<PAGE>
Semi-Annual Report
- -------------------------------------------------------------------------------
Dreyfus Premier
Small Cap
Value Fund
- -------------------------------------------------------------------------------
April 30, 1998
[LION LOGO]
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
It is a pleasure to introduce William P. Rydell who is the portfolio manager
of Dreyfus Premier Small Cap Value Fund.
Bill Rydell is a portfolio manager of The Dreyfus Corporation and President
and Chief Executive Officer of Mellon Equity Associates, Dreyfus' affiliate.
He was a major contributor when the Mellon equity process was redesigned in
1983, and he guides the investment team's continuous process improvements. He
brings to the team's deliberations his experience of successfully and
accurately translating fundamental investment beliefs into rigorous analytical
tools.
Bill began his Mellon Bank career in 1973 as a securities analyst in the
Investment Research Department. Since then, he has participated in nearly every
aspect of Mellon Equity's operations, from portfolio management to trading,
client service and marketing, leading to his current responsibility as Mellon
Equity's overall manager. Bill is a member of the Association for Investment
Management and Research and the Pittsburgh Society of Financial Analysts. He
earned his MBA at the University of Michigan, following a degree in economics
from Wabash College.
We have great confidence in Bill Rydell's qualifications for managing this
new Dreyfus fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
Chief Investment Officer
The Dreyfus Corporation
May 19, 1998
New York, N.Y.
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this first report to shareholders for
Dreyfus Premier Small Cap Value Fund. Since the Fund started operations on March
31, 1998, this report covers one month of Fund activity from the inception date
March 31, 1998 through April 30, 1998, which is the closing date of the Fund's
semi-annual fiscal period.
During that first month of operations, your Fund had total returns for the
various classes of shares as shown below:
Total Return*
-------------
Class A Shares 0.32%
Class B Shares 0.24%
Class C Shares 0.24%
Class R Shares 0.32%
Russell 2000 Value Index* 0.49%
Economic Review
Although real Gross Domestic Product (GDP) sustained a growth trend
approaching 4% into the first quarter, incoming evidence suggests a shift to
somewhat slower economic growth in coming months. Aggregate profit margins
already have begun to narrow in some sectors. The conflicting pressures of a
softening economy and a still tightening labor market have kept the Federal
Reserve Board (the "Fed") in neutral. Market interest rates have likewise stayed
within a narrow range in recent months.
While manufacturing has turned appreciably sluggish since year-end, this was
overshadowed in the first quarter by a strong rebound in domestic demand. The
industrial sector has been slowed by the strong dollar and by weak exports.
However, with Asian economies still in turmoil, competition from Asian-made
imports has emerged only gradually. The first quarter rebound in domestic demand
was fueled primarily by strong housing market conditions and rising real
household incomes, but additionally by several short-lived influences.
Rising real wages that have been such a boon to consumers in recent months
may also be taking a toll on corporate profit margins. The first sign of profit
pressure was seen last year as the dollar strengthened. This year, profit
margins have eroded further due to weak exports and falling prices in some
sectors. However, accelerating wage growth that is apparent alongside limited
pricing power may also prove a harbinger of margin erosion. Hence, a shift to
slower economic growth that coexists with rising wage pressures creates a
further risk to overall profit growth.
The above pressures have kept Fed policy unchanged until now. However,
policymakers seem more concerned about wage growth than economic strains, as
evidenced by a recent shift towards a tightening bias. Although long-term bond
yields were below year-ago levels at the end of April, substantially lower
yields have proven difficult to attain in the absence of lower short-term rates.
This too could restrain the economic growth rate.
Market Overview
Equity prices during the six months ended April 30, 1998 continued to display
considerable volatility, most of the time on the upside. Last November, the
markets were still trying to recover from the financial crisis in Asia. As the
months went by, however, the U.S. equity markets rebounded from that severe
blow.
Early in the New Year, there were temporary setbacks due to worries about
inflation and concern about the corporate profit outlook. By midwinter, however,
the markets resumed their upward surge, which continued almost unbroken until
interest rate jitters struck again in late April. This time the cause was a
press report that the Fed was going to tilt its policy toward tightening credit.
<PAGE>
As it turned out, even that scare was short-lived and, as the month of May
began, stock prices set new records once again, especially the stocks of the
large-capitalized corporations.
Despite the impressive gains in the broad market averages, it was not a
market that would allow investors simply to sit back and relax. Some
commentators had begun to refer to it as the "bubble market," a market that
could inflate to undreamed-of heights one week, yet the next week could be
deflated just as quickly by unexpected national, international and corporate
news.
Now that most first-quarter corporate profits have been reported, it is
apparent that the quarter saw a slowdown in total profits. The Wall Street
Journal cited estimates that the first-quarter profit growth for the Dow Jones
Industry Groups was just 4.1%. This was described as the smallest growth in
earnings since the fourth quarter of 1991. Yet an impressive segment of analysts
were predicting that profits could increase by 8% in the second quarter and even
by 11% for this year as a whole. Still, many skeptics saw those numbers as
overoptimistic. They cited several factors:
* possible delayed reaction to the collapse of Asian markets;
* the everpresent possibility that the Fed could still raise interest rates;
* the approaching shadow of the midterm elections next fall, with all the
political acrimony they could bring.
There was also the risk that Fed Chairman Greenspan might once again warn
against excessive enthusiasm in the equity markets, as he did in late 1996
when he spoke of "irrational exuberance."
In this atmosphere, wary investors were as quick to sell as to buy,
depending on the ebb and flow of economic and political news. Volatility, it
appeared, was a condition the markets would need to live with for some time to
come, in rising as well as in falling markets.
Portfolio Focus
The Dreyfus Premier Small Cap Value Fund seeks total investment returns that
consistently outperform the Russell 2000 Value Index. The Fund seeks to achieve
its investment objective by investing primarily in common stocks of small
capitalization companies while maintaining investment characteristics and a risk
profile that, in the aggregate, are similar to that of the Russell 2000 Value
Index. The Fund slightly underperformed the Russell 2000 Value Index in its
inaugural month. The transaction costs associated with establishing the
portfolio at the beginning of the month were a significant cause of the modest
underperformance. Securities that materially added to performance in April
included Trans Financial and Glenayre Technologies. Trans Financial is a
Kentucky-based bank that announced a merger agreement with Star Banc Corp. of
Ohio on April 10th and appreciated approximately 28% for the month. Glenayre
Technologies is a manufacturer of pagers and paging equipment that recently
signed sizable new contracts with two very large paging companies. Weak
performance by Caribiner International, a corporate events production company
that pre-announced disappointing earnings, and Lennar, a home construction
company whose stock reacted negatively to fears of higher interest rates, hurt
the relative return of the Fund slightly.
<PAGE>
We appreciate your investment in the Fund and look forward to managing your
assets.
Sincerely,
William P. Rydell
Portfolio Manager
May 19, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares, or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B and Class C shares.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and where applicable, capital gain distributions. The Russell
2000 Value Index is an unmanaged index comprised of the companies in the
Russell 2000 Index with lower price-to-book ratios and lower forcasted growth
rates.
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Statement of Investments April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks--97.0% Shares Value
- ------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Banking--17.3% Bay View Capital.............................. 200 6,525
CVB Financial................................. 1,300 31,850
Chittenden.................................... 500 18,750
City National................................. 1,000 37,188
Colonial BancGroup............................ 1,300 46,638
Commercial Federal............................ 2,200 79,750
Community First Bankshares.................... 700 35,262
Cullen/Frost Bankers.......................... 800 46,800
Dain Rauscher................................. 200 12,037
Downey Financial.............................. 1,100 38,156
Eaton Vance................................... 800 39,200
First Citizen BancShares...................... 100 11,325
First Western Bancorp......................... 1,200 35,700
Harbor Florida Bancshares..................... 4,400 56,100
North Fork Bancorp............................ 900 33,412
Paine Webber Group............................ 600 26,888
Peoples Heritage Financial Group.............. 1,300 62,725
Queens County Bancorp......................... 900 41,175
Resource Bancshares Mortgage Group............ 2,900 51,475
St. Paul Bancorp.............................. 1,700 42,500
T R Financial................................. 500 17,968
Trans Financial............................... 800 44,400
Washington Federal............................ 700 19,688
Westamerica Bancorp........................... 1,300 42,900
----------
878,412
----------
Basic Industries--7.8% Buckeye Technologies.......................... 1,200 (a) 27,900
GenCorp....................................... 1,800 54,788
Kaufman & Broad Home.......................... 500 14,531
Lennar........................................ 400 10,975
Lone Star Industries.......................... 1,000 82,625
Millennium Chemicals.......................... 400 14,350
Mississippi Chemical.......................... 700 12,688
Potash Corp. of Saskatchewan.................. 200 17,863
Rock-Tenn, Cl. A.............................. 700 11,156
Southdown..................................... 1,400 99,050
Terra Industries.............................. 4,000 43,000
Valspar....................................... 200 7,975
----------
396,901
----------
Capital Spending--13.9% American Power Conversion..................... 300 (a) 9,656
CHS Electronics............................... 1,800 (a) 37,575
CTS........................................... 700 25,856
California Water Service Group................ 2,200 58,987
Caribiner International....................... 300 (a) 6,000
Catalina Marketing............................ 300 (a) 15,600
Citrix Systems................................ 1,000 (a) 62,125
Cohu.......................................... 600 20,325
</TABLE>
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Capital Spending (continued) Cummins Engine................................ 300 $ 16,313
First Health Group............................ 400 (a) 23,600
Glenayre Technologies......................... 800 (a) 12,550
HMT Technology................................ 1,200 (a) 15,600
IDEX.......................................... 1,300 47,531
Innovex....................................... 500 12,781
Kaydon........................................ 600 26,288
Lincoln Electric, Cl. A....................... 1,300 61,425
Litton Industries............................. 300 (a) 18,000
Marshall Industries........................... 700 (a) 22,706
Regal Beloit.................................. 600 18,450
SPS Technologies.............................. 900 (a) 55,631
SPS Transaction Services...................... 2,100 (a) 64,706
Stewart & Stevenson Services.................. 800 17,800
Thiokol....................................... 300 16,163
Thomas Industries............................. 1,500 38,906
----------
704,574
----------
Consumer Cyclical--14.7% Arvin Industries.............................. 1,000 40,937
BJ's Wholesale Club........................... 700 (a) 28,044
Borg-Warner Automotive........................ 900 55,968
Burlington Coat Factory....................... 3,200 (a) 62,000
Burlington Industries......................... 700 (a) 12,250
Department 56................................. 500 (a) 17,969
Ethan Allen Interiors......................... 1,000 50,938
Franklin Covey................................ 800 (a) 20,000
Furniture Brands International................ 1,100 (a) 32,312
Genesco....................................... 2,100 (a) 35,568
Hearst-Argyle Television, Cl. A............... 400 (a) 14,250
Hollinger International, Cl. A................ 800 12,400
IHOP.......................................... 400 (a) 17,600
Interface, Cl. A.............................. 800 33,950
Kellwood...................................... 1,400 44,713
King World Productions........................ 1,300 (a) 34,694
Mikasa........................................ 1,800 23,962
Richfood Holdings............................. 400 10,975
Ross Stores................................... 1,200 55,575
Ryan's Family Steak House..................... 4,600 (a) 46,000
Springs Industries, Cl. A..................... 800 44,050
Standard Register............................. 700 27,956
Zale.......................................... 800 (a) 24,100
----------
746,211
----------
Consumer Staples--2.1% Chemed........................................ 400 16,025
Coors (Adolph), Cl. B......................... 200 7,150
Dean Foods.................................... 700 32,812
Universal..................................... 1,300 48,669
----------
104,656
----------
</TABLE>
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Energy--5.4% Energen....................................... 1,700 $ 37,931
Helmerich & Payne............................. 2,200 67,100
Tesoro Petroleum.............................. 2,300 (a) 45,713
WICOR ........................................ 1,000 47,938
Washington Gas Light.......................... 2,700 73,406
----------
272,088
----------
Health Care--2.8% ALPHARMA, Cl. A............................... 1,100 25,025
Marquette Medical Systems..................... 1,000 (a) 27,000
Paragon Health Network........................ 900 (a) 16,818
Serologicals.................................. 800 (a) 24,000
Sun Healthcare Group.......................... 1,600 (a) 26,800
Universal Health Services, Cl. B.............. 400 (a) 23,025
----------
142,668
----------
Insurance--9.3% Ambac Financial Group......................... 600 34,013
American National Insurance................... 200 21,600
Amerin........................................ 600 (a) 19,088
Capital Re.................................... 500 36,906
Financial Security Assurance Holdings......... 700 41,913
First American Financial...................... 700 49,744
Harleysville Group............................ 1,100 29,700
Mid Ocean..................................... 600 45,225
Orion Capital................................. 1,200 66,900
PartnerRe..................................... 600 30,037
Presidential Life............................. 1,500 30,563
Protective Life............................... 1,800 66,825
----------
472,514
----------
Mining and Metals--3.3% AK Steel Holding.............................. 3,600 75,600
Cleveland-Cliffs.............................. 600 33,600
Commercial Metals............................. 1,000 33,375
National Steel, Cl. B......................... 1,300 24,294
----------
166,869
----------
Real Estate--11.0% Capstead Mortgage............................. 3,300 62,906
D. R. Horton.................................. 3,400 63,113
Franchise Finance Corp. of America............ 1,300 34,856
M.D.C. Holdings............................... 1,200 20,625
Pulte......................................... 1,600 81,900
Rouse......................................... 1,500 46,312
Simon DeBartolo Group......................... 400 13,175
Toll Brothers................................. 2,900 (a) 80,838
U.S. Home..................................... 1,800 (a) 74,700
Webb (Del).................................... 3,000 78,562
----------
556,987
----------
</TABLE>
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Transportation--3.6% Alaska Air Group.............................. 900 (a) $ 50,513
America West Holdings, Cl. B.................. 1,700 (a) 51,425
Continental Airlines, Cl. B................... 700 (a) 41,213
SEACOR Smit................................... 400 (a) 23,450
USFreightways................................. 500 17,875
----------
184,476
----------
Utilities--5.8% Aliant Communications......................... 1,000 28,375
Boston Edison................................. 1,100 44,825
Calpine....................................... 1,500 (a) 27,094
Cleco......................................... 600 19,275
Commonwealth Energy Systems................... 800 30,600
Idaho Power................................... 500 17,813
Interstate Energy............................. 200 6,312
Montana Power................................. 1,200 44,625
Public Service Company of New Mexico.......... 1,900 43,819
Rochester Gas & Electric...................... 300 9,337
TNP Enterprises............................... 600 19,350
----------
291,425
----------
TOTAL COMMON STOCKS
(cost $4,905,445).......................... $4,917,781
==========
Principal
Short-Term Investments--2.8% Amount
- ------------------------------------------------------------------------------- ----------
U.S. Treasury Bills: 4.95%, 5/28/98................................ $ 103,000 $ 102,648
4.90%, 7/2/98................................. 12,000 11,900
4.89%, 7/30/98................................ 25,000 24,697
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $139,206)............................ $ 139,245
==========
TOTAL INVESTMENTS (cost $5,044,651)............................................ 99.8% $5,057,026
====== ==========
CASH AND RECEIVABLES (NET)..................................................... .2% $ 10,418
====== ==========
NET ASSETS..................................................................... 100.0% $5,067,444
====== ==========
</TABLE>
Notes to Statement of Investments:
- -------------------------------------------------------------------------------
(a) Non-income producing.
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
---------- ----------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of
Investments................................... $5,044,651 $5,057,026
Cash............................................. 6,596
Receivable for shares of Capital Stock subscribed 3,827
Dividends receivable............................. 6,853
----------
5,074,302
----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 6,523
Due to Distributor............................... 335
----------
6,858
----------
NET ASSETS..................................................................... $5,067,444
==========
REPRESENTED BY: Paid-in capital.................................. $5,050,295
Accumulated undistributed investment income--net. 4,838
Accumulated net realized gain (loss) on investments (64)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3......................... 12,375
----------
NET ASSETS..................................................................... $5,067,444
==========
</TABLE>
NET ASSET VALUE PER SHARE
-------------------------
<TABLE>
<CAPTION>
Class A Class B Class C Class R
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Assets..................................... $3,545,871 $ 518,677 $ 501,240 $ 501,656
Shares Outstanding............................. 282,790 41,393 40,000 40,000
NET ASSET VALUE PER SHARE...................... $12.54 $12.53 $12.53 $12.54
====== ====== ====== ======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Statement of Operations
From March 31, 1998 (commencement of operations) to April 30, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $8 foreign taxes
withheld at source)...................... $ 7,484
Interest................................... 4,212
-------
Total Income.......................... $11,696
EXPENSES: Management fee--Note 2(a)................... 5,252
Distribution and service fees--Note 2(b).... 1,606
-------
Total Expenses........................ 6,858
-------
INVESTMENT INCOME--NET.................................................... 4,838
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments.... $ (64)
Net unrealized appreciation (depreciation)
on investments........................... 12,375
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 12,311
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $17,149
=======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
From March 31, 1998 (commencement of operations) to April 30, 1998 (Unaudited)
<TABLE>
<S> <C>
OPERATIONS:
Investment income--net................................................................ $ 4,838
Net realized gain (loss) on investments.............................................. (64)
Net unrealized appreciation (depreciation) on investments............................ 12,375
----------
Net Increase (Decrease) in Net Assets Resulting from Operations................ 17,149
----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................... 3,535,228
Class B shares.................................................................... 515,910
Class C shares.................................................................... 499,157
Class R shares.................................................................... 500,000
----------
Increase (Decrease) in Net Assets from Capital Stock Transactions.............. 5,050,295
----------
Total Increase (Decrease) in Net Assets..................................... 5,067,444
NET ASSETS:
Beginning of Period.................................................................. --
----------
End of Period........................................................................ $5,067,444
==========
Undistributed investment income--net.................................................... $ 4,838
----------
CAPITAL SHARE TRANSACTIONS:
Class A
-------
Shares sold.......................................................................... 282,790
=======
Class B
-------
Shares sold.......................................................................... 41,393
=======
Class C
-------
Shares sold.......................................................................... 40,000
=======
Class R
-------
Shares sold.......................................................................... 40,000
=======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Cap Value 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 from March 31, 1998 (commencement of
operations) to April 30, 1998. This information has been derived from the Fund's
financial statements.
<TABLE>
<CAPTION>
Class A Class B Class C Class R
PER SHARE DATA: Shares Shares Shares Shares
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................... $12.50 $12.50 $12.50 $12.50
------ ------ ------ ------
Investment Operations:
Investment income--net..................................... .01 .01 .01 .02
Net realized and unrealized gain (loss) on investments..... .03 .02 .02 .02
------ ------ ------ ------
Total from Investment Operations........................... .04 .03 .03 .04
------ ------ ------ ------
Net asset value, end of period............................. $12.54 $12.53 $12.53 $12.54
====== ====== ====== ======
TOTAL INVESTMENT RETURN(1,2).................................. .32%(3) .24%(3) .24%(3) .32%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(1)................. .12% .19% .19% .10%
Ratio of net investment income to average net assets(1).... .11% .04% .04% .13%
Portfolio Turnover Rate.................................... -- -- -- --
Average commission rate paid(4)............................ $.0304 $.0304 $.0304 $.0304
Net Assets, end of period (000's Omitted).................. $3,546 $519 $501 $502
<FN>
- ---------------
(1) Not annualized.
(2) Calculated based on net asset value on the close of business on April 1,
1998 (commencement of initial offering) to April 30, 1998.
(3) Exclusive of sales load.
(4) The Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Small Cap Value Fund (the "Fund") is a separate diversified
series of The Dreyfus/Laurel Funds, Inc. (the "Company") which is registered
under the Investment Company Act of 1940 ("Act") as an open-end management
investment company and operates as a series company currently offering eighteen
series, including the Fund. The Fund's investment objective is to provide
investors with total investment returns that consistently outperform the Russell
2000 Value Index . The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
which is a wholly-owned subsidiary of Mellon Bank Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares. The Company is authorized to issue 400 million shares of
$.001 par value Capital Stock. The Fund's shares are classified into four
classes of shares: Class A, Class B, Class C and Class R. Class A, Class B and
Class C shares are sold primarily to retail investors through financial
intermediaries and bear a distribution fee and/or service fee. Class A shares
are sold with a front-end sales charge and bear a distribution fee, while Class
B and Class C shares are subject to a contingent deferred sales charge ("CDSC")
and distribution and service fees. 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.
As of April 30, 1998, MBIC Investment Corp., an indirect subsidiary of Mellon
Bank Corporation, held the following shares:
Class A.....................280,000 Class C.........................40,000
Class B......................40,000 Class R.........................40,000
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 (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. 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. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
(b) Foreign currency transactions: The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in 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 and the difference between the amounts of
<PAGE>
Dreyfus Premier Small Cap Value Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
(c) 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.
(d) Dividends 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 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.
NOTE 2--Investment Management Fee and Other Transfer 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. Out of
its fee, the Manager pays all of the expenses of the Fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
service fees, fees and expenses of non-interested 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). Each director receives
$27,000 per year, $1,000 for each Board meeting attended and $750 for each Audit
Committee meeting attended and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional annual fee of $25,000
per year. These fees pertain to the following funds: The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel Funds
Trust (The $1,000 attendance fee and reimbursement of meeting expenses are also
borne pro rata by Dreyfus High Yield Strategic Fund). These fees and expenses
are charged and allocated to each series based on net assets. Amounts required
to be paid by the Company directly to the non-interested Directors, that would
be applied to offset a portion of the management fee payable to the Manager, are
in fact paid directly by the Manager to the non-interested Directors.
(b) Distribution and service plan: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of their average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the
<PAGE>
Dreyfus Premier Small Cap Value Fund
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Distributor for activities and expenses primarily intended to result in the
sale of Class A shares. Under the Plan, Class B and Class C shares may pay the
Distributor for distributing 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 Class B and Class C shares pay 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 April 30, 1998, Class A,
Class B and Class C shares were charged $727, $335 and $324, respectively,
pursuant to the Plan and Class B and Class C shares were charged $112 and $108,
respectively, pursuant to the service plan.
Under its terms, the Plan shall remain in effect from year to year, provided
such continuance is approved annually by a vote of majority of those 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.
NOTE 3--Securities Transactions:
The aggregate amount of purchases of investment securities, excluding
short-term securities, during the period ended April 30, 1998, amounted to
$4,905,445.
At April 30, 1998, accumulated net unrealized appreciation on investments
was $12,375, consisting of $152,210 gross unrealized appreciation and $139,835
gross unrealized depreciation.
At April 30, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
<PAGE>
Dreyfus Premier Small Cap
Value 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. 148/158SA984
