agreements with the Fund's distributor and Retail shares are offered to any
investor. Other differences between the two classes include the services
offered to and the expenses borne by each class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: 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 a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the 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. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and discounts on investment, 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 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
DREYFUS BOND MARKET INDEX FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 dividends daily from investment income-net. Such dividends are paid
monthly. 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, it is the policy of the Fund not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the 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 $22,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. If not
applied, $7,000 of the carryover expires in fiscal 2002 and $15,000 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 .40% 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 PLAN: The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Institutional shares. Under the Plan, the Fund may pay annually up to .25% of
the value of the average daily net assets attributable to its Institutional
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
Institutional shares. The Retail shares bear no distribution fee. During the
period ended October 31, 1996, the distribution fee for the Investor shares
was $436.
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 "interest 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 Fund, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and The Dreyfus/Laurel Funds Trust. In addition the Chairman
of the Board receives and annual fee of $75,000 per year. These fees and
expenses are charged and allocated to each series based on net assets.
DREYFUS BOND MARKET INDEX FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchase and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1996
amounted to $31,806,851 and $7,025,347, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments was $638,571, consisting of $660,023 gross unrealized
appreciation and $21,452 gross unrealized depreciation.
At October 31, 1996, cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 5-ACQUISITION OF COMMON TRUST ASSETS:
On May 10, 1996, the Fund acquired a portion of the assets of the EB MBA
Government and Corporate Bond Index Fund, a trust advised by a subsidiary of
Mellon Bank, N.A. The acquisition was accomplished by an exchange of
1,788,594 Retail shares of the Fund's Capital Stock for cash, securities and
assumption of liabilities of the trust totaling $17,134,730 which is included
in net proceeds from shares sold on the Statement of Changes in Net Assets.
DREYFUS BOND MARKET INDEX 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,
including the statement of investments, of Dreyfus Bond Market Index Fund of
The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or periods in the three-year
period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Dreyfus Bond Market Index Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 1996, the results of its operations, changes in its net
assets and its financial highlights for each of the years or periods set
forth above, in conformity with generally accepted accounting principles.
[KPMG Peat Marwick LLP signature logo]
New York, New York
December 9, 1996
[Dreyfus lion "d" logo]
DREYFUS BOND MARKET
INDEX FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 310/710AR9610
[Dreyfus logo]
Bond Market
Index Fund
Annual Report
October 31, 1996
<PAGE>
Dreyfus
Disciplined Midcap
Stock Fund
Annual Report
October 31, 1996
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this annual report on The Dreyfus
Disciplined Midcap Stock Fund. For the twelve months ended October 31, 1996,
your Fund provided a total return of 26.61% and 26.29% for its Retail shares
and Institutional shares, respectively.* This compared to a total return of
17.35% for the Fund's benchmark, the Standard & Poor's 400 MidCap Index, for
the same period.**
Effective July 15, 1996, the Fund's Class R shares were redesignated as
Retail shares and the Fund's Investor shares were redesignated as Institutional
shares. Retail shares are offered to any investor. Institutional shares are
sold primarily through financial intermediaries.
ECONOMIC ENVIRONMENT
Economy Still Growing, Not Booming
The past few months have brought fresh evidence of a slowing, yet still
growing, U.S. economy. Real Gross Domestic Product (GDP) rose 4.7% in the
second quarter of 1996, tapering to 2.2% in the third quarter. Total final
sales nearly ground to a halt over the summer, and not in just a few areas.
Retailing results had been edging lower for several months and during the third
quarter, consumer spending rose at its weakest pace in five years. Construction
and exporting activity also moved ahead more tentatively in recent months than
they had during the first half of 1996. Sales of existing homes were off too,
declining a larger-than-expected 2.9% in September for the fourth consecutive
monthly loss. On the other hand, September's new-home sales dropped a scant
0.5% and remain near a ten-year high. Factory orders for big-ticket items also
rebounded in September, rising 4.6 percent for the biggest gain in almost four
years. On the job front, unemployment reached a 7-year low of 5.1%.
Federal Reserve Board Watches and Waits
Despite a long, strong cycle of economic growth, rising wage pressures, and
a great deal of market concern to the contrary, inflation so far remains tame.
Consequently, the Federal Reserve Board (the "Fed") did not raise short-term
interest rates at its September meeting--although many analysts and investors
had been convinced a hike was in the offing. They cited mixed economic signals
and, in some cases, conflicting statements from Fed officials themselves as
evidence supporting their expectations for higher rates. Nonetheless, the Fed
maintained the hands-off monetary policy it has been pursuing since early in
1996, trusting that the economy would slow enough to dampen any inflationary
forces that might be building.
MARKET ENVIRONMENT
As your Fund completed its fiscal year on October 31, 1996, the stock
market continued its upward climb.
The most important factor influencing the market's rise has been the
combination of economic growth and extremely low inflation. Amid this positive
environment, corporate earnings have continued to grow, albeit at a slower pace
in recent months than they had earlier in the year.
This is not to say that all has been roses. The stock market did suffer a
rather significant correction in July as particularly strong economic data and
concern about the future earnings potential of the high-flying technology
sector created a downdraft on stock prices.
Fortunately, the correction was very short-lived--about two to three
weeks--as more tepid economic news and reasonably
<PAGE>
solid second-quarter corporate earnings put the market back on solid footing.
In fact, most major broad-based indices reached all-time highs in recent
months.
PORTFOLIO OVERVIEW
During the annual period ended October 31, 1996, the investment strategy
that has guided the Fund since inception rewarded shareholders with exceptional
returns once again. That strategy relies on in-depth research and a proprietary
stock selection model to build a diversified portfolio of individual stocks
which seeks to outperform the Standard & Poor's 400 MidCap Index under current
market conditions.
In the most recent annual period, the Fund benefited from several takeover
situations in which stocks in the portfolio rose substantially in value after
the companies issuing them were purchased by other firms. In each case, we
later sold the holding at a substantial profit to the Fund. It was our
dedicated research and stock evaluation system that identified these stocks,
and their subsequent takeover confirms our initial assessment of them as
particularly attractive players in each of their industries. These takeover
stocks included: First Interstate Bancorp, purchased by Wells Fargo Bank;
electronic defense company Loral Corporation, purchased by Lockheed Martin;
Medisense, bought by Abbott Laboratories; electric utility Portland General,
bought by Enron; and networking equipment maker Stratacom, purchased by Cisco
Systems.
In addition to these takeover stocks, other top-performing holdings still
in the portfolio include: Cytec Industries, Dell Computer, BMC Software,
Veritas Software, and Cardinal Health.
The current climate of moderate economic growth and low inflation bodes
well for midcap stocks. We will continue to focus on building a diversified
portfolio of stocks from companies with positive earnings momentum.
Sincerely,
John R. O'Toole
Portfolio Manager
November 12, 1996
New York, N.Y.
*Total return includes reinvestment of dividends and capital gains paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends 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
- ------------------------------------------------------------------------------
Statement of Investments October 31, 1996
<TABLE>
<CAPTION>
Common Stocks--99.0% Shares Value
- ------------------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C> <C>
Basic Industries--7.5% ABT Building Products.................................... 3,700(a) $ 77,700
ACX Technologies......................................... 4,000(a) 71,000
Centex Construction Products............................. 1,400 21,875
Cytec Industries......................................... 5,400(a) 193,050
Eastman Chemical......................................... 1,700 89,675
Fort Howard.............................................. 5,100(a) 130,688
Lennar................................................... 5,100 113,475
Lubrizol................................................. 5,300 157,675
Morton International..................................... 3,000 118,125
Owens-Illinois........................................... 6,000(a) 93,000
Rohm & Haas.............................................. 2,200 157,025
Sigma-Aldrich............................................ 3,100 182,125
-----------
1,405,413
-----------
Business Services--8.8% AccuStaff................................................ 5,400(a) 144,450
Apollo Group, Cl. A...................................... 5,400(a) 148,500
BISYS Group.............................................. 2,200(a) 81,950
BMC Software............................................. 2,400(a) 199,200
COREStaff................................................ 2,400(a) 61,200
Cadence Design System.................................... 6,900(a) 251,850
Equifax.................................................. 5,500 163,625
Gartner Group, Cl. A..................................... 4,900(a) 150,675
HealthCare COMPARE....................................... 3,100(a) 136,400
Physician Computer Network............................... 8,400(a) 75,075
Veritas Software......................................... 4,800(a) 242,400
-----------
1,655,325
-----------
Capital Spending--16.6% Altera................................................... 2,000(a) 124,000
Applied Materials........................................ 3,100(a) 81,956
Augat.................................................... 4,400 121,000
Blyth Industries......................................... 1,000(a) 38,875
Cabletron Systems........................................ 1,700(a) 106,038
Case..................................................... 3,000 139,500
Cummins Engine........................................... 2,000 83,250
Danaher.................................................. 4,300 175,762
Dell Computer............................................ 3,900(a) 317,363
General Dynamics......................................... 1,100 75,487
Global Industrial Technologies........................... 8,300(a) 154,587
Hubbell, Cl. B........................................... 3,100 126,713
Johnson Controls......................................... 1,800 131,400
Komag.................................................... 4,400(a) 121,550
Maxim Integrated Products................................ 6,700(a) 234,500
Novellus Systems......................................... 1,800(a) 74,250
Raychem.................................................. 2,800 218,750
SCI Systems.............................................. 1,700(a) 84,575
Sun Microsystems......................................... 1,900(a) 115,900
3Com..................................................... 2,000(a) 135,250
</TABLE>
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C> <C>
Capital Spending (continued) Tellabs.................................................. 2,700(a) $ 229,838
Timken................................................... 3,000 133,875
Waters................................................... 3,300(a) 102,300
-----------
3,126,719
-----------
Consumer Cyclical--15.9% Applebee's International................................. 2,900 70,688
Brunswick................................................ 5,900 138,650
Callaway Golf............................................ 5,400 165,375
Carson Pirie Scott....................................... 3,100(a) 77,112
HFS...................................................... 3,600(a) 263,700
Harley-Davidson.......................................... 2,500 112,813
Harte-Hanks Communications............................... 4,400 113,850
IHOP..................................................... 3,400(a) 74,800
King World Productions................................... 1,500(a) 54,000
Lear..................................................... 900(a) 33,300
Leggett & Platt.......................................... 6,100 182,237
Longs Drug Stores........................................ 4,000 179,500
Marriott International................................... 2,300 130,813
Mercantile Stores........................................ 2,700 133,987
National Education....................................... 9,300(a) 151,125
Nautica Enterprises...................................... 3,600(a) 110,700
Ross Stores.............................................. 4,200 174,300
Schein (Henry)........................................... 4,800(a) 190,800
Smith (A.O.)............................................. 1,300 34,125
Sports Authority......................................... 3,050(a) 73,963
TJX Cos.................................................. 5,100 204,000
TSX...................................................... 4,500(a) 46,687
V.F. .................................................... 1,200 78,450
Vons Cos................................................. 2,600(a) 143,975
Washington Post, Cl. B................................... 200 65,800
-----------
3,004,750
-----------
Consumer Staples--4.8% Alberto-Culver, Cl. B.................................... 1,900 86,925
Chiquita Brands International............................ 9,600 120,000
DEKALB Genetics, Cl. B................................... 4,100 161,950
First Brands............................................. 5,600 158,900
IBP...................................................... 3,600 90,000
Interstate Bakeries...................................... 3,600 152,550
Ionics................................................... 3,000(a) 138,000
-----------
908,325
-----------
Energy--7.9% Brooklyn Union Gas....................................... 4,600 133,400
Chesapeake Energy........................................ 3,450(a) 200,963
Helmerich & Payne........................................ 2,800 151,550
National Fuel Gas........................................ 4,400 163,900
Reading & Bates.......................................... 7,500(a) 215,625
Smith International...................................... 5,500(a) 209,000
</TABLE>
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C> <C>
Energy (continued) Tosco.................................................... 2,300 $ 129,087
Valero Energy............................................ 2,700 64,125
Williams Cos............................................. 4,100 214,225
-----------
1,481,875
-----------
Financial--13.9% ADVANTA, Cl. A........................................... 1,000 48,313
American Bankers Insurance Group......................... 3,900 187,200
American National Insurance.............................. 1,600 104,800
Bancorp Hawaii........................................... 4,300 170,388
Barnett Banks............................................ 5,800 221,125
Bear Stearns Cos......................................... 5,100 120,488
Castle & Cooke........................................... 700(a) 10,762
City National............................................ 11,000 192,500
Commercial Federal....................................... 3,600 150,750
Cullen Frost Bankers..................................... 4,600 138,287
Donaldson, Lufkin & Jenrette............................. 3,200 102,800
Lehman Brothers Holdings................................. 4,800 120,600
Life Re.................................................. 3,500 128,187
Old Republic International............................... 4,700 116,325
SouthTrust............................................... 5,900 195,437
State Street Boston...................................... 3,200 202,800
T. Rowe Price Associates................................. 3,600 122,850
Union Planters........................................... 5,200 180,700
Vesta Insurance Group.................................... 4,200 107,625
-----------
2,621,937
-----------
Health Care--8.3% Ballard Medical Products................................. 7,900 139,238
Becton, Dickinson........................................ 2,400 104,400
Biogen................................................... 1,300(a) 96,850
Cardinal Health.......................................... 1,800 141,300
Elan ADS................................................. 5,200(a) 144,300
Guidant.................................................. 2,700 124,538
Jones Medical Industries................................. 2,200 95,700
Medtronic................................................ 2,400 154,500
Oxford Health Plans...................................... 2,400(a) 109,200
Physician Sales & Services............................... 3,800(a) 80,750
Sofamor/Danek Group...................................... 4,900(a) 134,750
TheraTech................................................ 11,800(a) 130,537
Watson Pharmaceuticals................................... 3,100(a) 103,462
-----------
1,559,525
-----------
Mining And Metals--.7% Alumax................................................... 1,100(a) 35,337
Ashland Coal............................................. 1,100 25,988
Cleveland-Cliffs......................................... 1,100 45,100
Cyprus Amax Minerals..................................... 1,200 27,150
-----------
133,575
-----------
</TABLE>
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Transportation--1.5% Comair Holdings.......................................... 5,400 $ 108,675
Illinois Central......................................... 5,500 178,063
-----------
286,738
-----------
Utilities--13.1% AES...................................................... 6,000(a) 263,250
Baltimore Gas & Electric................................. 6,900 188,025
Boston Edison............................................ 8,400 201,600
Century Telephone Enterprises............................ 10,900 350,162
Commonwealth Energy Systems.............................. 10,700 256,800
DQE...................................................... 5,900 169,625
GPU...................................................... 8,000 263,000
Illinova................................................. 7,300 198,925
PECO Energy.............................................. 5,000 126,250
Pinnacle West Capital.................................... 6,700 206,862
Transaction Network Services............................. 3,500(a) 47,688
United States Cellular................................... 7,000(a) 205,625
-----------
2,477,812
-----------
TOTAL COMMON STOCKS
(cost $15,772,460)..................................... $18,661,994
-----------
-----------
<CAPTION>
Principal
Repurchase Agreement--5.3% Amount
- ------------------------------------------------------------------------------------------ -----------
Goldman, Sachs & Company Tri-Party Repurchase
Agreement, 5.55% dated 10/31/96 to be
repurchased at $1,000,154 on 11/1/96,
collateralized by $1,016,000 U.S. Treasury
Notes, 5% due 1/31/98
(cost $1,000,000)...................................... $ 1,000,000 $ 1,000,000
-----------
-----------
TOTAL INVESTMENTS (cost $16,772,460)....................................................... 104.3% $19,661,994
------ -----------
------ -----------
LIABILITIES, LESS CASH AND RECEIVABLES..................................................... (4.3%) $ (813,322)
------ -----------
------ -----------
NET ASSETS................................................................................. 100.0% $18,848,672
------ -----------
------ -----------
</TABLE>
Notes to Statement of Investments:
- ------------------------------------------------------------------------------
(a) Non-income producing.
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1996
<TABLE>
<CAPTION>
Cost Value
----------- -----------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments...... $16,772,460 $19,661,994
Dividends and interest receivable............................ 21,650
Receivable from subscriptions to Capital Stock............... 2,000
-----------
19,685,644
-----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates................ 18,032
Due to Distributor........................................... 25
Cash overdraft due to Custodian.............................. 413,490
Payable for shares of Capital Stock redeemed................. 225,265
Payable for investment securities purchased.................. 180,149
Directors' fee payable....................................... 11
-----------
836,972
-----------
NET ASSETS................................................................................ $18,848,672
-----------
-----------
REPRESENTED BY: Paid-in capital.............................................. $13,182,825
Accumulated undistributed investment income--net............. 15,894
Accumulated net realized gain (loss) on investments.......... 2,760,419
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3................................... 2,889,534
-----------
NET ASSETS................................................................................ $18,848,672
-----------
-----------
</TABLE>
NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
Institutional Retail
Shares Shares
----------- -----------
<S> <C> <C>
Net Assets................................................................................ $ 3,205,258 $15,643,414
Shares Outstanding........................................................................ 223,212 1,089,303
NET ASSET VALUE PER SHARE................................................................. $14.36 $14.36
------ ------
------ ------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
Statement of Operations Year Ended October 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends............................................... $ 204,398
Interest..................................................... 36,560
-----------
Total Income......................................... $ 240,958
EXPENSES: Management fee--Note 2(a).................................... 159,095
Distribution fees (Institutional shares)--Note 2(b).......... 10,009
Directors' fees and expenses--Note 2(c)...................... 529
-----------
Total Expenses....................................... 169,633
-----------
INVESTMENT INCOME--NET.................................................................... 71,325
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments...................... $ 2,740,862
Net realized gain (loss) on financial futures................ 21,770
-----------
Net Realized Gain (Loss)................................. 2,762,632
Net unrealized appreciation (depreciation) on investments.... 580,279
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................................... 3,342,911
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 3,414,236
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996* October 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................... $ 71,325 $ 178,367
Net realized gain (loss) on investments.............................................. 2,762,632 1,357,909
Net unrealized appreciation (depreciation) on investments............................ 580,279 1,977,353
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations.............. 3,414,236 3,513,629
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional shares............................................................. (13,773) (4,227)
Retail shares.................................................................... (71,135) (194,302)
Net realized gain on investments:
Institutional shares............................................................. (82,775) --
Retail shares.................................................................... (513,426) --
------------ ------------
Total Dividends.............................................................. (681,109) (198,529)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Institutional shares............................................................. 10,484,621 1,469,329
Retail shares.................................................................... 14,547,685 7,089,344
Dividends reinvested:
Institutional shares............................................................. 94,778 3,676
Retail shares.................................................................... 560,917 187,481
Cost of shares redeemed:
Institutional shares............................................................. (9,412,409) (252,161)
Retail shares.................................................................... (13,705,922) (16,489,889)
------------ ------------
Increase (Decrease) in Net Assets from Capital Stock Transactions............ 2,569,670 (7,992,220)
------------ ------------
Total Increase (Decrease) in Net Assets.................................. 5,302,797 (4,677,120)
NET ASSETS:
Beginning of Period.................................................................. 13,545,875 18,222,995
------------ ------------
End of Period........................................................................ $ 18,848,672 $ 13,545,875
------------ ------------
------------ ------------
Undistributed investment income--net..................................................... $ 15,894 $ 29,477
------------ ------------
CAPITAL SHARE TRANSACTIONS:
<CAPTION>
Institutional Shares Shares Shares
-------------------- ------------ ------------
<S> <C> <C>
Shares sold.......................................................................... 790,094 137,173
Shares issued for dividends reinvested............................................... 7,750 343
Shares redeemed...................................................................... (693,523) (24,144)
------------ ------------
Net Increase (Decrease) in Shares Outstanding............................ 104,321 113,372
------------ ------------
------------ ------------
Retail Shares
-------------
Shares sold.......................................................................... 1,093,321 692,632
Shares issued for dividends reinvested............................................... 46,164 18,799
Shares redeemed...................................................................... (1,068,009) (1,554,326)
------------ ------------
Net Increase (Decrease) in Shares Outstanding............................ 71,476 (842,895)
------------ ------------
------------ ------------
<FN>
- --------------
*Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
</Tabale>
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>
<TABLE>
<CAPTION>
Institutional Shares Retail Shares
------------------------------ -------------------------------
Year Ended October 31, Year Ended October 31,
------------------------------ -------------------------------
PER SHARE DATA: 1996(1) 1995 1994(2)(3) 1996(1) 1995 1994(3)(4)
------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $11.92 $ 9.75 $10.00 $11.92 $ 9.76 $10.00
------ ------ ------ ------ ------ ------
Investment Operations:
Investment income--net.......................... .04 .09 .05 .07 .12 .09(5)
Net realized and unrealized gain (loss)
on investments.............................. 2.98 2.17 (.26) 2.98 2.16 (.27)
------ ------ ------ ------ ------ ------
Total from Investment Operations................ 3.02 2.26 (.21) 3.05 2.28 (.18)
------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net........... (.05) (.09) (.04) (.08) (.12) (.06)
Dividends from net realized gain
on investments.............................. (.53) -- -- (.53) -- --
------ ------ ------ ------ ------ ------
Total Distributions............................. (.58) (.09) (.04) (.61) (.12) (.06)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................. $14.36 $11.92 $ 9.75 $14.36 $11.92 $ 9.76
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN............................. 26.29% 23.39% (2.06%)(6) 26.61% 23.57% (1.77%)(6)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... 1.35% 1.35% .80%(6)(7) 1.10% 1.10% 1.13%(6)(7)(8)
Ratio of net investment income
to average net assets....................... .28% .86% .42%(6)(7) .57% 1.11% .95%(6)(7)
Portfolio Turnover Rate......................... 90.93% 71.00% 83.00%(6) 90.93% 71.00% 83.00%(6)
Average commission rate paid (9)................ $.0390 -- -- $.0390 -- --
Net Assets, end of period (000's Omitted)....... $3,205 $1,417 $54 $15,644 $12,129 $18,169
<FN>
- ------------
(1) Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
(2) The Fund commenced selling Investor shares on April 6, 1994.
(3) 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.
(4) 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.
(5) Net investment income before reimbursement of expenses by investment
adviser for the period ended October 31, 1994 was $.06%.
(6) Not annualized.
(7) These ratios have been restated to reflect current year's presentation.
(8) Net annualized expense ratio before voluntary reimbursement of expenses by
the investment adviser for the period ended October 31, 1994 was 1.48%.
(9) For fiscal years beginning on November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales of
investment securities.
</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
Fund's investment objective is to seek total investment returns (including
capital appreciation and income) which consistently outperform the Standard &
Poor's 400 Midcap Index. 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. Effective July 15, 1996, Investor shares were
redesignated as Institutional shares and Class R shares were redesignated as
Retail shares. The Fund is authorized to issue 82 million of $.001 par value
Capital Stock. The Fund currently offers two classes of shares: Institutional
(22 million shares authorized) and Retail (60 million shares authorized).
Institutional shares are offered only to clients of banks, securities brokers
or dealers and other financial institutions (collectively, Service Agents) that
have entered into selling agreements with the Fund's distributor and Retail
shares are offered to any investor. Other differences between the two classes
include the services offered to and the expenses borne by each class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including financial
futures) are valued at the last sales price on the securities exchange on which
such securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. 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 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
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 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. Typically, 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,
1996, 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 1, 1996, the Board of Directors declared dividends from net
investment income for the Institutional shares and Retail shares in the amount
of $0.004 per share and $0.013 per share, respectively, payable on November 4,
1996 to shareholders of record on November 1, 1996.
(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 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 Institutional
shares. Under the Plan, the Fund may pay annually up to .25% of the value of
the average daily net assets attributable to its Institutional shares to
compensate the Distributor and Dreyfus
<PAGE>
Dreyfus Disciplined Midcap Stock Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Service Corporation, an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities primarily intended to result in
the sale of Institutional shares. The Retail shares bear no distribution fee.
During the period ended October 31, 1996, the distribution fee for the
Institutional shares was $10,009.
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 meeting 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 purchases and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1996,
amounted to $15,161,344 and $12,665,520, respectively.
At October 31, 1996, accumulated net unrealized appreciation on investments
was $2,889,534, consisting of $3,242,733 gross unrealized appreciation and
$353,199 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. For the period ended October 31, 1996, the Fund did not borrow
under the line of credit.
<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,
including the statement of investments, of Dreyfus Disciplined Midcap Stock
Fund as of October 31, 1996, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the years
in the two-year period then ended, and the financial highlights for each of the
years or periods in the three-year period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of October 31, 1996, 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
Dreyfus Disciplined Midcap Stock Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1996, the results of its operations, changes in its net assets and
its financial highlights for each of the years or periods set forth above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 9, 1996
Important Tax Information (Unaudited)
For Federal tax purposes the Fund hereby designates $.534 per share as a
long-term capital gain distribution paid on December 26, 1995.
The Fund also designates 46.03% of the ordinary dividends paid during the
fiscal year ended October 31, 1996 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1997 of
the percentage applicable to the preparation of their 1996 income tax returns.
<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, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 330/730AR9610
DREYFUS DISCIPLINED STOCK FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report on the Dreyfus
Disciplined Stock Fund for the 12 months ended October 31, 1996. The Fund's
total return for the twelve-month period was 25.14% for its Retail shares and
24.84% for its Institutional shares.* The Standard & Poor's 500 Composite
Stock Price Index, the Fund's benchmark, had a total return of 24.08% for the
same period.**
Effective July 15, 1996, the Fund's Class R shares were redesignated as
Retail shares and the Fund's Investor shares were redesignated as
Institutional shares. Retail shares are offered to any investor.
Institutional shares are sold primarily through financial intermediaries.
ECONOMIC REVIEW
The U.S. economy is enjoying a good year. First, the tightening labor
market has failed to push price inflation higher. Second, economic growth has
slowed since midyear from the torrid pace of the first half. Third, corporate
profits are holding up quite well, albeit growing more slowly than last year.
These factors have vindicated Federal Reserve Board inaction, keeping market
interest rates stable. Although the economy has simmered down, it is
nevertheless operating with very little slack.
The Federal Reserve Board twice thwarted market expectations for
tightening interest rates this year, taking the view instead that steady
growth won't so easily foster inflation in this cycle. Indeed, the
unemployment rate has plunged towards 5% this year and wage growth has
outpaced price inflation for the first time since 1989. Yet there is little
evidence of accelerating price inflation to date. Even higher oil prices have
failed to lift prices elsewhere. This is very different from 1994 when the Fed
preemptively hiked interest rates to stem an anticipated future price
inflation that subsequently did not materialize.
After rising 3.3% in the first half of this year, real GDP growth slowed
to 2.2% in the third quarter. Early evidence for the fourth quarter indicates
further sustained growth. In particular, consumer spending has been
lackluster since midyear, despite solid income growth and high confidence
levels. And new highs in home sales have not been matched by new records in
homebuilding. Spending on capital goods has rebounded, however, while
incoming strong export orders indicate better growth ahead for this sector.
Capital goods and exports typically dominate the business cycle's late phase.
Corporate profit growth, albeit slower than in 1995, continues to surprise on
the upside.
Interest rates this fall are not much different than in the spring.
Short-term rates have especially stabilized in recent months based on the
view that Fed tightening is unlikely this year. Long-term rates have recently
fallen. Should the economy show signs of reaccelerating, then long-term rates
would likely rise.
As the U.S. economy moves into the late-cycle phase it is, as usual, out
of sync with most business cycles overseas which are at a much earlier stage.
This portends faster world growth in 1997. How well the U.S. economy can
participate in an accelerating growth world economy without igniting
inflation remains to be seen.
MARKET OVERVIEW
The stock market in the last twelve months shrugged off a variety of
potentially negative factors to barrel its way to new heights.
In late 1995 and early 1996 economic activity appeared to slow down,
enough to prompt the Federal Reserve to lower interest rates in January of
this year. By springtime, when the Fed had apparently suspended its
anti-inflationary measures, investors began to worry about signs of strength
exhibited by the economy. Though the Fed took no action to raise interest
rates, investor worries about that possibility restrained an ebullient stock
market.
By July, fears of higher interest rates, plus concerns that some stock
prices - technology issues in particular - might have gone too far, too fast,
caused a temporary retreat in equity prices.
As fall approached, however, the underlying factors of a strong economy,
such as low inflation and investor optimism, took hold again and propelled
stock prices to new highs.
Chief beneficiaries were the large capitalization stocks. It took a while
for technology stocks and small caps to recover the ground lost in the early
summer. However, the trend across the board was clearly bullish.
As the fiscal year closed, there were some negative factors on the
horizon. Corporate profits may have passed their peak. Consumer demand seemed
to be slowing in some sectors. There were also hints that employment costs,
which have been quite stable for a long time, might face upward pressures.
The market, however, seemed to soar above these factors. The prospect,
which has since become a fact, of a split government in Washington, with
Republicans controlling Congress and Democrats in the White House, was seen
as favorable for stock prices. Moreover, the specter of renewed inflation
remained just that - nothing more than a specter. Furthermore, individual
investors continued to pour money into equity mutual funds - not at
constantly increasing rates, to be sure, but still at a pace that gave strong
impetus for higher stock prices.
PORTFOLIO FOCUS
The Fund, in accordance with long-standing policy, was fully invested
throughout the fiscal year. This enabled us to participate in the strong rise
in stock market prices that characterized most of the reporting period.
Investments were diversified among all economic sectors, as shown in the
list of investments that appears later in this report. Holdings in the
computer industry and in consumer-oriented stocks helped overall performance.
Among the outstanding issues in the Fund's portfolio were Intel, Compaq
Computers, 3Com, Allstate and Gillette.
Because of our policy of being sector and industry neutral, we also held
positions in less volatile areas such as non-drug health care, as well as
telephone and electric utility stocks. In the rising interest rate
environment that prevailed earlier in the year, the latter two industry
holdings penalized performance to some extent.
At this time of the year, we would like to thank you for your confidence
in Dreyfus Disciplined Stock Fund and extend our best wishes to you for a
healthy and prosperous New Year.
Sincerely,
(Bert J. Mullins. Signature}
Bert J. Mullins
Portfolio Manager
November 14, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
DREYFUS DISCIPLINED STOCK FUND OCTOBER 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS DISCIPLINED
STOCK FUND RETAIL SHARES AND
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
$38,182
Disciplined Stock Fund
(Retail Shares)
Dollars
$37,308
Standard & Poor's 500
Composite Stock Price
Index*
*Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
Average Annual Total Returns
Institutional Shares* Retail Shares*
- ------------------------------------------- -------------------------------------------------
Period Ended 10/31/96 Period Ended 10/31/96
_______________________ ________________________
<S> <C> <C> <C>
1 Year 24.84% 1 Year 25.14%
From Inception (4/6/94) 20.59 5 Years 15.64
From Inception (12/31/87) 16.38
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Retail shares of
Dreyfus Disciplined Stock Fund on 12/31/87 (Inception Date) to a $10,000
investment made in the Standard & Poor's 500 Composite Stock Price Index on
that date. All dividends and capital gain distributions are reinvested.
Performance for Institutional shares will vary from the performance of Retail
shares shown above due to differences in charges and expenses.
The Dreyfus Disciplined Stock Fund seeks investment returns (including
capital appreciation and income) consistently superior to the Standard &
Poor's 500 Composite Stock Price Index by investing in a broadly diversified
list of equity securities generated by the application of quantitative
security selection and risk control techniques. The Fund's performance shown
in the line graph takes into account all applicable fees and expenses. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted,
unmanaged index of overall 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.
* Effective July 15, 1996, the Fund's Investor shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
<TABLE>
<CAPTION>
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Common Stocks-97.4% Shares Value
_____________ _____________
<S> <C> <C> <C>
Basic Industries-5.1% Dow Chemical........... 64,700 $ 5,030,425
Fort Howard............................ 98,000 (a) 2,511,250
Goodrich (B.F.)........................ 49,600 2,101,800
Kimberly-Clark......................... 82,500 7,693,125
Lubrizol............................... 40,100 1,192,975
Mead................................... 37,500 2,128,125
Morton International................... 70,700 2,783,812
Olin................................... 46,800 1,989,000
PPG Industries......................... 74,700 4,257,900
Praxair................................ 107,400 4,752,450
Rohm & Haas............................ 36,900 2,633,737
Sealed Air............................. 34,300 (a) 1,333,413
Union Carbide.......................... 99,300 4,232,663
_________-
42,640,675
__________-
Capital Spending-21.6% AGCO..................... 60,200 1,527,575
Adaptec................................ 39,900 (a) 2,428,912
Altera................................. 37,800 (a) 2,343,600
Ascend Communications.................. 22,300 (a) 1,457,862
Atmel.................................. 74,300 (a) 1,885,362
Avnet.................................. 36,500 1,838,687
Boeing................................. 13,300 1,268,488
Cabletron Systems...................... 14,370 (a) 896,329
Cadence Design System.................. 56,300 (a) 2,054,950
Case................................... 42,800 1,990,200
Caterpillar............................ 54,700 3,753,787
Ceridian............................... 44,600 (a) 2,213,275
Cisco Systems.......................... 136,200 (a) 8,427,375
Compaq Computer........................ 59,600 (a) 4,149,650
Computer Associates International...... 57,900 3,423,337
Cooper Industries...................... 77,300 3,111,325
Emerson Electric....................... 52,500 4,672,500
Gateway 2000........................... 47,000 (a) 2,211,938
General Electric....................... 269,600 26,083,800
General Motors, Cl. H.................. 58,300 3,111,763
Grainger (W.W.)........................ 17,400 1,289,775
HBO & Co............................... 9,400 565,175
Harnischfeger Industries............... 72,100 2,884,000
Illinois Tool Works.................... 57,100 4,011,275
Intel.................................. 160,100 17,590,988
International Business Machines........ 87,000 11,223,000
Lockheed Martin........................ 54,227 4,860,095
Manpower............................... 31,300 888,138
McDonnell Douglas...................... 16,500 899,250
Microsoft.............................. 97,600 (a) 13,395,600
Olsten................................. 37,900 758,000
Omnicom Group.......................... 49,700 2,472,575
Oracle................................. 191,600 (a) 8,107,075
Pitney Bowes........................... 60,700 3,391,613
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_____________ ____________
Capital Spending (continued) Rockwell International................. 81,900 $ 4,504,500
Sun Microsystems....................... 70,200 (a) 4,282,200
3Com................................... 66,800 (a) 4,517,350
Textron................................ 30,300 2,689,125
Thermo Electron........................ 47,700 1,741,050
U.S. Robotics.......................... 23,500 (a) 1,477,563
United Technologies.................... 43,600 5,613,500
Xerox.................................. 60,000 2,782,500
___________-
178,795,062
___________-
Consumer Cyclical-12.1% Albertson's............................ 79,400 2,729,375
Boston Chicken......................... 75,200 (a) 2,735,400
Chrysler............................... 205,100 6,896,487
Clear Channel Communications........... 14,900 (a) 1,087,700
Cooper Tire & Rubber................... 118,400 2,323,600
Dayton Hudson.......................... 94,500 3,272,062
Disney (Walt).......................... 120,971 7,968,965
Eckerd................................. 83,100 (a) 2,306,025
Federated Department Stores............ 123,700 (a) 4,082,100
Gap.................................... 172,300 4,996,700
General Motors......................... 116,800 6,292,600
Goodyear Tire & Rubber................. 95,700 4,390,237
Infinity Broadcasting, Cl. A........... 89,450 (a) 2,594,050
King World Productions................. 25,400 (a) 914,400
Lear................................... 53,300 (a) 1,972,100
Liz Claiborne.......................... 56,000 2,366,000
Marriott International................. 71,000 4,038,125
NIKE, Cl. B............................ 42,800 2,519,850
New York Times, Cl. A.................. 93,400 3,374,075
News Corp., A.D.S...................... 201,900 4,567,988
Outback Steakhouse..................... 67,100 (a) 1,555,881
Reynolds & Reynolds, Cl.A.............. 104,200 2,748,275
Safeway................................ 86,200 (a) 3,695,825
Sears, Roebuck......................... 142,900 6,912,788
TJX Cos................................ 99,400 3,976,000
Wal-Mart Stores........................ 381,800 10,165,425
___________-
100,482,033
___________-
Consumer Staples-11.7% Avon Products.......................... 79,600 4,318,300
Campbell Soup.......................... 54,800 4,384,000
Coca-Cola.............................. 391,700 19,780,850
Coca-Cola Enterprises.................. 49,700 2,118,463
Colgate-Palmolive...................... 46,000 4,232,000
ConAgra................................ 104,100 5,191,988
Dole Food.............................. 73,800 2,878,200
Eastman Kodak.......................... 62,300 4,968,425
First Brands........................... 69,400 1,969,225
Gillette............................... 103,600 7,744,100
Hershey Foods.......................... 73,500 3,555,562
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_____________ _____________
Consumer Staples (continued) Philip Morris Cos...................... 123,600 $ 11,448,450
Procter & Gamble....................... 61,000 6,039,000
Ralston-Purina Group................... 51,100 3,378,987
Sara Lee............................... 138,000 4,899,000
Seagram................................ 90,900 3,442,837
Unilever, N.V. ........................ 42,300 6,466,613
____________
96,816,000
___________-
Energy-10.1% Amoco.................................. 95,500 7,234,125
Atlantic Richfield..................... 23,900 3,166,750
British Petroleum, A.D.S............... 68,235 8,776,727
Chesapeake Energy...................... 14,500 (a) 844,625
Coastal................................ 74,300 3,194,900
Columbia Gas System.................... 47,700 2,897,775
Consolidated Natural Gas............... 63,100 3,352,187
Exxon.................................. 230,200 20,401,475
Halliburton............................ 39,800 2,253,675
Kerr-McGee............................. 43,300 2,717,075
Mobil.................................. 20,400 2,381,700
Noble Drilling......................... 173,900 (a) 3,238,887
Royal Dutch Petroleum ................. 112,300 18,571,613
Sonat.................................. 62,400 3,073,200
Tosco.................................. 30,200 1,694,975
__________-
83,799,689
___________-
Health Care-9.9% Amgen.................................. 74,400 (a) 4,561,650
Becton, Dickinson ..................... 71,600 3,114,600
Columbia/HCA Healthcare................ 97,926 3,500,854
Guidant................................ 62,300 2,873,587
Johnson & Johnson...................... 266,800 13,139,900
Lilly (Eli)............................ 136,400 9,616,200
Medtronic.............................. 63,600 4,094,250
Merck & Co............................. 217,000 16,085,125
OrNda Healthcorp....................... 43,000 (a) 1,171,750
Oxford Health Plans.................... 49,000 (a) 2,229,500
Pfizer................................. 132,050 10,927,138
Schering-Plough........................ 81,400 5,209,600
SmithKline Beecham, A.D.S.............. 53,700 3,362,963
United Healthcare...................... 58,700 2,223,263
___________-
82,110,380
___________-
Interest Sensitive-14.7% ACE Limited............................ 50,300 2,753,925
AMBAC.................................. 36,200 2,262,500
Allstate............................... 128,430 7,208,134
Bank of Boston......................... 133,280 8,529,920
BankAmerica............................ 150,400 13,761,600
Barnett Banks.......................... 141,400 5,390,875
Bear Stearns Cos....................... 163,840 3,870,720
CIGNA.................................. 56,800 7,412,400
Chase Manhattan........................ 131,740 11,296,705
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_____________ _____________
Interest Sensitive (continued) Citicorp............................... 54,200 $ 5,365,800
Federal National Mortgage Association.. 107,500 4,205,937
First Chicago NBD...................... 197,484 10,071,684
General Re............................. 15,600 2,297,100
ITT Hartford Group..................... 78,300 4,932,900
Merrill Lynch.......................... 77,400 5,437,350
NationsBank............................ 39,600 3,732,300
Old Republic International............. 70,950 1,756,012
PNC Bank............................... 160,700 5,825,375
Providian.............................. 58,100 2,730,700
Salomon................................ 75,600 3,411,450
Standard Federal Bancorporation........ 27,000 1,444,500
Travelers Group........................ 151,950 8,243,288
____________-
121,941,175
____________-
Mining And Metals-1.5% Aluminum Co. of America................ 56,400 3,306,450
Barrick Gold........................... 147,900 3,863,887
Potash Corp. Saskatchewan.............. 41,400 2,934,225
Reynolds Metals........................ 45,200 2,542,500
____________-
12,647,062
____________-
Transportation-1.5% CSX.................................... 88,000 3,795,000
Conrail................................ 56,300 5,355,537
Continental Airlines, Cl. B............ 55,100 (a) 1,384,388
Delta Air Lines........................ 26,400 1,871,100
___________-
12,406,025
___________-
Utilities-9.2% AT&T................................... 100,200 3,494,475
Allegheny Power System................. 63,500 1,897,062
Ameritech.............................. 157,200 8,606,700
BellSouth.............................. 277,400 11,304,050
CMS Energy............................. 37,200 1,176,450
Entergy................................ 229,400 6,423,200
GPU.................................... 89,500 2,942,312
GTE.................................... 250,700 10,560,738
Illinova............................... 60,500 1,648,625
MCI Communications..................... 333,000 8,366,625
SBC Communications..................... 203,700 9,904,913
Southern............................... 106,900 2,365,163
Texas Utilities........................ 180,000 7,290,000
___________-
75,980,313
___________-
TOTAL COMMON STOCKS
(cost $679,394,851).................. $807,618,414
============
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Repurchase Agreements-1.6% Amount Value
_____________ _____________
Goldman Sachs & Company Tri-Party Repurchase
Agreement, 5.55% dated 10/31/96 to be
repurchased at $13,250,507 on
11/1/96, collateralized by $12,889,000
U.S.
Treasury Notes, 6.75% due 5/31/99
(cost $13,248,465)................... $ 13,248,465 $ 13,248,465
=============
TOTAL INVESTMENTS (cost $692,643,316)....................................... 99.0% $820,866,879
======== =============
CASH AND RECEIVABLES (NET).................................................. 1.0% $ 8,595,621
======== =============
NET ASSETS.................................................................. 100.0% $829,462,500
======== =============
Notes to Statement of Investments:
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
_____________ ____________
ASSETS: Investments in securities-See Statement of Investments $692,643,316 $820,866,879
Cash....................................... 7,087,595
Receivable for investment securities sold.. 13,573,139
Receivable from subscriptions to Capital Stock 945,614
Dividends and interest receivable.......... 871,117
____________-
843,344,344
____________-
LIABILITIES: Due to The Dreyfus Corporation and affiliates 613,406
Due to Distributor......................... 4,550
Payable for investment securities purchased 13,019,775
Payable for shares of Capital Stock redeemed 242,543
Directors' fees payable.................... 1,570
___________-
13,881,844
____________-
NET ASSETS.................................................................. $829,462,500
============
REPRESENTED BY: Paid-in capital............................ $642,681,392
Accumulated undistributed investment income-net2,321,031
Accumulated net realized gain (loss) on investments 56,236,514
Accumulated net unrealized appreciation (depreciation)
on investments-Note 3....................... 128,223,563
____________-
NET ASSETS .................................................................. $829,462,500
=============
NET ASSET VALUE PER SHARE
Institutional Retail
Shares Shares
_____________ ______________
Net Assets.................................................................. $ 21,783,047 $807,679,453
Shares Outstanding.......................................................... 817,794 30,306,751
NET ASSET VALUE PER SHARE................................................... $26.64 $26.65
======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME
INCOME: Cash dividends (net of $ 153,737 foreign taxes withheld
at source)................................. $12,045,193
Interest................................... 793,145
____________
Total Income......................... $ 12,838,338
EXPENSES: Management fee-Note 2(a)................... 5,407,843
Distribution fee (Institutional shares)-Note 2(b) 57,100
Directors' fees and expenses-Note 2(c)..... 18,846
____________
Total Expenses....................... 5,483,789
___________-
INVESTMENT INCOME-NET....................................................... 7,354,549
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $57,954,936
Net unrealized appreciation (depreciation) on investments 67,153,959
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 125,108,895
__________-
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $132,463,444
============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED STOCK FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1996* October 31, 1995
________________ ________________
OPERATIONS:
Investment income-net.................................................... $ 7,354,549 $ 4,919,280
Net realized gain (loss) on investments.................................. 57,954,936 10,544,076
Net unrealized appreciation (depreciation) on investments................ 67,153,959 54,555,889
_______________ ______________
Net Increase (Decrease) in Net Assets Resulting from Operations...... 132,463,444 70,019,245
_______________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Institutional shares................................................... (255,975) (323,712)
Retail shares.......................................................... (6,232,853) (4,170,807)
Net realized gain on investments:
Institutional shares................................................... (515,099) (607,507)
Retail shares.......................................................... (10,485,121) (5,904,735)
_______________ ______________
Total Dividends...................................................... (17,489,048) (11,006,761)
_______________ ______________
CAPITAL STOCK TRANSACTIONS-Note 5:
Net proceeds from shares sold:
Institutional shares................................................... 8,663,919 31,801,974
Retail shares.......................................................... 528,257,385 205,045,630
Dividends reinvested:
Institutional shares................................................... 604,405 227,141
Retail shares.......................................................... 14,311,078 7,292,203
Cost of shares redeemed:
Institutional shares................................................... (23,996,494) (24,904,167)
Retail shares.......................................................... (228,187,217) (122,289,547)
_______________ ______________
Increase (Decrease) in Net Assets from Capital Stock Transactions.... 299,653,076 97,173,234
_______________ ______________
Total Increase (Decrease) in Net Assets............................ 414,627,472 156,185,718
NET ASSETS:
Beginning of Period...................................................... 414,835,028 258,649,310
_______________ ______________
End of Period............................................................ $ 829,462,500 $ 414,835,028
=============== ==============
Undistributed investment income-net........................................ $ 2,321,031 $ 1,455,310
_______________ ______________
CAPITAL SHARE TRANSACTIONS-Note 5:
Shares Shares
_______________ ______________
Institutional Shares
Shares sold.............................................................. 359,313 1,765,427
Shares issued for dividends reinvested................................... 26,498 12,685
Shares redeemed.......................................................... (1,025,776) (1,376,660)
_______________ ______________
Net Increase (Decrease) in Shares Outstanding........................ (639,965) 401,452
=============== =============
Retail Shares
Shares sold.............................................................. 21,523,328 10,432,849
Shares issued for dividends reinvested................................... 622,751 406,003
Shares redeemed.......................................................... (9,160,744) (6,410,071)
_______________ ______________
Net Increase (Decrease) in Shares Outstanding........................ 12,985,335 4,428,781
=============== =============
*Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail
shares.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED 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.
Institutional Shares
____________________________________
Year Ended October 31,
____________________________________
PER SHARE DATA: 1996(1) 1995 1994(2)(3)
_________ ________ ___________
Net asset value, beginning of period.................................. $22.08 $18.54 $17.86
_________ ________ ___________
Investment Operations:
Investment income-net................................................. .24 .28 .16
Net realized and unrealized gain (loss)
on investments...................................................... 5.11 3.98 .66
_________ ________ ___________
Total from Investment Operations...................................... 5.35 4.26 .82
_________ ________ ___________
Distributions:
Dividends from investment income-net.................................. (.23) (.25) (.14)
Dividends from net realized gain on investments....................... (.56) (.47) --
_________ ________ ___________
Total Distributions................................................... (.79) (.72) (.14)
_________ ________ ___________
Net asset value, end of period........................................ $26.64 $22.08 $18.54
========= ======== ===========
TOTAL INVESTMENT RETURN................................................... 24.84% 23.96% 4.62% (4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.15% 1.15% .66% (4)(5)
Ratio of net investment income
to average net assets............................................... 1.01% 1.36% .74% (4)(5)
Portfolio Turnover Rate............................................... 64.47% 60.00% 106.00% (4)
Average commission rate paid (6)...................................... $.0485 -- --
Net Assets, end of period (000's Omitted)............................. $21,783 $32,189 $19,580
(1) Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares.
(2) The Fund commenced selling Investor shares on April 6, 1994.
(3) 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.
(4) Not annualized.
(5) These ratios have been restated to reflect current year's presentation.
(6) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for
purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS DISCIPLINED 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>
Retail Shares
_________________________________________________________
Year Ended October 31,
_________________________________________________________
PER SHARE DATA: 1996(1) 1995 1994(2)(3) 1993 1992
________ _________ ____________ _________ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $22.09 $18.54 $ 18.69 $17.21 $16.40
________ _________ ____________ _________ _______
Investment Operations:
Investment income-net........................ .28 .30 .26(4) .30 .27
Net realized and unrealized gain(loss)
on investments............................. 5.13 4.02 .25 2.56 1.33
________ _________ ____________ _________ _______
Total from Investment Operations............. 5.41 4.32 .51 2.86 1.60
________ _________ ____________ _________ _______
Distributions:
Dividends from investment income-net......... (.29) (.30) (.26) (.31) (.27)
Dividends from net realized gain on investments (.56) (.47) (.40) (1.07) (.52)
________ _________ ____________ _________ _______
Total Distributions.......................... (.85) (.77) (.66) (1.38) (.79)
________ _________ ____________ _________ _______
Net asset value, end of period............... $26.65 $22.09 $ 18.54 $ 18.69 $ 17.21
======== ========= ============ ========= =======
TOTAL INVESTMENT RETURN.......................... 25.14% 24.33% 2.82% 17.46% 10.06%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (5).. .90% .90% .90%(6) .90% .90%
Ratio of net investment income
to average net assets...................... 1.23% 1.61% 1.54% 1.82% 1.73%
Portfolio Turnover Rate...................... 64.47% 60.00% 106.00% 64.00% 84.00%
Average commission rate paid (7)............. $.0485 -- -- -- --
Net Assets, end of period (000's Omitted).... $ 807,680 $382,646 $239,069 $92,955 $43,742
(1) Effective July 15, 1996, Class R shares were redesignated as Retail
shares.
(2) The Fund commenced selling Investor Shares on April 6, 1994. Those 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.
(3) 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.
(4) Net investment income per share before reimbursement of expenses by the
investment adviser was $.25 for the year ended October 31, 1994.
(5) For the years ended October 31, 1993 and 1992, the investment adviser
reimbursed expenses of the Fund amounting to $.0627 and $.0981 per share,
respectively.
(6) Expense ratio before reimbursement of expenses by the adviser was .96%
for the year ended October 31, 1994.
(7) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and
sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS DISCIPLINED 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 Stock Fund (the "Fund"). The
Fund's investment objective is to seek investment returns (including capital
appreciation and income) consistently superior to the Standard & Poor's 500
Composite Stock Price Index by investing in a broadly diversified list of
equity securities generated by the application of quantitative security
selection and risk control techniques. 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. Effective July 15, 1996, Investor Class
shares were redesignated as Institutional shares and Class R shares were
redesignated as Retail shares. The Fund is authorized to issue 245 million of
$.001 par value Capital Stock. The Fund currently offers two classes of
shares: Institutional (80 million shares authorized) and Retail (165 million
shares authorized). Retail shares are offered to any investor and Institutiona
l shares are offered only to clients of banks, securities brokers or dealers
and other financial institutions (collectively, Service Agents) that have
entered into selling agreements with the Fund's distributor. Other
differences between the two classes include the services offered to and the
expenses borne by each class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities 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 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.
DREYFUS DISCIPLINED STOCK FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) 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 1, 1996, the Board of Directors declared dividends from net
investment income for the Institutional shares and Retail shares in the
amount of $.054 per share and $.071 per share, respectively, payable on
November 4, 1996 to shareholders of record on November 1, 1996.
(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.
Certain prior year numbers have been reclassed to reflect current year's
presentation. Net investment income, net realized gains (loss) on investments
and net assets were not affected by this change.
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 .90% 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 plan: The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Institutional shares. Under the Plan, the Fund may pay annually up to .25% of
the value of the average daily net assets attributable to its Institutional
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
Institutional shares. The Retail shares bear no distribution fee. During the
period ended October 31, 1996, the distribution fee for the Institutional
shares was $57,100.
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) Director's 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 meeting 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 a
nd expenses are charged and allocated to each series based on net assets.
DREYFUS DISCIPLINED STOCK FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) Brokerage commissions: During the period ended October 31, 1996, the
Fund incurred total brokerage commissions of $1,132,421, of which $200,780
was paid to Dreyfus Investment Services Corporation, a subsidiary of
Mellon Bank.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchase and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1996
amounted to $657,527,644 and $379,506,024, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments was $128,223,563, consisting of $134,097,610 gross unrealized
appreciation and $5,874,047 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 5-ACQUISITION OF COMMON TRUST ASSETS:
On March 22, 1996, the Fund acquired all of the assets of the TBC Pooled
Employee Equity Fund, a trust advised by a subsidiary of Mellon Bank, N.A.
The acquisition was accomplished by an exchange of 538,998 Retail shares of
the Fund's Capital Stock for cash, securities and assumption of liabilities
of the trust totaling $13,097,649 which is included in net proceeds from
shares sold on the Statement of Changes in Net Assets.
DREYFUS DISCIPLINED 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,
including the statement of investments, of Dreyfus Disciplined Stock Fund of
The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Dreyfus Disciplined Stock Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 1996, the results of its operations, changes in its net
assets and its financial highlights for each of the years or periods set
forth above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP Signature)
New York, New York
December 9, 1996
DREYFUS DISCIPLINED STOCK FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.404 per share as a
long-term capital gain distribution paid on December 26, 1995.
The Fund also designates 79.19% of the ordinary dividends paid during the
fiscal year ended October 31, 1996 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1997 of
the percentage applicable to the preparation of their 1996 income tax
returns.
(Dreyfus Lion D Logo)
DREYFUS DISCIPLINED STOCK FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 328/728AR9610
(Dreyfus Logo)
Disciplined
Stock Fund
Annual Report
October 31, 1996
DREYFUS DISCIPLINED EQUITY INCOME FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report on the Dreyfus
Disciplined Equity Income Fund for the fiscal year ended October 31, 1996.
For the twelve-month period, your Fund provided a total return of 24.18% for
its Retail shares and 23.87% for its Institutional shares.* The total return
for the Standard & Poor's 500 Composite Stock Price Index, the Fund's
benchmark, which is not income-oriented, was 24.08% for the same period.**
Effective July 15, 1996, the Fund's Class R shares were redesignated as
Retail shares and the Fund's Investor shares were redesignated as
Institutional shares. Retail shares are offered to any investor.
Institutional shares are sold primarily through financial intermediaries.
Economic Review
The U.S. economy is enjoying a good year. First, the tightening labor
market has failed to push price inflation higher. Second, economic growth has
slowed since midyear from the torrid pace of the first half. Third, corporate
profits are holding up quite well, albeit growing more slowly than last year.
These factors have vindicated Federal Reserve Board inaction, keeping market
interest rates stable. Although the economy has simmered down, it is
nevertheless operating with very little slack.
The Federal Reserve Board twice thwarted market expectations for
tightening interest rates this year, taking the view instead that steady
growth won't so easily foster inflation in this cycle. Indeed, the
unemployment rate has plunged towards 5% this year and wage growth has
outpaced price inflation for the first time since 1989. Yet there is little
evidence of accelerating price inflation to date. Even higher oil prices have
failed to lift prices elsewhere. This is very different from 1994 when the Fed
preemptively hiked interest rates to stem an anticipated future price
inflation that subsequently did not materialize.
After rising 3.3% in the first half of this year, real GDP growth slowed
to 2.2% in the third quarter. Early evidence for the fourth quarter indicates
further sustained growth. In particular, consumer spending has been
lackluster since midyear, despite solid income growth and high confidence
levels. And new highs in home sales have not been matched by new records in
homebuilding. Spending on capital goods has rebounded, however, while
incoming strong export orders indicate better growth ahead for this sector.
Capital goods and exports typically dominate the business cycle's late phase.
Corporate profit growth, albeit slower than in 1995, continues to surprise on
the upside.
Interest rates this fall are not much different than in the spring.
Short-term rates have especially stabilized in recent months based on the
view that Fed tightening is unlikely this year. Long-term rates have recently
fallen. Should the economy show signs of reaccelerating, then long-term rates
would likely rise.
As the U.S. economy moves into the late-cycle phase it is, as usual, out
of sync with most business cycles overseas which are at a much earlier stage.
This portends faster world growth in 1997. How well the U.S. economy can
participate in an accelerating growth world economy without igniting
inflation remains to be seen.
Market Overview
The stock market in the last twelve months shrugged off a variety of
potentially negative factors to barrel its way to new heights.
In late 1995 and early 1996 economic activity appeared to slow down,
enough to prompt the Federal Reserve to lower interest rates in January of
this year. By springtime, when the Fed had apparently suspended its
anti-inflationary measures, investors began to worry about signs of strength
exhibited by the economy. Though the Fed took no action to raise interest
rates, investor worries about that possibility restrained an ebullient stock
market.
By July, fears of higher interest rates, plus concerns that some stock
prices - technology issues in particular - might have gone too far, too fast,
caused a temporary retreat in equity prices.
As fall approached, however, the underlying factors of a strong economy,
such as low inflation and investor optimism, took hold again and propelled
stock prices to new highs.
Chief beneficiaries were the large capitalization stocks. It took a while
for technology stocks and small caps to recover the ground lost in the early
summer. However, the trend across the board was clearly bullish.
As the fiscal year closed, there were some negative factors on the
horizon. Corporate profits may have passed their peak. Consumer demand seemed
to be slowing in some sectors. There were also hints that employment costs,
which have been quite stable for a long time, might face upward pressures.
The market, however, seemed to soar above these factors. The prospect,
which has since become a fact, of a split government in Washington, with
Republicans controlling Congress and Democrats in the White House, was seen
as favorable for stock prices. Moreover, the specter of renewed inflation
remained just that - nothing more than a specter. Furthermore, individual
investors continued to pour money into equity mutual funds - not at
constantly increasing rates, to be sure, but still at a pace that gave strong
impetus for higher stock prices.
Portfolio Focus
To adhere to its goal of generating dependable income, the Fund held a
number of stocks that were less volatile than the broad market averages. This
cost the Fund some basis points in performance during the strong equity
market that prevailed for most of the year. High-yielding telephone and
utility stocks, while producing income, did not share fully in the strong
price increases that characterized low-yielding or non-dividend paying
technology stocks.
Among the best performing stocks in the Fund's portfolio during the year
were Intel, Allstate, Gillette, Conrail and ConAgra.
We appreciate your confidence in Dreyfus Disciplined Equity Income Fund.
We would also like to take this occasion to wish you a healthy and prosperous
New Year.
Sincerely,
[Bert J. Mullins signature logo]
Bert J. Mullins
Portfolio Manager
November 14, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
DREYFUS DISCIPLINED EQUITY INCOME FUND OCTOBER 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS DISCIPLINED
EQUITY INCOME FUND RETAIL SHARES WITH THE STANDARD AND POOR'S 500 COMPOSITE
STOCK PRICE INDEX AND THE LIPPER EQUITY INCOME FUND INDEX
[Exhibit A:
$15,645
Standard & Poor's 500
Composite Stock Price
Index*
Dollars
$15,257
Dreyfus Disciplined
Equity Income Fund
(Retail Shares)
$13,944
Lipper Equity Income
Fund Index*
*Source: Lipper Analytical Services, Inc.]
Average Annual Total Returns
Institutional Shares* Retail Shares*
____________________________ _______________________
Period Ended 10/31/96 Period Ended 10/31/96
_________- _________
1 Year 23.87% 1 Year 24.18%
From Inception (9/14/94) 22.45 From Inception (9/2/94) 21.56
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Retail shares of
Dreyfus Disciplined Equity Income Fund on 9/2/94 (Inception Date) to a
$10,000 investment made in the Standard & Poor's 500 Composite Stock Price
Index on that date as well as to the Lipper Equity Income Fund Index which
are described below. For comparative purposes, the value of each Index on
8/31/94 is used as the beginning value on 9/2/94. All dividends and capital
gain distributions are reinvested. Performance for Institutional shares will
vary from the performance of Retail shares shown above due to differences in
charges and expenses.
The Dreyfus Disciplined Equity Income Fund seeks to provide above-average
income along with moderate long-term growth of principal and income by
investing primarily in a diversified portfolio of dividend-paying stocks. The
Fund's performance shown in the line graph takes into account all applicable
fees and expenses. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted, unmanaged index of overall stock market performance, which
does not take into account charges, fees and other expenses. The Lipper
Equity Income Fund Index is a non-weighted index of the 30 largest equity
income mutual funds. It is calculated daily with adjustments for income
dividends and capital gain distributions as of the ex-dividend dates. 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.
* Effective July 15, 1996, the Fund's Investor shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
<TABLE>
<CAPTION>
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Common Stocks-93.2% Shares Value
_______ _______
<S> <C> <C> <C>
Basic Industries-4.6%........... Dow Chemical 2,400 $ 186,600
Goodrich (B.F.)........................ 1,300 55,088
Kimberly-Clark......................... 1,550 144,536
Lubrizol............................... 1,550 46,113
Mead 900 51,075
Olin 1,800 76,500
PPG Industries......................... 2,700 153,900
Rohm & Haas............................ 800 57,100
Weyerhaeuser........................... 1,250 57,344
_______
828,256
_______
Capital Spending-17.0%.............Avnet 800 40,300
BCE 3,500 161,000
Boeing 500 47,687
Caterpillar............................ 1,400 96,075
Cooper Industries...................... 2,200 88,550
Deere & Co............................. 1,500 62,625
Eaton 1,050 62,738
Emerson Electric....................... 1,150 102,350
General Electric....................... 6,250 604,688
General Motors, Cl. H.................. 2,400 128,100
Harnischfeger Industries............... 1,500 60,000
Hewlett-Packard........................ 1,200 52,950
Illinois Tool Works.................... 700 49,175
Intel 2,950 324,131
International Business Machines........ 2,050 264,450
Lockheed Martin........................ 1,156 103,607
McDonnell Douglas...................... 350 19,075
Omnicom Group.......................... 1,050 52,238
Pitney Bowes........................... 2,000 111,750
Rockwell International................. 2,050 112,750
Texas Instruments...................... 500 24,062
Textron................................ 850 75,437
Timken 1,350 60,244
United Technologies.................... 1,250 160,937
Xerox 3,950 183,181
_______
3,048,100
_______
Consumer Cyclical-9.6%........... Albertson's 2,200 75,625
Belo (A.H.), Cl. A..................... 700 27,300
Chrysler............................... 4,500 151,312
Cooper Tire & Rubber................... 2,900 56,912
Dayton Hudson.......................... 2,750 95,219
Disney (Walt).......................... 1,400 92,225
Ford Motor............................. 1,800 56,250
Gap 2,250 65,250
General Motors......................... 750 40,406
Goodyear Tire & Rubber................. 1,500 68,813
Liz Claiborne.......................... 1,200 50,700
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_______ _______
Consumer Cyclical (continued) Marriott International 1,650 $ 93,844
May Department Stores.................. 2,650 125,544
McGraw-Hill Cos........................ 1,550 72,656
NIKE, Cl. B............................ 900 52,988
New York Times, Cl. A.................. 1,500 54,188
Penney (J.C.).......................... 1,700 89,250
Reynolds & Reynolds, Cl. A............. 3,600 94,950
Sbarro 1,525 40,222
Sears, Roebuck ........................ 2,950 142,706
Wal-Mart Stores........................ 7,000 186,375
_______
1,732,735
_______
Consumer Staples-12.1%.. Anheuser-Busch Cos. 2,800 107,800
Avon Products.......................... 2,800 151,900
Campbell Soup.......................... 1,200 96,000
Coca-Cola.............................. 7,750 391,375
Coca-Cola Enterprises.................. 1,100 46,888
Colgate-Palmolive...................... 1,000 92,000
ConAgra................................ 2,200 109,725
Dole Food.............................. 1,150 44,850
Eastman Kodak.......................... 1,950 155,513
First Brands........................... 1,250 35,469
Gillette 2,450 183,137
Hershey Foods.......................... 1,400 67,725
Philip Morris Cos...................... 2,550 236,194
Procter & Gamble....................... 1,900 188,100
Ralston-Purina Group................... 450 29,756
Sara Lee............................... 3,450 122,475
Seagram................................ 1,100 41,662
Unilever N.V........................... 500 76,438
_______
2,177,007
_______
Energy-11.2%.......................Amoco 2,350 178,012
Atlantic Richfield..................... 1,000 132,500
British Petroleum, A.D.S............... 850 109,331
Columbia Gas System.................... 700 42,525
Consolidated Natural Gas............... 1,450 77,031
Exxon 5,750 509,594
Kerr-McGee............................. 1,100 69,025
Mobil 1,150 134,263
Pacific Enterprises.................... 2,400 73,800
Royal Dutch Petroleum.................. 2,600 429,975
Sonat 1,250 61,563
Texaco 1,850 188,006
_______
2,005,625
_______
Health Care-10.8%................. Allegiance 160 3,000
American Home Products................. 1,800 110,250
Baxter International................... 900 37,462
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_______ _______
Health Care (continued).... Becton, Dickinson 600 $ 26,100
Bristol-Myers Squibb................... 1,550 163,913
Guidant................................ 1,300 59,963
Johnson & Johnson...................... 5,000 246,250
Lilly (Eli)............................ 3,800 267,900
Medtronic.............................. 1,100 70,813
Merck & Co............................. 4,700 348,387
Pfizer 3,950 326,862
Pharmacia & Upjohn..................... 1,500 54,000
Schering-Plough........................ 2,100 134,400
SmithKline Beecham, A.D.S.............. 1,600 100,200
_______
1,949,500
_______
Interest Sensitive-15.4%...........Allstate 2,651 148,787
American National Insurance............ 1,800 117,900
Bank of Boston......................... 760 48,640
BankAmerica............................ 3,450 315,675
Bankers Trust New York................. 1,400 118,300
Barnett Banks.......................... 3,574 136,259
Bear Stearns Cos....................... 3,565 84,223
Block (H&R)............................ 2,250 55,688
CIGNA.................................. 1,700 221,850
Chase Manhattan........................ 2,040 174,930
CoreStates Financial................... 3,450 167,756
Federal National Mortgage Association.. 3,650 142,806
First Chicago NBD...................... 3,617 184,467
General Re............................. 300 44,175
ITT Hartford Group..................... 1,550 97,650
Merrill Lynch ......................... 2,200 154,550
NationsBank............................ 1,000 94,250
PNC Bank............................... 4,450 161,313
Providian.............................. 1,250 58,750
SAFECO................................. 2,150 81,162
Salomon................................ 700 31,588
Travelers Group........................ 2,420 131,285
_______
2,772,004
_______
Mining And Metals-1.1% Aluminum Co. of America 1,050 61,556
Potash Corp. Saskatchewan.............. 1,150 81,506
Reynolds Metals........................ 1,100 61,875
_______
204,937
_______
Transportation-1.7%................CSX 1,900 81,937
Conrail................................ 1,650 156,956
Delta Air Lines........................ 908 64,355
_______
303,248
_______
Utilities-9.7%.....................AT&T 2,050 71,494
Allegheny Power System................. 1,100 32,862
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_______ _______
Utilities (continued)..............Ameritech 3,600 $ 197,100
Bell Atlantic.......................... 2,600 156,650
BellSouth.............................. 4,450 181,338
CINergy................................ 4,100 135,812
Entergy................................ 4,050 113,400
GPU 2,500 82,188
GTE 4,850 204,306
NYNEX.................................. 2,850 126,825
SBC Communications..................... 3,300 160,462
Southern............................... 3,650 80,756
Texas Utilities........................ 3,050 123,525
US West Communications Group........... 2,300 69,863
_______
1,736,581
_______
TOTAL COMMON STOCKS
(cost $14,505,362)................... $ 16,757,993
=======
Convertible Preferred Stocks-1.7%
Consumer Services-.6% Case, Ser. A, Cum., $4.50 600 $ 69,900
First U.S.A., Ser. A, Cum., 6.25%...... 800 38,800
_______
108,700
_______
Consumer Staples-.1% RJR Nabisco Holdings, Ser. C, Cum., 9.25% 4,600 25,875
_______
Energy-.1%............. Ashland, Cum., $3.125 300 19,987
_______
Financial-.3% TCI Communications, Ser. A, Cum., $2.125 1,400 51,888
_______
Retail-.6%...... Kmart Financing, Cum., 7.75% 700 33,250
TJX Cos., Ser. E, Cum., 7.00%.......... 300 68,250
_______
101,500
_______
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $309,104)...................... $ 307,950
=======
Principal
Convertible Corporate Bonds-1.1% Amount
_______
Corporate Express, Sub. Deb.,
4.50%, 7/1/2000...................... $ 50,000 $ 46,125
Fedrated Department Stores, Sub. Deb.,
5%, 10/1/2003........................ 55,000 62,562
Hospitality Franchise, Sub. Deb.,
4.75%, 3/1/2003...................... 40,000 51,350
Magna International, Sub. Deb.,
5%, 10/15/2002....................... 40,000 44,000
_______
TOTAL CONVERTIBLE CORPORATE BONDS
(cost $197,741)...................... $ 204,037
=======
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Short-Term Investments-4.0% Amount Value
_______ ______
Repurchase Agreements:Goldman Sachs & Company Tri-Party Repurchase
Agreement, 5.55% dated 10/31/96 to be
repurchased at $722,795 on
11/1/96, collateralized by $734,000 U.S.
Treasury Notes, 5% due 1/31/98
(cost $722,684)...................... $ 722,684 $ 722,684
=======
TOTAL INVESTMENTS (cost $15,734,891)........................................ 100.0% $ 17,992,664
==== =======
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (.0%) $ (6,814)
==== =======
NET ASSETS.................................................................. 100.0% $ 17,985,850
==== =======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
_______ ______
ASSETS: Investments in securities-See Statement of Investments $15,734,891 $17,992,664
Receivable for investment securities sold.. 138,996
Dividends and interest receivable.......... 30,012
______
18,161,672
______
LIABILITIES: Due to The Dreyfus Corporation and affiliates 13,972
Due to Distributor......................... 74
Cash overdraft due to Custodian............ 2,452
Payable for investment securities purchased 159,297
Director's fees payable.................... 27
______
175,822
______
NET ASSETS.................................................................. $17,985,850
=======
REPRESENTED BY: Paid-in capital............................ $14,988,097
Accumulated undistributed investment income-net88,766
Accumulated net realized gain (loss) on investments 651,214
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 3 2,257,773
______
NET ASSETS.................................................................. $17,985,850
=======
NET ASSET VALUE PER SHARE
_______________-
Institutional Retail
Shares Shares
_______ ______
Net Assets.................................................................. $ 4,598,732 $13,387,118
Shares Outstanding.......................................................... 317,388 923,693
NET ASSET VALUE PER SHARE................................................... $14.49 $14.49
==== ====
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME
INCOME: Cash dividends (net of $3,154 foreign taxes withheld
at source)............................. $ 282,978
Interest................................... 30,453
_____
Total Income......................... $ 313,431
EXPENSES: Management fee-Note 2(a)................... 94,844
Distribution fee (Institutional shares)-Note 2(b) 15,506
Directors' fees and expenses-Note 2(c)..... 319
_____
Total Expenses....................... 110,669
_____
INVESTMENT INCOME-NET....................................................... 202,762
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $ 651,540
Net unrealized appreciation (depreciation) on investments 1,346,152
_____
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 1,997,692
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,200,454
======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED EQUITY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1996(1) October 31, 1995
_________ ________
OPERATIONS:
Investment income-net................................................. $ 202,762 $ 138,405
Net realized gain (loss) on investments............................... 651,540 72,706
Net unrealized appreciation (depreciation) on investments............. 1,346,152 948,493
______ ______
Net Increase (Decrease) in Net Assets Resulting from Operations... 2,200,454 1,159,604
______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Institutional shares................................................ (85,357) (10,411)
Retail shares....................................................... (64,198) (115,886)
Net realized gain on investments:
Institutional shares................................................ (24,849) --
Retail shares....................................................... (38,584) --
______ ______
Total Dividends................................................... (212,988) (126,297)
______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Institutional shares................................................ 11,592,746 1,710,225
Retail shares....................................................... 14,631,001 690,542
Dividends reinvested:
Institutional shares................................................ 97,466 9,143
Retail shares....................................................... 31,502 26,865
Cost of shares redeemed:
Institutional shares................................................ (9,633,438) (150,971)
Retail shares....................................................... (6,943,843) (2,101,842)
______ ______
Increase (Decrease) in Net Assets from Capital Stock Transactions. 9,775,434 183,962
______ ______
Total Increase (Decrease) in Net Assets......................... 11,762,900 1,217,269
NET ASSETS:
Beginning of Period................................................... 6,222,950 5,005,681
______ ______
End of Period......................................................... $17,985,850 $ 6,222,950
====== ======
Undistributed investment income-net..................................... $ 88,766 $ 35,559
______ ______
CAPITAL SHARE TRANSACTIONS: Shares Shares
______ ______
Institutional Shares
__________
Shares sold........................................................... 879,064 155,201
Shares issued for dividends reinvested................................ 7,545 832
Shares redeemed....................................................... (712,063) (13,293)
______ ______
Net Increase (Decrease) in Shares Outstanding..................... 174,546 142,740
====== ======
Retail Shares
______-
Shares sold........................................................... 1,073,130 61,234
Shares issued for dividends reinvested................................ 2,461 2,697
Shares redeemed....................................................... (527,503) (191,141)
______ ______
Net Increase (Decrease) in Shares Outstanding..................... 548,088 (127,210)
====== ======
(1) Effective July 15, 1996, Investor Class shares were redesignated as Institutional shares and Class R shares were
redesignated as Retail shares.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED EQUITY INCOME 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.
Institutional Shares
________________________________
Year Ended October 31,
________________________________
PER SHARE DATA: 1996(1) 1995 1994(2)(3)
___ ___ ____
Net asset value, beginning of period.................................. $12.00 $ 9.95 $10.00
___ ___ ____
Investment Operations:
Investment income-net................................................. .27 .22 .03
Net realized and unrealized gain (loss)
on investments...................................................... 2.54 2.05 (.08)
___ ___ ____
Total from Investment Operations...................................... 2.81 2.27 (.05)
___ ___ ____
Distributions:
Dividends from investment income-net.................................. (.20) (.22) --
Dividends from net realized gain on investments....................... (.12) -- --
___ ___ ____
Total Distributions................................................... (.32) (.22) --
___ ___ ____
Net asset value, end of period........................................ $14.49 $12.00 $ 9.95
=== === ====
TOTAL INVESTMENT RETURN................................................... 23.87% 23.20% (.50%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.15% 1.15% .19%(4)
Ratio of net investment income
to average net assets............................................... 1.81% 2.32% .44%(4)
Portfolio Turnover Rate............................................... 44.33% 37.57% 5.00%(4)
Average commission rate paid (5)...................................... $.0555 -- --
Net Assets, end of period (000's Omitted)............................. $4,599 $1,714 $1
(1) Effective July 15, 1996, Investor Class shares were redesignated as Institutional shares.
(2) The Fund commenced operations on September 2, 1994.
(3) 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.
(4) Not annualized.
(5) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS
DREYFUS DISCIPLINED EQUITY INCOME 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.
Retail Shares
________________________________
Year Ended October 31,
________________________________
PER SHARE DATA: 1996(1) 1995 1994(2)(3)(4)
___ ___ ____
Net asset value, beginning of period.................................. $12.00 $ 9.95 $10.00
___ ___ ___
Investment Operations:
Investment income-net................................................. .21 .28 .05
Net realized and unrealized gain (loss)
on investments...................................................... 2.63 2.02 (.10)
___ ___ ___
Total from Investment Operations...................................... 2.84 2.30 (.05)
___ ___ ___
Distributions:
Dividends from investment income-net.................................. (.23) (.25) --
Dividends from net realized gain on investments....................... (.12) -- --
___ ___ ___
Total Distributions................................................... (.35) (.25) --
___ ___ ___
Net asset value, end of period........................................ $14.49 $12.00 $ 9.95
=== === ===
TOTAL INVESTMENT RETURN................................................... 24.18% 23.48% (.50%)(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... .90% .90% .15%(5)
Ratio of net investment income
to average net assets............................................... 2.06% 2.57% .48%(5)
Portfolio Turnover Rate............................................... 44.33% 37.57% 5.00%(5)
Average commission rate paid (6)...................................... $.0555 -- --
Net Assets, end of period (000's Omitted)............................. $ 13,387 $4,509 $5,005
(1) Effective July 15, 1996, Class R shares were redesignated as Retail shares.
(2) The Fund commenced operations on September 2, 1994.
(3) 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.
(4) Effective October 17, 1994, the Fund's Trust shares were redesignated Class R shares.
(5) Not annualized.
(6) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share for
purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS DISCIPLINED EQUITY 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 Dreyfus Disciplined Equity Income Fund (the
"Fund"). The Fund's investment objective is to seek an above-average level of
income along with moderate long-term growth of income and principal by
investing in a diversified list of securities, resulting in a portfolio with
a moderate level of risk. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. ("Mellon Bank").
On November 15, 1995, the Fund changed its name from "Dreyfus Equity
Income Fund" to the Dreyfus Disciplined Equity Income Fund.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. Effective July 15, 1996, Investor shares
were redesignated as Institutional shares and Class R shares were
redesignated as Retail shares. The Fund is authorized to issue 50 million of
$.001 par value Capital Stock. The Fund currently offers two classes of
shares: Institutional (20 million shares authorized) and Retail (30 million
shares authorized). Institutional shares are offered only to clients of banks,
securities brokers or dealers and other financial institutions
(collectively, Service Agents) that have entered into selling agreements with
the Distributor and Retail shares are offered to any investor. Other
differences between the two classes include the services offered to and the
expenses borne by each class.
Investment income, net of expenses (other than class specific expenses)
and realized and unrealized gains and losses are allocated daily to each
class of shares based upon the relative proportion of net assets of each
class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities 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 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 Manager, acting
under the supervision of the Board of Directors, reviews the value of the
collateral
DREYFUS DISCIPLINED EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
and the creditworthiness of those banks and dealers with which the Fund
enters into repurchase agreements to evaluate potential risks.
(d) 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 1, 1996, the Board of Directors declared dividends from net
investment income for the Institutional shares and Retail shares in the
amount of $.049 per share and $.059 per share, respectively, payable on
November 4, 1996 to shareholders of record on November 1, 1996.
(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.
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 .90% 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 plan: The Fund has adopted a distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Institutional shares. Under the Plan, the Fund may pay annually up to .25% of
the value of the average daily net assets attributable to its Institutional
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
Institutional shares. The Retail shares bear no distribution fee. During the
period ended October 31, 1996, the distribution fee for the Institutional
shares was $15,506.
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/Laural 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.
DREYFUS DISCIPLINED EQUITY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) Brokerage commissions: During the period ended October 31, 1996, the
Fund incurred total brokerage commissions of
$18,186, of which $7,643 was paid to Dreyfus Investment Services Corporation,
a subsidiary of Mellon Bank.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchase and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1996,
amounted to $13,895,743 and $4,505,936, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments was $2,257,773, consisting of $2,401,617 gross unrealized
appreciation and $143,844 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
DREYFUS DISCIPLINED EQUITY 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,
including the statement of investments, of Dreyfus Disciplined Equity Income
Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years or periods in the
three-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Dreyfus Disciplined Equity Income Fund of The Dreyfus/Laurel
Funds, Inc. as of October 31, 1996, the results of its operations, changes in
its net assets and its financial highlights for each of the years or periods
set forth above, in conformity with generally accepted accounting principles.
[KPMG Peat Marwick signature logo]
New York, New York
December 9, 1996
DREYFUS DISCIPLINED EQUITY INCOME FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.078 per share as a
long-term capital gain distribution paid on December 26, 1995.
The Fund also designates 99.70% of the ordinary dividends paid during the
fiscal year ended October 31, 1996 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1997 of
the percentage applicable to the preparation of their 1996 income tax
returns.
[Dreyfus lion "d" logo]
DREYFUS DISCIPLINED EQUITY INCOME FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 318/718AR9610
[Dreyfus logo]
Disciplined Equity
Income Fund
Annual Report
October 31, 1996
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this first annual report on the
Dreyfus Disciplined Intermediate Bond Fund. For its annual reporting period
ended October 31, 1996, your Fund produced a total return (including bond
price changes and interest income) of 4.18% and 4.45% for its Institutional
shares and Retail shares, respectively.* This compares to a total return of
5.85% for the Lehman Brothers Aggregate Bond Index, the Fund's benchmark
index.** Income dividends of approximately $.710 per share for Institutional
shares and $.742 per share for Retail shares were paid during this period.
This amounts to an annualized distribution rate per share of 5.76% and 6.02%
for Institutional shares and Retail shares, respectively.***
Effective July 15, 1996, the Fund's Class R shares were redesignated as
Retail Shares and the Fund's Investor Shares were redesignated as
Institutional Shares. Retail shares are offered to any investor.
Institutional shares are sold primarily through financial intermediaries.
THE ECONOMY
Recent fears of another round of monetary tightening by the Federal
Reserve Board (the "Fed") to ward off a resurgence in inflation have so far
proven unwarranted. Despite solid economic growth resulting in the creation
of new jobs and an overall tightening in the labor market, inflation has
remained subdued. Both the Consumer and Producer Price Indexes remained in
the 3% range. This is the fifth consecutive year of inflation under 3%, the
longest period since the 1960s. Despite the duration of the economic
recovery, most economic reports underscore the tepid nature of the current
inflationary environment.
The increase in long-term interest rates early this year may have
contributed to the recently reported slowdown in the rate of economic growth.
During the third quarter, the growth rate of Gross Domestic Product cooled to
2.2%, less than half the second quarter's strong 4.7% pace. Consumers - the
initiators of two-thirds of all economic activity - remained cautious
throughout the year. In the third quarter, the pace of consumer spending was
at its slowest in five years. Consumer borrowing has also declined from
levels of a year ago. Not surprisingly, retail sales growth has also been
modest this year. Consumers may have been restrained by wages not rising as
rapidly as had been previously expected, given the strength in the labor
market. The Employment Cost Index, considered to be an important gauge of
wage inflation by Fed Chairman Alan Greenspan, rose just 0.6% in the third
quarter, the lowest reading in over a year. This brought the growth in wages
to 2.8% over the past 12 months, slightly less than the rate of inflation as
measured by the Consumer Price Index.
The booming housing market also seems to have cooled with both new
housing starts and existing home sales slackening since midyear. Industrial
production has slowed somewhat from its more rapid pace earlier in the year.
Given the level of capacity utilization, there appears to be no sign of
production bottlenecks that could push prices higher. Anecdotal evidence
still supports the assertion that corporations are reluctant to raise prices.
The report that the 1996 Federal budget deficit had shrunk to $107.3 billion
- - its lowest level in two decades - provided another favorable sign for
inflation. The final reading of the 1996 deficit marks the fourth straight
decline from fiscal 1992's record $290.4 billion.
Despite the relatively benign current environment for inflation, we are
alert for early signs of its potential resurgence. While wage increases so
far have remained modest, workers should eventually expect compensation that
at least matches their cost of living. Furthermore, we are mindful that price
increases in energy and food may not continue to be as restrained as they
were over the past four years.
MARKET ENVIRONMENT
Investor psychology in the credit markets shifted to the bullish side in
the third quarter of 1996 compared to the first half of the year. Long-term
bond yields fell below 6.5% compared to highs of 7.22% in July. This
reduction in yields was spurred by reports of a weaker-than-expected economy
and strong technical factors. The technical condition of the
bond market was enhanced by strong demand for corporate and mortgage-backed
bonds, heavy investor cash inflows into the market, and strong overseas
demand, particularly in two- and five-year Treasury Notes. Additionally, most
new corporate bond offerings were met with strong demand (some were heavily
oversubscribed) causing spreads to tighten to historically narrow levels. The
mortgage market performed well in the third quarter, despite having lost some
of its luster as interest rates fell and concerns about prepayments
increased.
We believe that the Fed will keep the Fed Funds rate unchanged as long as
the economy shows signs of weakness and consumer spending remains sluggish.
Also, we believe that the Treasury market should have a better investment
tone as talks continue in Washington regarding a balanced budget agreement.
THE PORTFOLIO
Recently, the Fund's investment performance has improved relative to the
Lehman Brothers Aggregate Bond Index. In the last six months of the reporting
period, the Fund's Institutional and Retail shares provided total returns of
4.84% and 4.98%, respectively,* compared to a total return of 5.29% for the
index.** The improved performance is the result of the portfolio's
heavier-than-market allocation to the corporate and mortgage-backed sectors
and a modest extension of the Fund's maturity as interest rates began to
decline.
We have gradually increased the portfolio's exposure in the corporate
sector from 32% at the end of July to 36% by the end of the reporting period.
This action was taken due to our expectations for a decline in interest
rates, the related strengthening in the bond market and improving fundamental
and technical factors for corporate securities. We also reduced our position
in mortgage-backed securities in July and August from 35% to 25% because of
our anticipation of lower interest rates. Falling interest rates usually
result in mortgage-backed securities underperforming other sectors of the
bond market due to the refinancing of the underlying mortgages. This
refinancing results in accelerated repayments of principal which causes a
reduction in maturity for these securities at an inappropriate time. Over
this same period, the Fund's holdings in Treasury securities were increased
by 4%. The Fund's cash position was reduced in July and August to 2% (from
its high of 8%) and the maturity was extended modestly.
If signs of economic weakness and low inflation continue, we would
further reduce our position in mortgage-backed securities in favor of
Treasuries. We expect our corporate bond position to remain unchanged unless
we see signs of declining corporate profits and/or recession.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Ridgway Powell signature logo]
Ridgway Powell
Portfolio Manager
November 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LEHMAN BROTHERS - The Lehman Brothers Aggregate Bond Index is a
widely accepted, unmanaged index of corporate, government and government
agency debt instruments and reflects the reinvestment of dividends and
capital gains.
*** Distribution rate per share is based upon dividends per share paid
from net investment income during the period (annualized), divided by the net
asset value per share at the end of the period.
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND OCTOBER 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS DISCIPLINED
INTERMEDIATE BOND FUND INSTITUTIONAL SHARES AND RETAIL SHARES AND THE LEHMAN
BROTHERS AGGREGATE BOND INDEX
[Exhibit A:
$10,585
Lehman Brothers
Aggregate Bond Index*
Dollars
$10,445
Dreyfus Disciplined
Intermediate Bond Fund
(Retail Shares)
$10,418
Dreyfus Disciplined
Intermediate Bond Fund
(Institutional Shares)
*Source: Lehman Brothers]
Average Annual Total Returns
Institutional Shares* Retail Shares*
____________________________ ___________________________
Period Ended 10/31/96 Period Ended 10/31/96
_________ _________
1 Year 4.18% 1 Year 4.45%
From Inception (11/1/95) 4.18 From Inception (11/1/95) 4.45
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the
Institutional shares and Retail shares of Dreyfus Disciplined Intermediate
Bond Fund on 11/1/95 (Inception Date) to a $10,000 investment made in the
Lehman Brothers Aggregate Bond Index on that date. For comparative purposes,
the value of the Index on 10/31/95 is used as the beginning value on 11/1/95.
All dividends and capital gain distributions are reinvested.
The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Lehman Brothers Aggregate Bond Index is a
widely accepted, unmanaged index of corporate, government and government
agency debt instruments. 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.
* Effective July 15, 1996, the Fund's Investor shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
<TABLE>
<CAPTION>
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Principal
Bonds and Notes-96.9% Amount Value
______ ______
<S> <C> <C>
Banking-2.3% First Union National Bank of North Carolina,
Sub. Notes, 6.18%, 2006.............. $ 1,250,000 (a) $1,185,640
Fleet Financial Group,
Sub. Notes, 6 7/8%, 2003...................... 150,000 151,012
______
1,336,652
______
Collateralized
Mortgage Obligations-.9% Countrywide Funding,
Mortgage Pass-Through Ctfs.,
Ser. 1994-10, Cl. A-5, 6%, 2009...... 161,401 157,360
Home Mac Mortgage Securities,
Collateralized Mortgage Obligations,
Ser. 1986-5, Cl. C, 8.55%, 2008...... 4,675 4,768
Residential Funding Mortgage Securities I,
Mortgage Pass-Through Ctfs.,
Ser. 1994-S10, Cl. A-6, 6 1/2%, 2009. 389,824 377,143
______
539,271
______
Commercial Mortgage
Obligations-1.2% Asset Securitization,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1995-MD IV, Cl. A-1, 7.10%, 2029 715,657 723,485
______
Consumer-3.0%......... News America Holdings,
Gtd. Sr. Deb., 8%, 2016.............. 1,750,000 1,767,902
______
Entertainment-2.1%.............. Walt Disney,
Sr. Notes, 6 3/8%, 2001.............. 1,250,000 1,248,499
______
Finance-10.0%............ ERP Operating L.P.,
Notes, 7.57%, 2006................... 1,000,000 (b) 1,015,681
First Colony,
Sr. Notes, 6 5/8%, 2003...................... 500,000 498,704
Ford Motor Credit,
Notes, 6 5/8%, 2003.................. 1,500,000 1,489,011
Health and Rehabilitation Properties Trust,
Sr. Floating-Rate Notes,
Ser. A, 6.613%, 1999................. 300,000 (c) 299,247
NYNEX Capital Funding,
Gtd. Medium-Term Notes, 7.63%, 1999.. 1,100,000 (d,e) 1,193,642
Salomon:
Medium-Term Floating-Rate Notes,
..Ser. D, 6 1/4%, 1999 1,230,000 (c) 1,224,138
Sr. Notes, 7 1/8%, 1999...................... 120,000 121,796
______
5,842,219
______
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Bonds and Notes (continued) Amount Value
______ ______
Finance/Asset Backed-3.8%American Airlines Pass-Through Trusts,
Pass Through Ctfs., Ser. 1991-A, 9.71%, 2007 $ 995,650 $ 1,123,522
NationsBank Auto Grantor Trust 1995-A,
Asset Backed Ctfs., Cl. A, 5.85%, 2002 92,555 92,694
Premier Auto Trust 1996-2,
Asset Backed Notes, Cl. A-4, 6.575%, 2000 1,000,000 1,012,310
______
2,228,526
______
Industrial-7.3%....................Coastal,
Sr. Deb., 9 3/4%, 2003............... 100,000 115,176
Columbia/HCA Healthcare,
Notes, 6.91%, 2005................... 1,500,000 1,505,892
Hoechst Celanese,
Notes, 6 1/8%, 2004.................. 100,000 96,963
Tribune,
Notes, 6 7/8%, 2006.................. 1,000,000 996,500
WMX Technologies, Notes:
6.70%, 2001.......................... 1,000,000 1,007,865
7.10%, 2003.......................... 500,000 (f) 516,917
______
4,239,313
______
Foreign/Yankee-8.7%...... ABN AMRO Bank N.V.,
Sub. Notes, 7.55%, 2006.............. 1,500,000 1,563,573
Hanson Overseas B.V.,
Gtd. Sr. Notes, 7 3/8%, 2003......... 500,000 514,519
KfW International Finance,
Gtd. Notes, 9 1/8%, 2001...................... 310,000 343,512
Midland Bank plc,
Sub. Notes, 7 5/8%, 2006...................... 425,000 442,785
Province of Quebec,
Deb., 7.295%, 2006................... 1,000,000 (g) 1,036,064
Royal Bank of Scotland Group plc.,
Sub. Notes, 6 3/8%, 2011...................... 500,000 464,375
Smurfit Capital Funding plc,
(Gtd. by Jefferson Smurfit Group plc),
Deb., 7 1/2%, 2025................... 750,000 736,059
______
5,100,887
______
U.S. Government
Agencies-29.0% Federal Home Loan Banks Board,
6.702%, 10/25/2001................... 1,000,000 1,000,987
Federal Home Loan Mortgage Corp.:
6.42%, 12/1/2005..................... 178,470 172,949
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Bonds and Notes (continued) Amount Value
______ ______
U.S. Government
Agencies (continued) Federal Home Loan Mortgage Corp. (continued):
Multiclass Mortgage Participation Ctfs.:
Ser. 1453, Cl. S, 7.148%, 2000 $ 574,683 (h) $ 572,169
Ser. 1279, Cl. PH, 7 1/4%, 2020 400,000 405,992
Federal National Mortgage Association:
6 1/2%, 11/1/2025.................... 1,009,011 967,067
7%, 7/1/2000-3/1/2026................ 2,533,080 2,511,604
7 1/2%, 9/1/2011-6/1/2026............ 2,410,022 2,430,513
8%, 9/1/2026......................... 502,934 513,461
Real Estate Mortgage Investment
....Conduit Trust, Pass-Through Ctfs.
(collateralized by FNMA Pass-Through Ctfs.),
Ser. 1992-98, Cl. PM, 8%, 5/25/2021 .500,000 517,100
Government National Mortgage Association I:
6%, 12/15/2008-5/15/2009............. 979,989 957,626
7 1/2%, 6/15/2024-1/15/2026.......... 2,829,186 2,852,351
8%, 2/15/2008-12/15/2022...................... 1,975,495 2,051,274
8 1/2%, 11/15/2026 ...................... 1,500,000 (i) 1,555,313
9 1/2%, 4/15/2018.................... 62,035 67,367
Government National Mortgage Association II:
6%, 11/20/2025....................... 234,991 238,810
6 1/2%, 1/20/2024.................... 162,473 164,402
______
16,978,985
______
U.S. Government-28.6%... U.S. Treasury Bonds,
7 1/8%, 2/15/2023.................... 775,000 810,844
U.S. Treasury Notes:
5 3/4%, 8/15/2003................. 1,000,000 974,219
5 7/8%, 6/30/2000................. 5,750,000 5,729,336
6 1/2%, 8/15/2005................. 4,750,000 4,801,211
6 3/4%, 5/31/1999.................... 750,000 765,879
7%, 7/15/2006........................ 500,000 522,188
8%, 8/15/1999..................... 3,000,000 3,160,078
______
16,763,755
______
TOTAL BONDS AND NOTES
(cost $56,189,483)..................... $56,769,494
======
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Short-Term Investments-1.6% Amount Value
______ ______
Repurchase Agreement; Salomon Brothers, 5.52%
Dated 10/31/1996, due 11/1/1996 in the amount
of $930,143 (fully collateralized by
$915,000 U.S.Treasury Notes, 6 5/8%,
7/31/2001 value $964,357)
(cost $930,000)................... $ 930,000 $ 930,000
======
TOTAL INVESTMENTS (cost $57,119,483)........................................ 98.5% $57,699,494
==== ======
CASH AND RECEIVABLES (NET)............................................... 1.5% $ 892,828
==== ======
NET ASSETS.................................................................. 100.0% $58,592,322
==== ======
Notes to Statement of Investments:
(a) Reflects date security can be redeemed at holders' option; the
stated maturity date is 2/15/2036.
(b) Reflects date security can be redeemed at holders' option; the
stated maturity date is 8/15/2026.
(c) Variable rate security-interest rate subject to periodic change.
(d) Reflects date security can be redeemed at holders' option; the
stated maturity date is 10/15/2009.
(e) Interest rate is 7.63% until 10/15/1999, date on which the interest
rate increases to 8.23% until stated maturity.
(f) Reflects date security can be redeemed at holders' option; the
stated maturity date is 8/01/2026.
(g) Reflects first date security can be redeemed at holders' option; the
stated maturity is 7/22/2026.
(h) Inverse floater security-interest rate subject to periodic change.
(i) Purchased on a forward commitment basis.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
______ ______
ASSETS: Investments in securities-See Statement of Investments $57,119,483 $57,699,494
Cash....................................... 148,891
Receivable for investment securities sold.. 3,576,667
Interest receivable........................ 741,678
______
62,166,730
______
LIABILITIES: Due to The Dreyfus Corporation and affiliates 26,299
Payable for investment securities purchased 3,548,109
______
3,574,408
______
NET ASSETS.................................................................. $58,592,322
======
REPRESENTED BY: Paid-in capital............................ $58,655,128
Accumulated undistributed investment income-net1,686
Accumulated net realized gain (loss) on investments (644,503)
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 3 580,011
______
NET ASSETS.................................................................. $58,592,322
======
NET ASSET VALUE PER SHARE
________________-
Institutional Retail
Shares Shares
______ ______
Net Assets.................................................................. $ 126,448 $58,465,874
Shares Outstanding.......................................................... 10,292 4,755,424
NET ASSET VALUE PER SHARE................................................... $12.29 $12.29
=== ===
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF OPERATIONS
FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996
INVESTMENT INCOME
INCOME Interest Income............................ $2,121,183
EXPENSES: Management fee-Note 2(a)................... $ 169,710
Distribution fees (Institutional shares)-Note 2(b) 2,940
Directors' fees and expenses-Note 2(c)..... 1,227
____
Total Expenses....................... 173,877
_____
INVESTMENT INCOME-NET....................................................... 1,947,306
_____
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $(644,503)
Net unrealized appreciation (depreciation) on investments 580,011
____
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (64,492)
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,882,814
=====
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996*
OPERATIONS:
Investment income-net.................................................... $ 1,947,306
Net realized gain (loss) on investments.................................. (644,503)
Net unrealized appreciation (depreciation) on investments................ 580,011
______
Net Increase in Net Assets Resulting from Operations................. 1,882,814
______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Institutional shares................................................... (65,938)
Retail shares.......................................................... (1,879,682)
______
Total Dividends...................................................... (1,945,620)
______
CAPITAL STOCK TRANSACTIONS-Note 5:
Net proceeds from shares sold:
Institutional shares................................................... 1,871,917
Retail shares.......................................................... 62,800,824
Dividends reinvested:
Institutional shares................................................... 54,374
Retail shares.......................................................... 966,635
Cost of shares redeemed:
Institutional shares................................................... (1,739,591)
Retail shares.......................................................... (5,299,031)
______
Increase (Decrease) in Net Assets from Capital Stock Transactions.... 58,655,128
______
Total Increase (Decrease) in Net Assets............................ 58,592,322
NET ASSETS:
Beginning of Period...................................................... --
______
End of Period............................................................ $58,592,322
======
UNDISTRIBUTED INVESTMENT INCOME-NET........................................ $ 1,686
______
CAPITAL SHARE TRANSACTIONS-Note 5:
Shares
______
Institutional Shares
Shares sold.............................................................. 149,686
Shares issued for dividends reinvested................................... 4,407
Shares redeemed.......................................................... (143,801)
______
Net Increase (Decrease) in Shares Outstanding........................ 10,292
======
Retail Shares
Shares sold.............................................................. 5,108,674
Shares issued for dividends reinvested................................... 79,631
Shares redeemed.......................................................... (432,881)
______
Net Increase (Decrease) in Shares Outstanding........................ 4,755,424
======
*Effective July 15, 1996, Investor Class shares were redesignated as Institutional shares and Class R shares were
redesignated as Retail shares.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS DISCIPLINED INTERMEDIATE BOND 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 the period November 1, 1995
(commencement of operations) to October 31, 1996. This information has been
derived from the Fund's financial statements.*
PER SHARE DATA: Institutional Shares Retail Shares
________ ______
Net asset value, beginning of period................................ $12.50 $12.50
___ ___
Investment Operations:
Investment income-net............................................... .71 .74
Net realized and unrealized gain (loss)
on investments.................................................... (.21) (.21)
___ ___
Total from Investment Operations.................................... .50 .53
___ ___
Distributions:
Dividends from investment income-net................................ (.71) (.74)
___ ___
Net asset value, end of period...................................... $12.29 $12.29
=== ===
TOTAL INVESTMENT RETURN................................................. 4.18% 4.45%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses
to average net assets............................................. .79% .55%
Ratio of net investment income
to average net assets............................................. 5.61% 6.29%
Portfolio Turnover Rate............................................. 198.16% 198.16%
Net Assets, end of period (000's Omitted)........................... $126 $58,466
*Effective July 15, 1996, Investor Class shares were redesignated as Institutional shares and Class R shares were
redesignated as Retail shares.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS DISCIPLINED INTERMEDIATE BOND 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 Intermediate Bond Fund (the
"Fund") which commenced operations on November 1, 1995. The Fund's investment
objective is to outperform the Lehman Brothers Aggregate Bond Index, while
maintaining a similar level of risk, by investing primarily in domestic and
foreign investment-grade debt securities and by actively managing bond market
and maturity exposure. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares, which are sold to the public without a
sales charge. Effective July 15, 1996, Investor Class shares were
redesignated as Institutional shares and Class R shares were redesignated as
Retail shares. The Fund is authorized to issue 100 million of $.001 par value
Capital Stock in each of the following classes of shares: Institutional and
Retail. Institutional shares are offered only to clients of banks, securities
brokers or dealers and other financial institutions (collectively, Service
Agents) that have entered into selling agreements with the Fund's distributor
and Retail shares are offered to any investor. Other differences between the
two classes include the services offered to and the expenses borne by each
class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: 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 a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the 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. Realized gain and loss from
securities transactions are recorded on the identified cost basis. 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 posession 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
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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) Dividends to shareholders: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements 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.
(e) Federal income taxes: It is the policy of the Fund to qualify as a
regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $645,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. If not
applied, the carryover expires in fiscal 2004.
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 .55% 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 plan: The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Institutional shares. Under the Plan, the Fund may pay annually up to .25% of
the value of the average daily net assets attributable to its Institutional
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
Institutional shares. The Retail shares bear no distribution fee. During the
period ended October 31, 1996, the distribution fee for the Institutional
shares was $2,940.
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 meeting attended and is reimbursed
for
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 (including paydowns) of
investment securities, excluding short-term securities, during the year ended
October 31, 1996, amounted to $115,269,553 and $58,458,266, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments was $580,011, consisting of $693,387 gross unrealized
appreciation and $113,376 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 5-ACQUISITION OF COMMON TRUST ASSET:
On March 22, 1996, the Fund acquired all of the assets of the TBC Pooled
Employee Fixed Income Fund, a trust advised by a subsidiary of Mellon Bank,
N.A. The acquisition was accomplished by an exchange of 773,272 Retail shares
of the Fund's Capital Stock for cash, securities and assumption of
liabilities of the trust totaling $9,472,581 which is included in net
proceeds from shares sold on the Statement of Changes in Net Assets.
DREYFUS DISCIPLINED INTERMEDIATE BOND 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,
including the statement of investments of Dreyfus Disciplined Intermediate
Bond Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the
related statement of operations, the statement of changes in net assets and
the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Dreyfus Disciplined Intermediate Bond Fund of The Dreyfus/Laurel
Funds, Inc. as of October 31, 1996, the results of its operations, changes in
its net assets and its financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
[KPMG Peat Marwick signature logo]
New York, New York
December 9, 1996
[Dreyfus lion "d" logo]
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 302/702AR9610
[Dreyfus logo]
Disciplined
Intermediate
Bond Fund
Annual Report
October 31, 1996
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus
International Equity Allocation Fund. For the annual reporting period ended
October 31, 1996, the Fund's Institutional shares and Retail shares posted
total returns of 12.62% and 12.80% respectively.* The Morgan Stanley Capital
International Europe, Australasia, Far East Index (the "EAFE Index") returned
10.47% for that same period.**
Effective July 15, 1996, the Fund's Class R shares were redesignated as
Retail shares and the Fund's Investor shares were redesignated as
Institutional shares. Retail shares are offered to any investor.
Institutional shares are sold primarily through financial intermediaries.
Effective August 5, 1996 (the "effective date"), the Fund's Investment
Sub-Advisory Agreement with S.A.M. Finance, S.A. was terminated and The
Dreyfus Corporation assumed responsibility for the day-to-day portfolio
management of the Fund. Also on the effective date, the stock selection
process for the Fund changed from an active process to a passive process. The
same active country and currency allocation models are still used for the
Fund. As a result of the change from an active to passive stock selection
process, the fee payable by the Fund to Dreyfus was reduced from 1.50 of 1%
to 1.25 of 1% of the Fund's average daily net assets.
ECONOMIC REVIEW
The German monetary easing over a year ago has led to what appears to be
the beginning of a European economic recovery. Countries in the European
Union continue their negotiations to establish a single currency by January
1, 1999. As a precondition, Germany continues to argue for a strict
interpretation of the criteria relating to member country budget deficits,
particularly during times of recession. Interest rates in most European
countries have fallen over the reporting period in anticipation of further
progress toward monetary union.
Germany and France, two major engines of the European Union, continue to
sputter economically. However, Germany shows signs of recovering from its
moribund rate of economic growth and the industrial sector, spurred by strong
foreign demand for German goods, is strengthening. Exports are likely to
continue to play a strong role in extending the momentum of this emerging
economic recovery into next year. Germany continues to suffer from high labor
costs and high unemployment. France is also burdened with high unemployment
(12.5%) but, like Germany, is also experiencing a solid pick-up in export
demand. With an inflation rate target of 2.5% in mind for next year, Britain
recently tightened monetary policy. Regarding entry into the European
Monetary Union, Italy and Spain appear likely to overshoot the 3% budget
deficit range for 1997. Interest rates have fallen in both countries
reflecting the slow-growth paths of their economies.
Japan's economic recovery remains tenuous. Fiscal stimulation (resulting
in growing budget deficits) and rock-bottom interest rates have succeeded in
priming the economy, but the slow pace of structural reforms of both the
financial system and the bureaucracy has reduced the impact of these
measures.
THE PORTFOLIO AND THE MARKET
As of October 31, 1996, the portfolio was diversified among 267 stocks
allocated over the 20 countries that comprise the EAFE Index. The Fund uses
an asset allocation model. Active investment decisions are made to allocate
investments among Japan, the United Kingdom, Germany, and France. The model
is based on fundamental principles of investment analysis that examine the
expected returns from each country appropriately adjusted for risk. The other
countries in the EAFE index are generally weighted in the same proportion as
the index.
The largest overweighted positions versus the EAFE Index were Japan
(41.4% vs 35.4%), Germany (14.1% vs 7.3%) and France (11.3% vs 6.8%). The
largest underweighted position was the United Kingdom (3.3% vs 18.2%). The
better-than-index investment performance resulted from strong stock market
returns in Germany and France. Underweighting in the United Kingdom and
overweighting in Japan led to outperformance in the first half of the year,
but these markets reversed in the second half of the year and on net, these
positions have roughly broken even. Performance has also been enhanced by a
partial hedging of the Yen, Deutschmark, and French Franc exposure. Although
the Fund's performance exceeded the EAFE Index for the reporting period, this
performance advantage eroded somewhat over the past six months due to the
slow-developing Japanese economic recovery and the resulting reversal in the
performance of the Japanese stock market. The low interest rate environment
in Japan combined with the large fiscal stimulus program has yet to spur
investor confidence in the economy and the stock market. The stock market in
the United Kingdom rallied substantially over this same period as the Pound
strengthened versus the Dollar.
The Fund maintained partially hedged Deutchmark, French Franc and Yen
positions over the last six months of the reporting period. The Fund uses a
currency valuation model to determine when to hedge currency exposure. The
model considers the differences in real (inflation-adjusted) interest rates
across countries. These differences arise due to the different Central Bank
monetary policies pursued by each country. Our hedging strategy proved
beneficial to the Fund's investment performance as the Dollar appreciated
against the above three currencies. We continue to partially hedge our Yen to
our Deutschmark exposure.
We believe that the current low interest rate environment in continental
Europe and Japan will prove beneficial to long-term equity investments. We
believe that the gloom has been overdone regarding Japan and the stock market
there reflects attractive long-term value. Conversely, since corporate
earnings have not kept pace with the advance of equity prices in the United
Kingdom, that stock market appears to be significantly overvalued at current
levels.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Charles J. Jacklin, Ph.D. signature logo]
Charles J. Jacklin, Ph.D.
Portfolio Manager
November 22, 1996
San Francisco, CA
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE(R)) Index is an unmanaged
index composed of a sample of companies representative of the market
structure of European and Pacific Basin countries. The return indicated
includes net dividends reinvested. The Index is the property of Morgan
Stanley & Co., Incorporated.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND OCTOBER 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS INTERNATIONAL
EQUITY ALLOCATION FUND INSTITUTIONAL SHARES AND RETAIL SHARES AND THE MORGAN
STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (EAFERegistration
Mark) INDEX
[Exhibit A:
Dollars
$11,440
International Equity
Allocation Fund
(Retail Shares)
$11,405
International Equity
Allocation Fund
(Institutional Shares)
$11,014
Morgan Stanley Capital
International Europe,
Australasia, Far East
(EAFERegistration Mark) Index*
*Source: Lipper Analytical Services, Inc.]
<TABLE>
Average Annual Total Returns
Institutional Shares* Retail Shares*
_____________________________ _____________________________
<S> <C> <C> <C>
Period Ended 10/31/96 Period Ended 10/31/96
_________ _________
1 Year 12.62% 1 Year 12.80%
From Inception (9/15/94) 6.37 From Inception (9/15/94) 6.52
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the
Institutional shares and Retail shares of Dreyfus International Equity
Allocation Fund on 9/15/94 (Inception Date) to a $10,000 investment made in
the Morgan Stanley Capital International Europe, Australasia, Far East
(EAFERegistration
Mark) Index on that date. For comparative purposes, the value of the Index on
8/31/94 is used as the beginning value on 9/15/94. All dividends and capital
gain distributions are reinvested.
The Fund's objective is to exceed the total return of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFERegistration Mark)
Index. The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Index, which is the property of Morgan
Stanley & Co. Incorporated, is an unmanaged index composed of a sample of
companies representative of the market structure of European and Pacific
Basin countries and includes net dividends reinvested. 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.
*Effective July 15, 1996, the Fund's Investor shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
<TABLE>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Common Stocks-82.2% Shares Value
______ ______
<S> <C> <C> <C>
Australia-.5% Amcor.......................... 3,000 $ 18,625
Broken Hill Proprietary................ 2,453 32,537
Coca Cola Amatil....................... 1,012 13,904
ICI Australia.......................... 1,000 9,820
Pacific Dunlop......................... 5,912 13,109
Westpac Banking........................ 3,200 18,245
______
106,240
______
Austria-.2% Oesterreichische El Wirtsch...... 300 20,851
Strabag Oesterreich AG................. 420 25,224
______
46,075
______
Belgium-1.2% Electrabel...................... 50 11,577
Electrabel Strip VVPR.................. 50 (a) 51
Fortis...................................... 102 14,287
Fortis Strip VVPR...................... 2 (a) 1
Petrofina SA........................... 600 184,010
Solvay Et Cie, Series A, NPV........... 50 29,861
______
239,787
______
Denmark-.9% Danisco.......................... 3,000 171,326
______
Finland-.4% Enso Oy A........................ 5,000 39,063
Kone B................................. 400 39,437
Nokia AB, Cl. K........................ 200 9,243
______
87,743
______
France-8.3% AXA.............................. 2,100 130,853
Accor....................................... 104 13,030
Banque Nationale de Paris.............. 1,012 37,780
CPR Cie Parisienne De Reescompte....... 636 50,390
Carrefour.............................. 150 83,045
Chargeurs.............................. 10 433
Compagnie De St. Gobain................ 377 50,764
Compagnie Financiale (Paribas)......... 655 42,054
Eridania Beghin-Say.................... 700 111,196
L'Air Liquide.......................... 770 118,559
Lafarge................................ 673 40,294
L'Oreal................................ 209 70,601
Lyonnaise des Eaux..................... 428 37,753
Moulinex............................... 1,700 (a) 32,512
Pathe....................................... 10 (a) 2,691
Pechiney A............................. 339 14,521
Peugeot................................ 200 20,803
Promodes............................... 300 80,792
Rhone-Poulenc.......................... 3,137 92,745
SAGEM.................................. 50 31,029
SEITA....................................... 1,200 48,217
Saint Louis Bouchon.................... 100 25,311
Salomon................................ 500 44,689
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
______ ______
France (continued) Sanofi.................... 1,524 $ 137,729
Sefimeg Ste Francaise.................. 100 7,708
Sidel....................................... 900 59,909
Societe National Elf Aquitaine......... 1,857 148,145
Thomson CSF............................ 1,063 33,087
Total B..................................... 12 936
Unibail................................ 200 19,866
Union des Assurances de Paris.......... 4,112 85,220
Union Immobiliere De France............ 150 11,592
______
1,684,254
______
Germany-4.8% Agiv............................ 2,500 (a) 36,232
Allianz..................................... 50 89,526
BASF........................................ 2,000 63,768
Bayer....................................... 1,000 37,694
Bilfinger & Berger Bau................. 500 20,191
Brau Und Brunnen....................... 50 (a) 4,084
Ckag Colonia Koncern................... 70 5,211
Continental............................ 1,000 17,457
Daimler-Benz........................... 2,000 (a) 117,128
Dresdner Bank.......................... 2,500 66,700
Linde....................................... 100 61,759
Muenchener Rueckvesicherungs........... 50 119,236
RWE Aktiengesellschaft................. 3,000 123,202
Schering............................... 1,000 80,270
Siemen................................. 2,000 103,096
Victoria Holdings...................... 40 25,191
______
970,745
______
Hong Kong-3.9% Cheung Kong (Holdings)........ 25,000 200,471
China Light & Power.................... 8,740 40,581
HSBC Holdings.......................... 3,842 78,263
Hang Seng Bank......................... 3,400 40,346
Hong Kong & China Gas.................. 69,120 121,580
Hong Kong Telecommunications........... 23,218 40,990
Shangri-La Asia........................ 100,000 142,916
South China Morning Post............... 90,000 76,826
Sun Hung Kai Properties................ 4,220 48,030
______
790,003
______
Italy-2.5% Aedes Spa-Ligure Lombard.......... 5,000 20,824
Assicurazioni Generali................. 2,320 44,717
Banca Commercial Italiana SPA.......... 25,000 43,014
ENI......................................... 15,400 73,578
Fiat SPA............................... 20,000 53,072
Finanziaria Autogrill SPA.............. 24,000 (a) 24,463
Italgas..................................... 30,000 110,799
Mediobanca............................. 10,000 52,571
Telecom Italia Mobile.................. 30,680 63,190
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
______ ______
Italy (continued) Telecom Italia Mobile SPA 10,680 $ 23,854
______
510,082
______
Japan-36.3% Ajinomoto........................ 20,800 220,811
Asahi Chemical Industry................ 70,900 441,647
Asahi Glass............................ 800 8,423
Bank of Tokyo-Mitsubishi............... 2,620 53,329
Bridgestone............................ 400 6,738
Canon....................................... 2,100 40,165
Chudenko............................... 2,000 61,239
Chugai Pharmaceutical.................. 400 3,650
Dai-Ichi Kango Bank.................... 4,210 68,332
Dai Nippon Printing.................... 800 13,476
Dai-Tokoy Fire & Marine Insurance................... 11,000 68,617
Daido Steel............................ 200 825
Daikyo Kanko........................... 2,000 12,423
Daishowa Paper Manufacturing........... 11,400 (a) 67,212
Daiwa House Industry................... 8,400 116,441
Denki Kagaku Kougyo.................... 600 1,806
Fuji Bank.............................. 4,900 88,129
Fuji Photo Film........................ 200 5,738
Fujita...................................... 17,000 62,941
Fujitsu..................................... 21,800 191,262
Furukawa Electric...................... 13,000 68,889
Haseko................................. 12,000 (a) 40,744
Hitachi..................................... 13,900 123,171
Honda Motor............................ 400 9,546
House Food Industrial.................. 220 3,802
Industrial Bank of Japan............... 2,200 43,815
Itochu...................................... 1,500 9,041
Japan Air Lines........................ 3,600 (a) 20,530
Japan Energy........................... 600 1,969
Joyo Bank.............................. 462 3,048
Kajima...................................... 800 6,871
Kamigumi............................... 400 3,088
Kandenko............................... 105 1,133
Kansai Electric Power.................. 9,999 209,665
Kawasaki Steel......................... 16,600 51,119
Kinki Nippon Railway................... 995 6,591
Kirin Brewery.......................... 7,000 71,855
Komatsu................................ 600 4,906
Konica...................................... 18,000 120,179
Kumagai-Gumi........................... 27,000 85,278
Kyocera................................ 1,200 79,067
Kyushu Electric Power.................. 101 2,065
Mabuchi Motor.......................... 1,000 50,886
Maeda Road Construction................ 200 2,878
Marubeni............................... 68,000 314,406
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
______ ______
Japan (continued) Marudai Food............... 200 $ 1,230
Maruha................................. 400 (a) 1,246
Marui....................................... 3,000 55,536
Matsushita Electric Works.............. 10,400 166,064
Mitsubishi Chemical.................... 900 3,672
Mitsubishi Heavy Industries............ 44,700 343,152
Mitsubishi Trust & Banking............. 200 2,948
Mitsui & Company....................... 400 3,229
Mitsui Marine & Fire Insurance......... 600 3,895
Mitsui Trust & Banking................. 600 5,790
NEC......................................... 800 8,703
Nikon....................................... 8,600 95,069
Nippon Express......................... 8,000 64,924
Nippon Fire & Marine Insurance......... 38,000 200,036
Nippon Light Metal..................... 400 1,923
Nippon Oil............................. 800 4,562
Nippon Steel........................... 5,100 14,855
Nippon Yusen Kaisha.................... 10,800 54,009
Nomura Securities...................... 4,000 65,976
Oji Paper................................... 30,000 219,249
Orient...................................... 26,000 159,449
Orix........................................ 2,000 74,399
Osaka Gas.............................. 45,000 138,972
Sakura Bank............................ 28,600 270,995
Sanwa Shutter.......................... 200 1,651
Sekisui House.......................... 12,000 126,338
Seven-Eleven Japan NPV................. 119 6,912
Sharp....................................... 8,000 121,425
Shizuoka Bank.......................... 400 4,562
Snow Brand Milk Products............... 500 3,093
Sony........................................ 940 56,327
Sumitomo Bank.......................... 14,307 251,044
Sumitomo Coal Mining................... 12,000 55,483
Sumitomo Electric Industries........... 800 10,528
Sumitomo Metal Industries.............. 40,000 109,844
Sumitomo Trust & Banking............... 850 9,396
Takara Standard........................ 12,000 111,599
Takeda Chemical Industries............. 1,000 17,108
Tokai Bank............................. 6,800 78,751
Tokio Marine & Fire Insurance.......... 800 8,773
Tokyo Broadcasting System.............. 12,000 183,190
Tokyo Electric Power................... 1,272 29,127
Tokyo Gas.............................. 35,000 109,010
Tokyu....................................... 5,820 39,062
Toppan Printing........................ 12,000 146,341
Toray Industries....................... 21,000 126,575
Toshiba................................ 10,000 62,467
Toyo Engineering....................... 5,000 28,251
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
______ ______
Japan (continued) Toyobo..................... 1,200 $ 3,674
Toyota Motor........................... 25,014 590,346
Ube Industries......................... 600 1,937
Yakult Honsha.......................... 200 2,492
Yamato Transport....................... 400 4,141
Yasuda Trust & Banking................. 43,000 209,379
Yokogawa Electric...................... 2,900 25,697
______
7,362,152
______
Malaysia-2.5% Amsteel Berhad................. 110,000 80,111
Kemayan................................ 3,000 4,251
Malayan Banking Berhad................. 7,000 69,266
Perusahaan Otomobil.................... 9,000 56,996
Renong Berhad.......................... 14,000 22,054
Resorts World Berhad................... 23,000 132,001
Tanjong................................ 25,000 96,972
Technology Resources Industrial Berhad.............. 1,000 (a) 2,395
Telekom Malaysia Berhad................ 4,000 35,306
Tenaga Nasional Berhad................. 1,000 3,998
______
503,350
______
Netherlands-4.4% Akzo Nobel.................. 800 100,547
Elsevier............................... 15,000 248,663
ING Groep.............................. 2,607 81,071
Ihc Caland............................. 3,000 167,010
Philips Electronics.................... 3,000 105,461
Royal Dutch Petroleum.................. 455 74,946
Stad Rotterdam......................... 3,103 116,561
______
894,259
______
New Zealand-.5% Fisher & Paykel.............. 24,509 89,648
______
Norway-.5% Aker.............................. 4,500 93,901
______
Singapore-1.4% Development Bank of Singapore 2,000 24,006
Keppel...................................... 10,000 74,574
Oversea-Chinese Banking................ 4,000 45,739
Singapore Airlines..................... 11,000 96,875
United Overseas Bank................... 5,000 48,651
______
289,845
______
Spain-1.9% Banco Bilbao Vizcaya.............. 1,800 87,461
Empresa Nacional De Electricidad....... 1,400 85,690
Fomento de Construcciones y Contratas.. 700 56,834
Repsol...................................... 1,100 35,905
Telefonica de Espana................... 6,000 120,376
______
386,266
______
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
______ ______
Sweden-2.7% ABB AB Series B.................. 2,000 $ 222,830
Astra Series A......................... 500 22,952
Astra Series B......................... 2,000 91,199
Diligentia............................. 100 (a) 1,284
Esselte..................................... 4,000 89,375
Skandinaviska Enskilda Banken.......... 1,700 14,212
Stora Kopparbergs...................... 1,000 13,072
Svenska Handelsbanken.................. 600 14,774
Telefonaktiebolget Ericsson B.......... 2,600 70,345
______
540,043
______
Switzerland-6.1% ABB......................... 63 77,577
Ciba Geigy (Regd Shrs)................. 45 55,235
Danzas Holding......................... 50 56,169
Moevenpick Holding..................... 150 39,614
Nestle...................................... 53 57,366
Pharma Vision 2000..................... 140 (a) 64,454
Roche Holding.......................... 39 293,922
Roche Holding (Bearer Shrs)............ 7 85,534
Sandoz...................................... 50 57,706
Sandoz (Regd Shrs)..................... 55 63,346
Schindler Holding...................... 53 53,815
Schweizerische Bankgesellschaft........ 121 114,847
Schweizerische Bankverein.............. 175 33,593
Schweizerische Rueckversicherungs Gesellschaft 100 106,898
Winterthur Schweizerische Versicherungs Gesellschaft 140 83,106
______
1,243,182
______
United Kingdom-3.2% Allied Irish Banks....... 11,285 71,533
Arjo Wiggins Appleton.................. 1,933 5,033
B.A.T. Industries...................... 5,000 34,826
Barclays............................... 4,281 67,126
British Aerospace...................... 645 12,229
British Petroleum...................... 223 2,399
British Steel.......................... 3,763 10,457
British Telecommunications............. 9,056 52,393
Dawson International................... 6,075 5,734
East Midlands Electricity.............. 1,497 13,277
Glaxo Wellcome......................... 3,335 52,211
Grand Metropolitan..................... 739 5,574
Hanson................................. 13,335 17,578
Harrisons & Crosfield.................. 8,008 16,681
Imperial Chemical Industries........... 2,142 27,957
Imperial Tobacco Group................. 1,333 (a) 7,799
Kwik Save.............................. 1,275 6,598
Legal & General........................ 7,985 42,103
Marks & Spencer........................ 1,000 8,397
Meyer International.................... 2,343 15,824
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
______ ______
United Kingdom (continued) National Westminster Bank 2,932 $ 33,472
Northern Foods......................... 6,149 19,914
Redland................................ 434 2,966
Royal Bank of Scotland................. 4,000 33,166
Sedgwick Group......................... 4,166 8,441
Smithkline Beecham..................... 3,142 38,759
Southern Electric...................... 1,041 10,910
Tesco....................................... 116 628
Unigate................................ 3,984 28,203
Wolseley............................... 375 2,911
______
655,099
______
TOTAL COMMON STOCKS
(cost $15,879,661)................... $16,664,000
======
Preferred Stocks-.4%
Germany;..................... Friedrich Grohe
(cost $88,928)....................... 300 $ 83,202
======
Warrants-.0%
Hong Kong; Hong Kong & China Gas
(cost $830).......................... 5,760 $ 2,123
======
Principal
Short-Term Investments-14.1% Amount
______
Repurchase Agreements-12.7%UBS Securities Inc., Tri-Party Repurchase
Agreement, 5.46% dated 10/31/96 to
be repurchased at $2,566,389 on
11/1/96 collateralized by $2,545,000
U.S. Treasury Notes, 6.25% due 6/30/98 $..2,566,000 $ 2,566,000
______
U.S. Treasury Bills-1.4% 5.255%, 12/19/1996 290,000 (b) 288,005
______
TOTAL SHORT-TERM INVESTMENTS
(cost $2,854,068).................... $ 2,854,005
======
TOTAL INVESTMENTS (cost $18,823,487)........................................ 96.7% $19,603,330
==== ======
CASH AND RECEIVABLES (NET).................................................. 3.3% $ 659,684
==== ======
NET ASSETS.................................................................. 100.0% $20,263,014
==== ======
Notes to Statement of Investments:
(a) Non-income producing.
(b) Held by the custodian in a segregated account as collateral for open
futures positions.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF FINANCIAL FUTURES OCTOBER 31, 1996
Unrealized
Market Value Appreciation
Number of Covered (Depreciation)
Financial Futures Long: Contracts by Contracts Expiration at 10/31/96
_______________________ ______ _______ _______ _______
<S> <C> <C> <C> <C>
CAC 40 ...................................... 7 $561,988 December `96 $ 27,456
Deutsche Aktienindex......................... 5 865,928 December `96 41,996
Deutsche Aktienindex......................... 5 888,282 March `97 527
Nikkei 300................................... 37 993,382 December `96 (10,376)
_____
$ 59,603
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
_______ ______
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $18,823,487 $19,603,330
Cash....................................... 136,993
Cash denominated in foreign currencies..... 52,327 53,015
Receivable for investment securities sold.. 454,180
Net unrealized appreciation on forward
....... currency exchange contracts-Note 1(e) 25,356
Dividends and interest receivable.......... 68,358
Receivable for futures variation margin.... 1,937
______
20,443,169
______
LIABILITIES: Due to The Dreyfus Corporation and affiliates 21,693
Due to Distributor......................... 5
Payable for investment securities purchased 158,407
Directors' fee payable..................... 50
______
180,155
______
NET ASSETS.................................................................. $20,263,014
======
REPRESENTED BY: Paid-in capital............................ $18,315,711
Accumulated undistributed investment income-net346,291
Accumulated net realized gain (loss) on investments 638,011
Accumulated net unrealized appreciation (depreciation) on
investments and foreign currency transactions (including
........ $59,603 net unrealized appreciation
....................... on financial futures) 963,001
______
NET ASSETS.................................................................. $20,263,014
======
NET ASSET VALUE PER SHARE
_______________-
Institutional Retail
_______ ______
Net Assets.................................................................. $1,561,015 $18,701,999
Shares Outstanding.......................................................... 140,380 1,681,197
NET ASSET VALUE PER SHARE................................................... $11.12 $11.12
==== ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $ 49,822 foreign taxes withheld
at source)............................. $ 310,702
Interest................................... 28,965
_____-
Total Income......................... $ 339,667
EXPENSES: Management fee-Note 2(a)................... 273,154
Distribution fees (Institutional shares)-Note 2(c) 9,629
Directors' fees and expenses-Note 2(d)..... 687
_____-
Total Expenses....................... 283,470
_____-
INVESTMENT INCOME-NET....................................................... 56,197
_____-
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments and
foreign currency transactions.......... $ 943,227
Net realized gain (loss) on forward currency
exchange contracts..................... 350,238
Net realized gain (loss) on financial futures 7,555
_____-
Net Realized Gain (Loss)............. 1,301,020
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions (including $59,603
net unrealized appreciation on financial futures) 864,038
_____-
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 2,165,058
_____-
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,221,255
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1996* October 31, 1995
_________ ________-
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................... $ 56,197 $ 76,451
Net realized gain (loss) on investments.................................. 1,301,020 414,513
Net unrealized appreciation (depreciation) on investments................ 864,038 60,242
______ ______
Net Increase (Decrease) in Net Assets Resulting from Operations...... 2,221,255 551,206
______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Institutional shares................................................... (24,383) (180)
Retail shares.......................................................... (116,090) (26,993)
Net realized gain on investments:
Institutional shares................................................... (73,149) _-
Retail shares.......................................................... (241,414) _-
______ ______
Total Dividends...................................................... (455,036) (27,173)
______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Institutional shares................................................... 4,048,327 671,731
Retail shares.......................................................... 5,893,163 7,539,619
Issued in exchange for shares of Dreyfus/Laurel International Fund:
Institutional shares................................................... _- 6,499,140
Dividends reinvested:
Institutional shares................................................... 92,802 70
Retail shares.......................................................... 325,030 12,651
Cost of shares redeemed:
Institutional shares................................................... (7,131,303) (3,340,391)
Retail shares.......................................................... (1,993,211) (6,559,623)
______ ______
Increase (Decrease) in Net Assets from Capital Stock Transactions.... 1,234,808 4,823,197
______ ______
Total Increase (Decrease) in Net Assets............................ 3,001,027 5,347,230
NET ASSETS:
Beginning of Period...................................................... 17,261,987 11,914,757
______ ______
End of Period............................................................ $20,263,014 $17,261,987
====== ======
UNDISTRIBUTED INVESTMENT INCOME-NET........................................ $ 346,291 $ 76,362
______ ______
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
CAPITAL SHARE TRANSACTIONS: Shares Shares
______ ______
<S> <C> <C>
Institutional Shares
__________
Shares sold.............................................................. 366,693 266,245
Shares issued in connection with the acquisition of Dreyfus/Laurel International Fund _- 470,442
Shares issued for dividends reinvested................................... 9,080 7
Shares redeemed.......................................................... (639,858) (339,264)
______ ______
Net Increase (Decrease) in Shares Outstanding........................ (264,085) 397,430
====== ======
Retail Shares
_______
Shares sold.............................................................. 529,510 773,150
Shares issued for dividends reinvested................................... 31,835 1,314
Shares redeemed.......................................................... (182,281) (650,043)
______ ______
Net Increase (Decrease) in Shares Outstanding........................ 379,064 124,421
====== ======
*Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INTERNATIONAL EQUITY ALLOCATION 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>
Institutional Shares
________________-________________-
Year Ended October 31,
________________-________________-
PER SHARE DATA: 1996(1) 1995 1994(2)(3)
___- ___ ___-
<S> <C> <C> <C>
Net asset value, beginning of period.................................. $10.11 $10.06 $10.00
___- ___- ___-
Investment Operations:
Investment income (loss)-net.......................................... (.12) .01 .01
Net realized and unrealized gain (loss)
on investments...................................................... 1.37 .06 .05
___- ___- ___-
Total from Investment Operations...................................... 1.25 .07 .06
___- ___- ___-
Distributions:
Dividends from investment income-net.................................. (.06) (.02) .-
Dividends from net realized gain on investments....................... (.18) .- .-
___- ___- ___-
Total Distributions................................................... (.24) (.02) .-
___- ___- ___-
Net asset value, end of period........................................ $11.12 $10.11 $10.06
==== ==== ====
TOTAL INVESTMENT RETURN................................................... 12.62% .67% .60%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.71% 1.75% .39%(4)(5)
Ratio of net investment income to average net assets.................. .03% .04% .44%(4)(5)
Portfolio Turnover Rate............................................... 34.24% 64.85% .-
Average commission rate paid (6)...................................... $.0219 .- .-
Net Assets, end of period (000's Omitted)............................. $1,561 $4,088 $71
(1)Effective July 15, 1996, Investor Class shares were redesignated as Institutional shares.
(2)The Fund commenced operations on August 12, 1994.
(3)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 investment manager.
(4)Not annualized.
(5)These ratios have been restated to reflect current year's presentation.
(6)For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share for
purchases and sales of investment securities.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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>
Retail Shares
________________________________
Year Ended October 31,
________________________________
PER SHARE DATA: 1996(1) 1995 1994(2)(3)(4)
<S> <C> <C> <C>
___ ___ ____-
Net asset value, beginning of period.................................. $10.12 $10.06 $10.00
___ ___ ___
Investment Operations:
Investment income-net................................................. .04 .06 .02
Net realized and unrealized gain (loss)
on investments...................................................... 1.23 .02 .04
___ ___ ___
Total from Investment Operations...................................... 1.27 .08 .06
___ ___ ___
Distributions:
Dividends from investment income-net.................................. (.09) (.02) .-
Dividends from net realized gain on investments....................... (.18) .- .-
___ ___ ___
Total Distributions................................................... (.27) (.02) .-
___ ___ ___
Net asset value, end of period........................................ $11.12 $10.12 $10.06
=== === ===
TOTAL INVESTMENT RETURN................................................... 12.80% .81% .60%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.43% 1.50% .33%(5)(6)
Ratio of net investment income to average net assets.................. .36% .52% .49%(5)(6)
Portfolio Turnover Rate............................................... 34.24% 64.85% .-
Average commission rate paid (7)...................................... $.0219 .- .-
Net Assets, end of period (000's Omitted)............................. $18,702 $13,174 $11,844
(1) Effective July 15, 1996, Class R shares were redesignated as Retail shares.
(2) The Fund commenced operations on August 12, 1994.
(3) 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 investment manager.
(4) Effective October 17, 1994, the Fund's Trust shares were redesignated as Class R shares.
(5) Not annualized.
(6) These ratios have been restated to reflect current year's presentation.
(7) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share for
purchases and sales of investment securities.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INTERNATIONAL EQUITY ALLOCATION 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 International Equity Allocation Fund
(the "Fund"). The Fund's investment objective is to exceed the total return
of the Morgan Stanley Capital International-Europe Australia Far East (MSCI
EAFE) Index. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. Prior to August 5, 1996, S.A.M. Finance, S.A. (the
"Sub-Advisor"), a wholly-owned subsidiary of Credit Commercial de France,
served as the Fund's sub-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. Effective July 15, 1996, Investor shares
were redesignated as Institutional Class shares and Class R shares were
redesignated as Retail shares. The Fund is authorized to issue 60 million of
$.001 par value Capital Stock. The Fund currently offers two classes of
shares: Institutional (24 million shares authorized) and Retail (36 million
shares authorized). Retail shares are offered to any investor and Institutiona
l shares are offered only to clients of banks, securities brokers or dealers
and other financial institutions (collectively, Service Agents) that have
entered into selling agreements with the Fund's distributor. Other
differences between the two classes include the services offered to and the
expenses borne by each class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked priced is used for
valuation purposes. Bid price is used when no asked price is available.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(b) 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) Foreign currency transactions: The Fund does not isolate that portion
of the results of the operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from changes in the market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amount of dividends, interest and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) Financial futures: The Fund may invest in 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 (see Statement
of Financial Futures). 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. Typically,
variation margin payments are received or made 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. Contracts open at October 31, 1996, and their related unrealized
appreciation (depreciation) are set forth in the Statement of Financial
Futures.
(e) Forward currency exchange contracts: The Fund enters into forward
currency exchange contracts in order to hedge its exposure to changes in
foreign currency exchange rates on its foreign portfolio holdings. When
executing forward currency exchange contracts, the Fund is obligated to buy
or sell a foreign currency at a specified rate on a certain date in the
future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency
exchange contracts which is typically limited to the unrealized gains on such
contracts that are recognized in the Statement of Assets and Liabilities. In
addition, the following summarizes open forward currency exchange contracts
at October 31, 1996:
<TABLE>
Unrealized
Foreign Currency Appreciation
Forward Currency Contracts Amounts Proceeds Value (Depreciation)
_____________ _______- _______ ______- ______-
<S> <C> <C> <C> <C>
Sales:
__-
French Francs, expiring 11/29/96............. 2,286,854 $ 448,051 $ 446,276 $ 1,775
French Francs, expiring 1/3/97................. 1,965,000 387,367 384,758 2,609
Japanese Yen, expiring 12/17/96.............. 220,311,000 2,076,530 1,943,978 132,552
Buys: Cost
__- __-
Dutch Guilder, expiring 11/5/96........... 32,336 19,077 19,009 (68)
German Deutschmark, expiring 11/5/96 ... 530,200 361,490 350,359 (11,131)
Hong Kong Dollars, expiring 11/4/96 ...... 268,419 34,717 34,716 (1)
Italian Lira, expiring 11/8/96....... 17,034,413 11,241 11,216 (25)
Malaysian Ringgit, expiring 11/12/96......... 10,135 4,010 4,011 1
Swiss Francs, expiring 11/5/96................ 30,544 24,254 24,079 (175)
Swedish Krona, expiring 11/5/96............. 429,133 65,408 65,227 (181)
_____
Total.............................. $125,356
=====
(f) Distributions to shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and
dividends from net realized capital gain are normally declared and paid
annually, but the Fund may
</TABLE>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, it is the policy of
the Fund not to distribute such gain.
(g) 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 $1,256,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. The
amount of this loss which can be utilized in subsequent years is subject to
an annual limitation due to the Fund's merger with Dreyfus Laurel
International Fund. If not applied, $1,229,000 of the carryover expires in
fiscal 2000 and $27,000 expires in fiscal 2002.
In accordance with SOP 93-2, the Fund reclassed $762,959 from
undistributed gains, $354,205 to undistributed income-net and $408,754 to
paid-in-capital.
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 1.25% of the value of the Fund's
average daily net assets. Prior to August 5, 1996, the Fund was contractually
obligated to pay 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
fees, taxes, interest, Rule 12b-1 distribution fees and expenses, fees and
expenses of non-interested Directors (including counsel fees) and extraordinar
y 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) Sub-advisory agreement: Prior to August 5, 1996, pursuant to a
Sub-advisory agreement among the Fund, the Sub-Advisor and the Manager, the
Sub-Advisor was paid an annual fee of .25% of the value of the Fund's average
daily net assets and was paid by the Manager out of its fee.
(c) Distribution plan: The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Institutional shares. Under the Plan, the Fund may pay annually up to .25% of
the value of the average daily net assets attributable to its Institutional
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
Institutional shares. The Retail shares bear no distribution fee. During the
period ended October 31, 1996, the distribution fee for the Instituitional
shares was $9,629.
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.
(d) Director's 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 meeting attended and is reimbursed
for
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the period ended October 31, 1996 amounted to $6,273,174 and
$8,402,793, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments and forward currency exchange contracts was $964,802, consisting
of $2,291,739 gross unrealized appreciation and $1,326,937 gross unrealized
depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 5-REORGANIZATION:
On April 19, 1995, the Dreyfus/Laurel International Equity Allocation
Fund, acquired the assets and certain liabilities of the Dreyfus Laurel
International Fund, in exchange for shares of the Dreyfus/Laurel
International Equity Allocation Fund, pursuant to a plan of reorganization
approved by Dreyfus/Laurel International Fund shareholders on May 1, 1995.
Total shares issued by Dreyfus/Laurel International Equity Allocation Fund
and the total net assets of Dreyfus International Fund acquired are set forth
in the Statement of Changes in Net Assets.
DREYFUS INTERNATIONAL EQUITY ALLOCATION 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,
including the statement of investments and statement of financial futures, of
Dreyfus International Equity Allocation Fund of The Dreyfus/Laurel Funds,
Inc. as of October 31, 1996, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the years
in the two-year period then ended, and the financial highlights for each of
the years or 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Dreyfus International Equity Allocation Fund of The
Dreyfus/Laurel Funds, Inc. as of October 31, 1996, the results of its
operations, changes in its net assets and its financial highlights for each
of the years or periods set forth above, in conformity with generally
accepted accounting principles.
[KPMG Peat Marwick signature logo]
New York, New York
December 9, 1996
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund elects to provide each
shareholder with their portion of the Fund's foreign taxes paid and the
income sourced from foreign countries. Accordingly, the Fund hereby makes the
following designations regarding its fiscal year ended October 31, 1996.
-the total amount of taxes paid to those foreign countries was $49,822.
-the total amount of income sourced from foreign countries was $49,121.
As required by Federal tax law rules, shareholders will receive
notification of their proportionate share of foreign taxes paid and foreign
sourced income for the 1996 calendar year with Form 1099-DIV which will be
mailed by January 31, 1997.
For Federal tax purposes the Fund also designates $.019 per share as a
long-term capital gain distribution paid on December 19, 1995.
[Dreyfus lion "d" logo]
DREYFUS INTERNATIONAL EQUITY
ALLOCATION FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 723/323AR9610
[Dreyfus logo]
International
Equity Allocation
Fund
Annual Report
October 31, 1996
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus
Institutional Government Money Market Fund. For its annual reporting period
ended October 31, 1996, your Fund provided an annualized yield of 5.11%. The
annualized effective yield was 5.23% after taking into account the effect of
compounding.*
THE ECONOMY
The fear of another round of monetary tightening by the Federal Reserve
Board (the "Fed") to ward off a resurgence in inflation has so far proven
unwarranted. Indeed, despite solid economic growth resulting in the creation
of new jobs and an overall tightening in the labor market, inflation has
remained subdued. Both the Consumer and Producer Price Indexes remained at
annual rates in the 3% range. This is the fifth consecutive year of inflation
under 3%, the longest period since the 1960s. Despite the duration of the
economic recovery, most economic reports underscore the tepid nature of the
current inflationary environment.
The increase in long-term interest rates early this year may have
contributed to the recently reported slowdown in the rate of economic growth.
During the third quarter, the growth rate of the Gross Domestic Product
cooled to 2.2%, less than half the second quarter's strong 4.7% pace.
Consumers _ the initiators of two thirds of all economic activity _ remained
cautious throughout the year. In the third quarter, the pace of consumer
spending was at its slowest in five years. Consumer borrowing has also decline
d from levels of a year ago. Not surprisingly, retail sales growth has also
been modest this year. Consumers may have been restrained by wages not rising
as rapidly as had been previously expected, given the strength in the labor
market. The Employment Cost Index, considered to be an important gauge of
wage inflation by Fed Chairman Alan Greenspan, rose just 0.6% in the third
quarter, the lowest reading in over a year. This brought the growth in wages
to 2.8% over the past twelve months, slightly less than the rate of inflation
as measured by the Consumer Price Index.
The booming housing market also seems to have cooled with both new
housing starts and existing home sales slackening since midyear. Industrial
production has slowed somewhat from its more rapid pace earlier in the year.
Given the level of capacity utilization, there appears to be no sign of
production bottlenecks that could push prices higher. Anecdotal evidence
still supports the assertion that corporations are reluctant to raise prices.
The report that the 1996 Federal budget deficit had shrunk to $107.3 billion
_ its lowest level in two decades _ provided another favorable sign for
inflation. The final reading of the 1996 deficit marks the fourth straight
decline from fiscal 1992's record $290.4 billion.
Despite the relatively benign current environment for inflation, we are
alert for early signs of its potential resurgence. While wage increases so
far have remained modest, we believe workers should eventually expect
compensation that at least matches their cost of living. Furthermore, we are
mindful that price increases in energy and food may not continue to be as
restrained as they were over the past four years.
THE MARKET AND THE PORTFOLIO
During the reporting period ended October 31, 1996, the bond market
settled into its usual summer trading range after a volatile first four
months of 1996. Yields on six month Treasury Bills traded for most of the
period between 5.25% and 5.50%. Economic reports indicated the economy was
not growing as fast as previously feared. Employment growth moderated after
having shocked investors by its strength early in the year. Moreover, fears
of unexpected increases in inflation subsided as prices of oil and grains
moved lower throughout the summer. By the end of the reporting period,
investors' thinking turned positive, comfortable in the belief the bond
market could move to lower yield levels by the end of 1996, given the
evidence that the economy was growing at a moderate pace.
The Fed since lowering short-term interest rates in January 1996 has kept
the level of Fed funds at 5.25%. Accordingly, money market rates ended the
reporting period essentially unchanged since the beginning of the year. The
Fund invests primarily in Government obligations. At the end of the reporting
period, the Fund had an average maturity of 49 days.
The Fund's targeted average maturity range is currently 40 to 50 days. We
consider this policy to be neutral because we do not expect any change in Fed
policy over the near term. If the Fed were expected to increase (decrease)
interest rates, the targeted average maturity would be lowered (raised). We
currently expect to maintain such a policy unless we anticipate a change in
the level of short-term interest rates.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope you find them
informative. Please know that we appreciate greatly your continued confidence
in the Fund and in The Dreyfus Corporation.
Sincerely,
(Laurie Carroll Signature Logo)
Laurie Carroll
Portfolio Manager
November 15, 1996
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Annualized
Yield on
Date of Principal
U.S. Government Agencies_76.6% Purchase Amount Value
___________ __________ _________
<S> <C> <C> <C>
Federal Home Loan Banks, Discount Notes
11/6/96 ................................................... 5.29% $ 10,000,000 $ 9,992,743
11/19/96................................................... 5.46 10,000,000 9,973,300
1/10/97 ................................................... 5.34 10,000,000 9,898,306
3/7/97..................................................... 5.43 15,000,000 14,721,750
Federal Home Loan Banks, Notes
5.325%, 3/18/97 ........................................... 5.41 15,000,000 14,989,157
Federal Home Loan Mortgage Corp., Discount Notes
11/1/96 ................................................... 5.46 10,000,000 10,000,000
11/12/96................................................... 5.30 10,000,000 9,984,019
11/21/96................................................... 5.22 15,000,000 14,956,750
12/20/96................................................... 5.28 31,140,000 30,918,939
1/17/97 ................................................... 5.28 11,991,000 11,857,377
Federal National Mortgage Association, Discount Notes
11/8/96 ................................................... 5.28 15,000,000 14,984,804
11/20/96................................................... 5.48 10,000,000 9,971,606
12/20/96................................................... 5.52 10,000,000 9,926,500
1/27/97 ................................................... 5.35 15,000,000 14,809,325
2/21/97 ................................................... 5.32 15,000,000 14,756,400
2/24/97 ................................................... 5.31 15,000,000 14,750,354
Federal National Mortgage Association, Notes
4.78%, 2/14/97 ............................................ 4.85 10,000,000 9,996,672
____________
TOTAL U.S. GOVERNMENT AGENCIES (cost $226,488,002)............. $226,488,002
=============
Repurchase Agreements_23.3%
Donaldson, Lufkin & Jenrette Securities Inc.
dated 10/31/96, due 11/1/96 in the amount of
$25,003,840 (fully collateralized by $7,552,000
U.S. Treasury Bonds 10.75% to 13.375%, due from
8/15/01 to 2/15/15, and by $14,709,000
U.S. Treasury Notes 4.75% to 9.00%, due from
11/30/96 to 9/30/01, value $25,511,994).................... 5.53% $ 25,000,000 $ 25,000,000
Goldman, Sachs & Co.
dated 10/31/96, due 11/1/96 in the amount of
$43,810,099 (fully collateralized by $44,763,000
U.S. Treasury Bills due 11/14/96, value $44,685,411)....... 5.55 43,803,346 43,803,346
____________
TOTAL REPURCHASE AGREEMENTS (cost $68,803,346)............... $ 68,803,346
=============
TOTAL INVESTMENTS (cost $295,291,348)............... 99.9% $295,291,348
======= =============
CASH AND RECEIVABLES (NET).......................... .1% $ 142,772
======= =============
NET ASSETS.......................................... 100.0% $295,434,120
======= =============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
________________ _____________
ASSETS: Investments in securities_See Statement of Investments
(including Repurchase Agreements of $68,803,346) $295,291,348 $295,291,348
Cash....................................... 11,882
Interest receivable........................ 209,803
____________
295,513,033
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 39,457
Due to Distributor......................... 39,456
____________
78,913
____________
NET ASSETS.................................................................. $295,434,120
=============
REPRESENTED BY: Paid-in capital............................ $295,430,185
Accumulated net realized gain (loss) on investments 3,935
____________
NET ASSETS ................................................................. $295,434,120
=============
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized).............. 295,430,185
NET ASSET VALUE, offering and redemption price per share ................... $1.00
=====
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME
INCOME Interest Income............................ $17,642,370
EXPENSES: Management fee_Note 2(a)................... $458,878
Shareholder servicing costs _Note 2(b)..... 486,082
Directors' fees and expenses_Note 2(c)..... 27,204
____________
Total Expenses....................... 972,164
____________
INVESTMENT INCOME_NET....................................................... 16,670,206
NET REALIZED GAIN (LOSS) ON INVESTMENTS_Note 1(b)........................... 3,935
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $16,674,141
=============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1996 October 31, 1995
_________________ _______________
OPERATIONS:
Investment income_net.................................................. $ 16,670,206 $ 23,390,500
Net realized gain (loss) on investments................................ 3,935 __
_________________ _______________
Net Increase (Decrease) in Net Assets Resulting from Operations.... 16,674,141 23,390,500
_________________ _______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net.................................................. (16,670,206) (23,390,500)
_________________ _______________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold.......................................... 2,776,506,338 2,466,577,709
Dividends reinvested................................................. 2,946,604 2,614,140
Cost of shares redeemed................................................ (2,999,834,397) (2,423,387,079)
_________________ _______________
Increase( Decrease) in Net Assets from Capital Stock Transactions.. (220,381,455) 45,804,770
_________________ _______________
Total Increase (Decrease) in Net Assets.......................... (220,377,520) 45,804,770
NET ASSETS:
Beginning of Period.................................................... 515,811,640 470,006,870
_________________ _______________
End of Period.......................................................... $ 295,434,120 $ 515,811,640
================== ================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET 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 information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
Year Ended October 31,
________________________________________________
PER SHARE DATA: 1996 1995 1994(1) 1993 1992
______ ______ _______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
______ ______ _______ ______ ______
Investment Operations;
Investment income_net(2)..................... .051 .056 .036 .029 .039
______ ______ _______ ______ ______
Distributions;
Dividends from investment income_net......... (.051) (.056) (.036) (.029) (.039)
______ ______ _______ ______ ______
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ======= ====== ======
TOTAL INVESTMENT RETURN.......................... 5.25% 5.71% 3.63% 2.97% 3.92%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .30% .30% .30% .30% .30%
Ratio of net investment income
to average net assets..................... 5.14% 5.55% 3.60% 2.93% 3.82%
Net Assets, end of period (000's Omitted).... $295,434 $515,812 $470,007 $406,69 $391,364
(1) 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.(2) For the years ended October 31, 1993 and
1992 the investment adviser reimbursed expenses of the Fund amounting to
$.0001 and $.0004 per share, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET 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 Institutional Government Money Market
Fund (the "Fund"). The Fund's investment objective is to seek a high level of
current income consistent with stability of principal and conservative
investment risk by investing principally in high grade money market
instruments issued or guaranteed by the U.S. Government and its agencies and
instrumentalities. 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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has
been determined by the Fund's Board of Directors to represent the fair value
of the Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for the Fund; the Fund has adopted certain investment,
portfolio valuation and dividend and distribution policies to enable it to do
so. There is no assurance, however, that the Fund will be able to maintain a
stable net asset value per share of $1.00.
(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. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
(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 dividends daily from investment income-net; such dividends are paid
monthly. 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.
(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
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 .15% 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) SHAREHOLDER SERVICING PLAN: The Fund has adopted a Shareholder
Servicing Plan (the "Plan"). Under the Plan, the Fund may pay up to .15% of
the value of the average daily net assets annually to compensate certain
banks, brokers, dealers or other financial institutions for shareholder
services. During the period ended October 31, 1996, the Fund incurred service
fees of $486,082.
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 Company and who have
no direct or indirect financial interest in the operation of the Plan or 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 meeting 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET 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,
including the statement of investments, of Dreyfus Institutional Government
Money Market Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 1996,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Dreyfus Institutional Government Money Market Fund of The
Dreyfus/Laurel Funds, Inc. as of October 31, 1996, the results of its
operations, changes in its net assets, and its financial highlights for each
of the year set forth above, in conformity with generally accepted accounting
principles.
(KPMG PEAT MARWICK, LLP. Signature Logo)
New York, New York
December 9, 1996
(Dreyfus Lion D Logo)
DREYFUS INSTITUTIONAL GOVERNMENT
MONEY MARKET FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 919AR9610
(Dreyfus Logo)
Institutional
Government
Money Market Fund
Annual Report
October 31, 1996
<PAGE>
Dreyfus
Institutional Prime
Money Market Fund
Annual Report
October 31, 1996
<PAGE>
Dreyfus Institutional Prime Money Market Fund
- -----------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus Institutional
Prime Money Market Fund. For its annual reporting period ended October 31,
1996, your Fund provided an annualized yield of 5.19%. The annualized effective
yield was 5.32% after taking into account the effect of compounding.*
THE ECONOMY
The fear of another round of monetary tightening by the Federal Reserve
Board (the "Fed") to ward off a resurgence in inflation has so far proven
unwarranted. Indeed, despite solid economic growth resulting in the creation of
new jobs and an overall tightening in the labor market, inflation has remained
subdued. Both the Consumer and Producer Price Indexes remained at annual rates
in the 3% range. This is the fifth consecutive year of inflation under 3%, the
longest period since the 1960s. Despite the duration of the economic recovery,
most economic reports underscore the tepid nature of the current inflationary
environment.
The increase in long-term interest rates early this year may have
contributed to the recently reported slowdown in the rate of economic growth.
During the third quarter, the growth rate of the Gross Domestic Product cooled
to 2.2%, less than half the second quarter's strong 4.7% pace. Consumers--the
initiators of two thirds of all economic activity--remained cautious throughout
the year. In the third quarter, the pace of consumer spending was at its
slowest in five years. Consumer borrowing has also declined from levels of a
year ago. Not surprisingly, retail sales growth has also been modest this year.
Consumers may have been restrained by wages not rising as rapidly as had been
previously expected, given the strength in the labor market. The Employment
Cost Index, considered to be an important gauge of wage inflation by Fed
Chairman Alan Greenspan, rose just 0.6% in the third quarter, the lowest
reading in over a year. This brought the growth in wages to 2.8% over the past
twelve months, slightly less than the rate of inflation as measured by the
Consumer Price Index.
The booming housing market also seems to have cooled with both new housing
starts and existing home sales slackening since midyear. Industrial production
has slowed somewhat from its more rapid pace earlier in the year. Given the
level of capacity utilization, there appears to be no sign of production
bottlenecks that could push prices higher. Anecdotal evidence still supports
the assertion that corporations are reluctant to raise prices. The report that
the 1996 Federal budget deficit had shrunk to $107.3 billion--its lowest level
in two decades--provided another favorable sign for inflation. The final reading
of the 1996 deficit marks the fourth straight decline from fiscal 1992's record
$290.4 billion.
Despite the relatively benign current environment for inflation, we are
alert for early signs of its potential resurgence. While wage increases so far
have remained modest, we believe workers should eventually expect compensation
that at least matches their cost of living. Furthermore, we are mindful that
price increases in energy and food may not continue to be as restrained as they
were over the past four years.
THE MARKET AND THE PORTFOLIO
During the reporting period ended October 31, 1996, the bond market settled
into its usual summer trading range after a volatile first four months of 1996.
Yields on six-month commercial paper traded for most of the period between
5.40% and 5.65%. Economic reports indicated the economy was not growing as fast
as previously feared. Employment growth moderated after having shocked
investors by its strength early in the year. Moreover, fears of unexpected
increases
<PAGE>
in inflation subsided as prices of oil and grains moved lower throughout the
summer. By the end of the period investors' thinking turned positive,
comfortable in the belief the bond market could move to lower yield levels by
the end of 1996, given the evidence that the economy was growing at a moderate
pace.
The Fed, since lowering short-term rates in January 1996, has kept the
level of Fed funds at 5.25%. Accordingly, money market rates ended the
reporting period essentially unchanged since the beginning of the year. The
Fund invests in high grade money market instruments. At the end of the
reporting period, the Fund had an average maturity of 41 days.
The Fund's targeted average maturity range is currently 40 to 50 days. We
consider this policy to be neutral because we do not expect any change in Fed
policy over the near term. If the Fed were expected to increase (decrease)
interest rates, the targeted average maturity would be lowered (raised). We
currently expect to maintain such a policy unless we anticipate a change in
short-term interest rates.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope you find them informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely,
Laurie Carroll
Portfolio Manager
November 15, 1996
New York, N.Y.
*Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<PAGE>
Dreyfus Institutional Prime Money Market Fund
- ------------------------------------------------------
Statement of Investments October 31, 1996
Principal
Negotiable Bank Certificates of Deposit--9.6% Amount Value
- ----------------------------------------------- ------------ ------------
Bank Of Tokyo-Mitsubishi (Yankee)
5.62%, 1/28/97............................. $ 20,000,000 $ 19,997,529
Dai-Ichi Kangyo Bank Ltd. (Yankee)
5.51%, 12/31/96............................ 10,000,000 10,000,822
Industrial Bank of Japan Ltd. (Yankee)
5.45%, 1/24/97............................. 10,000,000 10,000,460
Sanwa Bank Ltd. (London)
5.55%, 12/16/96............................ 15,000,000 15,001,490
------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $55,000,301)........................... $ 55,000,301
------------
------------
Commercial Paper--74.3%
- -----------------------------------------------
ABN-AMRO North America Finance Inc.
5.44%, 11/12/96............................ $ 15,000,000 $ 14,975,708
AT&T Corp.
5.55%, 11/18/96............................ 15,000,000 14,961,608
Abbey National North America
5.37%, 11/19/96............................ 15,000,000 14,960,250
Alliance & Leicester Building Society
5.54%, 11/25/96............................ 15,000,000 14,945,600
American Honda Finance Corp.
5.38%, 12/12/96............................ 10,000,000 9,939,411
Anheuser-Busch Companies Inc.
5.52%, 11/1/96-7/3/97...................... 27,000,000 26,640,778
Avon Capital Corp.
5.30%, 11/22/96............................ 19,500,000 19,439,940
CSC Enterprises
5.30%, 11/13/96............................ 20,000,000 19,964,800
Caterpillar Financial Services Corp.
5.42%, 11/13/96............................ 15,000,000 14,973,600
Cooper Industries Inc.
5.62%, 11/1/96............................. 14,000,000 14,000,000
CoreStates Capital Corp.
5.59%, 11/18/96............................ 5,000,000 4,987,061
Daimler-Benz North America Corp.
5.54%, 2/11/97............................. 19,450,000 19,150,762
<PAGE>
Dreyfus Institutional Prime Money Market Fund
- ------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Principal
Commercial Paper (continued) Amount Value
- ----------------------------------------------- ------------ ------------
Dean Witter, Discover & Co.
5.36%-5.50%, 1/6/97-1/9/97................. $ 25,000,000 $ 24,751,133
FINOVA Capital Corp.
5.34%-5.49%, 11/4/96-2/4/97................ 20,000,000 19,784,033
General Motors Acceptance Corp.
5.66%, 5/1/97.............................. 6,480,000 6,301,462
Heller Financial Inc.
5.44%, 1/17/97............................. 10,000,000 9,885,142
Hewlett-Packard Co.
5.47%, 12/6/96............................. 8,000,000 7,958,000
ITT Industries Inc.
5.56%, 1/8/97.............................. 15,000,000 14,844,167
Monte Rosa Capital Corp.
5.27%, 11/19/96............................ 25,000,000 24,934,375
NationsBank Corp.
5.53%, 11/6/96............................. 15,000,000 14,988,646
Northern Rock Building Society
5.43%, 12/16/96............................ 15,000,000 14,900,062
Royal Bank of Canada
5.47%, 12/31/96............................ 15,000,000 14,867,500
Southern California Gas Co.
5.39%, 12/2/96............................. 280,000 278,710
Sweden (Kingdom of)
5.55%-5.72%, 11/25/96-2/14/97.............. 16,000,000 15,929,225
Toyota Motor Credit Corp.
5.37%, 11/27/96............................ 15,000,000 14,942,583
Transamerica Finance Corp.
5.45%, 4/1/97.............................. 10,000,000 9,776,856
USAA Capital Corp.
5.46%, 1/16/97............................. 15,000,000 14,830,583
U.S. Bancorp
5.62%, 11/7/96............................. 10,000,000 9,990,800
Whirlpool Corp.
5.43%, 12/4/96............................. 20,000,000 19,901,550
------------
TOTAL COMMERCIAL PAPER
(cost $427,804,345)........................ $427,804,345
------------
------------
Dreyfus Institutional Prime Money Market Fund
- -----------------------------------------------------
Statement of Investments (continued) October 31, 1996
Principal
Repurchase Agreements--16.0% Amount Value
- ----------------------------------------------- ------------ ------------
Donaldson, Lufkin & Jenrette Securities Inc.,
5.53% dated 10/31/96, due 11/1/96 in the amount
of $40,006,144 (fully collateralized by
$5,500,000 U.S. Treasury Bills due 1/2/97,
$9,678,000 U.S. Treasury Bonds 8.125% to 14.00%
due 5/15/09 to 5/15/21 and by $22,438,000 U.S.
Treasury Notes 5.125% to 8.875% due 4/15/98 to
5/15/05 value $40,843,906)..................... $ 40,000,000 $ 40,000,000
Goldman, Sachs & Co.,
5.55% dated 10/31/96, due 11/1/96 in the amount
of $52,348,589 (fully collateralized by
$49,416,000 U.S. Treasury Notes 7.75% due
11/30/99 to 12/31/99 value $53,398,946)..... 52,340,520 52,340,520
------------
TOTAL REPURCHASE AGREEMENTS
(cost $92,340,520)...................... $ 92,340,520
------------
------------
TOTAL INVESTMENTS
(cost $575,145,166).............. 99.9% $575,145,166
------ ------------
------ ------------
CASH AND RECEIVABLES (NET)............. 1% $ 554,858
------ ------------
------ ------------
NET ASSETS............................. 100.0% $575,700,024
------ ------------
------ ------------
See notes to financial statements.
<PAGE>
Dreyfus Institutional Prime Money Market Fund
- -------------------------------------------------------
Statement of Assets and Liabilities October 31, 1996
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments
(including Repurchase Agreements of $92,340,520).......... $575,145,166 $575,145,166
------------
Cash........................................................ 320,576
Interest Receivable......................................... 389,153
------------
575,854,895
------------
LIABILITIES: Due to The Dreyfus Corporation.............................. 77,436
Due to Distributor.......................................... 77,435
------------
154,871
------------
NET ASSETS................................................................... $575,700,024
------------
------------
REPRESENTED BY: Paid-in capital............................................. $575,700,190
Accumulated net realized gain (loss) on investments......... (166)
------------
NET ASSETS................................................................... $575,700,024
------------
------------
SHARES OUTSTANDING
(4 billion shares of $.001 par value Capital Stock authorized)............... 575,700,190
NET ASSET VALUE, offering and redemption price per share..................... $1.00
-----
-----
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Prime Money Market Fund
- --------------------------------------------------------
Statement of Operations Year Ended October 31, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income....................................... $31,867,897
EXPENSES: Management fee--Note 2(a)............................. $808,812
Shareholder servicing costs--Note 2(b)................ 862,061
Directors' fees and expenses--Note 2(c)............... 53,248
--------
Total Expenses 1,724,121
-----------
INVESTMENT INCOME--NET................................................... 30,143,776
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b)....................... (166)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $30,143,610
-----------
-----------
</TABLE>
See notes to financial statements.
Dreyfus Institutional Prime Money Market Fund
- -------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................... $ 30,143,776 $ 51,980,944
Net realized gain (loss) on investments................................... (166) 2,472
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations...... 30,143,610 51,983,416
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:................................................... (30,143,776) (51,980,944)
Net realized gain on investments.......................................... (2,472) --
-------------- --------------
Total Dividends...................................................... (30,146,248) (51,980,944)
-------------- --------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):*
Net proceeds from shares sold:
Class I shares........................................................ 3,991,999,649 6,764,968,751
Class II shares....................................................... -- 979,545,884
Dividends reinvested:
Class I shares........................................................ 12,134,814 14,679,121
Class II shares....................................................... -- 6,095,405
Cost of shares redeemed:
Class I shares........................................................ (4,202,033,832) (6,687,828,845)
Class II shares....................................................... -- (985,641,289)
-------------- --------------
Increase (Decrease) in Net Assets from Capital Stock Transactions... (197,899,369) 91,819,027
-------------- --------------
Total Increase (Decrease) in Net Assets.......................... (197,902,007) 91,821,499
NET ASSETS:
Beginning of Period....................................................... 773,602,031 681,780,532
-------------- --------------
End of Period............................................................. $ 575,700,024 $ 773,602,031
-------------- --------------
-------------- --------------
<FN>
* Effective November 1, 1995 the Fund's Class 1 designation was eliminated and
these shares were redesignated as shares of the Fund.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Prime Money Market 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 information provided in the Fund's financial
statements.(1)
<TABLE>
<CAPTION>
Class I Shares
----------------------------------------------------
Year Ended October 31,
----------------------------------------------------
PER SHARE DATA: 1996 1995 1994(2) 1993 1992
------ ------ --------- ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Investment Operations:
Investment income--net(3).......................... .052 .056 .035 .030 .040
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net.............. (.052) (.056) (.035) (.030) (.040)
------ ------ ------ ------ ------
Net asset value, end of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN................................ 5.33% 5.77% 3.67% 3.04% 4.09%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............. .30% .30% .29% .27% .29%
Ratio of net investment income
to average net assets........................... 5.25% 5.61% 3.58% 2.99% 4.04%
Net Assets, end of period (000's Omitted)........... $575,700 $773,602 $681,781 $824,080 $950,322
<FN>
(1) Prior to October 31, 1995, shares of the Fund were designated
Class I shares. Effective November 1, 1995 the Fund's Class I
and Class II designations were eliminated and the Fund became a
single class Fund.
(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) For the years ended October 31, 1993 and 1992 the investment
adviser reimbursed expenses of the Fund amounting to $.00005 and
$.0001 per share, respectively.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Prime Money Market Fund
- ------------------------------------------------------------------
Financial Highlights (continued)
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 information provided in the Fund's financial statements.
Class II Shares
--------------------
Year Ended
October 31, 1995(1)
PER SHARE DATA: (Unaudited)
--------------------
Net asset value, beginning of period.......... $ -- (2)
-----
Investment Operations:
Investment income--net........................ .028
-----
Distributions:
Dividends from investment income--net......... (.028)
-----
Net asset value, end of period................ $ -- (2)
-----
-----
TOTAL INVESTMENT RETURN........................... 2.81%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets....... .20%(3)
Ratio of net investment income
to average net assets..................... 5.67%(3)
Net Assets, end of period (000's Omitted)..... $ --
(1) The Fund commenced selling Class II shares on November 3, 1994.
(2) Beginning and end of the year there were no shares outstanding.
All shares were purchases and redeemed during the year.
(3) Annualized.
See notes to financial statements.
<PAGE>
Dreyfus Institutional Prime Money Market 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 Institutional Prime Money Market Fund (the
"Fund"). The Fund's investment objective is to seek a high level of current
income consistent with stability of principal by investing in high grade money
market instruments. 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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has been
determined by the Fund's Board of Directors to represent the fair value of the
Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per share
of $1.00 for the Fund; the Fund has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so. There
is no assurance, however, that the Fund will be able to maintain a stable net
asset value per share of $1.00.
(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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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
dividends daily from investment income-net; such dividends are paid monthly.
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.
(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
<PAGE>
Dreyfus Institutional Prime Money Market Fund
- -------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 $167
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. If not
applied, the carryover expires in fiscal 2004.
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 .15% 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) Shareholder servicing plan: The Fund has adopted a Shareholder
Servicing Plan (the "Plan"). Under the Plan, the Fund may pay up to .15% of the
value of the average daily net assets annually to compensate certain banks,
brokers, dealers or other financial institutions for shareholder services.
During the period ended October 31, 1996, the Fund incurred service fees of
$862,061.
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 Company and who have no
direct or indirect financial interest in the operation of the Plan or 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 meeting 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--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. For the period ended October 31, 1996, the Fund did not borrow
under the line of credit.
<PAGE>
Dreyfus Institutional Prime Money Market 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, including
the statement of investments, of Dreyfus Institutional Prime Money Market Fund
of The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or 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 also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1996, 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
Dreyfus Institutional Prime Money Market Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 1996, the results of its operations, changes in its net
assets and its financial highlights for each of the periods set forth above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 9, 1996
<PAGE>
Dreyfus Institutional Prime
Money Market Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 922AR9610
<PAGE>
Dreyfus
Institutional
U.S. Treasury
Money Market Fund
Annual Report
October 31, 1996
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ---------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus
Institutional U.S. Treasury Money Market Fund. For its annual reporting period
ended October 31, 1996, your Fund provided an annualized yield of 5.03%. The
annualized effective yield was 5.15% after taking into account the effect of
compounding.*
THE ECONOMY
The fear of another round of monetary tightening by the Federal Reserve
Board (the "Fed") to ward off a resurgence in inflation has so far proven
unwarranted. Indeed, despite solid economic growth resulting in the creation of
new jobs and an overall tightening in the labor market, inflation has remained
subdued. Both the Consumer and Producer Price Indexes remained at annual rates
in the 3% range. This is the fifth consecutive year of inflation under 3%, the
longest period since the 1960s. Despite the duration of the economic recovery,
most economic reports underscore the tepid nature of the current inflationary
environment.
The increase in long-term interest rates early this year may have
contributed to the recently reported slowdown in the rate of economic growth.
During the third quarter, the growth rate of Gross Domestic Product cooled to
2.2%, less than half the second quarter's strong 4.7% pace. Consumers--the
initiators of two-thirds of all economic activity--remained cautious throughout
the year. In the third quarter, the pace of consumer spending was at its
slowest in five years. Consumer borrowing has also declined from levels of a
year ago. Not surprisingly, retail sales growth has also been modest this year.
Consumers may have been restrained by wages not rising as rapidly as had been
previously expected, given the strength in the labor market. The Employment
Cost Index, considered to be an important gauge of wage inflation by Fed
Chairman Alan Greenspan, rose just 0.6% in the third quarter, the lowest
reading in over a year. This brought the growth in wages to 2.8% over the past
twelve months, slightly less than the rate of inflation as measured by the
Consumer Price Index.
The booming housing market also seems to have cooled with both new
housing starts and existing home sales slackening since midyear. Industrial
production has slowed somewhat from its more rapid pace earlier in the year.
Given the level of capacity utilization, there appears to be no sign of
production bottlenecks that could push prices higher. Anecdotal evidence still
supports the assertion that corporations are reluctant to raise prices. The
report that the 1996 Federal budget deficit had shrunk to $107.3 billion--its
lowest level in two decades--provided another favorable sign for inflation. The
final reading of the 1996 deficit marks the fourth straight decline from fiscal
1992's record $290.4 billion.
Despite the relatively benign current environment for inflation, we are
alert for early signs of its potential resurgence. While wage increases so far
have remained modest, we believe workers should eventually expect compensation
that at least matches their cost of living. Furthermore, we are mindful that
price increases in energy and food may not continue to be as restrained as they
were over the past four years.
THE MARKET AND THE PORTFOLIO
During the reporting period ended October 31, 1996 the bond market
settled into its usual summer trading range after a volatile first four months
of 1996. Yields on six month Treasury bills traded for most of the period
between 5.25% and 5.50%. Economic reports indicated the economy was not growing
as fast as previously feared. Employment growth moderated after having shocked
investors by its strength early in the year. Moreover, fears of unexpected
increases
<PAGE>
in inflation subsided as prices of oil and grains moved lower throughout the
summer. By the end of the period investors' thinking turned positive,
comfortable in the belief the bond market could move to lower yield levels by
the end of 1996, given the evidence that the economy was growing at a moderate
pace.
The Fed since lowering short-term interest rates in January 1996 has
kept the level of Fed funds at 5.25%. Accordingly, money market rates ended
the reporting period unchanged from the beginning of the year. The fund invests
in U.S. Treasury securities and repurchase agreements secured by such
obligations. At the end of the reporting period, the Fund had an average
maturity of 41 days.
The Fund's targeted average maturity range is currently 40 to 50 days.
We consider this policy to be neutral because we do not expect any change in
Fed policy over the near term. If the Fed were expected to increase (decrease)
interest rates the targeted average maturity would be lowered (raised). We
currently expect to maintain such a policy unless we anticipate a change in the
level of short-term interest rates.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope you find them informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely,
Laurie Carroll
Portfolio Manager
November 15, 1996
New York, N.Y.
*Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ----------------------------------------------------------------
Statement of Investments October 31, 1996
<TABLE>
<CAPTION>
Annualized
Yield on
Date of Principal
U.S. Treasury Bills--43.8% Purchase Amount Value
- --------------------------------------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
11/7/96................................................ 5.24% $ 25,000,000 $ 24,978,563
11/14/96............................................... 5.19 25,000,000 24,953,868
11/21/96............................................... 5.33 25,000,000 24,927,222
12/12/96............................................... 4.93 25,000,000 24,860,771
1/9/97................................................. 5.34 25,000,000 24,753,948
1/16/97................................................ 5.05 50,000,000 49,475,125
1/23/97................................................ 5.22 25,000,000 24,705,754
2/13/97................................................ 5.13 15,000,000 14,781,600
2/20/97................................................ 5.15 35,000,000 34,455,560
3/20/97................................................ 5.15 25,000,000 24,513,500
4/10/97................................................ 5.22 20,000,000 19,547,111
------------
TOTAL U.S. TREASURY BILLS
(cost $291,953,022).................................... $291,953,022
------------
------------
U.S. Treasury Notes--20.3%
- ---------------------------------------------------------
4.38%, 11/15/96........................................ 5.29% $ 45,000,000 $ 44,982,183
7.25%, 11/15/96........................................ 5.21 35,000,000 35,024,233
7.25%, 11/30/96........................................ 5.13 15,000,000 15,022,660
6.25%, 1/31/97......................................... 4.37 20,000,000 20,041,101
7.50%, 1/31/97......................................... 5.26 20,000,000 20,101,439
------------
TOTAL U.S. TREASURY NOTES
(cost $135,171,616).................................... $135,171,616
------------
------------
Repurchase Agreements--35.3%
- ---------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities, Inc.
dated 10/31/96, due 11/1/96 in the amount of
$70,010,753 (fully collateralized by
$17,884,000 U.S. Treasury Bills due from
1/9/97 to 2/13/97, $19,550,000 U.S.
Treasury Bonds, 6%-8%, due from
5/15/2016 to 8/15/2026 and by $33,466,000
U.S. Treasury Notes, 5.75%-8.875%, due from
1/15/97 to 8/15/2003, value $71,479,716)............... 5.53% $ 70,000,000 $ 70,000,000
Goldman, Sachs & Co.
dated 10/31/96, due 11/1/96 in the amount
of $165,247,484 (fully collateralized by
$67,898,000 U.S. Treasury Bonds, 9.375%,
due 2/15/2006 and by $84,640,000 U.S. Treasury
Notes, 6.25%, due 4/30/2001, value
$168,710,378).......................................... 5.55 165,222,012 165,222,012
------------
TOTAL REPURCHASE AGREEMENTS
(cost $235,222,012).................................... $235,222,012
------------
------------
TOTAL INVESTMENTS
(cost $662,346,650)............................ 99.4% $662,346,650
------ ------------
------ ------------
CASH AND RECEIVABLES (NET)....................... .6% $ 4,013,132
------ ------------
------ ------------
NET ASSETS....................................... 100.0% $666,359,782
------ ------------
------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ---------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1996
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments
(including Repurchase Agreements of $235,222,012).... $662,346,650 $662,346,650
Cash................................................... 914,800
Interest receivable.................................... 3,253,867
------------
666,515,317
------------
LIABILITIES: Due to The Dreyfus Corporation......................... 77,769
Due to Distributor..................................... 77,766
------------
155,535
------------
NET ASSETS................................................................. $666,359,782
------------
------------
REPRESENTED BY: Paid-in capital........................................ $666,362,032
Accumulated net realized gain (loss) on investments.... (2,250)
------------
NET ASSETS................................................................. $666,359,782
------------
------------
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized)............. 666,362,032
NET ASSET VALUE, offering and redemption price per share................... $1.00
-----
-----
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ----------------------------------------------------------------------
Statement of Operations Year Ended October 31, 1996
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................... $36,393,718
EXPENSES: Management fee--Note 2(a)..................... $ 967,698
Shareholder servicing costs--Note 2(b)........ 1,018,594
Directors' fees and expenses--Note 2(c)....... 50,895
----------
Total Expenses.......................... 2,037,187
-----------
INVESTMENT INCOME--NET................................................ 34,356,531
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b).................... (2,250)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $34,354,281
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ----------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net..................................................... $ 34,356,531 $ 37,628,925
Net realized gain (loss) on investments.................................... (2,250) --
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations........ 34,354,281 37,628,925
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net..................................................... (34,356,531) (37,628,925)
-------------- --------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold.............................................. 4,469,388,218 3,138,307,082
Dividends reinvested....................................................... 2,389,411 4,562,052
Cost of shares redeemed.................................................... (4,573,363,146) (2,961,699,870)
-------------- --------------
Increase (Decrease) in Net Assets from Capital Stock Transactions...... (101,585,517) 181,169,264
-------------- --------------
Total Increase (Decrease) in Net Assets.............................. (101,587,767) 181,169,264
NET ASSETS:
Beginning of Period........................................................ 767,947,549 586,778,285
-------------- --------------
End of Period.............................................................. $ 666,359,782 $ 767,947,549
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market 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 information
provided in the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA: 1996 1995 1994(1) 1993 1992
------ ------ --------- ------ ------
Net asset value, beginning of period................... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Investment Operations:
Investment income--net................................. .051 .054 .035(2) .029(3) .038(3)
----- ----- ----- ----- -----
Distributions:
Dividends from investment income--net.................. (.051) (.054) (.035) (.029) (.038)
----- ----- ----- ----- -----
Net asset value, end of period......................... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL INVESTMENT RETURN.................................. 5.17% 5.57% 3.55% 2.91% 3.88%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................ .30% .30% .30%(4) .30% .30%
Ratio of net investment income
to average net asset................................. 5.06% 5.44% 3.55% 2.87% 3.81%
Net Assets, end of period (000's Omitted).............. $666,360 $767,948 $586,778 $500,653 $666,378
<FN>
(1) 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.
(2) Net investment income before reimbursement of expenses by the investment
manager for the year ended October 31, 1994 was $0.0350 per share.
(3) For the years ended October 31, 1993 and 1992 the investment adviser
reimbursed expenses of the Fund amounting to $.00004 and $.0003 per share,
respectively.
(4) Annualized expense ratio before reimbursement of expenses by the investment
manager for the year ended October 31, 1994 was .31%.
</TABLE>
See notes to financial statments.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market 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 Institutional U.S. Treasury Money Market Fund
(the "Fund"). The Fund's investment objective is to seek a high level of
current income consistent with stability of principal and conservative
investment risk by investing in direct obligations of the U.S. Treasury and
repurchase agreements secured by such obligations. 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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has been
determined by the Fund's Board of Directors to represent the fair value of the
Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for the Fund; the Fund has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so. There
is no assurance, however, that the Fund will be able to maintain a stable net
asset value per share of $1.00.
(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. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
(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 dividends daily from investment income--net; such dividends are paid
monthly. 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,
it is the policy of the Fund not to distribute such gain.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(e) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the 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 $2,300
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. If not
applied, the carryover expires in fiscal 2004.
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 .15% 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) Shareholder servicing plan: The Fund has adopted a Shareholder
Servicing Plan (the "Plan"). Under the Plan, the Fund may pay up to .15% of the
value of the average daily net assets annually to compensate certain banks,
brokers, dealers or other financial institutions for shareholder services.
During the period ended October 31, 1996, the Fund incurred service fees of
$1,018,594.
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 Company and who have no
direct or indirect financial interest in the operation of the Plan or 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 meeting 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--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $100
million unsecured line of credit primarily to be utilized for temporary or
emergency purposes, including the financing of redemptions. Interest is charged
to the Fund at rates which are related to the Federal Funds rate in effect at
the time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market 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,
including the statement of investments, of Dreyfus Institutional U.S. Treasury
Money Market Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the five-year period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1996, 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 Dreyfus Institutional U.S. Treasury Money Market Fund of The
Dreyfus/Laurel Funds, Inc. as of October 31, 1996, the results of its
operations, changes in its net assets and its financial highlights for each of
the years set forth above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
December 9, 1996
<PAGE>
Dreyfus Institutional U.S. Treasury Money Market Fund
- ---------------------------------------------------------------
Important Tax Information (Unaudited)
For State individual income tax purposes, the Fund hereby designates
63.15% of the ordinary income dividends paid during its fiscal year ended
October 31, 1996 as attributable to interest income from direct obligations of
the United States. Such dividends are currently exempt from taxation for
individual income tax purposes in most states, including New York, California
and the District of Columbia.
<PAGE>
Dreyfus Institutional U.S. Treasury
Money Market Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 930AR9610
<PAGE>
Money Market
Reserves
Annual Report
October 31, 1996
<PAGE>
Dreyfus Money Market Reserves
- ------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus Money Market
Reserves. For the twelve months ended October 31, 1996, the Fund's conservative
investment strategy continued to provide shareholders with a competitive stream
of income, while maintaining a high quality portfolio and a stable $1 share
price. For the twelve months ended October 31, 1996, the Fund's annualized
yield was 4.82% for Investor shares and 5.02% for Class R shares. Reinvesting
the Fund's dividends and calculating the effect of compounding resulted in an
annualized effective yield of 4.93% and 5.14% for Investor shares and Class R
shares, respectively.*
In addition, you will be interested to know of a recent change in
management of the Fund. I am now the Fund's portfolio manager, replacing
Roberta Shea, who has resigned. I am a portfolio manager of The Dreyfus
Corporation and serve as director of Reserve Asset Management and as the
chairman of the Reserve Asset Strategy Committee at The Boston Company Asset
Management, Inc. ("TBCAM"). Prior to joining TBCAM and Dreyfus, I was a vice
president for State Street Global Advisors, where I served as a portfolio
manager for institutional cash and enhanced cash products.
ECONOMIC ENVIRONMENT
Economy Still Growing, Not Booming
The past few months have brought fresh evidence of a slowing, albeit still
growing, U.S. economy. Real Gross Domestic Product (GDP) rose 4.7% in the
second quarter of 1996, tapering to 2.2% in the third. Retail sales had been
slowing for several months, and during the third quarter consumer spending rose
at its weakest pace in five years. Construction and exporting activity also
moved ahead more tentatively in recent months than they had during the first
half of 1996. Sales of existing homes were off too, declining a
larger-than-expected 2.9% in September for the fourth consecutive monthly loss.
On the other hand, September's new home sales dropped a scant 0.5% and remain
near a ten-year high. Factory orders for big-ticket items also rebounded in
September, rising 4.6 percent for the biggest gain in almost four years. On the
job front, unemployment reached a seven-year low of 5.1%.
Federal Reserve Board Watches and Waits
Despite a long, strong cycle of economic growth, rising wage pressures and
a great deal of market concern that inflation might result, inflation so far
remains tame. Consequently, the Federal Reserve Board (the "Fed") did not raise
short-term interest rates at its September meeting--although many analysts and
investors had been convinced a hike was in the offing. They cited mixed
economic signals and, in some cases, conflicting statements from Fed officials
themselves as evidence supporting their expectations for higher rates.
Nonetheless, the Fed maintained the hands-off monetary policy it has been
pursuing since early in 1996, trusting that the economy would slow enough to
dampen any inflationary forces that might be building.
MARKET ENVIRONMENT
With inconclusive economic data suggesting stability to some and potential
inflation to others, the yields of money market securities fluctuated
throughout the period. In fact, many market participants had anticipated that
the Fed would raise short-term rates at its September meeting, and money market
yields had been moving higher based on this expectation. When the Fed left
rates alone, yields lost the interest-rate rise they had built in and receded a
bit.
PORTFOLIO OVERVIEW
With changing expectations for Federal Reserve Board monetary policy
producing an uncertain interest-rate environment throughout the period, we
employed a somewhat defensive strategy in managing the Fund. A key element of
this strategy was to maintain a portfolio maturity close to the average for its
peer group. In fact, we currently intend to
<PAGE>
keep the Fund's average portfolio maturity in this neutral position until it
becomes clear that the Fed is not going to raise interest rates or until yields
in the longer end of the money market securities spectrum became more
attractive.
We also attempted to add yield to the portfolio during the annual period
by maintaining a diversified portfolio of floating rate securities with
maturities of 397 days or less. Floating rate securities provide yields that
reset daily, weekly, monthly or quarterly according to certain money market
indices. In the recent annual period, many of these securities often provided
better returns than other money market instruments. As usual, we also invested
in commercial paper with longer maturities when yields were particularly
attractive.
Our strategy enabled the Fund to maintain a solid income stream while
remaining flexible and ready to respond to interest rate changes. In the months
ahead, we will continue to monitor interest rates, the economy and the market
carefully. At the same time, we will continue to seek a competitive level of
income by investing in a well-diversified portfolio of traditional money market
instruments while focusing on stability of principal, high quality and
liquidity.
Sincerely,
David S. Hertan
Portfolio Manager
November 12, 1996
New York, N.Y.
*Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<PAGE>
Dreyfus Money Market Reserves
- -----------------------------------------------------------------------
Statement of Investments October 31, 1996
<TABLE>
<CAPTION>
Principal
Negotiable Bank Certificates of Deposit--6.7% Amount Value
- ----------------------------------------------------------- ----------- ------------
<S> <C> <C>
Bayerische Landesbank Girozentrale (Yankee)
6.72%, 3/3/97 (a)........................................ $ 7,000,000 $ 7,000,000
Bayerische Vereinsbank AG (Yankee)
5.25%, 2/27/97........................................... 7,000,000 7,000,000
Deutsche Bank AG (Yankee)
5.25%, 2/27/97........................................... 7,000,000 7,000,000
------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $21,000,000)....................................... $ 21,000,000
------------
------------
Commercial Paper--58.2%
- -----------------------------------------------------------
Abbey National North America
5.50%, 11/29/96.......................................... $ 7,000,000 $ 6,970,872
Akzo Nobel Inc.
5.46%, 12/11/96.......................................... 1,456,000 1,447,329
Alliance & Leicester Building Society
5.44%, 11/15/96.......................................... 6,150,000 6,137,324
Allianz of America Finance Corp.
5.40%, 11/4/96........................................... 2,255,000 2,253,998
ANZ (DE) Inc.
5.44%, 12/16/96.......................................... 8,000,000 7,946,650
Bank of America FSB
5.45%, 11/6/96........................................... 9,000,000 8,993,288
Banque Nationale de Paris
5.52%, 1/6/97............................................ 2,000,000 1,980,163
BT Securities Corp.
5.28%, 11/18/96.......................................... 7,500,000 7,481,371
Caisse D'Amortissemente De La Sociale
5.79%, 3/10/97........................................... 5,000,000 4,899,129
Caisse des Depots et Consignations
5.39%, 1/17/97........................................... 7,500,000 7,414,658
Cheltenham & Gloucester PLC
5.41%, 2/28/97........................................... 7,500,000 7,368,356
Compagnie Bancaire USA Funding Corp.
5.41%, 1/21/97........................................... 7,500,000 7,409,888
Daimler-Benz North America Corp.
5.53%, 1/8/97............................................ 2,500,000 2,474,453
Dean Witter, Discover & Co.
5.49%, 1/28/97........................................... 2,000,000 2,001,006
Den Danske Corp. Inc.
5.60%, 2/20/97........................................... 7,500,000 7,373,969
EksportFinans A/S
5.31%-5.44%, 11/26/96-12/18/96........................... 7,500,000 7,462,679
Enel Commercial Paper Inc.
5.39%, 11/7/96........................................... 2,264,000 2,261,977
<PAGE>
Dreyfus Money Market Reserves
- -------------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Principal
Commercial Paper (continued) Amount Value
- ----------------------------------------------------------- ----------- ------------
Fleet Funding Corp.
5.31%, 12/3/96........................................... $ 7,000,000 $ 6,967,209
General Electric Capital Corp.
5.40%, 1/6/97............................................ 8,000,000 7,921,827
Generale Bank Inc.
5.40%, 1/21/97........................................... 5,000,000 4,940,038
Glaxo Wellcome PLC
5.48%, 1/3/97............................................ 2,000,000 1,981,100
Household International Corp.
5.31%, 11/14/96.......................................... 7,500,000 7,485,673
Merrill Lynch & Co. Inc.
5.55%, 1/13/97........................................... 7,000,000 6,922,924
Morgan Stanley Group Inc.
5.39%-5.70%, 11/1/96-1/24/97............................. 13,000,000 12,913,107
Quebec (Province of)
5.40%-5.81%, 11/22/96-3/6/97............................. 8,000,000 7,925,600
Saint-Gobain (Compagnie DE) S.A.
5.44%, 11/7/96........................................... 10,000,000 9,991,150
Temple-Inland Inc.
5.29%, 12/3/96........................................... 5,000,000 4,976,622
UBS Finance (DE) Inc.
5.31%, 11/5/96........................................... 7,500,000 7,495,583
Weyerhaeuser Real Estate Co.
5.29%, 11/25/96.......................................... 3,700,000 3,687,025
Yorkshire Building Society
5.41%, 1/10/97........................................... 8,000,000 7,916,856
------------
TOTAL COMMERCIAL PAPER
(cost $183,001,824)...................................... $183,001,824
------------
------------
Corporate Notes--12.7%
- -----------------------------------------------------------
Abbey National Treasury Services PLC
5.34%, 2/21/97 (a)....................................... $ 3,000,000 $ 2,999,449
American Express Centurion Bank
5.13%-5.34%, 12/13/96-10/24/97 (a)....................... 6,900,000 6,901,461
Caterpillar Financial Services Corp.
5.48%, 11/3/97 (a)....................................... 7,500,000 7,500,000
Dean Witter, Discover & Co.
2.69%, 1/3/97 (a)........................................ 5,000,000 5,000,000
Ford Motor Credit Co.
5.56%-5.84, 3/17/97-11/3/97 (a).......................... 7,320,000 7,356,024
IBM Credit Corp.
5.29%, 4/14/97 (a)....................................... 3,000,000 3,003,977
Transamerica Finance Corp.
5.77%, 4/7/97 (a)........................................ 7,000,000 7,057,983
------------
TOTAL CORPORATE NOTES
(cost $39,818,894)....................................... $ 39,818,894
------------
------------
<PAGE>
Dreyfus Money Market Reserves
- -------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Principal
Short-Term Bank Notes--9.2% Amount Value
- ----------------------------------------------------------- ----------- ------------
Bank One Milwaukee, N.A.
5.42%, 5/14/97 (a)....................................... $ 7,000,000 $ 6,997,462
First National Bank of Chicago
5.41%, 3/12/97 (a)....................................... 7,000,000 6,998,769
PNC Bank N.A.
5.41%, 9/3/97 (a)........................................ 8,000,000 7,995,380
Wachovia Bank of North Carolina, N.A.
5.34%, 3/25/97 (a)....................................... 7,000,000 6,997,713
------------
TOTAL SHORT-TERM BANK NOTES
(cost $28,989,324)....................................... $ 28,989,324
------------
------------
U.S. Government Agencies--3.2%
- -----------------------------------------------------------
Federal Home Loan Banks, Floating Rate Notes
5.31%, 3/14/97-3/27/97 (a)
(cost $9,998,149)........................................ $10,000,000 $ 9,998,149
------------
------------
Time Deposits--11.4%
- -----------------------------------------------------------
AmSouth Bank of Alabama (Cayman)
5.69%, 11/1/96........................................... $13,000,000 $ 13,000,000
Canadian Imperial Bank of Commerce (Cayman)
5.63%, 11/1/96........................................... 13,000,000 13,000,000
First Union National Bank of North Carolina (Nassau)
5.75%, 11/1/96........................................... 10,000,000 10,000,000
------------
TOTAL TIME DEPOSITS
(cost $36,000,000)....................................... $ 36,000,000
------------
------------
Repurchase Agreements--1.3%
- -----------------------------------------------------------
Lehman Government Securities, Inc., 5.54%
Dated 10/31/96, due 11/1/96 in the amount of
$4,160,640 (fully collateralized by $6,210,000
Federal National Mortgage Association Discount Notes,
due 12/26/96, value $4,243,498)
(cost $4,160,000)........................................ $ 4,160,000 $ 4,160,000
------------
------------
TOTAL INVESTMENTS
(cost $322,968,191)............................... 102.7% $322,968,191
------ ------------
------ ------------
LIABILITIES, LESS CASH AND RECEIVABLES.............. (2.7%) $ (8,391,213)
------ ------------
------ ------------
NET ASSETS.......................................... 100.0% $314,576,978
------ ------------
------ ------------
<FN>
Notes To Statement of Investments:
(a) Variable interest rates are subject to periodic change.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Money Market Reserves
- -------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1996
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments.................... $322,968,191 $322,968,191
Cash....................................................................... 397,929
Interest receivable........................................................ 1,251,019
------------
324,617,139
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.............................. 143,262
Due to Distributor......................................................... 1,082
Payable for investment securities purchased................................ 9,403,752
Dividends payable.......................................................... 492,065
------------
10,040,161
------------
NET ASSETS.................................................................................... $314,576,978
------------
------------
REPRESENTED BY: Paid-in capital............................................................ $314,586,774
Accumulated net realized gain (loss) on investments........................ (9,796)
------------
NET ASSETS.................................................................................... $314,576,978
------------
------------
</TABLE>
NET ASSET VALUE PER SHARE
-------------------------
<TABLE>
<CAPTION>
Investor Shares Class R
--------------- ------------
<S> <C> <C>
Net Assets.................................................................................... $144,167,492 $170,409,486
Shares Outstanding............................................................................ 144,172,783 170,413,991
NET ASSET VALUE PER SHARE..................................................................... $1.00 $1.00
----- -----
----- -----
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Money Market Reserves
- ----------------------------------------------------------------------
Statement of Operations Year Ended October 31, 1996
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income................................... $18,512,410
EXPENSES: Management fee--Note 2(a)......................... $1,651,339
Distribution fees (Investor shares)--Note 2(b).... 285,130
Directors' fees and expenses--Note 2(c)........... 24,150
----------
Total Expenses................................ 1,960,619
-----------
INVESTMENT INCOME--NET............................................................ 16,551,791
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b)................................ 1,082
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $16,552,873
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Money Market Reserves
- -------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net......................................................... $ 16,551,791 $ 16,314,763
Net realized gain (loss) on investments........................................ 1,082 (10,878)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations............ 16,552,873 16,303,885
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Investor shares.............................................................. (6,902,288) (9,095,601)
Class R shares............................................................... (9,649,503) (7,219,162)
------------- -------------
Total Dividends............................................................ (16,551,791) (16,314,763)
------------- -------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:
Investor shares.............................................................. 159,934,479 314,697,956
Class R shares............................................................... 716,962,318 225,926,525
Issued in exchange for shares of Dreyfus/Laurel Cash Management Fund:
Investor shares.............................................................. -- 209,866,862
Dividends reinvested:
Investor shares.............................................................. 6,757,305 8,003,722
Class R shares............................................................... 5,233,636 4,593,646
Cost of shares redeemed:
Investor shares.............................................................. (184,344,018) (374,354,965)
Class R shares............................................................... (691,573,952) (215,481,690)
------------- -------------
Increase (Decrease) in Net Assets from Capital Stock Transactions.......... 12,969,768 173,252,056
------------- -------------
Total Increase (Decrease) in Net Assets.................................. 12,970,850 173,241,178
NET ASSETS:
Beginning of Period............................................................ 301,606,128 128,364,950
------------- -------------
End of Period.................................................................. $ 314,576,978 $ 301,606,128
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Money Market Reserves
- ----------------------------------------------------------------------
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 information provided in the Fund's financial statements.
<TABLE>
<CAPTION>
Investor Shares
--------------------------------
Year Ended October 31,
--------------------------------
<S> <C> <C> <C>
PER SHARE DATA: 1996 1995 1994(1)(2)
---- ---- ----------
Net asset value, beginning of period..................................... $1.00 $1.00 $1.00
----- ----- -----
Investment Operations:
Investment income--net................................................... .048 .052 .021
----- ----- -----
Distributions:
Dividends from investment income--net..................................... (.048) (.052) (.021)
----- ----- -----
Net asset value, end of period........................................... $1.00 $1.00 $1.00
----- ----- -----
----- ----- -----
TOTAL INVESTMENT RETURN.................................................... 4.94% 5.28% 2.14%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................................. .70% .70% .71%(4)
Ratio of net investment income
to average net assets.................................................. 4.84% 5.25% 3.31%(4)
Net Assets, end of period (000's Omitted)................................ $144,168 $161,819 $3,611
<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) Not annualized.
(4) Annualized.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Money Market Reserves
- ------------------------------------------------------------
Financial Highlights (continued)
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 information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
Class R Shares
-----------------------------------------------
Year Ended October 31,
-----------------------------------------------
PER SHARE DATA: 1996 1995 1994(1)(2) 1993 1992
----- ---- ---------- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Investment Operations:
Investment income--net......................................... .050 .053 .034(3) .028 .039
----- ----- ----- ----- -----
Distributions:
Dividends from investment income--net.......................... (.050) (.053) (.034) (.028) (.039)
----- ----- ----- ----- -----
Net asset value, end of period................................. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL INVESTMENT RETURN.......................................... 5.16% 5.44% 3.52% 2.84% 3.92%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........................ .50% .50% .51%(4) .50%(5) .50%(5)
Ratio of net investment income
to average net assets........................................ 5.01% 5.40% 3.51%(4) 2.80%(5) 3.88%(5)
Net Assets, end of period (000's Omitted)...................... $170,409 $139,787 $124,754 $103,760 $91,848
<FN>
(1) 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.
(2) The Fund commenced selling Investor shares on April 6, 1994. Those shares
outstanding prior to April 4, 1994 were redesignated as Trust shares.
Effective October 17, 1994, the Fund's Trust shares were reclassified as
Class R shares.
(3) Net investment income before expenses reimbursed by the investment adviser
for the year ended October 31, 1994 was $0.0331.
(4) Annualized expense ratio before expenses reimbursed by the investment adviser
for the year ended October 31, 1994 was 0.64%.
(5) For the year ended October 31, 1992, the investment adviser waived all or a
portion of its advisory fee amounting to $.0007 per share. For the years ended
October 31, 1993 and 1992, the investment adviser reimbursed expenses of the
Fund amounting to $.0036 and $.0027 per share, respectively.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Money Market Reserves
- ---------------------------------------------------------------
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 Money Market Reserves (the "Fund"). The Fund's
investment objective is to seek a high level of current income consistent with
stability of principal by investing in high-grade money market instruments. 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 Fund is authorized to issue 2 billion of
$.001 par value Capital Stock in each of the following classes of shares:
Investor Class and Class R. 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.
Investment income, net of expenses (other than class specific
expenses), realized and unrealized gains and losses are allocated daily to each
class of shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(a) Portfolio valuation: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has been
determined by the Fund's Board of Directors to represent the fair value of the
Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for the Fund; the Fund has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so. There
is no assurance, however, that the Fund will be able to maintain a stable net
asset value per share of $1.00.
(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. Interest
income, adjusted for amortization of premiums and discounts on investments, is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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
<PAGE>
Dreyfus Money Market Reserves
- -----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 dividends daily from investment income-net; such dividends are paid
monthly. 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,
it is the policy of the Fund not to distribute such gain.
(e) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the 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 $10,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. If not
applied, the carryover expires in fiscal 2003.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 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 .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 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 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. During the period October 31, 1996, the distribution
fee for the Investor shares was $285,130.
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.
<PAGE>
Dreyfus Money Market Reserves
- ---------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(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 meeting 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--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $100
million unsecured line of credit primarily to be utilized for temporary or
emergency purposes, including the financing of redemptions. Interest is charged
to the Fund at rates which are related to the Federal Funds rate in effect at
the time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 4--Reorganization:
On November 7, 1994, Dreyfus Money Market Reserves, acquired the assets
and certain liabilities of the Dreyfus/Laurel Cash Management Fund, in exchange
for shares of Dreyfus Money Market Reserves, pursuant to a plan of
reorganization approved by Dreyfus/Laurel Cash Management Fund shareholders on
May 20, 1994. Total shares issued by Dreyfus Money Market Reserves and the
total net assets of Dreyfus/Laurel Cash Management Fund acquired are set forth
in the Statement of Changes in Net Assets.
<PAGE>
Dreyfus Money Market Reserves
- ----------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Money Market Reserves of The
Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years or 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 also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of October 31, 1996, 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
Dreyfus Money Market Reserves of The Dreyfus/Laurel Funds, Inc. as of October
31, 1996, the results of its operations, changes in its net assets and its
financial highlights for each of the years or periods set forth above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 9, 1996
<PAGE>
Dreyfus Money Market Reserves
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 317/717AR9610
DREYFUS MUNICIPAL RESERVES
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus Municipal
Reserves. For the twelve months ended October 31, 1996, the Fund's annualized
yield was 2.92% for Investor shares and 3.12% for Class R shares. Reinvesting
the Fund's dividends and calculating the effect of compounding resulted in an
annualized effective yield of 2.96% and 3.16% for Investor shares and Class R
shares, respectively.* For taxpayers in the highest Federal tax bracket of
39.60%, a comparable taxable investment would have had to yield 4.83% for
Investor shares and 5.17% for Class R shares, in order to equal the Fund's
return.
ECONOMIC ENVIRONMENT
Economy Still Growing, Not Booming
The past few months have brought fresh evidence of a slowing, albeit
still growing, U.S. economy. Real Gross Domestic Product (GDP) rose 4.7% in
the second quarter of 1996, tapering to 2.2% in the third. Final sales
diminished to a trickle everywhere over the summer, and not in just a few
areas. Retail sales had been slowing for several months and during the third
quarter, consumer spending rose at its weakest pace in five years.
Construction and exporting activity also moved ahead more slowly in recent
months than they did during the first half of 1996. Sales of existing homes
were off too, declining a larger-than-expected 2.9% in September for the
fourth consecutive monthly loss. On the other hand, September's new home
sales dropped a scant .5% and remain near a ten-year high. Factory orders for
big-ticket items also rebounded in September, rising 4.6 percent for the
biggest gain in almost four years. On the job front, unemployment reached a
seven-year low of 5.1%.
Federal Reserve Board Watches and Waits
Despite a long, strong cycle of economic growth, rising wage pressures
and a great deal of market concern that inflation might result, inflation
remains tame. Consequently, the Federal Reserve Board (the "Fed") did not
raise short-term interest rates at its September meeting - although many
analysts and investors had been convinced a hike was in the offing. These
pundits pointed to inconclusive economic data and, in some cases, statements
from the Fed itself as proof that rising rates were imminent. Nonetheless,
the Fed left rates alone in September, retaining the hands-off monetary
policy it has pursued since early 1996. Apparently, the Fed continues to
believe that the economy will slow enough on its own to dampen any
inflationary forces that might be building beneath the surface.
MARKET ENVIRONMENT
In addition to economic conditions and interest rates, supply and demand
dynamics also influence the performance of tax-exempt securities and this
annual period was no exception. Municipal money market securities remained
well sought after throughout the period, especially in January and July, when
demand surged according to well-established seasonal patterns. In terms of
supply, economic growth raised tax revenues for some municipalities, thereby
reducing their short-term borrowing needs. Some tax-exempt money market
issuers also took advantage of lower long-term interest rates to refinance
existing short-term municipal securities at lower rates and longer
maturities.
Although mixed economic signals and seasonal fluctuations in supply and
demand produced some market volatility, the annual period concluded on a
relatively positive note. Yields on tax-exempt money market securities had
been strong throughout the year, and they remained essentially unchanged at
the end of the period.
PORTFOLIO OVERVIEW
Dramatic seasonal shifts in the demand for tax-exempt money market
securities heavily influenced our investment strategy, which remained focused
on preserving capital and maintaining a portfolio of highest quality. The
Fund continued to provide shareholders with a competitive stream of federally
tax-free income,** while maintaining superior quality and a stable $1 share
price throughout the annual period.
Amid the challenges of the current investment environment, your Fund used
a conservative, two-part strategy that continued to serve it well. The first
aspect of that strategy involved maintaining a weighted average portfolio
maturity that enabled the Fund to seek to maximize its income stream while
protecting its net asset value. In this market climate, that meant
positioning the portfolio with a weighted average maturity more consistent
with our peer group in order to keep the Fund flexible to take advantage of
higher yields as they became available. We also continued to hold a large
number of variable-rate securities in the portfolio. These securities provide
yields that reset daily and weekly. By purchasing and selling these
securities in concert with the seasonal ebb and flow of supply and demand, we
have been able to boost the Fund's income stream in recent months.
Our outlook remains one of cautious optimism. We believe the portfolio's
neutral weighted average maturity, carefully chosen variable-rate security
holdings, and strict credit quality standards can help the Fund to continue
to produce competitive returns. As always, we will continue to monitor the
market, the economy, and Federal Reserve Board policy closely in order to
keep the Fund's strategy on target for current investment conditions.
Sincerely,
[John Flahive signature logo]
John Flahive
Portfolio Manager
November 12, 1996
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
<TABLE>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Principal
Tax Exempt Investments-100.0% Amount Value
_______ ______
<S> <C> <C>
Alaska-.5%
Anchorage, Higher Education Revenue, Refunding, VRDN (Alaska Pacific
University)
3.55% (LOC; Seattle First National Bank) (a,b)............................ $ 1,200,000 $ 1,200,000
Arizona-2.0%
Pinal County Industrial Development Authority, HR, VRDN
(Casa Grande Regional Medical Center) 3.60% (LOC; Chase Manhattan Bank) (a,b) 5,000,000 5,000,000
California-2.1%
Eastern Municipal Water District, Water and Sewer Revenue, COP, Refunding,
VRDN
3.40%, Series B (Insured; FGIC) (a)....................................... 200,000 200,000
Fairfield Industrial Development Authority, IDR, VRDN (R. Dakin and Co.
Project)
3.40% (LOC; Bank of America) (a,b)........................................ 600,000 600,000
City of Glendale, Reliance Development Revenue, VRDN (Public Parking)
3.40% (LOC; Barclays Bank) (a,b).......................................... 900,000 900,000
Los Angeles Regional Airport Improvement Corporation, Lease Revenue, VRDN
(American Airlines) 3.65% (LOC; Wachovia Bank and Trust Co.) (a,b)........ 1,100,000 1,100,000
Regional Airports Improvement Corporation of Los Angeles, Terminal Completion Revenue,
VRDN (Los Angeles International Airport) 3.65% (LOC; Societe Generale) (a,b) 2,400,000 2,400,000
Colorado-1.8%
Arapahoe County, IDR, VRDN (CSX Beckett Aviation) 3.68% (LOC; Barclays Bank) (a,b) 700,000 700,000
Colorado Health Facilities Authority, Revenue, VRDN (North Colorado Medical
Center)
3.55% (BPA; Credit Suisse and Insured; MBIA) (a).......................... 200,000 200,000
Dover Valley Metropolitan District of Arapahoe County, Revenue, Refunding
3.90%, Series B, 11/1/97 (LOC; Banque Nationale de Paris) (b)............. 1,000,000 1,000,000
Lakewood, IDR, VRDN (Service Merchandise Co., Inc. Project)
3.65% (LOC; Canadian Imperial Bank of Commerce) (a,b)..................... 500,000 500,000
South Denver Metropolitan District 3.65%, 12/1/96 (LOC; Barclays Bank) (b).. 2,000,000 2,000,000
City of Thornton, IDR, VRDN (Service Merchandise Co., Inc. Project)
3.65% (LOC; Canadian Imperial Bank of Commerce) (a,b)..................... 200,000 200,000
Florida-4.1%
Florida Multi-Family Housing Finance Agency, Refunding, VRDN
3.75%, Series E (LOC; Comerica Bank) (a,b)................................ 1,200,000 1,200,000
Hillsborough County Port District, Special Purpose Revenue, Refunding, VRDN (IMC Fertilizer)
3.55% (LOC; Rabobank Nederland) (a,b)..................................... 2,100,000 2,100,000
Pinellas County Educational Facilities Authority,
Pooled Independent Higher Education Revenue, CP
3.55%, 11/25/96 (BPA; Credit Suisse and Insured; MBIA).................... 3,700,000 3,700,000
Putnam County Development Authority, PCR, VRDN (Seminole Electric)
3.60%, Series H-1 (Corp. Guaranty; National Rural Utility Co-Op) (a)...... 1,100,000 1,100,000
West Orange Memorial Hospital, Tax District Revenue, CP
3.50%, Series 1-A, 11/7/96 (LOC; Rabobank Nederland) (b).................. 2,300,000 2,300,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Tax Exempt Investments (continued) Amount Value
_______ ______
Georgia-2.2%
Cobb County Development Authority, Revenue, VRDN (Nuclear Power Inc. Project)
3.60% (LOC; Trust Co. Bank) (a,b)......................................... $ 1,730,000 $ 1,730,000
Fulton County Development Authority, Industrial Revenue, VRDN
3.65% (LOC; National Westminster Bank) (a,b).............................. 1,900,000 1,900,000
Hart County Industrial Building Authority, IDR, Refunding, VRDN
(Dundee Mills Inc. Project) 3.75% (LOC; Trust Co. Bank) (a,b)............. 2,000,000 2,000,000
Illinois-12.1%
Alsip, IDR, VRDN (Ardco Inc. Project) 3.75% (LOC; Harris Trust and Savings Bank) (a,b) 1,565,000 1,565,000
Burbank, IDR, VRDN (Service Merchandise Co., Inc. Project)
3.65% (LOC; Canadian Imperial Bank of Commerce) (a,b)..................... 400,000 400,000
City of Chicago, VRDN 3.50%, Series B (LOC; Canadian Imperial Bank of Commerce) (a,b) 1,000,000 1,000,000
Chicago O'Hare International Airport, General Airport Revenue, VRDN (Second
Lien)
3.50%, Series B (LOC; Societe Generale) (a,b)............................. 780,000 780,000
Illinois Development Finance Authority, VRDN:
IDR:
(Columbia Graphics Corp. Project) 3.75% (LOC; Harris Trust and Savings Bank) (a,b) 2,400,000 2,400,000
(Overton Gear and Tool Corp.) 3.75% (LOC; Harris Trust and Savings Bank) (a,b) 2,100,000 2,100,000
Revenue:
(Aurora Central Catholic High School) 3.60% (LOC; Northern Trust Co.) (a,b) 1,000,000 1,000,000
(Council Jewish Elderly) 3.50% (LOC; Lasalle National Bank) (a,b)....... 3,500,000 3,500,000
(Saint Paul's House Project) 3.60% (LOC; Lasalle National Bank) (a,b)... 1,625,000 1,625,000
(WBEZ Alliance Inc. Project) 3.65% (LOC; Lasalle National Bank) (a,b)... 1,000,000 1,000,000
Illinois Educational Facilities Authority, Revenues, VRDN:
(Aurora University) 3.60% (LOC; Harris Trust and Savings Bank) (a,b)...... 500,000 500,000
(Cultural Pool) 3.50% (LOC; First Chicago Corp.) (a,b).................... 3,000,000 3,000,000
Illinois Health Facilities Authority, Revenue, VRDN (Palos Community
Hospital)
3.45%, Series B (LOC; ABN-Amro Bank) (a,b)................................ 2,000,000 2,000,000
City of Lockport, IDR, VRDN (Panduit Corp. Project) 3.65% (LOC; Commerzbank) (a,b) 3,200,000 3,200,000
City of Naperville, IDR, VRDN (Service Merchandise Co., Inc. Project) 3.65% (a) 1,800,000 1,800,000
City of New Lenox, IDR, VRDN (Panduit Corp. Project) 3.75% (LOC; Commerzbank) (a,b) 1,300,000 1,300,000
City of Northbrook, IDR, Refunding, VRDN (Euromarket Designs Inc.)
3.60% (LOC; Harris Trust and Savings Bank) (a,b).......................... 100,000 100,000
City of Zion, Revenue, VRDN (H & M Enterprises LLC Project)
3.70% (LOC; Federal Home Loan Banks) (a,b)................................ 3,050,000 3,050,000
Indiana-6.8%
City of Auburn, EDR, VRDN (RJ Tower Corp. Project) 3.90% (LOC; Comerica Bank) (a,b) 325,000 325,000
Fort Wayne Hospital Authority, HR, VRDN (Parkview Memorial Hospital)
3.50%, Series B (LOC; Bank of America) (a,b).............................. 1,950,000 1,950,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Tax Exempt Investments (continued) Amount Value
_______ ______
Indiana (continued)
Indiana Educational Facilities Authority, Revenue, VRDN
(University of Notre Dame Du Lac Project)
3.40% (Liquidity; First National Bank of Chicago) (a)..................... $ 800,000 $ 800,000
Indiana Health Facilities Financing Authority, Revenue, VRDN
(Capital-Access Pooled Program) 3.55% (LOC; Banc One Corp.) (a,b)......... 1,500,000 1,500,000
Indiana Hospital Equipment Financing Authority, Revenue, VRDN
3.55%, Series A (BPA; The Bank of New York and Insured; MBIA) (a)......... 8,275,000 8,275,000
City of Whiting, PCR (Amoco Project-Standard Oil)
3.80%, 2/15/97 (Corp. Guaranty; Amoco Credit Corp.)....................... 4,100,000 4,100,000
Kentucky-.4%
Mayfield, Multi-City Lease Revenue, VRDN (League of Cities Funding Trust)
3.75% (LOC; PNC Bank) (a,b)............................................... 1,000,000 1,000,000
Louisiana-5.3%
East Baton Rouge Parish, PCR, Refunding, VRDN (Rhone Poulenc Inc. Project)
3.60% (LOC; Banque Nationale de Paris) (a,b).............................. 2,200,000 2,200,000
Louisiana Public Facilities Authority, Care Systems Revenue, CP (Sisters of
Charity Incarnation)
3.50%, 11/26/96 (SBPA; Credit Suisse)..................................... 6,100,000 6,100,000
Louisiana Recovery District, Sales Tax Revenue 3.90%, 7/1/97
(Escrowed in; U.S. Government Securities, BPA; Swiss Bank Corp. and Insured; FGIC) 5,000,000 5,000,000
Maine-.8%
State of Maine, TAN 4.50%, 6/27/97.......................................... 2,000,000 2,007,841
Maryland-1.7%
Montgomery County, Consolidated, CP
3.35%, 11/5/96 (Liquidity; Union Bank of Switzerland)..................... 2,300,000 2,300,000
University of Maryland, University Revenues, VRDN (Revolving Equipment Loan
Program)
3.40%, Series B (SBPA; Student Loan Marketing Association) (a)............ 2,000,000 2,000,000
Massachusetts-6.8%
Town of Andover, Revenue 6.50%, 11/1/96..................................... 600,000 600,000
Town of Leverett, BAN 3.98%, 12/6/96........................................ 107,620 107,635
Massachusetts Bay Transportation Authority:
CP 3.55%, Series C, 11/26/96 (LOC; Westdeutsche Landesbank) (b)........... 1,900,000 1,900,000
Notes 4.75%, Series B, 9/5/97............................................. 2,000,000 2,012,978
Massachusetts Health and Educational Facilities Authority, Revenue, VRDN:
(Amherst College) 3.40%, Series F (Guaranteed by; Amherst College) (a).... 1,300,000 1,300,000
(Childrens Hospital) 3.60%, Series F (SBPA; Sanwa Bank) (a)............... 1,815,000 1,815,000
(Harvard University) 3.35%, Series F (a).................................. 835,000 835,000
Massachusetts Industrial Finance Agency, RRR, Refunding, VRDN (Ogden
Haverhill Project)
3.35%, Series A (LOC; Union Bank of Switzerland) (a,b).................... 2,000,000 2,000,000
Middlesex County, RAN 3.69%, 12/13/96....................................... 1,500,000 1,500,011
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Tax Exempt Investments (continued) Amount Value
_______ ______
Massachusetts (continued)
Town of Middleboro, BAN 3.49%, 3/6/97....................................... $ 1,733,000 $ 1,732,290
City of Worchester:
BAN 3.97%, 8/28/97........................................................ 1,500,000 1,502,324
Municipal Purpose Loan Revenue, Refunding 5%, Series A, 8/1/97 (Insured; AMBAC) 1,640,000 1,652,467
Michigan-2.4%
Flint Hospital Building Authority, Revenue, VRDN (Hurley Medical Center)
3.50%, Series B (LOC; Lasalle National Bank) (a,b)........................ 300,000 300,000
Michigan Building Authority, Revenue, CP
3.65%, Series 1, 12/12/96 (LOC; Canadian Imperial Bank of Commerce) (b)... 2,600,000 2,600,000
Michigan Municipal Bond Authority, Revenue, Notes 4.50%, 7/3/97............. 3,000,000 3,011,572
Minnesota-2.2%
Minneapolis Special School District No. 001, Revenue 5%, 2/1/97............. 5,500,000 5,517,151
Missouri-1.5%
Kansas City Industrial Development Authority, MFHR, VRDN
(Timberline Village Apartments Project) 3.60% (LOC; Bank of America) (a,b) 1,300,000 1,300,000
Saint Charles County Industrial Development Authority, Industrial Revenue,
Refunding, VRDN
(Cedar Ridge Apartments) 3.60%, Series A (LOC; Bank One) (a,b)............ 2,505,000 2,505,000
Montana-.2%
Butte-Silver Bow, PCR, Refunding, VRDN (Rhone-Poulenc Inc. Project)
3.50% (LOC; Banque Nationale de Paris) (a,b).............................. 405,000 405,000
Nevada-.4%
Clark County, IDR, VRDN (Nevada Power Co. Project)
3.75%, Series A (LOC; Barclays Bank) (a,b)................................ 1,000,000 1,000,000
New Hampshire-.6%
New Hampshire Higher Educational and Health Facilities Authority, Revenue
(Dartmouth Educational Loan Corp.) 3.80%, 6/1/97.......................... 1,575,000 1,575,000
New York-.6%
Suffolk County, Refunding (Southwest Sewer District) 4%, 2/1/97 (Insured; MBIA) 1,400,000 1,401,701
North Carolina-.8%
North Carolina Educational Facilities Finance Agency, Revenue, VRDN
(Bowman Gray School Medical Project) 3.50% (LOC; Wachovia Bank) (a,b)..... 2,000,000 2,000,000
North Dakota-.4%
City of Fargo, Revenue, Refunding 3.80%, 7/1/97............................. 890,000 889,270
Oregon-1.3%
City of Portland, Revenue 7%, Series B, 6/1/97.............................. 1,130,000 1,150,048
Umatilla County Hospital Facility Authority, HR, VRDN (Franciscan Health
System)
3.55% (LOC; Societe Generale) (a,b)....................................... 2,000,000 2,000,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Tax Exempt Investments (continued) Amount Value
_______ ______
Pennsylvania-4.4%
Allegheny County Industrial Development Authority, PCR, CP (Duquesne)
3.75%, Series A, 11/7/96 (LOC; Canadian Imperial Bank of Commerce) (b).... $ 3,500,000 $ 3,500,000
Bucks County Industrial Development Authority, Revenue, VRDN (SHV Real Estate
Inc.)
3.60% (LOC; ABN-Amro Bank) (a,b).......................................... 200,000 200,000
Chartiers Valley Industrial and Commercial Development Authority,
Commercial Development Revenue (William Penn Place Project) 3.85% (LOC; PNC
Bank) (a,b)................................................................. 1,000,000 1,000,000
Chester County Industrial Development Authority, IDR, VRDN (Keystone Foods
Corp.)
3.95% (LOC; Bank of Scotland) (a,b)....................................... 1,700,000 1,700,000
Jeanette Health Service Authority, HR, VRDN (Jeanette District Memorial
Hospital Project)
3.85% (LOC; PNC Bank) (a,b)............................................... 600,000 600,000
Lehigh County Industrial Development Authority, PCR, VRDN (Allegheny Electric
Co-Op)
3.75% (LOC; Rabobank Nederland) (a,b)..................................... 120,000 120,000
Moon Industrial Development Authority, IDR, VRDN (Executive Office
Association Project)
3.65% (LOC; PNC Bank) (a,b)............................................... 1,250,000 1,250,000
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue, VRDN
3.60%, Series C (LOC; Student Loan Marketing Association) (a,b)........... 100,000 100,000
Union County Higher Educational Facilities Financing Authority, University
Revenues
(Bucknell University)
7.75%, 4/1/97 (Escrowed in; U.S. Government Securities and Insured; MBIA). 1,000,000 1,019,193
Warren County Hospital Authority, Revenue, VRDN (Warren General Hospital
Project)
3.65%, Series B (LOC; PNC Bank) (a,b)..................................... 1,000,000 1,000,000
Washington County Industrial Development Authority, IDR, Refunding, VRDN
(Wetterau Finance Co. Project) 3.65% (LOC; PNC Bank) (a,b)................ 500,000 500,000
South Carolina-3.1%
State of South Carolina, Revenue (State Institution) 5.80%, Series B, 11/1/96 100,000 100,000
South Carolina Job-Economic Development Authority, EDR, VRDN (Wellman Inc.
Project)
3.65% (LOC; Wachovia Bank and Trust Co.) (a,b)............................ 5,300,000 5,300,000
City of Walhalla, Revenue, Refunding, VRDN (Avondale Mills Inc. Project)
3.60% (LOC; Trust Co. Bank) (a,b)......................................... 1,600,000 1,600,000
York County, PCR, VRDN (North Carolina Electric Project)
3.60%, Series N-2 (Corp. Guaranty; National Rural Utility Co-Op) (a)...... 750,000 750,000
Tennessee-3.4%
Knox County Industrial Development Board, Industrial Revenue, VRDN
(Service Merchandise Co., Inc. Project) 3.65% (LOC; Industrial Bank of Japan) (a,b) 400,000 400,000
Metropolitan Nashville Airport Authority, Special Facilities Revenue,
Refunding, VRDN
(American Airlines Project) 3.55%, Series A (LOC; Credit Suisse) (a,b).... 8,200,000 8,200,000
Texas-12.5%
City of Austin, Utilities Systems Revenue, Refunding 5.20%, 11/15/96 (Insured; AMBAC) 250,000 250,141
Cypress-Fairbanks Independent School District, Revenue
5.40%, 2/1/97 (Guaranteed by; Permanent School Fund Guaranty)............. 2,000,000 2,008,660
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Tax Exempt Investments (continued) Amount Value
_______ ______
Texas (continued)
Dallas Industrial Development Corporation, IDR, VRDN (Sealed Power Corp.)
3.75% (LOC; National Bank of Detroit) (a,b)............................... $ 1,100,000 $ 1,100,000
Gulf Coast Industrial Development Authority, Marine Terminal Revenue (Amoco
Oil Project)
3.60%, 12/1/96 (Corp. Guaranty; Amoco Credit Corp.)...................... 2,000,000 2,000,000
Gulf Coast Waste Disposal Authority, Water Pollution Control, Contract
Revenue
(Amoco Oil-Amoco Chemicals) 3.70%, 1/15/97 (Corp. Guaranty; Amoco Credit Corp.) 2,000,000 2,000,000
Harris County Health Facilities Development Corporation, Health Care System
Revenue, CP
(Sisters of Charity) 3.55%, 11/26/96 (SBPA; Credit Suisse)................ 3,400,000 3,400,000
Hockley County Industrial Development Corporation, PCR
(Amoco Project-Standard Oil Co.) 3.75%, 3/1/97 (Corp. Guaranty; Standard Oil Co.) 2,300,000 2,300,355
City of Houston, CP 3.45%, 12/30/96 (Liquidity; Toronto-Dominion Bank)...... 5,000,000 5,000,000
Lower Neches Valley Authority, PCR (Chevron USA Inc. Project)
3.65%, 2/18/97 (Corp. Guaranty; Chevron USA Inc.)......................... 1,000,000 1,000,000
North Texas Higher Education Authority, Student Loan Revenue, VRDN:
3.60%, Series F (Insured; AMBAC) (a)...................................... 1,100,000 1,100,000
Refunding
3.60%, Series A (BPA; Student Loan Marketing Association and Insured; AMBAC) (a) 1,900,000 1,900,000
Nueces County Health Facilities Development Corporation, Revenue, VRDN
(Driscoll Foundation Children) 3.60% (LOC; Bank One) (a,b)................ 2,395,000 2,395,000
City of Pasadena, Revenue 6.20%, 2/15/97 (Escrowed in; U.S. Government Securities) 2,210,000 2,225,930
State of Texas, TRAN:
4.75%, Series A, 8/29/97.................................................. 4,000,000 4,025,370
Refunding 6.70%, 12/1/96.................................................. 630,000 631,400
Utah-5.4%
Salt Lake County, TRAN 4.50%, 12/31/96...................................... 2,150,000 2,152,629
State of Utah Board of Regents, Student Loan Revenue, VRDN:
3.50%, Series B (BPA; Dredsner Bank and Insured; AMBAC) (a)............... 200,000 200,000
3.60%, Series Q (BPA; Barclays Bank and Insured; AMBAC) (a)............... 5,000,000 5,000,000
Washington County School District, TAN (Saint George) 4.25%, 1/31/97........ 2,000,000 2,002,187
City of West Jordan, TRAN 4%, 6/30/97....................................... 4,350,000 4,350,000
Vermont-.4%
State of Vermont, Notes 6.80%, 2/1/97....................................... 1,000,000 1,007,630
Virginia-.8%
Campbell County Industrial Development Authority, Exempt Facility Revenue,
VRDN
(Hadson Power 12) 3.65%, Series A (LOC; Barclays Bank) (a,b).............. 1,600,000 1,600,000
Fairfax County, Revenue, Refunding
6.60%, Series B, 11/1/96 (Escrowed in; U.S. Treasury Securities).......... 300,000 303,000
Washington-1.7%
Marysville, Water and Sewer Revenue, Refunding 4.20%, 12/1/96 (Insured; MBIA) 200,000 200,144
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Tax Exempt Investments (continued) Amount Value
_______ ______
Washington (continued)
Port Seattle Industrial Development Corporation, Revenue, Refunding, VRDN
(Sysco Food Services Project) 3.65% (a)................................... $ 1,000,000 $ 1,000,000
Snohomish County Public Utility District No. 001, Electric Revenue, Refunding
(Generation Systems)
8%, Series A, 1/1/97 (Escrowed in; U.S. Government Securities and Insured; MBIA) 1,000,000 1,026,907
Washington State Health Care Facilities Authority, Revenue, VRDN
(Fred Hutchinson Cancer Center) 3.55%, Series C (LOC; Morgan Guaranty Trust Co.) (a,b) 2,000,000 2,000,000
West Virginia-1.4%
Putnam County, IDR, VRDN (FMC Corp.) 3.75% (LOC; Union Bank of Switzerland) (a,b) 700,000 700,000
West Virginia Public Energy Authority, Energy Revenue, CP (Morgantown
Association Project)
3.65%, Series A, 11/7/96 (LOC; Swiss Bank Corp.) (b)...................... 2,800,000 2,800,000
Wisconsin-4.3%
City of Carlton, PCR, VRDN (Wisconsin Power and Light) 3.65% (a)............ 1,000,000 1,000,000
City of Platteville, IDR, VRDN (Woodward Communications Project)
3.75% (LOC; Harris Trust and Savings Bank) (a,b).......................... 2,850,000 2,850,000
Sheboygan, PCR, Refunding, VRDN (Wisconsin Electric Power Co.) 3.60% (a).... 2,850,000 2,850,000
State of Wisconsin, Revenue 7.25%, 5/1/97................................... 3,825,000 3,926,243
Wisconsin Health Facilities Authority, Revenue, VRDN (Franciscan Health Care)
3.45%, Series A (LOC; Toronto-Dominion Bank) (a,b)........................ 200,000 200,000
Wyoming-2.8%
Green River and Sweetwater Counties Joint Powers Water Board, Revenue,
Refunding
4.25%, 3/1/97 (Insured; FSA).............................................. 650,000 650,402
Green River, VRDN (Rhone Pollenc Inc. Project):
PCR, Refunding 3.60% (LOC; ABN-Amro Bank) (a,b)........................... 4,200,000 4,200,000
Revenue 3.65% (LOC; Societe Generale) (a,b)............................... 2,100,000 2,100,000
U.S. Related-2.8%
Commonwealth of Puerto Rico Government Development Bank, CP:
3.55%, 11/14/96 (Guaranteed by; Puerto Rico Government Development Bank).. 5,000,000 5,000,000
3.50%, 11/18/96 (Guaranteed by; Puerto Rico Government Development Bank).. 2,000,000 2,000,000
_______
TOTAL INVESTMENTS (cost $250,314,056)....................................... $250,315,479
=======
</TABLE>
<TABLE>
DREYFUS MUNICIPAL RESERVES
Summary of Abbreviations
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
BAN Bond Anticipation Notes Insurance Association
BPA Bond Purchase Agreement MFHR Multi-Family Housing Revenue
COP Certificate of Participation PCR Pollution Control Revenue
CP Commercial Paper RAN Revenue Anticipation Notes
EDR Economic Development Revenue RRR Resources Recovery Revenue
FGIC Financial Guaranty Insurance Company SBPA Standby Bond Purchase Agreement
FSA Financial Security Association TAN Tax Anticipation Notes
HR Hospital Revenue TRAN Tax and Revenue Anticipation Notes
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
Summary of Combined Ratings (Unaudited)
Fitch (c) or Moody's or Standard & Poor's Percentage of Value
___- ____ ________- _________-
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 75.2%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 20.1
Not Rated (f) Not Rated (f) Not Rated (f) 4.7
___-
100.0%
====
</TABLE>
Notes to Statement of Investments:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit. At October 31, 1996, 52.6% of the
Fund's net assets are backed by letters of credit issued by domestic
banks, foreign banks, government agencies and brokerage firms.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) P1 and A1 are the highest ratings assigned tax exempt commercial
paper by Moody's and Standard & Poor's, respectively.
(e) Notes which are not F, MIG or SP rated are represented by bond
ratings of the issuers.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Fund's Board of Directors to be of
comparable quality to those rated securities in which the Fund may
invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
_______ _______
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $250,314,056 $250,315,479
Interest receivable........................ 1,493,182
_______
251,808,661
_______
LIABILITIES: Due to The Dreyfus Corporation and affiliates 109,301
Due to Distributor......................... 100
Cash overdraft due to Custodian............ 13,160,962
Payable for investment securities purchased 3,036,560
Dividends payable.......................... 249,498
_______
16,556,421
_______
NET ASSETS.................................................................. $235,252,240
=======
REPRESENTED BY: Paid-in capital............................ $235,117,144
Accumulated distributions in excess of
.. investment income-net (1,575)
Accumulated net realized gain (loss) on investments 135,248
Accumulated gross unrealized appreciation (depreciation)
...on investments 1,423
_______
NET ASSETS.................................................................. $235,252,240
=======
</TABLE>
<TABLE>
NET ASSET VALUE PER SHARE
________________-
Investor Shares Class R
_______ _______
<S> <C> <C>
Net Assets................................................................ $ 14,073,814 $221,178,426
Shares Outstanding........................................................ 14,066,868 221,049,673
NET ASSET VALUE PER SHARE................................................. $1.00 $1.00
=== ===
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income............................ $8,659,200
EXPENSES: Management fee-Note 2(a)................... $1,182,931
Distribution fees (Investor shares)-Note 2(b) 32,872
Directors' fees and expenses-Note 2(c)..... 11,987
_____-
Total Expenses......................... 1,227,790
_____-
INVESTMENT INCOME-NET....................................................... 7,431,410
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 1(b):
Net realized gain (loss) on investments.... $ 136,101
Net unrealized appreciation (depreciation) on investments 1,423
_____-
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 137,524
_____-
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $7,568,934
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1996 October 31, 1995
_________ ________-
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................... $ 7,431,410 $ 7,580,263
Net realized gain (loss) on investments.................................. 136,101 (853)
Net unrealized appreciation (depreciation) on investments................ 1,423 _-
________ ______
Net Increase (Decrease) in Net Assets Resulting from Operations...... 7,568,934 7,579,410
________ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Investor shares........................................................ (481,550) (665,686)
Class R shares......................................................... (6,949,860) (6,913,817)
________ ______
Total Dividends...................................................... (7,431,410) (7,579,503)
________ ______
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:
Investor shares........................................................ 13,776,159 13,061,878
Class R shares......................................................... 922,707,532 744,180,112
Issued in exchange for shares of Dreyfus/Laurel Tax Free Money Fund:
Investor shares........................................................ _- 21,402,629
Class R shares......................................................... _- 17,563,875
Dividends reinvested:
Investor shares........................................................ 469,830 582,123
Class R shares......................................................... 1,964,486 2,258,237
Cost of shares redeemed:
Investor shares........................................................ (17,943,271) (18,443,197)
Class R shares......................................................... (908,996,571) (763,734,703)
________ ______
Increase (Decrease) in Net Assets from Capital Stock Transactions.... 11,978,165 16,870,954
________ ______
Total Increase (Decrease) in Net Assets............................ 12,115,689 16,870,861
NET ASSETS:
Beginning of Period...................................................... 223,136,551 206,265,690
________ ______
End of Period............................................................ $ 235,252,240 $ 223,136,551
======== ======
DISTRIBUTIONS IN EXCESS OF INVESTMENT INCOME-NET........................... $ (1,575) $ (1,575)
________ ______
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL RESERVES
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 information provided in the Fund's
financial statements.
<TABLE>
Investor Shares
________________-________________-
Year Ended October 31,
________________-________________-
<S> <C> <C> <C>
PER SHARE DATA: 1996 1995 1994(1)(2)
___ ___- ____
Net asset value, beginning of period.................................. $ 1.00 $ 1.00 $ 1.00
___- ___- ___-
Investment Operations:
Investment income-net................................................. .029 .032 .012
Distributions:
Dividends from investment income-net.................................. (.029) (.032) (.012)
___- ___- ___-
Net asset value, end of period........................................ $ 1.00 $ 1.00 $ 1.00
___- ___- ___-
___- ___- ___-
TOTAL INVESTMENT RETURN................................................... 2.96% 3.28% 1.23%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... .70% .70% .70%(4)
Ratio of net investment income
to average net assets............................................... 2.92% 3.33% 2.11%(4)
Net Assets, end of period (000's Omitted)............................. $14,074 $17,764 $1,161
(1) 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.
(2) The Fund commenced selling Investor shares on April 20, 1994. Those shares outstanding prior to April 4, 1994 were
redesignated as Trust shares. Effective October 17, 1994, the Fund's Trust
shares were reclassified as Class R shares.
(3) Not annualized.
(4) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL RESERVES
FINANCIAL HIGHLIGHTS (CONTINUED)
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 information provided in the Fund's
financial statements.
<TABLE>
Class R Shares
____________________________________________________________
Year Ended October 31,
____________________________________________________________
PER SHARE DATA: 1996 1995 1994(1)(2) 1993 1992
___- ___- ___- ___- ___-
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
___- ___- ___- ___- ___-
Investment Operations:
Investment income-net........................ .031 .034 .023(3) .021 .029
___- ___- ___- ___- ___-
Distributions:
Dividends from investment income-net......... (.031) (.034) (.023) (.021) (.029)
___- ___- ___- ___- ___-
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
___- ___- ___- ___- ___-
___- ___- ___- ___- ___-
TOTAL INVESTMENT RETURN.......................... 3.17% 3.48% 2.29% 2.10% 2.94%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .50% .50% .51%(4) .50%(5) .50%(5)
Ratio of net investment income
to average net assets...................... 3.11% 3.41% 2.30% 2.08% 2.90%
Net Assets, end of period (000's Omitted).... $221,178 $205,373 $205,105 $187,830 $184,719
(1) 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.
(2) The Fund commenced selling Investor shares on April 20, 1994. Those shares outstanding prior to April 4, 1994 were
redesignated as Trust shares. Effective October 17, 1994, the Fund's Trust
shares were reclassified as Class R shares.
(3) Net investment income before expenses reimbursed by the investment adviser for the year ended October 31, 1994 was $0.0218.
(4) Annualized expense ratio before expenses reimbursed by the investment adviser for the year ended October 31, 1994 was 0.61%.
(5) For the years ended October 31, 1993 and 1992, the investment adviser reimbursed expenses of the Fund amounting to $.0024
and $.0029 per share, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL RESERVES
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 Municipal Reserves (the "Fund"). The
Fund's investment objective is to seek a high level of current income
consistent with stability of principal by investing in high-grade money
market instruments. 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 Fund is authorized to issue 1 billion
of $.001 par value Capital Stock in each of the following classes of shares:
Investor Class and Class R. 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.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has
been determined by the Fund's Board of Directors to represent the fair value
of the Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for the Fund; the Fund has adopted certain investment,
portfolio valuation and dividend and distribution policies to enable it to do
so. There is no assurance, however, that the Fund will be able to maintain a
stable net asset value per share of $1.00.
(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. Interest
income, adjusted for amortization of premiums on investments, is recognized
on the accrual basis. Cost of investments represents amortized cost.
(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.
DREYFUS MUNICIPAL RESERVES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net; such
dividends are paid monthly. Dividends from net realized capital gain 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.
(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.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 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 .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 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 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. During the period October 31, 1996,
the distribution fee for the Investor shares was $32,872.
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 meeting 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 a
nd expenses are charged and allocated to each series based on net assets.
DREYFUS MUNICIPAL RESERVES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 4-REORGANIZATION:
On November 7, 1994, Dreyfus Municipal Reserves, acquired the assets and
certain liabilities of the Dreyfus/Laurel Tax-Free Money Fund, in exchange
for shares of Dreyfus Municipal Reserves, pursuant to a plan of
reorganization approved by Dreyfus/Laurel Tax-Free Money Fund shareholders on
May 20, 1994. Total shares issued by Dreyfus Municipal Reserves and the total
net assets of Dreyfus/Laurel Tax-Free Money Fund acquired are set forth in
the Statement of Changes in Net Assets.
DREYFUS MUNICIPAL RESERVES
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
THE DREYFUS/LAUREL FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Municipal Reserves of The
Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years or 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Dreyfus Municipal Reserves of The Dreyfus/Laurel Funds, Inc. as
of October 31, 1996, the results of its operations, changes in its net assets
and its financial highlights for each of the years or periods set forth
above, in conformity with generally accepted accounting principles.
[KPMG Peat Marwick signature logo]
New York, New York
December 9, 1996
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the fiscal year ended
October 31, 1996 as "exempt-interest dividends" (not generally subject to
regular Federal income tax).
[Dreyfus lion "d" logo]
DREYFUS MUNICIPAL RESERVES
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 324/724AR9610
[Dreyfus logo]
Municipal Reserves
Annual Report
October 31, 1996
<PAGE>
Institutional
S&P 500 Stock
Index Fund
Annual Report
October 31, 1996
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- ------------------------------------------------
Letter to Shareholders
Dear Shareholder:
It is a pleasure to send you this annual report for the Dreyfus
Institutional S&P 500 Stock Index Fund covering the fiscal year ended October
31, 1996.
Your Fund seeks to replicate the performance of the Standard & Poor's
500 Composite Stock Price Index (S&P 500). For the twelve-month period ended
October 31, 1996, your Fund provided a total return of 23.78%.* This compares
with a total return of 24.08% for the S&P 500.** The difference is accounted
for mainly by transaction fees and other Fund expenses.
While all segments of the U.S. equity market provided strong returns
over the fiscal year, large capitalization stocks led the way. The return on
the S&P 500 compares with 17.35% for the S&P MidCap 400 Index.***
ECONOMIC REVIEW
The U.S. economy is enjoying a good year. First, the tightening labor
market has failed to move price inflation higher. Second, economic growth has
slowed since midyear from the torrid pace of the first half. Third, corporate
profits are holding up quite well, albeit growing more slowly than last year.
These factors have vindicated Federal Reserve Board (the "Fed") inaction,
keeping market interest rates stable. Although the economy has simmered down,
it is nevertheless operating with very little slack.
The Fed twice thwarted market expectations for tightening interest
rates this year, taking the view instead that steady growth won't so easily
foster inflation in this cycle. Indeed, the unemployment rate has plunged
towards 5% this year and wage growth has outpaced price inflation for the first
time since 1989. Yet there is little evidence of accelerating price inflation
to date. Even higher oil prices have failed to lift prices elsewhere. This is
very different from 1994 when the Fed preemptively hiked interest rates to stem
anticipated price inflation that subsequently did not materialize.
After rising 3.3% in the first half of this year, real GDP growth
slowed to a near-trend 2.2% in the third quarter. Early evidence for the
fourth quarter indicates sustained near-trend growth. In particular, consumer
spending has been lackluster since midyear, despite solid income growth and
high confidence levels. And new highs in home sales have not been matched by
new records in homebuilding. Spending on capital goods has rebounded, however,
while the strength of new export orders indicates better growth ahead for this
sector. Capital goods and exports typically dominate the business cycle's late
phase. Corporate profit growth, albeit slower than in 1995, generally
continues to surprise on the upside.
Interest rates this fall are not much different than in the spring.
Short-term rates have especially stabilized in recent months based on the view
that Fed tightening is unlikely this year. Long-term rates have recently
fallen. Should the economy show signs of reaccelerating, long-term rates would
likely rise.
As the U.S. economy moves into the late-cycle phase it is, as usual,
out of sync with most business cycles overseas which are at a much earlier
stage. This portends faster world growth in 1997. How well the U.S. economy
can participate in an accelerating growth world economy without igniting
inflation remains to be seen.
MARKET OVERVIEW
The stock market in the last twelve months shrugged off a variety of
potentially negative factors to barrel its way to new heights.
In late 1995 and early 1996 economic activity appeared to slow down
enough to prompt the Fed to lower interest rates in January of this year. By
springtime, when the Fed had apparently suspended its anti-inflationary
measures, investors began to worry about signs of strength exhibited by the
economy. Though the Fed took no action to raise interest rates, investor
worries about that possibility restrained an ebullient stock market.
<PAGE>
By July, fears of higher interest rates, plus concern that some stock
prices--technology issues in particular--might have gone too far, too fast,
caused a temporary retreat in equity prices. As fall approached, however, the
underlying factors of a strong economy, low inflation and investor optimism
took hold again and propelled stock prices to new highs. Chief beneficiaries
were the large capitalization stocks. It took a while for technology stocks
and small caps to recover the ground lost in the early summer. However, the
trend across the board was clearly bullish.
As the fiscal year closed, there were some negative factors on the
horizon. Corporate profits may have passed their peak. Consumer demand seemed
to be slowing in some sectors. There were also hints that employment costs,
which have been quite stable for a long time, might face upward pressures.
The market, however, seemed to soar above these factors. The prospect
(now a reality) of a split government in Washington, with Republicans
controlling Congress and Democrats in the White House, was seen as favorable
for stock prices. Moreover, the specter of renewed inflation remained just
that--nothing more than a specter. Furthermore, individual investors continued
to pour money into equity mutual funds--not at constantly increasing rates, to
be sure, but still at a pace that gave strong impetus for higher stock prices.
We appreciate that you have asked us to manage the assets invested in
Dreyfus Institutional S&P 500 Stock Index Fund. At this season, we would also
like to extend our best wishes for a healthy and happy New Year.
Sincerely,
Steven Falci
Portfolio Manager
November 22, 1996
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC.--The Standard & Poor's 500
Composite Stock Price Index is a widely accepted unmanaged index of stock
market performance. "Standard & Poor's," "S&P," "S&P 500," "Standard &
Poor's 500" and "500" are trademarks of Standard & Poor's, a division of
The McGraw-Hill Companies, Inc. and have been licensed for use by the Fund.
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's
and Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.
***SOURCE: LIPPER ANALYTICAL SERVICES, INC.--The Standard & Poor's MidCap 400
Index is a broad-based Index of 400 companies with market capitalization
generally ranging from $50 million to $10 billion and is a widely accepted,
unmanaged index of medium-cap stock market performance.
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund October 31, 1996
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $100,000 INVESTMENT IN DREYFUS
INSTITUTIONAL S&P 500 STOCK INDEX FUND AND THE STANDARD & POOR'S
500 COMPOSITE STOCK PRICE INDEX
Dollars
GRAPH GOES HERE
$166,274
Standard & Poor's 500
Composite Stock Price
Index*
$164,799
Dreyfus Institutional
S&P 500 Stock
Index Fund
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- ---------------------------------------------------------
One Year Ended From Inception (9/30/93)
October 31, 1996 to October 31, 1996
------------------ --------------------------
23.78% 17.58%
- ------------------------
Past performance is not predictive of future performance. All performance
information reflects the performance of the Fund's previously existing Class R
shares through September 14, 1995 and the Fund's single class of shares from
September 15, 1995 through October 31, 1996.
The above graph compares a $100,000 investment made in
Dreyfus Institutional S&P 500 Stock Index Fund on
9/30/93 (Inception Date) to a $100,000 investment made in the Standard & Poor's
500 Composite Stock Price Index on that date. All dividends and capital gain
distributions are reinvested.
The Fund seeks to replicate the total return
performance of the Standard & Poor's 500 Composite Stock Price Index. The
Fund's performance shown in the line graph takes into account all applicable
fees and expenses. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted, unmanaged index of overall 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>
<TABLE>
Dreyfus Institutional S&P 500 Stock Index Fund
- -----------------------------------------------------
Statement of Investments October 31, 1996
Shares Common Stocks--97.2% Value
-------- -----------
<S> <C> <C>
Basic Industries--5.8%
9,100 Air Products & Chemicals........... $ 546,000
10,600 Alco Standard...................... 491,575
3,000 Armstrong World Industries......... 200,250
4,246 Avery Dennison..................... 279,705
2,500 Ball............................... 60,312
4,300 Bemis.............................. 150,500
3,914 Boise Cascade...................... 121,334
2,307 Centex............................. 69,498
7,800 Champion International............. 339,300
10,400 Crown Cork & Seal.................. 499,200
20,025 Dow Chemical....................... 1,556,943
45,800 duPont (E.I.) de Nemours & Co...... 4,247,964
6,426 Eastman Chemical................... 338,971
3,000(a) FMC................................ 220,875
6,789 Fluor.............................. 444,679
7,400 Georgia Pacific.................... 555,000
4,400 Goodrich (B.F.).................... 186,450
7,700 Grace (W.R.)....................... 408,100
5,203 Great Lakes Chemical............... 271,206
8,700 Hercules........................... 414,337
24,465 International Paper................ 1,045,878
6,900 James River........................ 217,350
23,000 Kimberly-Clark..................... 2,144,750
8,900 Louisiana Pacific.................. 185,787
4,227 Mead............................... 239,882
34,200 Minnesota Mining &
Manufacturing.................... 2,620,575
47,800 Monsanto........................... 1,894,075
11,600 Morton International............... 456,750
5,445 Nalco Chemical..................... 198,061
26,300 Occidental Petroleum............... 644,350
15,221 PPG Industries..................... 867,590
2,400 Potlach............................ 102,600
12,700 Praxair............................ 561,975
5,311 Rohm & Haas........................ 379,072
7,000 Sherwin-Williams................... 350,875
4,100 Sigma-Aldrich...................... 240,875
8,100 Stone Container.................... 123,525
4,500 Temple-Inland...................... 230,625
5,600 Union Camp......................... 273,000
10,622 Union Carbide...................... 452,762
8,300 Westvaco........................... 236,550
16,200 Weyerhaeuser....................... 743,175
4,500 Willamette Industries.............. 303,750
------------
25,916,031
------------
Capital Goods--21.8%
17,900 AMP................................ 606,362
11,000(a) Advanced Micro Devices............. 195,250
3,700 Alexander & Alexander Services..... 56,425
14,167 Allegheny Teledyne................. 302,819
Shares Capital Goods (continued) Value
-------- -----------
23,100 Allied Signal...................... $ 1,513,050
9,888(a) Amdahl............................. 101,352
13,871 American Brands.................... 662,340
4,900 Andrew............................. 238,875
10,200 Apple Computer..................... 234,600
14,600(a) Applied Materials.................. 385,987
3,700 Autodesk........................... 84,637
23,600 Automatic Data Processing.......... 982,350
15,400(a) Bay Networks....................... 311,850
28,400 Boeing............................. 2,708,650
2,400 Briggs & Stratton.................. 96,000
17,300 Browning-Ferris Industries......... 454,125
22,000(a) COMPAQ Computer.................... 1,531,750
6,200(a) Cabletron Systems.................. 386,725
5,900 Case............................... 274,350
15,700 Caterpillar........................ 1,077,410
5,533(a) Ceridian........................... 274,575
3,200 Cincinnati Milacron................ 61,200
52,800(a) Cisco Systems...................... 3,267,000
29,700 Computer Associates
International.................... 1,756,010
6,100(a) Computer Sciences.................. 452,925
8,800 Cooper Industries.................. 354,200
2,400 Crane.............................. 111,600
30,050(a) Cuc International.................. 736,225
3,247 Cummins Engine..................... 135,156
9,500(a) DSC Communications................. 131,812
3,203(a) Data General....................... 47,644
21,100 Deere & Co......................... 880,925
7,300(a) Dell Computer...................... 594,037
6,700 Deluxe............................. 218,587
12,700(a) Digital Equipment.................. 374,650
9,300 Dover.............................. 477,787
7,900 Dow Jones & Co..................... 260,700
14,600 Dresser Industries................. 479,975
13,900 Dun & Bradstreet................... 804,462
3,816 EG&G............................... 67,257
18,900(a) EMC................................ 496,125
6,321 Eaton.............................. 377,679
18,300 Emerson Electric................... 1,628,700
18,300 First Data......................... 1,459,420
3,300 Foster Wheeler..................... 135,300
5,100 General Dynamics................... 349,987
134,700 General Electric................... 13,032,258
4,100 General Signal..................... 167,075
9,900 Genuine Parts...................... 433,125
2,864 Giddings & Lewis................... 33,652
4,200 Grainger (W.W.).................... 311,325
8,400 H&R Block.......................... 207,900
3,800 Harnischfeger Industries........... 152,000
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- ---------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Shares Common Stocks--97.2% Value
-------- -----------
Capital Goods (continued)
3,203 Harris............................. $ 200,587
83,400 Hewlett-Packard.................... 3,680,025
10,300 Honeywell.......................... 639,887
10,000 Illinois Tool Works................ 702,500
8,900 Ingersoll-Rand..................... 370,462
43,000 International Business Machines.... 5,547,000
67,100 Intel.............................. 7,372,610
3,800(a) Intergraph......................... 35,625
6,600 Interpublic Group Cos.............. 320,100
3,364 Johnson Controls................... 245,572
10,591(a) LSI Logic.......................... 280,661
25,500 Laidlaw, Cl. B..................... 299,625
16,300 Lockheed Martin.................... 1,460,887
51,964 Lucent Technologies................ 2,442,305
6,000 Mallinckrodt Group................. 261,000
5,900 Marsh & McLennan................... 614,337
4,500 McDermott International............ 79,875
17,600 McDonnell Douglas.................. 959,200
17,000 Micron Technology.................. 431,375
48,800(a) Microsoft.......................... 6,697,800
48,300 Motorola........................... 2,221,800
11,300(a) National Semiconductor............. 217,525
3,900 National Service Industries........ 134,550
21,100 Northern Telecommunications........ 1,374,137
4,700 Northrop Grumman................... 379,525
28,800(a) Novell............................. 266,400
53,400(a) Oracle............................. 2,259,487
4,200 Owens-Corning...................... 162,750
9,403 Pall............................... 240,951
6,060 Parker-Hannifin.................... 229,522
3,600 Perkin-Elmer....................... 193,050
12,203 Pitney Bowes....................... 681,842
3,600 Raychem............................ 281,250
19,300 Raytheon........................... 950,525
17,800 Rockwell International............. 979,000
6,600 Ryder System....................... 196,350
4,700 Safety-Kleen....................... 73,437
6,300 Scientific-Atlanta................. 91,350
8,600(a) Seagate Technology................. 574,050
19,200 Service Corp. International........ 547,200
1,900 Shared Medical Systems............. 91,675
14,100(a) Silicon Graphics................... 260,850
5,000 Snap-On............................ 160,625
7,227 Stanley Works...................... 204,162
15,000(a) Sun Microsystems................... 915,000
13,800(a) 3COM............................... 933,225
2,300 TRINOVA............................ 75,612
5,300 TRW................................ 479,650
9,600(a) Tandem Computers................... 121,200
2,706 Tektronix.......................... 105,872
Shares Common Stocks (continued) Value
-------- -----------
Capital Goods (continued)
7,300(a) Tellabs............................ $ 621,412
15,500 Texas Instruments.................. 745,937
6,600 Textron............................ 585,750
3,241 Thomas & Betts..................... 137,337
2,600 Timken............................. 116,025
12,400 Tyco International................. 615,350
14,100(a) Unisys............................. 88,125
9,907 United Technologies................ 1,275,530
40,000 WMX Technologies................... 1,375,000
34,300 Westinghouse Electric.............. 587,387
26,524 Xerox.............................. 1,230,050
------------
97,898,088
------------
Consumer Cyclical--11.9%
20,500 Albertson's........................ 704,687
6,100 American Greetings, Cl. A.......... 178,806
11,900 American Stores.................... 492,362
4,200(a) Bally Entertainment................ 126,525
7,200 Black & Decker..................... 269,100
8,000 Brunswick.......................... 188,000
8,500(a) Charming Shoppes................... 39,312
59,400 Chrysler........................... 1,997,325
8,018 Circuit City Stores................ 262,589
19,000 Comcast, Cl. A..................... 280,250
6,803 Cooper Tire and Rubber............. 133,508
8,300 Dana............................... 245,887
12,900 Darden Restaurants................. 108,037
17,600 Dayton Hudson...................... 609,400
9,300 Dillard Department Stores, Cl. A... 295,275
55,300 Disney (Walt)...................... 3,642,880
12,500 Donnelley (R.R.) & Sons............ 379,687
5,000 Echlin............................. 163,125
16,900(a) Federated Department Stores........ 557,700
2,900 Fleetwood Enterprises.............. 97,875
3,090 Fleming Cos........................ 53,688
96,400 Ford Motor......................... 3,012,500
6,200(a) Fruit of the Loom, Cl. A........... 225,525
11,500 Gannett............................ 872,560
23,400 Gap................................ 678,600
11,200(a) General Instrument................. 225,400
61,600 General Motors..................... 3,318,700
4,900 Giant Food, Cl. A.................. 165,375
12,700 Goodyear Tire & Rubber............. 582,612
3,143 Great Atlantic & Pacific........... 94,290
10,100(a) HFS................................ 739,825
5,900 Harcourt General................... 293,525
2,541 Harland (John H.).................. 79,088
8,394(a) Harrah's Entertainment............. 140,599
7,000 Hasbro............................. 272,125
15,900 Hilton Hotel....................... 482,962
39,100 Home Depot......................... 2,140,725
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- -----------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Shares Common Stocks (continued) Value
-------- -----------
Consumer Cyclical (continued)
9,500(a) ITT................................ $ 399,000
9,600 ITT Industries..................... 223,200
3,122 Jostens............................ 67,123
39,600 K mart............................. 386,100
3,062(a) King World Productions............. 110,232
7,800 Knight-Ridder...................... 291,525
10,200(a) Kroger............................. 455,175
22,100 Limited............................ 406,087
6,000 Liz Claiborne...................... 253,500
1,569 Longs Drug Stores.................. 70,408
14,000 Lowes.............................. 565,250
2,000 Luby's Cafeterias.................. 42,000
10,400 Marriott International............. 591,500
13,109 Masco.............................. 411,294
22,300 Mattel............................. 643,912
20,400 May Department Stores.............. 966,450
8,300 Maytag............................. 164,962
57,000 McDonald's......................... 2,529,370
8,100 McGraw-Hill Cos.................... 379,687
8,609 Melville........................... 320,685
3,000 Mercantile Stores.................. 148,875
2,230 Meredith........................... 112,057
8,102 Moore.............................. 164,065
722 NACCO Industries, Cl. A............ 33,392
23,400 NIKE, Cl. B........................ 1,377,675
6,100(a) Navistar International............. 56,425
8,018 New York Times, Cl. A.............. 289,650
6,600 Nordstrom.......................... 238,012
3,161 PACCAR............................. 176,225
18,300 Penney (J.C.)...................... 960,750
5,100 Pep Boys-Manny, Moe & Jack......... 178,500
16,000(a) Price/Costco....................... 318,000
4,615 Reebok International............... 164,986
6,800 Rite Aid........................... 231,200
3,114 Russell............................ 88,359
4,189(a) Ryan's Family Steak House.......... 30,893
31,900 Sears, Roebuck & Co................ 1,543,160
3,900(a) Shoney's........................... 28,762
1,600 Springs Industries................. 72,200
4,000 Stride Rite........................ 33,000
5,500 Supervalu.......................... 163,625
14,802 Sysco.............................. 503,268
5,900 TJX Cos............................ 236,000
4,838 Tandy.............................. 182,029
53,200(a) Tele-Communications, Cl. A......... 661,675
46,400 Time Warner........................ 1,728,400
8,439 Times Mirror, Cl. A................ 390,303
22,300(a) Toys R Us.......................... 755,412
5,011 Tribune............................ 409,649
38,600 US West Media Group................ 603,125
Shares Common Stocks (continued) Value
-------- -----------
Consumer Cyclical (continued)
5,200 V.F................................ $ 339,950
29,200(a) Viacom, Cl. B...................... 952,650
187,000 Wal-Mart Stores.................... 4,978,912
20,100 Walgreen........................... 758,775
10,447 Wendy's International.............. 215,469
6,100 Whirlpool.......................... 288,225
12,400 Winn-Dixie Stores.................. 413,850
10,900(a) Woolworth.......................... 228,900
-----------
53,484,292
-----------
Consumer Staples--12.7%
2,272 Alberto-Culver, Cl. B.............. 103,944
40,400 Anheuser-Busch Cos................. 1,555,400
44,545 Archer Daniels Midland............. 968,853
10,868 Avon Products...................... 589,589
5,600 Brown-Forman, Cl. B................ 242,200
11,800 CPC International.................. 930,725
19,100 Campbell Soup...................... 1,528,000
4,200 Clorox............................. 458,325
203,300 Coca-Cola.......................... 10,266,660
12,000 Colgate-Palmolive.................. 1,104,000
19,816 ConAgra............................ 988,323
3,115 Coors (Adolph), Cl. B.............. 60,742
27,500 Eastman Kodak...................... 2,193,125
5,200 Ecolab............................. 189,800
13,000 General Mills...................... 742,625
36,300 Gillette........................... 2,713,425
30,200 Heinz (H.J.)....................... 1,072,100
12,500 Hershey Foods...................... 604,687
9,000 International Flavors &
Fragrances....................... 372,375
108,700 Johnson & Johnson.................. 5,353,470
17,300 Kellogg............................ 1,098,550
12,900 Newell............................. 366,037
127,700 PepsiCo............................ 3,783,112
66,800 Philip Morris Cos.................. 6,187,350
6,700 Pioneer Hi-Bred International...... 449,737
3,700 Polaroid........................... 150,312
55,900 Procter & Gamble................... 5,534,100
11,000 Quaker Oats........................ 390,500
8,600 Ralston-Ralston Purina Group....... 568,675
12,248 Rubbermaid......................... 284,766
39,600 Sara Lee........................... 1,405,800
30,500 Seagram............................ 1,155,187
5,100 Tupperware......................... 262,012
15,400 UST................................ 444,675
13,100 Unilever, N.V...................... 2,002,662
8,600 Whitman............................ 208,550
9,500 Wrigley, (Wm), Jr.................. 572,375
-----------
56,902,768
-----------
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- -----------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Shares Common Stocks (continued) Value
-------- -----------
Energy--9.7%
7,600 Amerada Hess....................... $ 420,850
40,500 Amoco.............................. 3,067,875
5,300 Ashland............................ 225,250
13,100 Atlantic Richfield................. 1,735,750
11,800 Baker Hughes....................... 420,375
10,200 Burlington Resources............... 513,825
53,200 Chevron............................ 3,497,900
8,610 Coastal............................ 370,230
4,500 Columbia Gas System................ 273,375
7,731 Consolidated Natural Gas........... 410,709
1,618 Eastern Enterprises................ 62,293
20,700 Enron.............................. 962,550
5,600 Enserch............................ 120,400
101,300 Exxon.............................. 8,977,722
10,200 Halliburton........................ 577,575
2,005 Helmerich & Payne.................. 108,520
4,040 Kerr-McGee......................... 253,510
2,808 Louisiana Land & Exploration....... 159,705
32,100 Mobil.............................. 3,747,670
4,100 Nicor.............................. 142,987
11,200 Noram Energy....................... 172,200
2,182 Oneok.............................. 58,641
8,500(a) Oryx Energy........................ 163,625
6,900 Pacific Enterprises................ 212,175
12,300 Panenergy.......................... 473,550
3,800 Pennzoil........................... 193,800
2,870 Peoples Energy..................... 101,167
21,500 Phillips Petroleum................. 881,500
6,910(a) Rowan Cos.......................... 154,611
43,700 Royal Dutch Petroleum.............. 7,226,887
7,400(a) Santa Fe Energy Resources.......... 105,450
20,000 Schlumberger....................... 1,982,500
7,000 Sonat.............................. 344,750
6,068 Sun Company........................ 135,771
13,900 Tenneco............................ 688,050
21,600 Texaco............................. 2,195,100
20,307 Union Pacific Resources Group...... 558,442
20,300 Unocal............................. 743,487
23,400 USX-Marathon Group................. 511,875
4,400(a) Western Atlas...................... 305,250
8,600 Williams Cos....................... 449,350
-----------
43,707,252
-----------
Health Care--9.1%
6,900(a) ALZA............................... 178,537
63,700 Abbott Laboratories................ 3,224,810
5,300 Allergan........................... 161,650
51,900 American Home Products............. 3,178,875
21,580(a) Amgen.............................. 1,323,123
4,600 Bard (C.R.)........................ 129,950
4,564 Bausch & Lomb...................... 154,035
Shares Common Stocks (continued) Value
-------- -----------
Health Care (continued)
22,200 Baxter International................ $ 924,075
10,200 Becton, Dickinson & Co.............. 443,700
8,100(a) Beverly Enterprises................. 100,237
9,400(a) Biomet.............................. 151,575
14,500(a) Boston Scientific................... 788,437
40,900 Bristol-Myers Squibb................ 4,325,183
54,700 Columbia/HCA Healthcare............. 1,955,525
18,800 Corning............................. 728,500
13,200(a) Humana.............................. 240,900
44,600 Lilly (Eli)......................... 3,144,300
5,100 Manor Care.......................... 200,175
19,500 Medtronic........................... 1,255,310
99,200 Merck & Co.......................... 7,353,200
3,500 Millipore........................... 122,500
52,400 Pfizer.............................. 4,336,100
41,500 Pharmacia & Upjohn.................. 1,494,000
30,100 Schering-Plough..................... 1,926,400
6,600(a) St. Jude Medical.................... 260,700
17,600(a) Tenet Healthcare.................... 367,400
5,100 U.S. Surgical....................... 213,562
15,000 United Healthcare................... 568,125
22,100 Warner-Lambert...................... 1,406,112
-----------
40,656,996
-----------
Interest Sensitive--14.4%
12,327 Aetna............................... 824,368
8,819 Ahmanson (H.F.) & Co................ 276,696
36,300 Allstate............................ 2,037,330
38,700 American Express.................... 1,818,900
16,700 American General.................... 622,075
38,300 American International Group........ 4,160,351
8,800 Aon................................. 508,200
35,500 Banc One............................ 1,504,312
31,464 Bank of New York.................... 1,042,245
29,300 BankAmerica......................... 2,680,950
12,400 Bank of Boston...................... 793,600
6,500 Bankers Trust New York.............. 549,250
15,748 Barnett Banks....................... 600,392
4,400 Beneficial.......................... 257,400
12,800 Boatmens Bancshares................. 777,600
6,200 CIGNA............................... 809,100
35,541 Chase Manhattan..................... 3,047,640
14,200 Chubb............................... 710,000
39,200 Citicorp............................ 3,880,800
9,400 Comerica............................ 499,375
18,200 CoreStates Financial................ 884,975
13,400 Dean Witter, Discover & Co.......... 788,925
89,000 Federal National Mortgage
Association....................... 3,482,125
14,600 Federal Home Loan Mortgage.......... 1,474,600
8,600 Fifth Third Bancorp................. 538,575
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- -----------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Shares Common Stocks (continued) Value
-------- -----------
Interest Sensitive (continued)
11,517 First Bank Systems................. $ 760,122
25,800 First Chicago NBD.................. 1,315,800
22,500 First Union........................ 1,636,875
21,400 Fleet Financial Group.............. 1,067,325
6,758 General Re......................... 995,115
4,700 Golden West Financial.............. 304,912
11,223 Great Western Financial............ 314,244
11,200 Green Tree Financial............... 443,800
7,923 Household International............ 701,185
9,600 ITT Hartford....................... 604,800
5,800 Jefferson Pilot.................... 329,875
3,200 Kaufman & Broad Home............... 38,400
18,800 Keycorp............................ 876,550
8,500 Lincoln National................... 412,250
9,400 Loews.............................. 776,675
18,200 MBNA............................... 687,050
4,800 MGIC Investment.................... 329,400
10,600 Mellon Bank........................ 690,325
13,800 Merrill Lynch & Co................. 969,450
15,200 Morgan (J.P.) & Co................. 1,312,900
12,400 Morgan Stanley Group............... 623,100
18,100 National City...................... 785,087
23,700 NationsBank........................ 2,233,725
30,200 Norwest............................ 1,325,025
27,800 PNC Bank........................... 1,007,750
7,600 Providian.......................... 357,200
2,099 Pulte.............................. 55,623
4,500 Republic New York.................. 343,125
10,300 Safeco............................. 388,825
8,600 Salomon............................ 388,075
6,800 St. Paul Cos....................... 369,750
18,200 SunTrust Banks..................... 848,575
5,858 Torchmark.......................... 283,380
5,393 Transamerica....................... 409,193
39,200 Travelers Group.................... 2,126,600
5,932 UNUM............................... 372,974
9,600 USF&G.............................. 182,400
2,777 USLife............................. 86,781
12,700 U.S. Bancorp....................... 508,000
13,600 Wachovia........................... 731,000
7,648 Wells Fargo........................ 2,042,972
-----------
64,605,997
-----------
Mining and Metals--1.4%
8,700(a) ARMCO.............................. 32,625
3,500 ASARCO............................. 91,875
18,400 Alcan Aluminium.................... 604,900
14,200 Aluminum Co. of America............ 832,481
29,100 Barrick Gold....................... 760,237
18,300 Battle Mountain Gold............... 139,537
9,000(a) Bethlehem Steel.................... 73,125
Shares Common Stocks (continued) Value
-------- -----------
Mining and Metals (continued)
7,608 Cyprus Amax Minerals............... $ 172,130
11,400 Echo Bay Mines..................... 89,062
11,700 Engelhard.......................... 213,525
15,900 Freeport-McMoRan Copper, Cl.B...... 482,960
12,000 Homestake Mining................... 171,000
13,700 Inco............................... 434,975
4,000 Inland Steel Industries............ 64,500
8,127 Newmont Mining..................... 375,873
7,200 Nucor.............................. 341,100
5,390 Phelps Dodge....................... 338,896
19,500 Placer Dome........................ 468,000
5,200 Reynolds Metals.................... 292,500
10,700 Santa Fe Pacific Gold.............. 127,062
6,900 USX-U.S. Steel..................... 188,025
7,400 Worthington Industries............. 153,550
-----------
6,447,938
-----------
Transportation--1.4%
7,400(a) AMR................................ 621,600
12,439 Burlington Northern Santa Fe....... 1,024,660
17,200 CSX................................ 741,750
3,200 Caliber System..................... 54,000
6,600 Conrail............................ 627,825
3,600 Consolidated Freightways........... 86,400
6,400 Delta Air Lines.................... 453,600
4,648(a) Federal Express.................... 374,164
10,300 Norfolk Southern................... 917,991
11,800 Southwest Airlines................. 265,500
5,200(a) USAir Group........................ 90,350
19,900 Union Pacific...................... 1,116,887
2,300(a) Yellow............................. 30,043
-----------
6,404,770
-----------
Utilities--9.0%
15,500 ALLTEL............................. 472,750
131,500 AT&T............................... 4,586,074
40,700(a) Airtouch Communications............ 1,063,287
15,300 American Electric Power............ 634,950
44,800 Ameritech.......................... 2,452,800
12,000 Baltimore Gas & Electric........... 327,000
35,700 Bell Atlantic...................... 2,150,925
81,100 BellSouth.......................... 3,304,825
12,900 CINergy............................ 427,312
12,356 Carolina Power & Light............. 446,360
17,100 Central & Southwest................ 453,150
19,200 Consolidated Edison................ 561,600
11,800 DTE Energy......................... 355,475
14,500 Dominion Resources................. 547,375
16,500 Duke Power......................... 806,437
35,800 Edison International............... 707,050
18,600 Entergy............................ 520,800
15,000 FPL Group.......................... 690,000
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- -----------------------------------------------------------------
Statement of Investments (continued) October 31, 1996
Shares Common Stocks (continued) Value
-------- -----------
Utilities (continued)
9,800 GPU................................ $ 322,175
78,900 GTE................................ 3,323,660
20,500 Houston Industries................. 468,937
56,100 MCI Communications................. 1,409,512
35,800 NYNEX.............................. 1,593,100
11,800 Niagara Mohawk Power............... 100,300
5,600 Northern States Power.............. 263,200
12,400 Ohio Edison........................ 258,850
18,100 PECO Energy........................ 457,025
13,200 PP&L Resources..................... 308,550
33,900 Pacific Gas & Electric............. 796,650
34,900 Pacific Telesis Group.............. 1,186,600
24,000 PacifiCorp......................... 507,000
19,900 Public Service Enterprise Group.... 534,812
49,700 SBC Communications................. 2,416,660
54,900 Southern........................... 1,214,660
35,100 Sprint............................. 1,377,675
18,300 Texas Utilities.................... 741,150
17,600 UniCom............................. 457,600
8,300 Union Electric..................... 320,587
38,900 US West............................ 1,181,587
31,600(a) WorldCom........................... 770,250
------------
40,518,710
------------
TOTAL COMMON STOCKS
(cost $350,406,467).............. $436,542,842
------------
------------
Principal SHORT-TERM
Amount INVESTMENTS--2.6% Value
---------- -----------
$ 800,000(b) U.S. Treasury Bills--.2%
5.14%, 12/19/1996.................. $ 794,496
-----------
Repurchase Agreement--2.4%
10,883,874 Goldman Sachs & Co., 5.55%
dated 10/31/1996, due 11/1/1996
in the amount of $10,885,552
(fully collateralized by $8,034,000
U.S. Treasury Notes, 11.625%
11/15/2004, value
$11,102,478)....................... 10,883,874
-----------
TOTAL SHORT-TERM
INVESTMENTS
(cost $11,678,485)............... $11,678,370
-----------
-----------
TOTAL INVESTMENTS
(cost $362,084,952)......................... 99.8% $448,221,212
------ ------------
------ ------------
CASH AND RECEIVABLES (NET).................... .2% $ 901,786
------ ------------
------ ------------
NET ASSETS......................................100.0% $449,122,998
------ ------------
------ ------------
<FN>
Notes to Statement of Investments:
(a) Non-income producing.
(b) Partially held by custodian in segregated account as collateral for
open financial futures positions.
</TABLE>
Statement of Financial Futures October 31, 1996
<TABLE>
<CAPTION>
Financial Futures Purchased:
- ----------------------------
<S> <C> <C> <C> <C>
Market Value Unrealized
Number of Covered (Depreciation)
Issuer Contracts by Contracts Expiration at 10/31/96
- ------ --------- ------------ ------------ -------------
Standard & Poor's 500.................................... 36 $12,773,700 December '96 ($35,850)
---------
---------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1996
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments........ $362,084,952 $448,221,212
Cash........................................................... 187,579
Dividends and interest receivable.............................. 652,271
Receivable for futures variation margin--Note 1(d)............. 123,730
Receivable for investment securities sold...................... 20,897
Receivable from subscriptions to Capital Stock................. 16,061
------------
449,221,750
------------
LIABILITIES: Due to The Dreyfus Corporation................................. 73,887
Payable for shares of Capital Stock redeemed................... 24,865
------------
98,752
------------
NET ASSETS.................................................................... $449,122,998
------------
------------
REPRESENTED BY: Paid-in capital............................................... $355,838,595
Accumulated undistributed investment income--net.............. 1,756,694
Accumulated net realized gain (loss) on investments........... 5,427,299
Accumulated net unrealized appreciation (depreciation)
on investments (including $35,850 net unrealized
(depreciation) on financial futures)--Note 3................ 86,100,410
------------
NET ASSETS.................................................................... $449,122,998
------------
------------
SHARES OUTSTANDING
(70 million shares of $.001 par value Capital Stock authorized)............... 29,194,314
NET ASSET VALUE, offering and redemption price per share...................... $15.38
------
------
</TABLE>
See notes to financial statements.
Dreyfus Institutional S&P 500 Stock Index Fund
- ---------------------------------------------------------------
Statement of Operations Year Ended October 31, 1996
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends
(net of $48,603 foreign taxes withheld at source)............ $7,010,329
Interest....................................................... 481,095
----------
Total Income............................................. $ 7,491,424
EXPENSES: Management fee--Note 2(a)....................................... 631,728
Directors' fees and expenses--Note 2(b)......................... 4,263
----------
Total Expenses............................................ 635,991
-----------
INVESTMENT INCOME--NET.................................................................. 6,855,433
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments......................... $4,366,349
Net realized gain (loss) on financial futures................... 829,934
----------
Net Realized Gain (Loss).................................... 5,196,283
Net unrealized appreciation (depreciation) on investments
(including $16,175 net unrealized appreciation on
financial futures).......................................... 52,593,574
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................................. 57,789,857
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $64,645,290
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- --------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................ $ 6,855,433 $ 3,712,845
Net realized gain (loss) on investments........................................... 5,196,283 1,120,267
Net unrealized appreciation (depreciation) on investments......................... 52,593,574 32,124,097
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations................. 64,645,290 36,957,209
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Investor shares................................................................. -- (86,823)
Class R shares.................................................................. (6,203,176) (3,296,842)
Net realized gain on investments:
Investor shares................................................................. -- (2,114)
Class R shares.................................................................. (857,577) (508,850)
------------ ------------
Total Dividends............................................................... (7,060,753) (3,894,629)
------------ ------------
CAPITAL STOCK TRANSACTIONS--Note 5:
Net proceeds from shares sold:
Investor shares................................................................. -- 18,014,652
Class R shares.................................................................. 270,339,224 78,667,021
Dividends reinvested:
Investor shares................................................................. -- 85,429
Class R shares.................................................................. 6,961,370 3,790,189
Cost of shares redeemed:
Investor shares................................................................. -- (19,863,189)
Class R shares.................................................................. (90,040,231) (33,853,613)
------------ ------------
Increase (Decrease) in Net Assets from Capital Stock Transactions............. 187,260,363 46,840,489
------------ ------------
Total Increase (Decrease) in Net Assets..................................... 244,844,900 79,903,069
NET ASSETS:
Beginning of Period............................................................... 204,278,098 124,375,029
------------ ------------
End of Period..................................................................... $449,122,998 $204,278,098
------------ ------------
------------ ------------
Undistributed investment income--net................................................ $ 1,756,694 $ 1,104,437
------------ ------------
CAPITAL SHARE TRANSACTIONS--Note 5:
Shares Shares
------------ ------------
Investor Class*
---------------
Shares sold....................................................................... -- 1,538,481
Shares issued for dividends reinvested............................................ -- 7,306
Shares redeemed................................................................... -- (1,582,364)
------------ ------------
Net Increase (Decrease) in Shares Outstanding............. -- (36,577)
------------ ------------
------------ ------------
Class R
-------
Shares sold....................................................................... 19,010,939 6,713,863
Shares issued for dividends reinvested............................................ 506,046 349,258
Shares redeemed................................................................... (6,345,352) (2,943,826)
------------ ------------
Net Increase (Decrease) in Shares Outstanding............. 13,171,633 4,119,295
------------ ------------
------------ ------------
<FN>
- -------------------
*Effective September 15, 1995, the Fund converted to a single Class Fund,
with the existing Investor Class shares converted into Class R shares.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional S&P 500 Stock Index 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,
----------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA: 1995(1) 1994(2)(3) 1996 1995(1) 1994(2)(4) 1993(4)
-------- ---------- ------ ------- ---------- --------
Net asset value, beginning of period........... $10.41 $ 9.78 $12.75 $10.42 $10.23 $10.00
------ ------ ------ ------ ------ ------
Investment Operations:
Investment income--net......................... .18 .17 .29 .26 .21(5) .01
Net realized and unrealized gain (loss)
on investments............................... (10.32) .59 2.69 2.37 .14 .22
------ ------ ------ ------ ------ ------
Total from Investment Operations............... (10.14) .76 2.98 2.63 .35 .23
------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net.......... (.23) (.13) (.30) (.26) (.16) --
Dividends from net realized gain
on investments............................... (.04) -- (.05) (.04) (.00)(6) --
------ ------ ------ ------ ------ ------
Total Distributions............................ (.27) (.13) (.35) (.30) (.16) --
------ ------ ------ ------ ------ ------
Net asset value, end of period................. -- $10.41 $15.38 $12.75 $10.42 $10.23
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN.......................... -- 7.86%(7) 23.78% 25.75% 3.50% 2.30%(7)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........ .55% .35%(7)(8) .20% .37% .40%(9) .04%(7)(8)(10)
Ratio of net investment income
to average net assets........................ 2.15% 1.15%(7)(8) 2.16% 2.36% 2.38% .12%(7)(8)(10)
Portfolio Turnover Rate........................ 1.03% 13.00% 4.75% 1.03% 13.00% 22.00%(11)
Average commission rate paid (12).............. -- -- $.0297 -- -- --
Net Assets, end of period (000's Omitted)...... -- $381 $449,123 $204,278 $123,994 $24,004
<FN>
- ------------------
(1) Effective September 15, 1995, the Fund's Investor and Class R designates
were eliminated and the Fund became a single class Fund.
(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 Investor shares on April 18, 1994.
(4) The Fund commenced operations on September 30, 1993. Those 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.
(5) Net investment income before reimbursement of expenses by the investment
adviser for the year ended October 31, 1994 was $0.21.
(6) Amount represents less than $0.01.
(7) Not annualized.
(8) These ratios have been restated to reflect current year's presentation.
(9) Annualized expense ratio before voluntary reimbursement of expenses by the
investment adviser for the year ended October 31, 1994 was 0.45%.
(10) For the period September 30, 1993 (commencement of operations) to October 31,
1993, the investment adviser reimbursed expenses of the Fund amounting to
$0.0103 per share.
(11) Turnover calculation does not include in-kind purchases amounting to $22,472,314.
(12) For fiscal years beginning November 1, 1995, the Fund is required to disclose
its average commission rate paid per share for purchases and sales of investment
securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional S&P 500 Stock Index 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 Institutional S&P 500 Stock Index Fund (the
"Fund"). The Fund's investment objective is to replicate the total return of
the Standard & Poor's 500 Composite Stock Price Index primarily through
investments in equity securities. 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 Fund's financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(a) Portfolio valuation: Investments in securities 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 to 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 obligation, including interest. In the event
of a counterpart 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) Financial futures: The Fund may invest in 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 (see Statement of Financial Futures).
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. Typically, 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
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- ---------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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. Contracts open at October 31,
1996, and their related unrealized depreciation are set forth in the Statement
of Financial Futures.
(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. This may result in distributions that are in excess of the net
realized gains on the fiscal year basis. 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 1, 1996, the Board of Directors declared dividends from net
investment income for the Class R shares in the amount of $.06 per share
payable on November 4, 1996 to shareholders of record on November 1, 1996.
(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--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 and/or affiliates parties 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 .20 of 1% 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, 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) 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 meeting 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,
excluding short-term securities, during the period ended October 31, 1996,
amounted to $195,958,372 and $14,569,167, respectively.
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- ---------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
At October 31, 1996, accumulated net unrealized appreciation on
investments was $86,100,410, consisting of $93,853,527 gross unrealized
appreciation and $7,753,117 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $100
million unsecured line of credit primarily to be utilized for temporary or
emergency purposes, including the financing of redemptions. Interest is charged
to the Fund at rates which are related to the Federal Funds rate in effect at
the time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 5--Acquisition of Common Trust Assets:
On May 10, 1996, the Fund acquired a portion of the assets of the EB
Stock Index Fund, a trust advised by a subsidiary of Mellon Bank, N.A. The
acquisition was accomplished by an exchange of 7,652,013 Class R shares of the
Fund's Capital Stock for cash, securities and assumption of liabilities of the
trust totaling $108,505,537 which is included in net proceeds from shares sold
on the Statement of Changes in Net Assets.
<PAGE>
Dreyfus Institutional S&P 500 Stock Index 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, including
the statement of investments and statement of financial futures, of Dreyfus
Institutional S&P 500 Stock Index Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1996, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
or 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 also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1996, 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
Dreyfus Institutional S&P 500 Stock Index Fund of The Dreyfus/Laurel Funds,
Inc. as of October 31, 1996, the results of its operations, changes in its net
assets and its financial highlights for each of the years or periods set forth
above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 9, 1996
<PAGE>
Dreyfus Institutional S&P 500 Stock Index Fund
- ------------------------------------------------
Important Tax Information (Unaudited)
For Federal tax purposes the Fund hereby designates $.045 per share as a
long-term capital gain distribution of the $.1175 per share paid on December
26, 1995.
The Fund also designates 92.94% of the ordinary dividends paid during
the fiscal year ended October 31, 1996 as qualifying for the corporate
dividends received deduction. Shareholders will receive notification in
January 1997 of the percentage applicable to the preparation of their 1996
income tax returns.
<PAGE>
Dreyfus Institutional S&P 500
Stock Index Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 713AR9610
<PAGE>
Dreyfus U.S. Treasury Reserves
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus U.S. Treasury
Reserves. For the twelve-month period ended October 31, 1996, Dreyfus U.S.
Treasury Reserves posted solid performance. The Fund's conservative investment
strategy continued to provide shareholders with a competitive stream of income,
while maintaining a high quality portfolio and a stable $1 share price. For the
twelve months ended October 31, 1996, the Fund's annualized yield was 4.62% for
Investor shares and 4.82% for Class R shares. Reinvesting the Fund's dividends
and calculating the effect of compounding resulted in an annualized effective
yield of 4.72% and 4.93% for Investor shares and Class R shares, respectively.*
In August 1996, the Fund received an AAA rating from the Standard & Poor's
Ratings Group, the top rating offered by this well-respected rating agency. In
determining eligibility, S&P generally focuses on four factors: portfolio
analysis, historical volatility, management and surveillance of portfolio and
risk components.
In addition, you will be interested to know of a recent change in
management of the Fund. I am now the Fund's portfolio manager, replacing
Roberta Shea, who has resigned. I am a portfolio manager of the Dreyfus
Corporation and serve as director of Reserve Asset Management and as the
chairman of the Reserve Asset Strategy Committee at The Boston Company Asset
Management, Inc. ("TBCAM"). Prior to joining TBCAM and Dreyfus, I was a vice
president for State Street Global Advisors, where I served as a portfolio
manager for institutional cash and enhanced cash products.
ECONOMIC ENVIRONMENT
Economy Still Growing, Not Booming
The past few months have brought fresh evidence of a slowing, albeit
still growing, U.S. economy. Real Gross Domestic Product (GDP) rose 4.7% in the
second quarter of 1996, tapering to 2.2% in the third. Retail sales had been
slowing for several months, and during the third quarter consumer spending rose
at its weakest pace in five years. Construction and exporting activity also
moved ahead more tentatively in recent months than they had during the first
half of 1996. Sales of existing homes were off too, declining a
larger-than-expected 2.9% in September for the fourth consecutive monthly loss.
On the other hand, September's new home sales dropped a scant 0.5% and remain
near a ten-year high. Factory orders for big-ticket items also rebounded in
September, rising 4.6 percent for the biggest gain in almost four years. On the
job front, unemployment reached a seven-year low of 5.1%.
Federal Reserve Board Watches and Waits
Despite a long, strong cycle of economic growth, rising wage pressures
and a great deal of market concern that inflation might result, inflation so
far remains tame. Consequently, the Federal Reserve Board (the "Fed") did not
raise short-term interest rates at its September meeting--although many analysts
and investors had been convinced a hike was in the offing. They cited mixed
economic signals and, in some cases, conflicting statements from Fed officials
themselves as evidence supporting their expectations for higher rates.
Nonetheless, the Fed maintained the hands-off monetary policy it has been
pursuing since early in 1996, trusting that the economy would slow enough to
dampen any inflationary forces that might be building.
MARKET ENVIRONMENT
With inconclusive economic data suggesting stability to some and
potential inflation to others, Treasury yields fluctuated throughout the
period. In fact, many market participants had anticipated that the Fed would
raise short-term
<PAGE>
rates at its September meeting, and Treasury yields had been moving higher
based on this expectation. When the Fed left rates alone, yields lost the
interest-rate rise they had built in and receded a bit.
PORTFOLIO OVERVIEW
In seeking to provide a high level of current income consistent with
stability of principal amid ongoing fluctuations in Treasury yields, we
employed a somewhat defensive management strategy. First, we maintained a
relatively short average portfolio maturity throughout the period. This
positioned the Fund well, protecting its income stream and net asset value in
the face of interest-rate uncertainty. We currently plan to retain this
positioning until it becomes clearer that the Fed is not going to raise
interest rates or until yields on Treasury securities become more attractive.
We also allocated a substantial portion of the portfolio's assets to
repurchase agreements or "repos." Repos are collateralized by U.S. Treasury
securities and generally offer yields competitive in the market. This annual
period was no exception, and repo investments made a significant contribution
to Fund returns.
Our defensive strategy enabled the Fund to maintain its income stream
while remaining flexible and ready to respond to interest rate changes. In the
months ahead, we will be monitoring interest rates, the economy, and the market
carefully. At the same time, we will continue to seek a competitive level of
income and expect our focus on U.S. Treasury investments to enable the Fund to
maintain the stability it has provided thus far.
Sincerely,
David S. Hertan
Portfolio Manager
November 12, 1996
New York, N.Y.
*Annualized effective yield is based upon dividends declared
daily and reinvested monthly.
<PAGE>
Dreyfus U.S. Treasury Reserves
- ---------------------------------------------------------
Statement of Investments October 31, 1996
<TABLE>
<CAPTION>
Annualized
Yield on
Date of Principal
U.S. Treasury Bills--25.6% Purchase Amount Value
- ----------------------------------------------------------- ---------- ----------- ------------
<S> <C> <C> <C>
11/21/96................................................. 5.28% $75,000,000 $ 74,785,625
12/19/96................................................. 5.20 50,000,000 49,656,000
------------
TOTAL U.S. TREASURY BILLS (cost $124,441,625).............. $124,441,625
------------
------------
U. S. Treasury Notes--34.3%
- -----------------------------------------------------------
4.375%, 11/15/96......................................... 5.18% $66,423,000 $ 66,402,403
7.25%, 11/15/96.......................................... 4.99 50,000,000 50,037,598
6.50%, 4/30/97........................................... 5.54 25,000,000 25,083,459
6.50%, 5/15/97........................................... 4.35 25,000,000 25,132,776
------------
TOTAL U.S. TREASURY NOTES (cost $166,656,236).............. $166,656,236
------------
------------
Repurchase Agreements--49.4%
- -----------------------------------------------------------
CS First Boston Corporation Inc.
Dated 10/31/96, due 11/1/96 in the amount
of $75,011,667 (fully collateralized by
$77,500,000 U.S. Treasury Bills,
due 1/30/97, value $76,527,375).......................... 5.60% $75,000,000 $ 75,000,000
Dean Witter Reynolds Inc.
Dated 10/31/96, due 11/1/96 in the amount
of $10,001,583 (fully collateralized by
$9,593,000 U.S. Treasury Notes, 8.25%,
due 7/15/98, value $10,203,381).......................... 5.70 10,000,000 10,000,000
Goldman, Sachs & Co.
Dated 10/31/96, due 11/1/96 in the amount
of $75,011,563 (fully collateralized by
$60,905,000 U.S. Treasury Bonds, 8.875%,
due 2/15/19, value $76,839,188).......................... 5.55 75,000,000 75,000,000
Lehman Government Securities Inc.
Dated 10/31/96, due 11/1/96 in the amount
of $80,434,331 (fully collateralized by
$36,665,000 U.S. Treasury Bonds, 12.50%,
due 8/15/14, value $56,117,875 and
$24,875,000 U.S. Treasury Notes, 7.50%,
due 10/31/99, value $25,916,641)......................... 5.52 80,422,000 80,422,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $240,422,000)............ $240,422,000
------------
------------
TOTAL INVESTMENTS (cost $531,519,861)............. 109.3% $531,519,861
------ ------------
------ ------------
LIABILITIES, LESS CASH AND RECEIVABLES............ (9.3%) $(45,390,897)
------ ------------
------ ------------
NET ASSETS........................................ 100.0% $486,128,964
------ ------------
------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus U.S. Treasury Reserves
- --------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1996
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments
(including Repurchase Agreements of $240,422,000)................ $531,519,861 $531,519,861
Cash............................................................... 1,399,391
Interest receivable................................................ 3,796,593
------------
536,715,845
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates...................... 206,288
Due to Distributor................................................. 53
Payable for investment securities purchased........................ 49,656,000
Dividends payable.................................................. 724,540
------------
50,586,881
------------
NET ASSETS Represented by paid-in capital..................................... $486,128,964
------------
------------
NET ASSET VALUE PER SHARE
-------------------------
Investor Shares Class R
--------------- -------------
Net Assets......................................................................... $21,826,310 $464,302,654
Shares Outstanding................................................................. 21,826,310 464,302,083
NET ASSET VALUE PER SHARE.......................................................... $1.00 $1.00
----- -----
----- -----
</TABLE>
Statement of Operations Year Ended October 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income..................................................... $22,933,144
EXPENSES: Management fee--Note 2(a)........................................... $2,138,371
Distribution fees (Investor shares)--Note 2(b)...................... 54,705
Directors' fees and expenses--Note 2(c)............................. 28,564
----------
Total Expenses................................................ 2,221,640
-----------
INVESTMENT INCOME--NET Representing net increase in net assets
resulting from operations........................................ $20,711,504
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus U.S. Treasury Reserves
- ---------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net.............................................. $ 20,711,504 $ 16,831,606
Net realized gain (loss) on investments............................. -- 5,410
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations. 20,711,50 16,837,016
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Investor shares................................................... (1,270,016) (1,527,211)
Class R shares.................................................... (19,441,488) (15,304,349)
Net realized gain on investments:
Investor shares................................................... (397) --
Class R shares.................................................... (5,013) --
-------------- --------------
Total Dividends................................................. (20,716,914) (16,831,560)
-------------- --------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:
Investor shares................................................... 324,250,936 194,173,669
Class R shares.................................................... 2,060,016,760 1,478,105,952
Issued in exchange for shares of Dreyfus/Laurel Government Money Fund:
Investor shares................................................... -- 44,774,273
Dividends reinvested:
Investor shares................................................... 1,205,008 1,307,881
Class R shares.................................................... 16,026,655 11,884,976
Cost of shares redeemed:
Investor shares................................................... (325,014,906) (220,194,051)
Class R shares.................................................... (2,011,609,264) (1,318,919,643)
-------------- --------------
Increase (Decrease) in Net Assets from Capital Stock Transactions 64,875,189 191,133,057
-------------- --------------
Total Increase (Decrease) in Net Assets....................... 64,869,779 191,138,513
NET ASSETS:
Beginning of Period................................................. 421,259,185 230,120,672
-------------- --------------
End of Period....................................................... $ 486,128,964 $ 421,259,185
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus U.S. Treasury Reserves
- ------------------------------------------
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 information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
Investor Shares
--------------------------------
Year Ended October 31,
--------------------------------
PER SHARE DATA: 1996 1995 1994(1)(2)
---- ---- ----------
<S> <C> <C> <C>
Net asset value, beginning of period............................ $1.00 $1.00 $1.00
----- ----- -----
Investment Operations:
Investment income--net.......................................... .046 .049 .020
----- ----- -----
Distributions:
Dividends from investment income--net........................... (.046) (.049) (.020)
----- ----- -----
Net asset value, end of period.................................. $1.00 $1.00 $1.00
----- ----- -----
----- ----- -----
TOTAL INVESTMENT RETURN........................................... 4.74% 5.02% 1.96%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................... .70% .70% .70%(4)
Ratio of net investment income
to average net assets......................................... 4.64% 4.92% 3.42%(4)
Net Assets, end of period (000's Omitted)....................... $21,826 $21,386 $1,324
<FN>
_____________________
(1) The Fund commenced selling Investor shares on April 18, 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) Not annualized.
(4) Annualized.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus U.S. Treasury Reserves
- ------------------------------------------------------------------------
Financial Highlights (continued)
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 information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
Class R Shares
---------------------------------------------
Year Ended October 31,
---------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA: 1996 1995 1994(1)(2) 1993 1992
---- ---- ---------- ---- ----
Net asset value, beginning of period........................... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Investment Operations:
Investment income--net......................................... .048 .051 .033(3) .027 .037
----- ----- ----- ----- -----
Distributions:
Dividends from investment income--net.......................... (.048) (.051) (.033) (.027) (.037)
----- ----- ----- ----- -----
Net asset value, end of period................................. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL INVESTMENT RETURN.......................................... 4.94% 5.23% 3.37% 2.77% 3.73%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........................ .50% .50% .50%(4) .50%(5) .50%(5)
Ratio of net investment income
to average net assets........................................ 4.79% 5.14% 3.62% 2.74% 3.63%
Net Assets, end of period (000's Omitted)...................... $464,303 $399,873 $228,797 $69,785 $69,187
<FN>
- ----------------------
(1) 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.
(2) The Fund commenced selling Investor shares on April 18, 1994.
Those shares outstanding prior to April 4, 1994 were designated
as Trust shares. Effective October 17, 1994, the Fund's Trust
shares were reclassified as Class R shares.
(3) Net investment income before expenses reimbursed by the investment
adviser for the year ended October 31, 1994 was $0.0323.
(4) Annualized expense ratio before expenses reimbursed by the investment
adviser for the year ended October 31, 1994 was 0.59%.
(5) For the years ended October 31, 1993 and 1992, the investment adviser
reimbursed expenses of the Fund amounting to $.0040 and $.0040 per
share, respectively.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus U.S. Treasury Reserves
- -----------------------------------------------------------------
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 U.S. Treasury Reserves (the "Fund"). The Fund's
investment objective is to seek a high level of current income consistent with
stability of principal by investing in high-grade money market instruments. 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 Fund is authorized to issue 1 billion of
$.001 par value Capital Stock in each of the following classes of shares:
Investor Class and Class R. 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.
Investment income, net of expenses (other than class specific
expenses), realized and unrealized gains and losses are allocated daily to each
class of shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(a) Portfolio valuation: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has been
determined by the Fund's Board of Directors to represent the fair value of the
Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for the Fund; the Fund has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so. There
is no assurance, however, that the Fund will be able to maintain a stable net
asset value per share of $1.00.
(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. Interest
income, adjusted for amortization of premiums and discounts on investments, is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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
<PAGE>
Dreyfus U.S. Treasury Reserves
- -----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 dividends daily from investment income-net; such dividends are paid
monthly. 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.
(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.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 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 .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 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 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. During the period October 31, 1996, the distribution
fee for the Investor shares was $54,705.
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 meeting 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
<PAGE>
Dreyfus U.S. Treasury Reserves
- -----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $100
million unsecured line of credit primarily to be utilized for temporary or
emergency purposes, including the financing of redemptions. Interest is charged
to the Fund at rates which are related to the Federal Funds rate in effect at
the time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
NOTE 4--Reorganization:
On November 7, 1994, Dreyfus U.S. Treasury Reserves, acquired the
assets and certain liabilities of the Dreyfus/Laurel Government Money Fund, in
exchange for shares of Dreyfus U.S. Treasury Reserves, pursuant to a plan of
reorganization approved by Dreyfus/Laurel Government Money Fund shareholders on
May 20, 1994. Total shares issued by Dreyfus U.S. Treasury Reserves and the
total net assets of Dreyfus/Laurel Government Money Fund acquired are set forth
in the Statement of Changes in Net Assets.
<PAGE>
Dreyfus U.S. Treasury Reserves
- ------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus U.S. Treasury Reserves of
The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or 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 also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of October 31, 1996, 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 Dreyfus U.S. Treasury Reserves of The Dreyfus/Laurel Funds, Inc. as
of October 31, 1996, the results of its operations, changes in its net assets
and its financial highlights for each of the years or periods set forth above,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 9, 1996
Important Tax Information (Unaudited)
For State individual income tax purposes, the Fund hereby designates
50.10% of the ordinary income dividends paid during its fiscal year ended
October 31, 1996 as attributable to interest income from direct obligations of
the United States. Such dividends are currently exempt from taxation for
individual income tax purposes in most states, including New York, California
and the District of Columbia.
<PAGE>
Dreyfus U.S. Treasury Reserves
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 326/726AR9610
PREMIER BALANCED FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report on the Premier
Balanced Fund for the twelve-month period ended October 31, 1996. The Fund
outperformed its benchmark index and its Lipper peer group for the fiscal
year ended October 31, 1996. Positive contributions from asset allocation
strategy and stock selection contributed to this relative performance.
The Fund's total return for the twelve-month period was 18.71% for its
Class A shares, 17.76% for Class B shares, 17.83% for Class C shares and
18.99% for Class R shares.* This compares with a total return of 17.55% for a
hybrid benchmark index comprising 60% Standard & Poor's 500 Composite Stock
Price Index and 40% Lehman Brothers Intermediate Government/Corporate Bond
Index.** The total return for the S&P 500 was 24.08% and was 5.81% for the
Lehman Brothers Intermediate Government/Corporate Bond Index for the same
period.** The total return for the Lipper Balanced Funds Index measured by
Lipper Analytical Services, Inc. was 14.48%.***
Economic Review
The U.S. economy is enjoying a good year. First, the tightening labor
market has failed to push price inflation higher. Second, economic growth has
slowed since midyear from the torrid pace of the first half. Third, corporate
profits are holding up quite well, albeit growing more slowly than last year.
These factors have vindicated Federal Reserve Board inaction, keeping market
interest rates stable. Although the economy has simmered down, it is
nevertheless operating with very little slack.
The Federal Reserve Board twice thwarted market expectations for
tightening this year, taking the view instead that steady growth won't easily
foster inflation in this cycle. Indeed, the unemployment rate has plunged
towards 5% this year and wage growth has outpaced price inflation for the
first time since 1989. Yet there is little evidence of accelerating price
inflation to date. Even higher oil prices have failed to lift prices
elsewhere. This is very different from 1994 when the Fed preemptively hiked
interest rates to stem an anticipated price inflation that subsequently did
not materialize.
After rising 3.3% in the first half of this year, real GDP growth slowed
to 2.2% in the third quarter. Early evidence for the fourth quarter indicates
further sustained growth. In particular, consumer spending has been
lackluster since midyear, despite solid income growth and high confidence
levels. And new highs in home sales have not been matched by new records in
homebuilding. Spending on capital goods has rebounded, however, while
incoming strong export orders indicate better growth ahead for this sector.
Capital goods and exports typically dominate the business cycle's late phase.
Corporate profit growth, albeit slower than in 1995, continues to surprise on
the upside.
Interest rates this fall are not much different than in the spring.
Short-term rates have especially stabilized in recent months based on the
view that the Fed tightening is unlikely this year. Long-term rates have
recently fallen. Should the economy show signs of reaccelerating, long-term
rates would likely rise.
As the U.S. economy moves into the late-cycle phase it is, as usual, out
of sync with most business cycles overseas which are at a much earlier stage.
This portends faster world growth in 1997. How well the U.S. economy can
participate in an accelerating growth world economy without igniting
inflation remains to be seen.
Market Overview
The stock market in the last twelve months shrugged off a variety of
potentially negative factors to barrel its way to new heights.
In late 1995 and early 1996 economic activity appeared to slow down,
enough to prompt the Federal Reserve to lower interest rates in January of
this year. By springtime, when the Fed had apparently suspended its
anti-inflationary measures, investors began to worry about signs of strength
exhibited by the economy. Though the Fed took no action to raise interest
rates, investor worries about the possibility restrained an ebullient stock
market. By July, fears of higher interest rates, plus concerns that some
stock prices - technology issues in particular - might have gone too far, too
fast, caused a temporary retreat in equity prices.
As fall approached, however, the underlying factors of a strong economy,
such as low inflation and investor optimism, took hold again and propelled
stock prices to new highs. Chief beneficiaries were the large capitalization
stocks. It took a while for technology stocks and small caps to recover the
ground lost in the early summer. However, the trend across the board was
clearly bullish.
As the fiscal year closed, there were some negative factors on the
horizon. Corporate profits may have passed their peak. Consumer demand seemed
to be slowing in some sectors. There were also hints that employment costs,
which have been quite stable for a long time, might face upward pressures.
The market, however, seemed to soar above these factors. The prospect (since
become a fact) of a split government in Washington, with Republicans
controlling Congress and Democrats in the White House, was seen as favorable
for stock prices. Moreover, the specter of renewed inflation remained just
that - nothing more than a specter. Furthermore, individual investors
continued to pour money into equity mutual funds - not at constantly
increasing rates, to be sure, but still at a pace that gave strong impetus
for higher stock prices.
During the reporting period ended October 31, 1996 the bond market
settled into its usual summer trading range after a volatile first four
months of 1996. Yields on ten-year securities traded for most of the period
between 6.50% and 7.00%. Economic reports indicated the economy was not
growing as fast as previously feared. Employment growth moderated after
having shocked investors by its strength early in the year. Moreover, fears
of unexpected increases in inflation subsided as prices of oil and grains
moved lower throughout the summer. By the end of the period investors'
thinking turned positive, comfortable in the belief the bond market could
move to lower yield levels by the end of 1996 given the evidence that the
economy was growing at a moderate pace.
Portfolio Focus
During the year, the Fund's allocation to equities was higher than the
normal 60% target. On June 30th, the allocation was approximately 73%
equities, 25% bonds. Our favorable expectations for the stock market compared
to the bond market were driven by ongoing strength in corporate earnings and
the stable short-term interest rate environment. Our current analysis
continues to suggest a greater emphasis on stocks. As of October 31, our
allocation remained 73% stocks and 25% fixed income securities.
Within the equity component, stock selection in the capital spending,
interest sensitive and energy related sectors contributed to the
outperformance of its benchmark index. We continue to maintain a broadly
diversified portfolio with sector weightings in line with that of the S&P
500.
For most of the second and third calendar quarters, the Fund kept a
duration neutral with the benchmark index, the Lehman Brothers Intermediate
Government Corporate Bond Index. This neutral approach was assumed given the
unexpected volatility experienced earlier in the year. The Fund's positions
in the corporate sectors continue to add incremental yield to the Fund's
performance. We currently have a positive bias as to how the market should
perform through the end of the year. It is likely that we would increase the
Fund's duration if the bond market exhibited more value.
We appreciate your confidence in the Premier Balanced Fund. We would also
like to take this opportunity to wish you a healthy and prosperous New Year.
Sincerely,
[Ronald P. Gala signature logo]
Ronald P. Gala
[Laurie Carrol signature logo]
Laurie Carrol
Portfolio Managers
November 20, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any 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 shares and Class C shares.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Standard & Poor's 500
Composite Stock Price Index is a widely accepted unmanaged index of U.S.
stock market performance. 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 F
und is permitted to invest up to 75% and as little as 40% of its total assets
in common stocks and up to 60% and as little as 25% of its total assets in
bonds, as deemed advisable by Dreyfus.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Average total return for
the thirty largest Balanced Funds reflect reinvestment of distributions. The
Fund's share price, yield and investment return fluctuate.
PREMIER BALANCED FUND OCTOBER 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER BALANCED FUND
CLASS R SHARES WITH
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX, THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX, THE LIPPER BALANCED FUNDS INDEX
AND A HYBRID INDEX
[Exhibit A:
$16,499
Standard & Poor's 500 Composite
Stock Price Index*
Dollars
$14,813
Premier Balanced Fund
(Class R Shares)
$14,603
Hybrid Index***
$13,546
Lipper Balanced Funds Index*
$11,758
Lehman Brothers Intermediate Government/Corporate
Bond Index**
* Source: Lipper Analytical Services, Inc.
** Source: Lehman Brothers
***Source: Lipper Analytical Services, Inc. and Lehman Brothers]
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class R shares of
Premier Balanced Fund on 9/15/93 (Inception Date) to a $10,000 investment
made on that date in each of the Standard & Poor's 500 Composite Stock Price
Index, the Lehman Brothers Intermediate Government/Corporate Bond Index and
the Lipper Balanced Funds Index, as well as to a Hybrid Index as described
below. For comparative purposes, the value of each index on 8/31/93 is used
as the beginning value on 9/15/93. All dividends and capital gain
distributions are reinvested. Performance for Class A, Class B and Class C
shares will vary from the performance of Class R shares shown above due to
differences in charges and expenses.
Premier Balanced Fund invests in common stocks and bonds. The Fund's
performance shown in the line graph takes into account all applicable fees
and expenses. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted, unmanaged index of overall stock market performance. 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 Lipper Balanced Funds Index is an
equally-weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds in this investment
objective. The Indices do not take into account charges, fees and other
expenses. The Hybrid Index is composed of 60% Standard & Poor's 500 Composite
Stock Price Index and 40% Lehman Brothers Intermediate Government/Corporate
Bond Index. Under normal circumstances, the Fund's total assets are allocated
approximately 60% to common stocks and 40% to bonds; however, the Fund is
permitted to invest up to 75%, and as little as 40%, of its total assets in
common stocks and up to 60%, and as little as 25%, of its total assets in
bonds, as deemed advisable by The Dreyfus Corporation. Further information
relating to Fund performance, including expense reimbursements, if
applicable, is contained in the Financial Highlights section of the
Prospectus and elsewhere in the report.
<TABLE>
<CAPTION>
PREMIER BALANCED FUND OCTOBER 31, 1996
Average Annual Total Returns
____________________________________________________________________________________________________________________________
Class A Shares
____________________________________________________________________________________________________________________________
% Return
Reflecting
% Return Without Maximum Initial
Period Ended 10/31/96 Sales Charge Sales Charge (4.5%)
___________- ________ _________
<S> <C> <C>
1 Year 18.71% 13.38%
From Inception (4/14/94) 17.40 15.30
Class B Shares
____________________________________________________________________________________________________________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming No Charge Upon
Period Ended 10/31/96 Redemption Redemption*
___________- ________ _________
1 Year 17.76% 13.76%
From Inception (12/19/94) 22.04 20.23
Class C Shares
____________________________________________________________________________________________________________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
Period Ended 10/31/96 No Redemption Redemption**
___________- ________ _________
1 Year 17.83% 16.83%
From Inception (12/19/94) 22.13 22.13
Class R Shares
____________________________________________________________________________________________________________________________
Period Ended 10/31/96
___________-
1 Year 18.99%
From Inception (9/15/93) 13.38
</TABLE>
*The maximum contingent deferred sales charge for Class B shares is 4%
and is reduced to 0% after six years.
** The maximum contingent deferred sales charge for Class C shares is
1% for shares redeemed within one year of the date of purchase.
<TABLE>
<CAPTION>
PREMIER BALANCED FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Common Stocks-61.6% Shares Value
_______ ______
<S> <C> <C>
Basic Industries-3.6%. Champion International 6,300 $ 274,050
Dow Chemical........................... 8,700 676,425
duPont (E.I.) deNemours & Co........... 8,700 806,925
Georgia-Pacific........................ 3,900 292,500
International Paper.................... 18,600 795,150
Morton International................... 12,900 507,937
Owens-Illinois....................... (a) 1,000 15,500
PPG Industries......................... 10,200 581,400
Praxair................................ 7,500 331,875
Sealed Air........................... (a) 4,200 163,275
Sherwin-Williams....................... 4,800 240,600
Union Carbide.......................... 9,000 383,625
Willamette Industries.................. 1,300 87,750
_______
5,157,012
_______
Capital Spending-13.2%..... Applied Materials (a) 10,200 269,663
Cabletron Systems.................... (a) 6,000 374,250
Case........................................ 11,400 530,100
Caterpillar............................ 17,700 1,214,662
Cisco Systems........................ (a) 22,200 1,373,625
Compaq Computer...................... (a) 11,100 772,838
Computer Associates International...... 7,800 461,175
Gateway 2000......................... (a) 5,700 268,256
General Electric....................... 17,100 1,654,425
General Motors, Cl. H.................. 5,400 288,225
HBO & Co............................... 6,300 378,788
Harnischfeger Industries............... 10,200 408,000
....Harsco 1,100 70,262
HealthCare COMPARE................... (a) 7,500 330,000
Illinois Tool Works.................... 8,100 569,025
Ingram Micro, Cl. A.................... 5,000 90,000
....Intel 16,800 1,845,900
LSI Logic............................ (a) 17,400 461,100
Lockheed Martin........................ 7,200 645,300
Lucent Technologies.................... 5,023 236,081
MemberWorks............................ 2,500 36,250
Microsoft............................ (a) 16,200 2,223,450
Newbridge Networks................... (a) 24,900 787,462
....Oracle (a) 23,400 990,113
Pitney Bowes........................... 5,100 284,962
Raytheon............................... 11,700 576,225
....Tellabs (a) 5,100 434,137
....3Com (a) 11,400 770,925
Wheelabrator Technology................ 3,100 48,050
....Xerox 17,700 820,838
_______
19,214,087
_______
Consumer Cyclical-8.2%........ Black & Decker 5,400 201,825
Boston Chicken....................... (a) 6,600 240,075
Brunswick.............................. 10,800 253,800
PREMIER BALANCED FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_______ ______
Consumer Cyclical (continued)......Chrysler 21,900 $ 736,388
Dayton Hudson.......................... 21,900 758,287
Eckerd (a) 15,600 432,900
Federated Department Stores.......... (a) 13,800 455,400
Gannett................................ 3,000 227,625
....Gap 32,400 939,600
General Motors......................... 21,300 1,147,538
Goodyear Tire & Rubber................. 3,300 151,387
....K2 6,000 138,000
King World Productions............... (a) 8,100 291,600
Leggett & Platt........................ 7,800 233,025
Magna International, Cl. A............. 4,200 210,525
McDonald's............................. 12,900 572,438
Mirage Resorts....................... (a) 15,000 330,000
New York Times, Cl. A.................. 18,600 671,925
NIKE, Cl. B............................ 13,800 812,475
OfficeMax............................ (a) 12,600 170,100
Safeway.............................. (a) 29,100 1,247,662
Sears, Roebuck & Co.................... 12,000 580,500
....TJX 20,700 828,000
....V.F. 3,600 235,350
Waban................................ (a) 3,300 86,213
_______
11,952,638
_______
Consumer Staples-6.9%.......... Avon Products 19,800 1,074,150
Campbell Soup.......................... 8,100 648,000
....Clorox 2,000 218,250
Coca-Cola.............................. 50,100 2,530,050
Coca-Cola Enterprises.................. 1,900 80,988
Eastman Kodak.......................... 9,000 717,750
....Gillette 16,800 1,255,800
Hershey Foods.......................... 10,200 493,425
....IBP 25,500 637,500
Philip Morris.......................... 15,000 1,389,375
Ralston-Ralston Purina Group........... 8,100 535,612
Sara Lee............................... 13,800 489,900
_______
10,070,800
_______
Energy-5.8%........................Amoco 4,500 340,875
British Petroleum, A.D.S............... 7,200 926,100
Chevron................................ 15,300 1,005,975
Coastal................................ 10,800 464,400
Consolidated Natural Gas............... 7,200 382,500
....Exxon 15,900 1,409,138
PanEnergy.............................. 6,300 242,550
Phillips Petroleum..................... 19,500 799,500
....Texaco 10,800 1,097,550
Transocean Offshore.................... 6,900 436,425
....Unocal 20,100 736,163
PREMIER BALANCED FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_______ ______
Energy (continued)........ USX-Marathon Group 11,700 $ 255,937
Williams............................... 5,400 282,150
_______
8,379,263
_______
Health Care-7.4%......... Abbott Laboratories 15,900 804,938
Amgen................................ (a) 15,300 938,081
Becton, Dickinson & Co................. 22,500 978,750
Bristol-Myers Squibb................... 10,500 1,110,375
Columbia/HCA Healthcare................ 15,900 568,425
General Surgical Innovations........... 2,000 14,500
Johnson & Johnson...................... 39,300 1,935,525
Medtronic.............................. 9,300 598,688
Merck & Co............................. 24,900 1,845,712
Oxford Health Plans.................. (a) 4,500 204,750
....Pfizer 11,700 968,175
Schering-Plough........................ 13,200 844,800
_______
10,812,719
_______
Interest Sensitive- 9.1%...........Allstate 14,700 825,038
AMBAC.................................. 6,300 393,750
American National Insurance............ 3,000 196,500
AmSouth Bancorp........................ 9,600 445,200
BankAmerica............................ 16,200 1,482,300
Barnett Banks.......................... 10,200 388,875
Bear Stearns........................... 22,200 524,475
Chase Manhattan........................ 6,300 540,225
CIGNA.................................. 5,400 704,700
Citicorp............................... 7,500 742,500
Comerica............................... 21,000 1,115,625
Conseco................................ 9,300 497,550
Dean Witter, Discover & Co............. 4,500 264,937
....EXEL 20,700 786,600
First Chicago.......................... 20,100 1,025,100
Green Tree Financial................... 13,800 546,825
Morgan (J.P.).......................... 5,100 440,512
NationsBank............................ 3,900 367,575
Republic New York...................... 3,900 297,375
Standard Federal Bancorporation........ 3,900 208,650
Student Loan Marketing Association..... 9,000 744,750
Travelers Group........................ 12,000 651,000
_______
13,190,062
_______
Mining & Metals-.7%................ASARCO 9,900 259,875
....Nucor 3,900 184,763
Phelps Dodge........................... 4,500 282,937
USX-U.S. Steel Group................... 9,600 261,600
_______
989,175
_______
Transportation-.9%.................CSX 14,400 621,000
Carnival, Cl. A........................ 7,500 225,938
PREMIER BALANCED FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
_______ ______
Transportation (continued)... Delta Air Lines 2,400 $ 170,100
Illinois Central....................... 9,300 301,087
_______
1,318,125
_______
Utilities-5.8%.....................AT&T 7,800 272,025
Ameritech.............................. 24,000 1,314,000
BellSouth.............................. 23,100 941,325
Consolidated Edison.................... 20,400 596,700
....DQE 10,200 293,250
Entergy................................ 35,400 991,200
Frontier............................... 12,600 365,400
....GPU 18,300 601,613
MCI Communications..................... 33,000 829,125
Pacific Gas & Electric................. 12,900 303,150
Pinnacle West Capital.................. 6,300 194,512
SBC Communications..................... 19,500 948,188
Vodafone Group, A.D.R.................. 10,500 405,562
WorldCom............................. (a) 17,100 416,813
_______
8,472,863
_______
TOTAL COMMON STOCKS
(cost $72,743,188)................... $ 89,556,744
=======
Principal
Bonds & Notes-25.2% Amount
______-
Basic Industries-.1% Aluminum Company of America, Notes,
5.75%, 2/1/2001...................... $ 100,000 $ 97,618
_______
Consumer Cyclical-.2%.. Sears Roebuck, Notes,
6.25%, 1/15/2004..................... 175,000 170,292
Wal-Mart Stores,Notes,
5.50%, 3/1/1998...................... 150,000 149,608
_______
319,900
_______
Consumer Staples-1.2%... Heinz (H.J.), Notes,
6.875%, 1/15/2003.................... 100,000 101,723
Pepsico, Deb.,
7.625%, 11/1/1998.................... 700,000 721,177
Philip Morris, Deb.,
6%, 11/15/1999....................... 1,000,000 986,666
_______
1,809,566
_______
Energy-1.1%.......... . Texaco Capital, Notes,
6.875%, 7/15/1999.................... 500,000 509,119
WMX Technologies, Notes,
8.125%, 2/1/1998..................... 1,000,000 1,026,679
_______
1,535,798
_______
Interest Sensitive-2.7% Associated Corporation of North America,
Sr. Notes, 7.50%, 5/15/1999.......... 100,000 103,103
PREMIER BALANCED FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Bonds & Notes (continued) Amount Value
_______ ______
Interest Sensitive (continued) Chase Manhattan, Sub. Deb.,
8.625%, 5/1/2002..................... $ 500,000 $ 545,416
Commercial Credit, Notes,
6.70%, 8/1/1999...................... 75,000 75,934
First Chicago, Sub. Notes,
9.875%, 8/15/2000.................... 150,000 167,116
Ford Motor Credit, Notes,
5.625%, 12/15/1998................... 100,000 99,061
General Motors Acceptance, Notes,
7.75%, 1/15/1999..................... 500,000 516,388
Norwest Financial, Sr. Notes,
7%, 1/15/2003........................ 150,000 152,969
Province of Ontario, Sr. Unsub.,
7%, 8/4/2005......................... 700,000 713,713
Republic New York, Deb.,
9.75%, 12/1/2000..................... 1,000,000 1,118,624
Wells Fargo & Co., Sub. Notes,
6.125%, 11/1/2003.................... 500,000 481,865
_______
3,974,189
_______
Utilities-.5%..... Consolidated Edison, Deb.,
6.375%, 4/1/2003..................... 150,000 147,972
Duke Power, First Ref. Mort.:
7.50%, 4/1/1999...................... 125,000 128,754
6.125%, 7/22/2003.................... 500,000 484,643
_______
761,369
_______
U.S. Government
& Agencies-19.4%. Federal Home Loan Mortgage,
5.40%, 11/1/2000..................... 500,000 485,363
Federal National Mortgage Association,
5.30%, 12/10/1998.................... 1,000,000 988,836
U.S. Treasury Bonds:
11.625%, 11/15/2002.................. 500,000 636,641
12.375%, 5/15/2004................... 100,000 136,094
10.75%, 8/15/2005.................... 500,000 646,094
U.S. Treasury Notes:
4.75%, 2/15/1997..................... 700,000 698,469
6%, 8/31/1997........................ 500,000 501,953
8.875%, 11/15/1997................... 1,000,000 1,033,125
5.625%, 1/31/1998.................... 800,000 800,000
6.25%, 6/30/1998..................... 2,500,000 2,522,266
8.25%, 7/15/1998..................... 1,000,000 1,040,781
4.75%, 8/31/1998..................... 1,000,000 983,281
5.125%, 11/30/1998................... 200,000 197,531
5.125%, 12/31/1998................... 200,000 197,406
7%, 4/15/1999........................ 400,000 410,719
6.75%, 5/31/1999..................... 1,000,000 1,021,172
6.875%, 7/31/1999.................... 1,000,000 1,024,609
PREMIER BALANCED FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Principal
Bonds & Notes (continued) Amount Value
_______ ______
U.S. Government
& Agencies (continued) U.S. Treasury Notes (continued):
6.375%, 1/15/2000.................... $ 3,400,000 $ 3,445,156
6.875%, 3/31/2000.................... 500,000 513,906
6.250%, 5/31/2000.................... 1,930,000 1,946,284
7.875%, 8/15/2001.................... 400,000 429,313
7.50%, 11/15/2001.................... 3,000,000 3,178,594
6.375%, 8/15/2002.................... 1,000,000 1,011,719
5.75%, 8/15/2003..................... 1,000,000 974,219
7.25%, 8/15/2004..................... 500,000 529,297
6.50%, 5/15/2005..................... 1,300,000 1,314,625
6.50%, 8/15/2005..................... 1,500,000 1,516,172
_______
28,183,625
_______
TOTAL BONDS & NOTES
(cost $36,275,808)................... $ 36,682,065
=======
Short-Term Investments-12.5%
Repurchase Agreement-11.8% Goldman, Sachs & Co.
5.55% Dated 10/31/1996,
Due 11/1/1996 in the amount of
$17,145,018 (fully collateralized
by $16,680,000 U.S. Treasury Notes,
6.75%, 5/31/1999, value $17,488,100). $ 17,145,018 $ 17,145,018
U.S. Treasury Bill-.7%....... 4.91%, 12/19/96 (b) 1,070,000 1,062,638
=======
TOTAL SHORT-TERM INVESTMENTS
(cost $18,208,010)................... $ 18,207,656
=======
TOTAL INVESTMENTS (cost $ 127,227,006)...................................... 99.3% $144,446,465
==== =======
CASH AND RECEIVABLES (NET).................................................. .7% $ 950,851
==== =======
NET ASSETS.................................................................. 100.0% $145,397,316
==== =======
Notes to Statement of Investments:
(a) Non-income producing.
(b) Held by the custodian in a segregated account as collateral for open
Financial Futures positions.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES OCTOBER 31, 1996
Market Value Unrealized
Number of Covered Appreciation
Financial Futures Purchased; Contracts by Contracts Expiration at 10/31/96
______ _______ ______- ______-
<S> <C> <C> <C> <C>
Standard & Poor's 500.................... 47 $ 16,676,775 December `96 $ 393,800
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
PREMIER BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
_______ _______
<S> <C> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments
(including Repurchase Agreements of $17,145,018) $127,227,006 $144,446,465
Cash....................................... 4,659
Dividends and interest receivable.......... 909,160
Receivable for futures variation margin.... 160,975
Receivable from subscriptions to Capital Stock 151,613
Receivable for investment securities sold.. 28,092
_______
145,700,964
_______
LIABILITIES: Due to The Dreyfus Corporation and affiliates 122,389
Due to Distributor......................... 9,108
Payable for investment securities purchased 90,000
Payable for shares of Capital Stock redeemed 82,151
_______
303,648
_______
NET ASSETS.................................................................. $145,397,316
=======
REPRESENTED BY: Paid-in capital............................ $112,801,320
Accumulated undistributed investment income-net844,911
Accumulated net realized gain (loss) on investments 14,137,826
Accumulated net unrealized appreciation (depreciation)
on investments (including $393,800 net unrealized
... appreciation on financial futures)-Note 3 17,613,259
_______
NET ASSETS.................................................................. $145,397,316
=======
NET ASSET VALUE PER SHARE
________________-
Class A Class B Class C Class R
_______ _______ _______ _______
Net Assets................................. $6,274,674 $9,140,998 $237,604 $129,744,040
Shares Outstanding......................... 457,722 668,037 17,348 9,457,743
NET ASSET VALUE PER SHARE.................. $13.71 $13.68 $13.70 $13.72
==== ==== ==== ====
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER BALANCED FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME
INCOME: Cash dividends (net of $5,529 foreign taxes withheld
at source)............................. $ 1,405,839
Interest................................... 2,968,449
______
Total Income........................... $ 4,374,288
EXPENSES: Management fee-Note 2(a)................... 1,188,750
Distribution and service fee-Note 2(b)..... 73,118
Directors' fees and expenses-Note 2(c)..... 1,567
______
Total Expenses......................... 1,263,435
______
INVESTMENT INCOME-NET....................................................... 3,110,853
______
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $11,517,005
Net realized gain (loss) on financial futures:
Long transactions...................... 2,701,810
Short transactions..................... (52,116)
______
Net Realized Gain (Loss)............... 14,166,699
Net unrealized appreciation (depreciation)
on investments
(including $370,137 net unrealized appreciation
on financial futures).................. 3,609,857
______
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 17,776,556
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $20,887,409
======
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1996 October 31, 1995
________- ________-
OPERATIONS:
Investment income-net.................................................... $ 3,110,853 $ 2,566,644
Net realized gain (loss) on investments.................................. 14,166,699 2,859,296
Net unrealized appreciation (depreciation) on investments................ 3,609,857 12,325,435
_______ _______
Net Increase (Decrease) in Net Assets Resulting from Operations...... 20,887,409 17,751,375
_______ _______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares......................................................... (82,168) (54,581)
Class B shares......................................................... (93,190) (15,467)
Class C shares......................................................... (880) (63)
Class R shares......................................................... (2,779,831) (2,292,181)
Net realized gain on investments:
Class A shares......................................................... (12,895) _-
Class B shares......................................................... (23,311) _-
Class C shares......................................................... (93) _-
Class R shares......................................................... (630,855) _-
_______ _______
Total Dividends...................................................... (3,623,223) (2,362,292)
_______ _______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 4,827,120 5,596,014
Class B shares......................................................... 5,867,242 2,919,383
Class C shares......................................................... 220,931 5,416
Class R shares......................................................... 91,066,091 22,961,009
Dividends reinvested:
Class A shares......................................................... 80,519 48,751
Class B shares......................................................... 85,124 15,934
Class C shares......................................................... 935 63
Class R shares......................................................... 3,412,336 2,284,969
Cost of shares redeemed:
Class A shares......................................................... (821,065) (6,049,079)
Class B shares......................................................... (790,373) (67,410)
Class C shares......................................................... (3,092) -
Class R shares......................................................... (78,467,084) (17,974,028)
_______ _______
Increase (Decrease) in Net Assets from Capital Stock Transactions.... 25,478,684 9,741,022
_______ _______
Total Increase (Decrease) in Net Assets............................ 42,742,870 25,130,105
NET ASSETS:
Beginning of Period...................................................... 102,654,446 77,524,341
_______ _______
End of Period............................................................ $145,397,316 $102,654,446
======= =======
Undistributed investment income-net........................................ $ 844,911 $ 690,127
_______ _______
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
__________________-__________________-
Year Ended Year Ended
October 31, 1996 October 31, 1995
________- ________-
CAPITAL SHARE TRANSACTIONS:
Class A
____
Shares sold.............................................................. 376,308 566,013
Shares issued for dividends reinvested................................... 6,409 4,833
Shares redeemed.......................................................... (63,542) (610,712)
_____ _____
Net Increase (Decrease) in Shares Outstanding 319,175 (39,866)
===== =====
Class B*
____
Shares sold.............................................................. 459,770 266,500
Shares issued for dividends reinvested................................... 6,805 1,443
Shares redeemed.......................................................... (60,720) (5,761)
_____ _____
Net Increase (Decrease) in Shares Outstanding 405,855 262,182
===== =====
Class C*
____
Shares sold.............................................................. 16,995 511
Shares issued for dividends reinvested................................... 74 6
Shares redeemed.......................................................... (238) _-
_____ _____
Net Increase (Decrease) in Shares Outstanding 16,831 517
===== =====
Class R
____
Shares sold.............................................................. 6,955,109 2,189,828
Shares issued for dividends reinvested................................... 274,851 217,471
Shares redeemed.......................................................... (5,985,999) (1,700,811)
_____ _____
Net Increase (Decrease) in Shares Outstanding 1,243,961 706,488
===== =====
*The Fund commenced selling Class B and Class C shares on December 20,
1994.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
PREMIER BALANCED 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.
Class A Shares
________________________________
Year Ended October 31,
________________________________
PER SHARE DATA: 1996 1995 1994(1)(2)
___- ___- ___-
<S> <C> <C> <C> <C>
Net asset value, beginning of period.................................. $11.91 $10.08 $ 9.73
___- ___- ___-
Investment Operations:
Investment income-net................................................. .31 .28 .11
Net realized and unrealized gain (loss)
on investments...................................................... 1.88 1.82 .34
___- ___- ___-
Total from Investment Operations...................................... 2.19 2.10 .45
___- ___- ___-
Distributions:
Dividends from investment income-net.................................. (.31) (.27) (.10)
Dividends from net realized gain on investments....................... (.08) .- .-
___- ___- ___-
Total Distributions................................................... (.39) (.27) (.10)
___- ___- ___-
Net asset value, end of period........................................ $13.71 $11.91 $10.08
==== ==== ====
TOTAL INVESTMENT RETURN(3)................................................ 18.71% 21.17% 4.68%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.25% 1.25% .71%(4)(5)
Ratio of net investment income
to average net assets............................................... 2.39% 2.65% 1.09%(4)(5)
Portfolio Turnover Rate............................................... 85.21% 53.20% 83.00%
Average commission rate paid(6)....................................... $.0540 .- .-
Net Assets, end of period (000's Omitted)............................. $6,275 $1,650 $1,798
(1) The Fund commenced selling Investor shares on April 14, 1994. On October 17, 1994, Investor shares were redesignated as
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) Exclusive of sales load.
(4) Not annualized.
(5) These ratios have been restated to reflect current year's presentation.
(6) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER BALANCED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class B Shares
____________________________
Year Ended October 31,
____________________________
PER SHARE DATA: 1996 1995(1)
___- ___-
Net asset value, beginning of period.................................... $11.89 $ 9.76
___- ___-
Investment Operations:
Investment income-net................................................... .21 .14
Net realized and unrealized gain(loss)
on investments........................................................ 1.87 2.11
___- ___-
Total from Investment Operations........................................ 2.08 2.25
___- ___-
Distributions:
Dividends from investment income-net.................................... (.21) (.12)
Dividends from net realized gain on investments......................... (.08) .-
___- ___-
Total Distributions..................................................... (.29) (.12)
___- ___-
Net asset value, end of period.......................................... $13.68 $11.89
==== ====
TOTAL INVESTMENT RETURN..................................................... 17.76% 23.19%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. 2.00% 1.73%(2)
Ratio of net investment income
to average net assets................................................. 1.65% 2.16%(2)
Portfolio Turnover Rate................................................. 85.21% 53.20%(2)
Average commission rate paid(3)......................................... $.0540 .-
Net Assets, end of period (000's Omitted)............................... $9,141 $3,118
(1) The Fund commenced selling Class B shares on December 20, 1994.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER BALANCED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class C Shares
____________________________
Year Ended October 31,
____________________________
PER SHARE DATA: 1996 1995(1)
___- ___-
Net asset value, beginning of period.................................... $11.90 $ 9.76
___- ___-
Investment Operations:
Investment income-net................................................... .25 .11
Net realized and unrealized gain (loss)
on investments........................................................ 1.84 2.15
___- ___-
Total from Investment Operations........................................ 2.09 2.26
___- ___-
Distributions:
Dividends from investment income-net.................................... (.21) (.12)
Dividends from net realized gain on investments......................... (.08) .-
___- ___-
Total Distributions..................................................... (.29) (.12)
___- ___-
Net asset value, end of period.......................................... $13.70 $11.90
==== ====
TOTAL INVESTMENT RETURN..................................................... 17.83% 23.29%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. 2.00% 1.73%(2)
Ratio of net investment income
to average net assets................................................. 1.62% 2.16%(2)
Portfolio Turnover Rate................................................. 85.21% 53.20%(2)
Average commission rate paid(3)......................................... $.0540 -
Net Assets, end of period (000's Omitted)............................... $237 $6
(1) The Fund commenced selling Class C shares on December 20, 1994.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER BALANCED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class R Shares
_______________________-_______________________-
Year Ended October 31,
_______________________-_______________________-
PER SHARE DATA: 1996 1995 1994(1) 1993(2)
___- ___- ___- ___-
Net asset value, beginning of period.................. $11.92 $10.09 $10.18 $10.00
___- ___- ___- ___-
Investment Operations:
Investment income-net................................. .34 .31 .20(3) .02
Net realized and unrealized gain (loss)
on investments...................................... 1.88 1.81 (.13) .16
___- ___- ___- ___-
Total from Investment Operations...................... 2.22 2.12 .07 .18
___- ___- ___- ___-
Distributions:
Dividends from investment income-net.................. (.34) (.29) (.16) .-
Dividends from net realized gain on investments....... (.08) .- .- .-
___- ___- ___- ___-
Total Distributions................................... (.42) (.29) (.16) .-
___- ___- ___- ___-
Net asset value, end of period........................ $13.72 $11.92 $10.09 $10.18
==== ==== ==== ====
TOTAL INVESTMENT RETURN................................... 18.99% 21.46% .68% 1.80%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............... 1.00% 1.00% 1.04%(5) .15%(4)(6)(7)
Ratio of net investment income
to average net assets............................... 2.68% 2.89% 2.23% .25%(4)(7)
Portfolio Turnover Rate............................... 85.21% 53.20% 83.00% -
Average commission rate paid(8)....................... $.0540 - - -
Net Assets, end of period (000's Omitted)............. $129,744 $97,881 $75,720 $28,904
(1) 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.
(2) The Fund commenced operations on September 15, 1993. On April 14, 1994, the Fund commenced selling Investor shares.
Those shares outstanding prior to April 14, 1994 were designated as Trust
shares. On October 17, 1994, Trust shares were redesignated as Class R
shares.
(3) Net investment income before reimbursement of expenses by the investment adviser for the year ended October 31, 1994 was
$.2031. The amount shown in this caption for each share outstanding
throughout the period may not accord with the change in the aggregate
gains and losses in the portfolio securities for the period because of
the timing of purchases and withdrawals of shares in relation to the
fluctuations of market values of the portfolio.
(4) Not annualized.
(5) Expense ratio before voluntary reimbursement of expenses by the investment adviser for the year ended October 31, 1994
was 1.09%.
(6) For the period September 30, 1993 (commencement of operations) to October 31, 1993, the investment adviser reimbursed
expenses of the Fund amounting to $.0109.
(7) These ratios have been restated to reflect current year's presentation.
(8) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
PREMIER BALANCED 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 Balanced Fund (the "Fund"). The Fund's
investment objective is to outperform a hybrid index, 60% of which is the
Standard & Poor's 500 Composite Stock Price Index and 40% of which is the
Lehman Brothers Intermediate Government/Corporate Bond Index, by investing in
common stocks and bonds in proportions consistent with their expected returns
and risks as determined by the Fund's investment manager. 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 Fund is authorized to issue 50 million
shares of $.001 par value Capital Stock in each of the following classes of
shares: Class A, Class B, Class C and Class R. Class A, Class B and Class C
shares are sold primarily to retail investors through financial
intermediaries and bear a distribution fee and/or service fee. Class A shares
are sold with a front-end sales charge, 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.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities 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 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
PREMIER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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) FINANCIAL FUTURES: The Fund may invest in 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 (see Statement of Financial Futures).
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. Typically, variation margin payments are
received or made 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. Contracts open at
October 31, 1996, and their related unrealized appreciation are set forth in
the Statement of Financial Futures.
(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. This may result in distributions that are in excess of the net
realized gains on the fiscal year basis. 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 1, 1996, the Board of Directors declared dividends from net
investment income for the Class A, Class B, Class C and Class R shares in the
amount of $.0736, $.0478, $.0480 and $.0823 per share, respectively, payable
on November 4, 1996 to shareholders of record on November 1, 1996.
(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 1.00% 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 annually up
PREMIER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 .75% 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, under which the Fund pays Dreyfus Service
Corporation or the Distributor for providing certain services to the holders
of Class B and Class C shares a fee at the annual rate of .25% of the value
of the average daily net assets of Class B and Class C shares. Class R shares
bear no service or distribution fee. During the period ended October 31,
1996, the distribution fee for Class A, Class B and Class C shares was
$9,935, $46,789 and $598, respectively. During the period ended October 31,
1996, the service fee for Class B shares and Class C shares was $15,597 and
$199 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) DIRECTOR'S 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 meeting 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 a
nd expenses are charged and allocated to each series based on net assets.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1996,
amounted to $105,669,631 and $88,701,919, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments was $17,613,259, consisting of $18,303,682 gross unrealized
appreciation and $690,423 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
PREMIER BALANCED 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,
including the statement of investments and statement of financial futures, of
Premier Balanced Fund of The Dreyfus/Laurel Funds, Inc. as of October 31,
1996, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for the years or 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Premier Balanced Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1996, the results of its operations, changes in its net assets
and its financial highlights for each of the years or periods set forth
above, in conformity with generally accepted accounting principles.
[KPMG Peat Marwick signature logo]
New York, New York
December 9, 1996
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.076 per share as a
long-term capital gain distribution paid on December 26, 1995 and also
designates $.0133 per share as a long-term capital gain distribution paid on
August 2, 1996.
The Fund also designates 29.93% of the ordinary dividends paid during the
fiscal year ended October 31, 1996 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1997 of
the percentage applicable to the preparation of their 1996 income tax
returns.
PREMIER BALANCED FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 342/642AR9610
Annual Report
Premier
Balanced Fund
October 31, 1996
[Dreyfus lion/2hres logo]
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 ended October 31, 1996. For
this twelve-month period, the Fund provided the following total returns for
its share classes:*
Class A....................... 4.85%
Class B....................... 4.33%
Class C....................... 3.83%
Class R....................... 5.12%
These returns compare with a total return of 5.81% for the Fund's
benchmark index, the Lehman Brothers Intermediate Government/Corporate Bond
Index, and 5.85% for the Lehman Brothers Aggregate Bond Index.**
Income dividends per share were paid during the period in the following
approximate amounts and annualized distribution rates were:
Income Dividends per share Annualized Distribution Rate***
Class A $.568 5.10%
Class B $.514 4.75%
Class C $.512 4.76%
Class R $.595 5.51%
ECONOMIC REVIEW
The fear of another round of monetary tightening by the Federal Reserve
Board (the "Fed") to ward off a resurgence in inflation has so far proven to
be unwarranted. Indeed, despite solid economic growth resulting in the
creation of new jobs and an overall tightening in the labor market, inflation
has remained subdued. Both the Consumer and Producer Price Indexes remained
at annual rates in the 3% range. This is the fifth consecutive year of
inflation under 3%, the longest period since the 1960s. Despite the duration
of the economic recovery, most economic reports underscore the tepid nature
of the present inflationary environment.
The increase in long-term interest rates early this year may have
contributed to the recently reported slowdown in the rate of economic growth.
During the third quarter, the growth rate of Gross Domestic Product cooled to
2.2%, less than half the second quarter's strong 4.7% pace. Consumers - the
initiators of two-thirds of all economic activity - remained cautious
throughout the year. In the third quarter, the pace of consumer spending was
at its slowest in five years. Consumer borrowing has also declined from
year-ago levels. Not surprisingly, retail sales growth has also been modest
this year. Consumers may have been restrained by wages not rising as rapidly
as had been previously expected, given the strength in the labor market. The
Employment Cost Index, considered to be an important gauge of wage inflation
by Federal Reserve Chairman Alan Greenspan, rose just 0.6% in the third
quarter, the lowest reading in over a year. This brought the growth in wages
to 2.8% over the past twelve months, slightly less than the rate of inflation
as measured by the Consumer Price Index.
The booming housing market also seems to have cooled with both new
housing starts and existing home sales slackening since midyear. Industrial
production has slowed somewhat from its more rapid pace earlier in the year.
Given the level of capacity utilization, there appears to be no sign of
production bottlenecks that could push prices higher. Anecdotal evidence
still supports the assertion that corporations are reluctant to raise prices.
The report that the 1996 Federal budget deficit had shrunk to $107.3 billion
- - its lowest level in two decades - provided another favorable sign for
inflation. The final reading of the 1996 deficit marks the fourth straight
decline from fiscal 1992's record $290.4 billion.
Despite the relatively benign current environment for inflation, we are
alert for early signs of its potential resurgence. While wage increases so
far have remained modest, workers should eventually expect compensation that
at least matches their cost of living. Furthermore, we are mindful that price
increases in energy and food may not continue to be as restrained as they
were over the past four years.
THE MARKET AND THE PORTFOLIO
After a volatile first four months of 1996, the bond market settled into
a trading range during the summer with yields on ten-year securities varying
within a range of 6.5% to 7.0%. Economic reports began to indicate an economy
not growing as fast as many investors had feared. Employment growth, a shock
to investors earlier in the year, moderated. Additionally, investor fear of
abnormal increases in the rate of inflation subsided as oil and grain prices
moved lower over the summer. By the end of the reporting period, investor
psychology turned positive and bond yields moved lower as evidence grew that
the economy was growing at a moderate pace.
From October 1995 through March 1996, the Fund maintained a longer
duration than its benchmark index. The longer a fund's duration, the more
volatile the fund will be as interest rates move. In a declining interest
rate environment, a longer duration is advantageous to a fund. The reverse is
true in a rising interest rate environment. As rates rose early in 1996, this
longer duration contributed to the Fund's underperforming its benchmark.
In response to the unexpected bond market volatility earlier in the year
the Fund adjusted its duration to a neutral position similar to its benchmark
index. Recently, we adopted a more positive attitude toward the bond market
in anticipation of continued low inflation and moderate economic growth. The
Fund continues to hold broad positions in the mortgage and corporate sectors
which add incremental yield to the Fund's performance.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely,
[Laurie Carroll signature logo]
Laurie Carroll
Portfolio Manager
November 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any 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 shares and Class 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. The
Lehman Brothers Aggregate Bond Index is a widely accepted, unmanaged index of
corporate, government and government agency debt instruments with an average
maturity of 1-10 years.
*** Distribution rate per share is based upon dividends per share paid
from net investment income during the period (annualized), divided by the
maximum offering price in the case of Class A shares, or net asset value per
share in the case of Class B, Class C and Class R shares at the end of the
period, adjusted for any capital gain distributions.
PREMIER LIMITED TERM INCOME FUND OCTOBER 31, 1996
[Exhibit A]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER LIMITED TERM
INCOME FUND CLASS R SHARES
WITH THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX AND
THE LEHMAN BROTHERS AGGREGATE BOND INDEX
$15,482
Lehman Brothers Aggregate
Bond Index*
Dollars
$14,972
Lehman Brothers Intermediate
Government/Corporate Bond Index*
$14,466
Premier Limited Term Income Fund
(Class R Shares)
[Exhibit A]
*Source: Lehman Brothers
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
CLASS A SHARES CLASS B SHARES
________________________________________________________________ _________________________________________________________
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
PERIOD ENDED 10/31/96 Sales Charge Sales Charge (3.0%) PERIOD ENDED 10/31/96 Redemption Redemption*
____________________ ____________ _____________________ _____________________ _________ _________________
<S> <C> <C> <C> <C> <C>
1 Year 4.85% 1.66% 1 Year 4.33% 1.34%
From Inception (4/7/94) 6.43 5.20 From Inception (12/19/94) 8.33 6.83
CLASS C SHARES CLASS R SHARES
________________________________________________________________ _________________________________________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
PERIOD ENDED 10/31/96 No Redemption Redemption** PERIOD ENDED 10/31/96
____________________ ____________ _____________________ _____________________
1 Year 3.83% 3.09% 1 Year 5.12%
From Inception (12/19/94) 8.06 8.06 5 Years 6.52
From Inception (7/11/91) 7.20
</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 as well as to the Lehman Brothers Aggregate Bond Index
which are described below. For comparative purposes, the value of each 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, Class B
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
Lehman Brothers Aggregate Bond Index is a widely accepted, unmanaged index of
corporate, government and government agency debt instruments. The Indices do
not take into account charges, fees and other expenses. Further information
relating to Fund performance, including expense reimbursements, if
applicable, is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
* The maximum contingent deferred sales charge for Class B shares is 3% and
is reduced to 0% after five years.
**The maximum contingent deferred sales charge for Class C shares is .75% for
shares redeemed within one year of the date of purchase.
<TABLE>
<CAPTION>
PREMIER LIMITED TERM INCOME FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
PRINCIPAL
BONDS AND NOTES-95.2% AMOUNT VALUE
___________ __________
<S> <C> <C> <C> <C>
FINANCIAL-.2%............ GMAC Grantor Trust,
Ser. 1992-F, Cl. A, 4 1/2%, 1997..... $ 79,952 $ 79,737
__________
FOODS AND BEVERAGES-4.2%...... McDonald's,
Medium-Term Notes, 8 3/8%, 1999...... 2,000,000 2,120,846
__________
INDUSTRIAL-7.8%..................ASARCO,
Deb., 8 1/2%, 2025................... 1,500,000 1,610,870
Lukens,
Medium-Term Notes, Ser. A, 6 1/2%, 2006.... 2,500,000 2,380,752
__________
3,991,622
__________
U.S. GOVERNMENT
AGENCIES-38.7% Federal National Mortgage Association,
Deb., 8.90%, 6/12/2000............... 2,000,000 2,176,494
Government National Mortgage Association I:
6 1/2%, 3/15/2024.................... 5,768,199 5,557,256
7%, 8/15/2008 - 2/15/2026............ 4,838,989 4,806,785
7 1/2%, 5/15/2010 - 5/15/2023........ 4,278,631 4,342,549
9%, 9/15/2024........................ 2,622,161 2,786,046
__________
19,669,130
__________
U.S. GOVERNMENT-44.3%... U.S. Treasury Bonds:
12 3/8%, 5/15/2004................... 1,060,000 1,442,594
7 1/4%, 8/15/2022.................... 500,000 530,156
U.S. Treasury Notes:
8 7/8%, 11/15/1998................... 3,000,000 3,176,719
7 1/8%, 9/30/1999.................... 3,000,000 3,097,031
8 7/8%, 5/15/2000.................... 2,000,000 2,183,438
7 1/2%, 5/15/2002.................... 4,000,000 4,256,875
7 1/4%, 5/15/2004.................... 2,000,000 2,116,563
6 7/8%, 5/15/2006.................... 3,500,000 3,624,688
7%, 7/15/2006........................ 2,000,000 2,088,750
__________
22,516,814
__________
TOTAL BONDS AND NOTES
(cost $48,136,601)................... $48,378,149
============
SHORT-TERM INVESTMENTS-4.2%
REPURCHASE AGREEMENT;Goldman, Sachs & Co., 5.55%
dated 10/31/1996, due 11/1/1996 in the amount
of $2,121,307 (fully collateralized by
$1,566,000 U.S. Treasury Bonds, 11 5/8%,
11/15/2004, value $2,164,113)
(cost $2,120,980).................... $ 2,120,980 $ 2,120,980
============
TOTAL INVESTMENTS (cost $50,257,581)........................................ 99.4% $50,499,129
====== ============
CASH AND RECEIVABLES (NET).................................................. .6% $ 308,793
====== ============
NET ASSETS.................................................................. 100.0% $50,807,922
====== ============
See notes to financial statements.
PREMIER LIMITED TERM INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
COST VALUE
_________ _________
ASSETS: Investments in securities-See Statement of Investments $50,257,581 $50,499,129
Cash....................................... 783,842
Interest receivable........................ 980,583
__________
52,263,554
__________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 25,824
Due to Distributor......................... 50
Payable for Capital Stock redeemed......... 894,028
Payable for investment securities purchased 535,730
__________
1,455,632
__________
NET ASSETS.................................................................. $50,807,922
============
REPRESENTED BY: Paid-in capital............................ $52,491,136
Accumulated net realized gain (loss) on investments (1,924,762)
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 3 241,548
__________
NET ASSETS.................................................................. $50,807,922
============
NET ASSET VALUE PER SHARE
___________________________
CLASS A CLASS B CLASS C CLASS R
_____________ _______ _______ ___________
Net Assets.................................. $1,001,146 $ 143,356 $ 16.86 $49,663,403
Shares Outstanding.......................... 92,880 13,304 1.571 4,607,134
NET ASSET VALUE PER SHARE................... $10.78 $10.78 $10.73 $10.78
========== ========= ======= ========
See notes to financial statements.
PREMIER LIMITED TERM INCOME FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME
INCOME Interest Income............................ $3,707,408
EXPENSES: Management fee-Note 2(a)................... $ 351,360
Directors' fees and expenses-Note 2(c)..... 6,119
Distribution and service fees-Note 2(b).... 3,606
___________
TOTAL EXPENSES......................... 361,085
____________
INVESTMENT INCOME-NET....................................................... 3,346,323
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $213,628
Net unrealized appreciation (depreciation)
on investments......................... (695,719)
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (482,091)
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,864,232
==============
See notes to financial statements.
PREMIER LIMITED TERM INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
___________________ ________________
OPERATIONS:
Investment income-net.............................................. $ 3,346,323 $ 4,271,815
Net realized gain (loss) on investments............................ 213,628 (302,901)
Net unrealized appreciation (depreciation) on investments.......... (695,719) 4,840,620
___________________ ________________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,864,232 8,809,534
___________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares................................................... (55,899) (58,159)
Class B shares................................................... (6,186) (1,637)
Class C shares................................................... (47) __
Class R shares................................................... (3,244,519) (4,212,019)
___________________ ________________
TOTAL DIVIDENDS.............................................. (3,306,651) (4,271,815)
___________________ ________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares................................................... 73,664 999,504
Class B shares................................................... 73,604 74,448
Class C shares................................................... 16,607 15
Class R shares................................................... 10,953,081 41,024,884
Dividends reinvested:
Class A shares................................................... 23,900 20,894
Class B shares................................................... 4,451 1,026
Class C shares................................................... 24 __
Class R shares................................................... 2,447,188 2,845,297
Cost of shares redeemed:
Class A shares................................................... (239,578) (865,359)
Class B shares................................................... (11,612) __
Class C shares................................................... (16,722) __
Class R shares................................................... (28,225,985) (65,824,826)
___________________ ________________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS (14,901,378 )(21,724,117)
___________________ ________________
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... (15,343,797) (17,186,398)
NET ASSETS:
Beginning of Period................................................ 66,151,719 83,338,117
___________________ ________________
End of Period...................................................... $ 50,807,922 $ 66,151,719
================= ==================
UNDISTRIBUTED INVESTMENT INCOME (DISTRIBUTIONS IN EXCESS OF INVESTMENT INCOME)-NET $ 39,672 $ (22,636)
___________________ ________________
See notes to financial statements.
PREMIER LIMITED TERM INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
______________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
_________________ ________________
CAPITAL SHARE TRANSACTIONS:
CLASS A
_______
Shares sold........................................................... 6,946 97,702
Shares issued for dividends reinvested................................ 2,231 1,985
Shares redeemed....................................................... (22,392) (84,833)
_________________ ________________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (13,215) 14,854
================= =================
CLASS B(1)
_________
Shares sold........................................................... 6,818 7,054
Shares issued for dividends reinvested................................ 417 96
Shares redeemed....................................................... (1,081) __
_________________ ________________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 6,154 7,150
================= =================
CLASS C(2)
_________
Shares sold........................................................... 1,585 2
Shares issued for dividends reinvested................................ 2 __
Shares redeemed....................................................... (1,587) __
_________________ ________________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... __ 2
================= =================
CLASS R
________
Shares sold........................................................... 1,019,945 4,035,604
Shares issued for dividends reinvested................................ 228,591 271,316
Shares redeemed....................................................... (2,631,091) (6,382,003)
_________________ ________________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (1,382,555) (2,075,083)
================= =================
(1) The Fund commenced selling B shares on December 19, 1994.
(2) The Fund commenced selling C shares on April 30, 1995.
See notes to financial statements.
PREMIER LIMITED TERM INCOME 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.
CLASS A SHARES
__________________________________
YEAR ENDED OCTOBER 31,
__________________________________
PER SHARE DATA: 1996 1995 1994(1)(2)
_____ _____ _____
Net asset value, beginning of period.................................. $10.84 $10.22 $10.49
_______ _______ _______
INVESTMENT OPERATIONS:
Investment income-net................................................. .58 .56 .28
Net realized and unrealized gain (loss)
on investments...................................................... (.07) .62 (.27)
_______ _______ _______
TOTAL FROM INVESTMENT OPERATIONS.................................... .51 1.18 .01
_______ _______ _______
DISTRIBUTIONS:
Dividends from investment income-net.................................. (.57) (.56) (.28)
_______ _______ _______
Net asset value, end of period........................................ $10.78 $10.84 $10.22
======== ====== ========
TOTAL INVESTMENT RETURN(3)................................................ 4.85% 11.83% .11%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... .85% .85% .83%(4)
Ratio of net investment income
to average net assets............................................... 5.38% 5.33% 4.47%(4)
Portfolio Turnover Rate............................................... 153.63% 73.00% 117.00%
Net Assets, end of period (000's Omitted)............................. $1,001 $1,150 $932
(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) Exclusive of sales load.
(4) Annualized.
See notes to financial statements.
PREMIER LIMITED TERM INCOME FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
CLASS B SHARES CLASS C SHARES
______________________ ____________________
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
______________________ _______________________
PER SHARE DATA: 1996 1995(1) 1996 1995(1)
______ ______ ______ ______
Net asset value, beginning of period.................... $10.84 $10.15 $10.84 $10.15
______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net................................... .52 .47 3.05 .48
Net realized and unrealized gain (loss)
on investments........................................ (.07) .69 (2.65) .69
______ ______ ______ ______
TOTAL FROM INVESTMENT OPERATIONS............. ........ .45 1.16 .40 1.17
______ ______ ______ ______
DISTRIBUTIONS:
Dividends from investment income-net.................... (.51) (.47) (.51) (.48)
______ ______ ______ ______
Net asset value, end of period.......................... $10.78 $10.84 $10.73 $10.84
======= ======== ======== ========
TOTAL INVESTMENT RETURN.................................... 4.33% 11.32% 3.83% 11.32%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. 1.35% 1.35%(2) 1.41% -
Ratio of net investment income
to average net assets................................. 4.86% 4.85%(2) 5.50% -
Portfolio Turnover Rate................................. 153.63% 73.00% 153.63% 73.00%
Net Assets, end of period (000's Omitted)............... $143 $78 - -
(1) The Fund commenced selling Class B and Class C shares on December 19, 1994.
(2) Annualized.
</TABLE>
See notes to financial statements.
PREMIER LIMITED TERM INCOME FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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>
CLASS R SHARES
______________________________________________________________________
YEAR ENDED OCTOBER 31,
______________________________________________________________________
PER SHARE DATA: 1996 1995 1994(1) 1993 1992
________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $10.84 $10.22 $ 11.07 $10.71 $10.41
________ ________ ________ ________ ________
INVESTMENT OPERATIONS:
Investment income-net........................ .60 .58 .49 (2) .51 .62
Net realized and unrealized gain (loss)
on investments............................. (.06) .62 (.75) .46 .30
________ ________ ________ ________ ________
TOTAL FROM INVESTMENT OPERATIONS............. .54 1.20 (.26) .97 .92
________ ________ ________ ________ ________
DISTRIBUTIONS:
Dividends from investment income-net......... (.60) (.58) (.53) (.52) (.62)
Dividends from net realized gain on investments .- .- (.06) (.09) .-
________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS.......................... (.60) (.58) (.59) (.61) (.62)
________ ________ ________ ________ ________
Net asset value, end of period............... $10.78 $ 10.84 $10.22 $11.07 $10.71
======== ========= ======== ========= =========
TOTAL INVESTMENT RETURN.......................... 5.12% 12.11% (2.46%) 9.33% 9.11%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .60% .60% .60%(3) .60% .51%
Ratio of net investment income
to average net assets................... 5.62% 5.58% 4.70% 4.81%(4) 5.91%(4)
Portfolio Turnover Rate..................... 153.63% 73.00% 117.00% 112.00% 67.00%
Net Assets, end of period (000's Omitted).... $ 49,664 $69,924 $82,406 $59,534 $20,619
(1) 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.
(2) Net investment income before reimbursement of expenses by the
investment adviser was $.49 per share for the year ended
October 31, 1994.
(3) Expense ratio before reimbursement of expenses by the investment
adviser was .60% for the year ended October 31, 1994.
(4) For the year ended October 31, 1992 the investment adviser waived
all or a portion of its advisory fee amounting to
$.0064 per share. For the years ended October 31, 1993 and 1992, the
investment adviser reimbursed expenses of the Fund amounting to $.0509 and
$.1147 per share, respectively.
See notes to financial statements.
</TABLE>
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 Fund's investment objective is to obtain as high a level of current
income as is consistent with safety of principal and maintenance of liquidity
by investing in fixed income obligations with average maturities not in
excess of ten years. 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 Fund is authorized to issue 250 million
of $.001 par value Capital Stock. The Fund currently offers four classes of
shares: Class A (50 million shares authorized), Class B (50 million shares
authorized), Class C (50 million shares authorized) and Class R (100 million
shares authorized). 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 or service fees. Class R shares are offered without a front-end
sales load or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution and service fees and voting rights on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: 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 a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the 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. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and discounts 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, 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,
PREMIER LIMITED TERM INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $1,925,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. If not
applied, $1,651,000 of the carryover expires in fiscal 2002 and $274,000 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 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, under which the Fund pays Dreyfus Service
Corporation or the Distributor for providing certain services to the holders
of Class B and Class C shares a fee at the annual rate of .25% of the value
of the average daily net assets of Class B and Class C shares. Class R shares
bear no service or distribution fee. During the period ended October 31,
1996, the distribution fee for Class A, Class B and Class C shares was
$2,633, $644 and $5, respectively. During the period ended October 31, 1996,
the service fee for Class B shares and Class C shares was $322 and $2,
respectively.
PREMIER LIMITED TERM INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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) DIRECTOR'S 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 meeting 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 a
nd 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,
excluding short-term securities, during the period ended October 31, 1996,
amounted to $86,966,631 and $99,213,312, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments was $241,548, consisting of $508,782 gross unrealized
appreciation and $267,234 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
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,
including the statement of investments, of Premier Limited Term Income Fund
of The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Premier Limited Term Income Fund of The Dreyfus/Laurel Funds,
Inc. as of October 31, 1996, the results of its operations, changes in its
net assets and its financial highlights for each of the years or periods set
forth above, in conformity with generally accepted accounting principles.
{KPMG Peat Marwick LLP signature logo]
New York, New York
December 9, 1996
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, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 345/645AR9610
[lion2/hres logo]
Annual Report
Premier Limited Term
Income Fund
October 31, 1996
PREMIER SMALL COMPANY STOCK FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
James C. Wadsworth, who has been managing Premier Small Company Stock
Fund since its inception, has now been joined by a comanager. He is Anthony
J. Galise. Mr. Galise has provided research inputs on the Fund since
inception.
We believe this will be a very strong team for managing the assets in the
Fund. Tony Galise joined Mellon Bank in 1993 after 20 years of investment
experience. He is currently a portfolio manager of The Dreyfus Corporation,
and a Vice President and Senior Equity Analyst of Mellon Private Asset
Management. A graduate of Suffolk University, he is a Chartered Financial
Analyst and a member of the Pittsburgh and Boston Societies of Financial
Analysts.
Jim Wadsworth has been with Mellon since 1977. He is a portfolio manager
of The Dreyfus Corporation, Chief Equity Officer of Mellon Private Asset
Management and First Vice President of Mellon Bank.
Sincerely,
[Stephen E. Canter signature logo]
Stephen E. Canter
Chief Investment Officer
The Dreyfus Corporation
November 20, 1996
New York, N.Y.
PREMIER SMALL COMPANY STOCK FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report on the Premier
Small Company Stock Fund for the fiscal year ended October 31, 1996. The Fund
provided total returns of 19.22% for its Class A shares, 18.17% for its Class
B shares, 18.27% for its Class C shares and 19.43% for its Class R shares.*
This compared to a total return of 18.79% for the Russell 2500 Index, the
Fund's benchmark, for the same period.**
Economic Review
The U.S. economy is enjoying a good year. First, the tightening labor
market has failed to push price inflation higher. Second, economic growth has
slowed since midyear from the torrid pace of the first half. Third, corporate
profits are holding up quite well, albeit growing more slowly than last year.
These developments have vindicated Federal Reserve Board (the "Fed")
inaction, keeping market interest rates stable. Although the economy has
simmered down, it is nevertheless operating with very little slack.
The Fed twice thwarted market expectations for tightening interest rates
this year, taking the view instead that steady growth won't so easily foster
inflation in this cycle. The unemployment rate has plunged towards 5% this
year and wage growth has outpaced price inflation for the first time since
1989. Yet, there is little evidence of accelerating price inflation to date.
Even higher oil prices have failed to lift prices elsewhere. This is very
different from 1994 when the Fed preemptively hiked interest rates to stem an
anticipated price inflation that subsequently did not materialize.
After rising 3.3% in the first half of this year, real GDP growth slowed
to 2.2% in the third quarter. Early evidence for the fourth quarter indicates
further sustained growth. In particular, consumer spending has been
lackluster since midyear, despite solid income growth and high confidence
levels. And new highs in home sales have not been matched by new records in
homebuilding. Spending on capital goods has rebounded, however, while
incoming strong export orders indicate better growth ahead for this sector.
Capital goods and exports typically dominate the business cycle's late phase.
Corporate profit growth, albeit slower than in 1995, generally continues to
surprise on the upside.
Interest rates this fall are not much different than in the spring.
Short-term rates have especially stabilized in recent months based on the
view that Fed tightening is unlikely this year. Long-term rates have recently
fallen. Should the economy show signs of reaccelerating, long-term rates
would likely rise.
As the U.S. economy moves into the late-cycle phase it is, as usual, out
of sync with most business cycles overseas, which are at a much earlier
stage. This portends faster world growth in 1997. How well the U.S. economy
can participate in an accelerating growth world economy without igniting
inflation remains to be seen.
Market Overview
The stock market in the last twelve months shrugged off a variety of
potentially negative factors to barrel its way to new heights.
In late 1995 and early 1996 economic activity appeared to slow down,
enough to prompt the Fed to lower interest rates in January of this year. By
springtime, when the Fed had apparently suspended its anti-inflationary
measures, investors began to worry about signs of strength exhibited by the
economy. Though the Fed took no action to raise interest rates, investor
worries about that possibility restrained an ebullient stock market. By July,
fears of higher interest rates, plus concerns that some stock prices -
technology issues in particular - might have gone too far, too fast, caused a
temporary retreat in equity prices.
As fall approached, however, the underlying factors of a strong economy,
such as low inflation and investor optimism, took hold again and propelled
stock prices to new highs. Chief beneficiaries were the large capitalization
stocks. It took a while for technology stocks and small caps to recover the
ground lost in the early summer. However, the trend across the board was
clearly bullish.
As the fiscal year closed, there were some negative factors on the
horizon. Corporate profits may have passed their peak. Consumer demand seemed
to be slowing in some sectors. There were also hints that employment costs,
which have been quite stable for a long time, might face upward pressures.
The market, however, seemed to soar above these factors. The prospect
(since become a fact) of a split government in Washington, with Republicans
controlling Congress and Democrats in the White House, was seen as favorable
for stock prices. Moreover, the specter of renewed inflation remained just
that - nothing more than a specter. Furthermore, individual investors
continued to pour money into equity mutual funds - not at constantly
increasing rates, to be sure, but still at a pace that gave strong impetus
for higher stock prices.
Portfolio Focus
Our investment philosophy is that stocks with above average value and
above average earnings momentum will generate above average performance over
time. Portfolio risks like sector weightings and beta are constrained to a
level similar to the Russell 2500 Index benchmark. The Fund does not engage
in market timing, so typically about 98% of the portfolio is fully invested
in stocks while cash is maintained near 2%.
The Fund's strong price performance over the past 12 months was
attributed to several factors.
First, the portfolio sectors that made the largest contribution to our
overall performance were Energy, Technology, Health Care, Consumer Cyclical
and Interest Sensitive.
Second, many of our best performing stocks were also concentrated in
those sectors and they included such names as Smith International,
Electronics for Imaging, Tellabs, Lincare Holdings, CompUSA, Fila Holdings
SPA, Money Store and CMAC Investment.
Finally, another active year on the merger and acquisition front also
resulted in a significant contribution to overall performance. The most
portfolio activity took place in the Interest Sensitive sector where
BayBanks, Cal Fed Bancorp, Columbia First Savings, and West One Bancorp were
acquired by other corporations at significant price premiums above our cost.
In Health Care, Cordis, Medisense, and OrNda Healthcorp all benefited from
takeovers or mergers. Other merger situations in our portfolio included
Federal Paper Board and Infinity Broadcasting.
By design, this Fund is broadly diversified. Companies that surprise
investors with weaker than expected earnings witness a significant decline in
the price of their stock. The Fund's positions in Mariner Health Group, Apple
South and America West Airlines, Cl.B impacted performance, but were not
large enough to seriously hurt the portfolio.
We consider it a privilege to manage the Fund and will continue to
implement the investment process to the best of our ability.
Sincerely,
[ James C. Wadsworth signature logo]
James C. Wadsworth
[Anthony J. Galise signature logo]
Anthony J. Galise
Portfolio Managers
November 20, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any 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 shares and Class C shares.
**Source: FRANK RUSSELL COMPANY - Reflects the reinvestment of income
dividends and where applicable capital gain distributions. The Russell 2500
Index is a widely accepted measure of small cap stock performance.
PREMIER SMALL COMPANY STOCK FUND OCTOBER 31, 1996
[Exhibit A]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER SMALL COMPANY
STOCK FUND CLASS A SHARES AND CLASS R SHARES AND THE RUSSELL 2500 INDEX
$15,719
Premier Small Company
Stock Fund (Class R Shares)
Dollars
$14,941
Premier Small Company
Stock Fund (Class A Shares)
$14,294
Russell 2500 Index*
[Exhibit A]
*Source: The Frank Russell Company
<TABLE>
<CAPTION>
Average Annual Total Returns
CLASS A SHARES CLASS B SHARES
________________________________________________________________ _________________________________________________________
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
PERIOD ENDED 10/31/96 Sales Charge Sales Charge (4.5%) PERIOD ENDED 10/31/96 Redemption Redemption*
____________________ ____________ _____________________ _____________________ _________ _________________
<S> <C> <C> <C> <C> <C>
1 Year 19.22% 13.82% 1 Year 18.17% 14.17%
From Inception (9/2/94) 22.97 20.39 From Inception (12/19/94) 29.68 27.96
Class C Shares Class R Shares
________________________________________________________________ _________________________________________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
PERIOD ENDED 10/31/96 No Redemption Redemption** PERIOD ENDED 10/31/96
____________________ ____________ _____________________ _____________________
1 Year 18.27% 17.27% 1 Year 19.43%
From Inception (12/19/94) 29.68 29.68 From Inception (9/2/94) 23.24
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A
shares and Class R shares of Premier Small Company
Stock Fund on 9/2/94 (Inception Date) to a $10,000 investment made in the
Russell 2500 Index on that date. For comparative purposes, the value of the
Index on 8/31/94 is used as the beginning value on 9/2/94. All dividends and
capital gain distributions are reinvested. Performance for Class B and Class
C shares will vary from the performance of both Class A and Class R shares
shown above due to differences in charges and expenses.
The Fund's performance shown in the line graph takes into account the maximum
initial sales charge on Class A shares and all other applicable fees and
expenses on Class A and Class R shares. The Russell 2500 Index is an
unmanaged index and is composed of the 2,500 smallest companies in the
Russell 3000 Index. The Russell 3000 Index is composed of 3,000 of the
largest U.S. companies by market capitalization. The Index does not take into
account charges, fees and other expenses. Further information relating to
Fund performance, including expense reimbursements, if applicable, is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
* The maximum contingent deferred sales charge for Class B shares is 4% and
is reduced to 0% after six years.
**The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of the date of purchase.
<TABLE>
<CAPTION>
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Common Stocks-97.2% Shares Value
__________ __________
<S> <C> <C> <C> <C>
Basic Industries-6.1%...... ACX Technologies (a) 35,150 $ 623,913
American Building.................... (a) 13,410 281,191
AptarGroup............................. 13,910 448,598
Arcadian............................... 37,310 918,759
.. Cabot 37,680 909,030
Caraustar Industries................... 20,170 589,972
Cytec Industries..................... (a) 51,590 1,844,342
Jacobs Engineering Group............. (a) 15,680 346,920
Medusa................................. 17,440 573,340
Sealed Air........................... (a) 11,850 460,669
Triangle Pacific..................... (a) 18,140 383,774
_____________
7,380,508
_____________
Business Services-8.1% Analysts International 25,220 630,500
Flightsafety International............. 13,410 662,119
Heritage Media, Cl. A................ (a) 34,890 532,073
Hummingbird Communications........... (a) 18,410 524,685
Mutual Risk Management................. 39,480 1,263,360
NetManage............................ (a) 31,320 213,368
.... PHH 28,790 856,503
Pittston Brinks Group.................. 42,510 1,211,535
.. Regis 25,910 628,317
Sotheby's Holdings, Cl. A.............. 41,710 709,070
Sterling Commerce...................... 29,660 834,187
Sterling Software.................... (a) 18,610 604,825
SunGuard Data Systems................ (a) 27,030 1,155,532
_____________
9,826,074
_____________
Capital Goods-17.2%.......... AGCO 41,460 1,052,048
AMETEK................................. 26,630 529,271
Adaptec.............................. (a) 23,800 1,448,825
... Altron (a) 30,160 444,860
Amphenol, Cl. A...................... (a) 29,290 582,139
... Atmel (a) 32,490 824,434
CIDCO................................ (a) 23,400 441,675
Cognex............................... (a) 21,140 272,178
Colonial Data Technologies........... (a) 52,490 498,655
Dallas Semiconductor................... 21,440 428,800
Danka Business Systems, A.D.R.......... 13,410 531,371
ECI Telecommunications................. 26,880 537,600
Electroglas.......................... (a) 20,770 272,606
Electronics For Imaging.............. (a) 22,700 1,634,400
Elsag Baily Process Automation, N.V. .(a) 33,390 567,630
.. Hadco (a) 21,340 648,203
Kennametal............................. 20,670 702,780
Philip Environmental................. (a) 107,350 1,113,756
Plantronics.......................... (a) 14,210 534,651
Quanex................................. 27,990 797,715
...Rohr (a) 25,930 479,705
...Shiva (a) 14,080 577,280
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
___________ ___________
Capital Goods (continued) Silicon Valley Group (a) 49,830 $ 828,424
Tech Data............................ (a) 34,190 880,393
... Tellabs (a) 19,770 1,682,921
Thermedics........................... (a) 30,560 634,120
....Thiokol 10,590 443,456
Wyle Electronics....................... 22,740 679,357
Zebra Technologies, Cl. A............ (a) 28,790 831,311
_____________
20,900,564
_____________
Consumer Cyclical-17.5%.........Apple South 22,200 260,850
Borg-Warner Automotive................. 21,040 807,410
Breed Technologies..................... 33,890 779,470
Clear Channel Communications......... (a) 12,150 886,950
CompUSA.............................. (a) 28,000 1,295,000
Devon Group.......................... (a) 17,660 441,500
.. Eckerd (a) 53,160 1,475,190
Evergreen Media, Cl. A............... (a) 28,700 774,900
Fila Holding, A.D.R.................... 12,050 867,600
Fingerhut.............................. 41,440 616,420
General Nutrition.................... (a) 58,950 1,075,838
Harman International................... 15,425 792,459
Infinity Broadcasting, Cl. A......... (a) 4,600 133,400
Interface, Cl. A....................... 32,490 548,269
Interstate Hotels...................... 19,510 526,770
Luby's Cafeterias...................... 19,010 399,210
Regal Cinemas........................ (a) 38,105 990,730
Reynolds & Reynolds, Cl. A............. 31,020 818,152
Richfood Holdings...................... 19,515 470,799
Ryan's Family Steak House............ (a) 56,720 418,310
Speedway Motorsports................. (a) 20,600 471,225
Sports Authority..................... (a) 30,820 747,385
Sturm Ruger............................ 18,110 339,562
Tommy Hilfiger....................... (a) 16,840 875,680
. Toro 13,010 408,189
U.S. Office Products................. (a) 16,090 466,610
Waban................................ (a) 27,230 711,384
Wallace Computer Services.............. 31,020 911,212
Warnaco Group, Cl. A................... 35,450 881,819
Winnebago Industries................... 41,210 303,924
.. Zale (a) 33,490 648,869
_____________
21,145,086
_____________
Consumer Staples-3.0%... Central Garden & Pet (a) 34,100 805,613
....Ionics (a) 9,020 414,920
Morningstar Group.................... (a) 54,220 914,963
Paragon Trade Brands................. (a) 17,610 462,262
Robert Mondavi, Cl. A................ (a) 22,900 652,650
Ultratech Stepper.................... (a) 23,400 397,800
_____________
3,648,208
_____________
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
___________ __________
Energy-8.0%............... Benton Oil & Gas (a) 42,310 $ 1,036,595
Cairn Energy USA..................... (a) 40,340 428,613
....Holly 16,440 408,945
KN Energy.............................. 16,440 614,445
Nabors Industries.................... (a) 60,110 999,329
Noble Drilling....................... (a) 73,330 1,365,771
Pacific Enterprises.................... 43,370 1,333,628
Reading & Bates...................... (a) 41,610 1,196,287
Smith International.................. (a) 29,760 1,130,880
Valero Energy.......................... 23,900 567,625
... WICOR 16,840 599,925
_____________
9,682,043
_____________
Health Care-9.1%... AmeriSource Health, Cl. A (a) 28,490 1,207,264
Lincare Holdings..................... (a) 32,490 1,218,375
Living Centers of America............ (a) 19,170 448,099
Mariner Health Group................. (a) 38,880 330,480
.. NABI (a) 35,110 324,768
OrNda Healthcorp..................... (a) 68,740 1,873,165
Rotech Medical....................... (a) 34,550 552,800
Teva Pharmaceutical Industries, A.D.R.. 20,950 877,281
Universal Health Services, Cl. B.... .(a) 39,640 991,000
.. Vencor (a) 34,373 1,018,300
Vital Signs... ......................... 21,840 464,100
...Vivra (a) 26,380 840,862
Watson Pharmaceutical................ (a) 26,330 878,764
_____________
11,025,258
_____________
Interest Sensitive-18.7%........ AMBAC 12,150 759,375
AMRESCO.............................. (a) 33,790 713,814
Advanta, Cl. B......................... 11,450 535,288
Bancorp Hawaii......................... 27,590 1,093,254
Bank United............................ 14,010 373,016
CMAC Investment........................ 24,360 1,683,885
City National.......................... 41,410 724,675
Clayton Homes.......................... 54,613 921,594
Conseco................................ 17,410 931,435
Crestar Financial...................... 20,770 1,277,355
Cullen Frost Bankers................... 27,490 826,418
Edwards (A.G.)......................... 22,090 659,939
Everen Capital......................... 7,100 140,225
First Tennessee National............... 25,560 929,745
Franchise Finance Corp. of America..... 25,930 622,320
Health Care Property Investors......... 21,750 763,969
Kimco Realty........................... 20,230 584,141
.. Mid Ocean 18,910 888,770
Money Store............................ 31,370 807,778
ONBANCorp.............................. 20,470 744,596
Old Kent Financial..................... 18,076 815,680
Old Republic International............. 40,040 990,990
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996
Common Stocks (continued) Shares Value
___________ ___________
Interest Sensitive (continued). People's Bank 39,640 $ 1,020,730
RCSB Financial......................... 24,610 713,690
Reliance Group Holdings................ 67,770 559,102
Sirrom Capital......................... 6,460 235,790
Standard Federal Bancorporation........ 19,520 1,044,320
... USLife 22,550 704,687
United Companies Financial............. 21,940 655,457
_____________
22,722,038
_____________
Mining And Metals-2.2%....... Brush Wellman 23,600 445,450
Cable Design Technologies............ (a) 18,610 483,860
IMCO Recycling......................... 14,880 238,080
Pittston Minerals Group................ 24,560 285,510
... Potash 17,710 1,255,196
_____________
2,708,096
_____________
Transportation-1.7% Air Express International 13,410 405,652
America West Airlines, Cl. B......... (a) 44,540 512,210
Illinois Central, Ser. A............... 23,150 749,481
Pittston Burlington Group.............. 20,270 377,529
_____________
2,044,872
_____________
Utilities-5.6%........... Calenergy (a) 39,840 1,155,360
.. DQE 30,670 881,763
Illinova............................... 27,330 744,742
LCI International.................... (a) 28,090 895,369
MidAmerican Energy..................... 47,354 733,987
Pinnacle West Capital.................. 33,390 1,030,916
Transaction Network Services......... (a) 57,300 780,712
Vanguard Cellular Systems............ (a) 34,350 568,922
_____________
6,791,771
_____________
TOTAL COMMON STOCKS
(cost $107,693,573).................. $117,874,518
=============
Principal
Short-Term Investments-2.7% Amount
_________
Repurchase Agreement; Goldman Sachs & Co., 5.55%
dated 10/31/96, due 11/1/96 in the amount
of $3,296,707 (fully collateralized by
$2,433,000 U.S. Treasury Bonds,
11.625%, 11/15/2004, value $3,362,252)
(cost $3,296,199).................... $ 3,296,199 $ 3,296,199
=============
TOTAL INVESTMENTS (cost $110,989,772)....................................... 99.9% $121,170,717
======== =============
CASH AND RECEIVABLES (NET).................................................. .1% $ 69,264
======== =============
NET ASSETS.................................................................. 100.0% $121,239,981
======== =============
Notes to Statement of Investments:
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
Cost Value
__________ __________
ASSETS: Investments in securities-See Statement of Investments $110,989,772 $121,170,717
Cash....................................... 378,493
Dividends and interest receivable.......... 98,286
Receivable for subscriptions to Capital Stock 17,638
_________________
121,665,134
_________________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 131,198
Due to Distributor......................... 1,168
Payable for investment securities purchased 292,103
Payable for shares of Capital Stock redeemed 684
_________________
425,153
_________________
NET ASSETS.................................................................. $121,239,981
=================
REPRESENTED BY: Paid-in capital............................ $105,069,433
Distributions in excess of investment income-net (24,883)
Accumulated net realized gain (loss) on investments 6,014,486
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 3 10,180,945
_________________
NET ASSETS.................................................................. $121,239,981
=================
NET ASSET VALUE PER SHARE
_______________________________
Class A Class B Class C Class R
_________ _________ _________ _________
Net Assets.............................. $3,884,466 $4,633,000 $513,510 $112,209,005
Shares Outstanding...................... 256,705 309,802 34,346 7,406,410
NET ASSET VALUE PER SHARE............... $15.13 $14.95 $14.95 $15.15
========= ========= ========== ============
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME
INCOME: Cash dividends (net of $4,831 foreign taxes
withheld at source).................... $ 904,866
Interest................................... 205,786
____________
Total Income........................... $ 1,110,652
EXPENSES: Management fee-Note 2(a)................... 1,035,858
Distribution and service fees-Note 2(b).... 41,414
Directors' fees and expenses-Note 2(c)..... 1,216
____________
Total Expenses......................... 1,078,488
____________
INVESTMENT INCOME-NET....................................................... 32,164
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $6,007,705
Net unrealized appreciation (depreciation)
on investments......................... 6,376,076
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 12,383,781
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $12,415,945
==============
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1996 October 31, 1995
_________________ _________________
OPERATIONS:
Investment income-net.................................................. $ 32,164 $ 74,340
Net realized gain (loss) on investments................................ 6,007,705 1,683,118
Net unrealized appreciation (depreciation) on investments.............. 6,376,076 3,736,077
_________________ _________________
Net Increase (Decrease) in Net Assets Resulting from Operations.... 12,415,945 5,493,535
_________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares....................................................... __ (550)
Class R shares....................................................... (74,620) (74,861)
Net realized gain on investments:
Class A shares....................................................... (46,945) __
Class B shares....................................................... (70,569) __
Class C shares....................................................... (5,415) __
Class R shares....................................................... (1,525,133) __
_________________ _________________
Total Dividends.................................................... (1,722,682) (75,411)
_________________ _________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 2,878,911 1,410,579
Class B shares....................................................... 6,644,770 967,580
Class C shares....................................................... 566,377 149,491
Class R shares.................................................... 66,544,296 36,992,799
Dividends reinvested:
Class A shares....................................................... 38,169 406
Class B shares....................................................... 35,174 __
Class C shares....................................................... 2,374 __
Class R shares....................................................... 1,284,178 54,591
Cost of shares redeemed:
Class A shares....................................................... (733,226) (272,564)
Class B shares....................................................... (3,370,585) (9,877)
Class C shares....................................................... (240,657) __
Class R shares....................................................... (9,724,649) (8,896,002)
_________________ _________________
Increase (Decrease) in Net Assets from Capital Stock Transactions.. 63,925,132 30,397,003
_________________ _________________
Total Increase (Decrease) in Net Assets.................. 74,618,395 35,815,127
NET ASSETS:
Beginning of Period.................................................... 46,621,586 10,806,459
_________________ _________________
End of Period.......................................................... $121,239,981 $ 46,621,586
================ ==================
UNDISTRIBUTED INVESTMENT INCOME (DISTRIBUTIONS IN EXCESS OF INVESTMENT INCOME)-NET $ (24,883) $ 17,573
_________________ _________________
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY STOCK FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
__________________ __________________
Year Ended Year Ended
October 31, 1996 October 31, 1995
__________________ __________________
CAPITAL SHARE TRANSACTIONS:
Class A
____
Shares sold.............................................................. 199,489 120,861
Shares issued for dividends reinvested................................... 2,890 38
Shares redeemed.......................................................... (49,482) (23,027)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 152,897 97,872
================ ==================
Class B(1)
_____
Shares sold.............................................................. 464,654 79,297
Shares issued for dividends reinvested................................... 2,675 _
Shares redeemed.......................................................... (236,062) (762)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 231,267 78,535
================ ==================
Class C(2)
_____
Shares sold.............................................................. 39,491 11,259
Shares issued for dividends reinvested................................... 180 _
Shares redeemed.......................................................... (16,584) _
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 23,087 11,259
================ ==================
Class R
____
Shares sold.............................................................. 4,605,951 3,154,920
Shares issued for dividends reinvested................................... 96,979 5,116
Shares redeemed.......................................................... (662,887) (861,037)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 4,040,043 2,298,999
================ ==================
(1)The Fund commenced selling Class B shares on December 19, 1994.
(2)The Fund commenced selling Class C shares on April 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY 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.
Class A Shares
____________________________________
Year Ended October 31,
____________________________________
PER SHARE DATA: 1996 1995 1994(1)(2)
________ ________ ________
Net asset value, beginning of period.................................. $13.09 $10.07 $10.00
________ ________ ________
Investment Operations:
Investment income (loss)-net.......................................... (.02) .02 .01
Net realized and unrealized gain (loss)
on investments...................................................... 2.48 3.03 .06
________ ________ ________
Total from Investment Operations...................................... 2.46 3.05 .07
________ ________ ________
Distributions:
Dividends from investment income-net.................................. .- (.03) .-
Dividends from net realized gain on investments....................... (.42) .- .-
________ ________ ________
Total Distributions................................................... (.42) (.03) .-
________ ________ ________
Net asset value, end of period........................................ $15.13 $13.09 $10.07
======== ======== =======
TOTAL INVESTMENT RETURN(3)................................................ 19.22% 30.31% .70%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.50% 1.50% .25%(4)(5)
Ratio of net investment income (loss)
to average net assets............................................... (.16%) .10% .14%(4)(5)
Portfolio Turnover Rate............................................... 49.03% 56.00% 8.00%(5)
Average commission rate paid(6)...................................... $.0528 - -
Net Assets, end of period (000's Omitted)............................. $3,884 $1,359 $60
(1) The Fund commenced operations and commenced selling Class A shares on
September 2, 1994. Effective October 17, 1994, the
Fund's Investor shares were redesignated as 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) Exclusive of sales load.
(4) Not annualized.
(5) These ratios have been restated to reflect current year's presentation.
(6) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY STOCK FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class B Shares
____________________________
Year Ended October 31,
______________________________
PER SHARE DATA 1996 1995(1)
_________ ________
Net asset value, beginning of period.................................... $13.05 $ 9.49
_________ ________
Investment Operations:
Investment income (loss)-net............................................ (.07) (.03)
Net realized and unrealized gain (loss)
on investments........................................................ 2.39 3.59
_________ ________
Total from Investment Operations........................................ 2.32 3.56
_________ ________
Distributions:
Dividends from net realized gain on investments......................... (.42) .-
_________ ________
Net asset value, end of period.......................................... $14.95 $13.05
========= ==========
TOTAL INVESTMENT RETURN..................................................... 18.17% 37.51%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. 2.25% 1.95%(2)
Ratio of net investment income (loss)
to average net assets................................................. (.93%) (.56%)(2)
Portfolio Turnover Rate................................................. 49.03% 56.00%(2)
Average commission rate paid(3)......................................... $.0528 -
Net Assets, end of period (000's Omitted)............................... $4,633 $1,025
(1) The Fund commenced selling Class B shares on December 19, 1994.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY STOCK FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class C Shares
______________________________
Year Ended October 31,
______________________________
PER SHARE DATA 1996 1995(1)
_________ ________
Net asset value, beginning of period.................................... $13.04 $ 9.49
_________ ________
Investment Operations:
Investment income (loss)-net............................................ (.09) (.01)
Net realized and unrealized gain (loss)
on investments........................................................ 2.42 3.56
_________ ________
Total from Investment Operations........................................ 2.33 3.55
_________ ________
Distributions:
Dividends from net realized gain on investments......................... (.42) .-
_________ ________
Net asset value, end of period.......................................... $14.95 $13.04
========= ==========
TOTAL INVESTMENT RETURN..................................................... 18.27% 37.41%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. 2.25% 1.14%(2)
Ratio of net investment income (loss)
to average net assets................................................. (.93%) (.33%)(2)
Portfolio Turnover Rate................................................. 49.03% 56.00%(2)
Average commission rate paid(3)......................................... $.0528 -
Net Assets, end of period (000's Omitted)............................... $514 $147
(1) The Fund commenced selling Class C shares on April 30, 1995.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER SMALL COMPANY STOCK FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class R Shares
________________________________________
Year Ended October 31,
________________________________________
PER SHARE DATA: 1996 1995 1994(1)(2)
______ ______ ______
Net asset value, beginning of period.................................. $13.10 $10.07 $10.00
______ ______ ______
Investment Operations:
Investment income-net................................................. .01 .04 .02
Net realized and unrealized gain (loss)
on investments...................................................... 2.48 3.04 .05
______ ______ ______
Total from Investment Operations...................................... 2.49 3.08 .07
______ ______ ______
Distributions:
Dividends from investment income-net.................................. (.02) (.05) .-
Dividends from net realized gain on investments....................... (.42) .- .-
______ ______ ______
Total Distributions................................................... (.44) (.05) .-
______ ______ ______
Net asset value, end of period........................................ $15.15 $13.10 $10.07
======== ======= =========
TOTAL INVESTMENT RETURN................................................... 19.43% 30.70% .70%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.25% 1.25% .21%(3)(4)
Ratio of net investment income
to average net assets............................................... .09% .35% .18%(3)(4)
Portfolio Turnover Rate............................................... 49.03% 56.00% 8.00%
Average commission rate paid(5)....................................... $.0528 - -
Net Assets, end of period (000's Omitted)....................... $112,209 $44,091 $10,747
(1) The Fund commenced operations and commenced selling Trust shares on
September 2, 1994. Effective October 17, 1994, the
Fund's Trust shares were redesignated as Class R shares.
(2) Effective October 17, 1994, The Dreyfus Corporation serves as the
Funds' investment manager. Prior to October 17, 1994,
Mellon Bank, N.A. served as the Fund's investment manager.
(3) Not annualized.
(4) These ratios have been restated to reflect current year's presentation.
(5) For fiscal year beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share
for purchases and sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
PREMIER SMALL COMPANY 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 Premier Small Company Stock Fund (the "Fund").
The Fund's investment objective is to consistently exceed the total return
performance of the Russell 2500trademark Stock Index while maintaining a
similar level of risk. 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.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund is authorized to issue 168 million
of $.001 par value Capital Stock. The Fund currently offers four classes of
shares: Class A (27 million shares authorized), Class B (50 million shares
authorized), Class C (50 million shares authorized) and Class R (41 million
shares authorized). 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 or service fees. Class R shares are offered without a front-end
sales load or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution and service fees and voting rights on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities 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 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
PREMIER SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and dividends from net
realized capital gain are normally declared and paid annually, but the Fund
may make distributions on a more frequent basis to comply with the distributio
n 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.
(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.
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 1.25% of the value of the Fund'
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 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 .75% 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, under which the Fund pays Dreyfus Service
Corporation or the Distributor for providing certain services to the holders
of Class B and Class C shares a fee at the annual rate of .25% of the value
of the average daily net assets of Class B and Class C shares. Class R shares
bear no service or distribution fee. During the period ended October 31,
1996, the distribution fee for Class A, Class B and Class C shares was
$6,536, $23,631 and $2,528, respectively. During the period ended October 31,
1996, the service fee for Class B shares and Class C shares was $7,877 and
$842, respectively.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of the 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.
PREMIER SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 meeting
attended and is reimbursed for travel and out-of-pocket expenses. These expens
es 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,
excluding short-term securities, during the period ended October 31, 1996,
amounted to $100,194,633 and $39,116,239, respectively.
At October 31, 1996, accumulated net unrealized appreciation on
investments was $10,180,945, consisting of $16,660,360 gross unrealized
appreciation and $6,479,415 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended October 31, 1996, the Fund did not
borrow under the line of credit.
PREMIER SMALL COMPANY 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,
including the statement of investments, of Premier Small Company Stock Fund
of The Dreyfus/Laurel Funds, Inc. as of October 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or 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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1996, by correspondence with the custodi
an 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 Premier Small Company Stock Fund of The Dreyfus/Laurel Funds,
Inc. as of October 31, 1996, the results of its operations, changes in its
net assets and its financial highlights for each of the periods set forth
above, in conformity with generally accepted accounting principles.
[KPMG Peat Marwick signature logo]
New York, New York
December 9, 1996
PREMIER SMALL COMPANY STOCK FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.02 per share as a
long-term capital gain distribution paid on December 26, 1995.
The Fund also designates 16.53% of the ordinary dividends paid during the
fiscal year ended October 31, 1996 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1997 of
the percentage applicable to the preparation of their 1996 income tax
returns.
[Dreyfus lion "d" logo]
PREMIER SMALL COMPANY STOCK FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 385/685AR9610
[Dreyfus logo]
Annual Report
Premier Small
Company Stock
Fund
October 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS BOND MARKET INDEX FUND RETAIL SHARES AND THE
LEHMAN BROTHERS GOVERNMENT / CORPORATE BOND INDEX
EXHIBIT A:
___________________________________________________
| | DREYFUS BOND LEHMAN BROTHERS |
| | MARKET GOVERNMENT / |
| PERIOD | INDEX FUND CORPORATE |
| | (RETAIL SHARES) BOND INDEX * |
|-----------|--------------------------------------|
| 11/30/93 | 10,000 10,000 |
| 10/31/94 | 9,632 9,645 |
| 10/31/95 | 11,116 11,204 |
| 10/31/96 | 11,638 11,808 |
|-----------|--------------------------------------|
* Source: Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS DISCIPLINED MIDCAP STOCK FUND RETAIL
SHARES AND THE STANDARD & POOR'S MIDCAP
400 INDEX
EXHIBIT A:
____________________________________________
| | DISCIPLINED | STANDARD |
| | MIDCAP | & POOR'S |
| PERIOD | STOCK FUND | MIDCAP 400 |
| |(RETAIL SHARES) | INDEX * |
|-----------|----------------|--------------|
| 11/12/93 | 10,000 | 10,000 |
| 10/31/94 | 9,823 | 10,238 |
| 10/31/95 | 12,139 | 12,410 |
| 10/31/96 | 15,368 | 14,563 |
|-----------|----------------|--------------|
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS DISCIPLINED STOCK FUND RETAIL SHARES AND THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
_______________________________________________
| | DISCIPLINED | STANDARD |
| | STOCK | & POOR'S 500 |
| PERIOD | FUND | COMPOSITE STOCK |
| |(RETAIL SHARES) | PRICE INDEX * |
|----------|----------------|------------------|
| 12/31/87 | 10,000 | 10,000 |
| 10/31/88 | 11,080 | 11,623 |
| 10/31/89 | 14,084 | 14,686 |
| 10/31/90 | 13,650 | 13,587 |
| 10/31/91 | 18,464 | 18,128 |
| 10/31/92 | 20,321 | 19,932 |
| 10/31/93 | 23,869 | 22,904 |
| 10/31/94 | 24,541 | 23,788 |
| 10/31/95 | 30,512 | 30,067 |
| 10/31/96 | 38,182 | 37,308 |
|----------|----------------|------------------|
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
DISCIPLINED EQUITY INCOME FUND RETAIL SHARES WITH THE STANDARD
AND POOR'S 500 COMPOSITE STOCK PRICE INDEX AND THE LIPPER EQUITY
INCOME FUND INDEX
EXHIBIT A:
____________________________________________________________
| | DREYFUS STANDARD | LIPPER |
| | DISCIPLINED & POOR'S | EQUITY |
| | EQUITY 500 COMPOSITE | INCOME |
| PERIOD | INCOME FUND STOCK | FUND |
| | (RETAIL SHARES) PRICE INDEX* | INDEX* |
|---------|-----------------------------------|-------------|
| 9/2/94 | 10,000 10,000 | 10,000 |
|10/31/94 | 9,950 9,975 | 9,864 |
|10/31/95 | 12,286 12,609 | 11,631 |
|10/31/96 | 15,257 15,645 | 13,944 |
|---------|-----------------------------------|-------------|
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND INSTITUTIONAL
SHARES AND RETAIL SHARES AND THE LEHMAN BROTHERS AGGREGATE
BOND INDEX
EXHIBIT A:
______________________________________________________________
| | DREYFUS DREYFUS |
| | DISCIPLINED DISCIPLINED |
| | INTERMEDIATE INTERMEDIATE | LEHMAN
| | BOND FUND BOND FUND | BROTHERS
| PERIOD | (INSTITUTIONAL (RETAIL | AGGREGATE
| | SHARES) SHARES) | BOND INDEX*
|-----------|----------------------------------|---------------
| 11/1/95 | 10,000 10,000 | 10,000
| 1/31/96 | 10,296 10,302 | 10,361
| 4/30/96 | 9,937 9,950 | 10,053
| 7/31/96 | 10,042 10,061 | 10,195
| 10/31/96 | 10,418 10,445 | 10,585
|-----------|----------------------------------|---------------
* Source: Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
INTERNATIONAL EQUITY ALLOCATION FUND INSTITUTIONAL SHARES AND
RETAIL SHARES AND THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, FAR EAST (EAFE(R)) INDEX
EXHIBIT A:
_________________________________________________________________
| | | | MORGAN |
| | | | STANLEY |
| | INTERNATIONAL | INTERNATIONAL | CAPITAL |
| | EQUITY | EQUITY | INTERNATIONAL |
| | ALLOCATION | ALLOCATION | EUROPE, |
| | FUND | FUND | AUSTRALASIA, |
| PERIOD | (INSTITUTIONAL | (RETAIL | FAR EAST |
| | SHARES) | SHARES) |(EAFE(R)) INDEX* |
|----------|------------------|----------------|-----------------|
| 9/15/94 | 10,000 | 10,000 | 10,000 |
| 10/31/94 | 10,060 | 10,060 | 10,008 |
10/31/95 | 10,128 | 10,142 | 9,971 |
| 10/31/96 | 11,405 | 11,440 | 11,014 |
|----------|------------------|----------------|-----------------|
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $100,000 INVESTMENT IN
DREYFUS INSTITUTIONAL S&P 500 STOCK INDEX FUND AND THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
__________________________________________________
| DREYFUS | |
| INSTITUTIONAL | STANDARD |
| S&P 500 | & POOR'S 500 |
| PERIOD STOCK | COMPOSITE STOCK |
| INDEX FUND | PRICE INDEX * |
|----------------------------|--------------------|
| 9/30/93 100,000 | 100,000 |
| 10/31/93 102,300 | 102,070 |
| 10/31/94 105,877 | 106,010 |
| 10/31/95 133,145 | 134,000 |
| 10/31/96 164,799 | 166,274 |
|____________________________|____________________|
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
PREMIER BALANCED FUND CLASS R SHARES WITH THE STANDARD
& POOR'S 500 COMPOSITE STOCK PRICE INDEX, THE LEHMAN
BROTHERS INTERMEDIATE GOVERNMENT / CORPORATE BOND INDEX,
THE LIPPER BALANCED FUNDS INDEX AND A HYBRID INDEX
EXHIBIT A:
STANDARD LEHMAN
& POOR'S BROTHERS
PREMIER 500 INTER.
BALANCED COMPOSITE GOVT. / LIPPER
FUND STOCK CORP. BALANCED
PERIOD (CLASS R PRICE BOND HYBRID FUNDS
SHARES) INDEX* INDEX** INDEX*** INDEX*
9/15/93 10,000 10,000 10,000 10,000 10,000
10/31/93 10,180 10,128 10,068 10,104 10,125
10/31/94 10,249 10,519 9,874 10,261 10,063
10/31/95 12,449 13,297 11,112 12,423 11,833
10/31/96 14,813 16,499 11,758 14,603 13,546
* Source: Lipper Analytical Services, Inc.
** Source: Lehman Brothers
*** Source: Lipper Analytical Services, Inc. and Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER LIMITED TERM INCOME FUND CLASS R SHARES
WITH THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT /
CORPORATE BOND INDEX AND THE LEHMAN BROTHERS AGGREGATE
BOND INDEX
EXHIBIT A:
______________________________________________________________
| PREMIER LEHMAN |
| LIMITED BROTHERS |
| TERM INTERMEDIATE | LEHMAN
| INCOME GOVERNMENT / | BROTHERS
| PERIOD FUND CORPORATE | AGGREGATE
| (CLASS R BOND | BOND
| SHARES) INDEX* | INDEX*
|----------------------------------------------|---------------
| 7/11/91 10,000 10,000 | 10,000
| 10/31/91 10,550 10,601 | 10,686
| 10/31/92 11,511 11,662 | 11,736
| 10/31/93 12,584 12,821 | 13,130
| 10/31/94 12,275 12,573 | 12,648
| 10/31/95 13,761 14,150 | 14,627
| 10/31/96 14,466 14,972 | 15,482
----------------------------------------------|---------------
*Source: Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER SMALL COMPANY STOCK FUND CLASS A SHARES AND
CLASS R SHARES AND THE RUSSELL 2500 INDEX
EXHIBIT A:
___________________________________________________
| PREMIER PREMIER
| SMALL SMALL
| COMPANY COMPANY
| PERIOD STOCK FUND STOCK FUND RUSSELL
| (CLASS A (CLASS R 2500
| SHARES) SHARES) INDEX*
|---------------------------------------------------
| 9/2/94 9,551 10,000 10,000
| 10/31/94 9,618 10,070 9,915
| 10/31/95 12,533 13,162 12,033
| 10/31/96 14,941 15,719 14,294
|---------------------------------------------------
*Source: The Frank Russell Company
