<PAGE>
Annual Report
- -------------------------------------------------------------------------------
Dreyfus Premier
Balanced Fund
- -------------------------------------------------------------------------------
October 31, 1997
[LOGO]
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for Dreyfus Premier Balanced Fund
for the 12-month reporting period ended October 31, 1997, as shown in the
following table:
Total Return*
------------
Class A 25.24%
Class B 24.27%
Class C 24.41%
Class R 25.56%
Hybrid Index** 22.26%
The Fund's Hybrid Index is composed of 60% Standard & Poor's 500 Composite
Stock Price Index (S&P 500 Index) and 40% Lehman Brothers Intermediate
Government/Corporate Bond Index (Intermediate Government/Corporate Bond
Index).** Because of the structure of the Fund's portfolio, a mix of stocks and
bonds, its returns are not comparable to a market index composed entirely of
either common stocks, such as the S&P 500 Index, or bonds, such as the
Intermediate Government/Corporate Bond Index. The total returns of the S&P 500
Index and the Intermediate Government/Corporate Bond Index for the same period
were 32.10% and 7.49%, respectively .***
Economic Review
The U.S. economy has registered a step-up in growth in 1997 and the evidence
coming in suggests that momentum is still building. Stronger growth this year
has helped keep corporate profits buoyant despite a substantially tighter labor
market. This is because nationwide shortages of labor have so far not generated
much wage inflation. Moreover, price inflation has decelerated markedly during
the year, suppressed by the strong dollar, import competition and continued
disinflation in health care.
Although the Federal Reserve Board (the "Fed") has held a tightening bias
since mid-1996, the central bank has raised interest rates only once this year.
Expectations for further hikes have been continually postponed. They were first
dampened by the surprising drop in this year's price inflation, and more
recently by unfolding crises in foreign economies. Both events have helped to
cap short-term rates and to pull long-term interest rates lower since the
spring.
Real Gross Domestic Product (GDP) growth accelerated to about 4% this year
from 3% in 1996. Virtually all economic sectors have been strong so far.
Consumer spending has been supported by rising real incomes. Capital spending
has been very robust and new orders imply continued strength. Even housing
demand has reached new highs. Most incoming signals support sustained fast
growth. The exception is that exporters' new orders have marginally slowed in
recent months, indicating that economic turmoil overseas may be impacting this
sector. By contrast, imports have been very robust and, if their growth is
sustained, could help mitigate the economic weakness abroad.
Overall corporate profits have continued to trend higher, although some
companies have been hurt by events overseas and the stronger dollar.
Domestically generated profits have typically remained solid, helped by strong
growth and contained wages.
Market Overview
As the year progressed, fixed income investors became comfortable with the
economic scenario of solid growth combined with low inflation. Long-term
interest rates peaked in April with the 30-year U.S. Treasury Bond yielding
7.17%. By October, the 30-year U.S. Treasury had decreased in yield by 102 basis
points to a level of 6.15%. The change in market sentiment, in particular over
the last month of the reporting period, was due not only to low inflation
prospects but also a certain amount of concern over the currency devaluation in
some South Asian economies.
<PAGE>
Even though the equity markets stumbled badly in late October, the fiscal
year ended October 31, 1997 saw solid gains. Measured by price changes alone,
excluding income for the same 12-month period, the Dow Jones Industrial Average
gained 23.58%, the S&P 500 Index 29.96%, the Nasdaq Composite 30.43% and the
Russell 2000 Index, 27.52%. These were the gains after the drop that occured the
last week in October, and before counting the rebounds that occurred in the
first week of November.
In retrospect, it appears as though stock valuations had been riding for a
fall. There was weakness in March when the Fed raised interest rates for the
first time in two years. By early summer, equity prices recovered and soared to
new highs. Then, however, some nervousness set in, related mainly to concern
about high stock valuations and fears of another Fed move to cool off the
bubbling economy. Weakness was apparent mainly in companies with large
capitalization, while smaller companies, such as those listed in the Russell
2000 Index, gained ground.
As autumn leaves began to turn, the stock market as a whole regained its wind
- -- but not for long. The relatively high valuations that had prevailed were
vulnerable to major unpleasant surprises. That came in late October from an
unexpected source -- the Far East. Severe market setbacks in Hong Kong and
Southeast Asia, together with drops in their foreign exchange rates, triggered
the fall in the U.S. market.
Richard Hoey, Chief Economist for The Dreyfus Corporation, reviewing the
recent events, said that the U.S. stock market had a selling panic, followed by
a buying panic. The underlying logic of it all was valuation, he observed.
When the Dow Jones index peaked at above 8200 in early August, the stock
market was simply discounting favorable U.S. fundamentals into high stock
prices, said Hoey. The financial crisis in Asia was the trigger for a correction
of the major problem for the U.S. stock market: high valuation.
The market drop in Asia was caused by serious fundamental problems of excess
productive capacity, overvalued real estate and a banking system crisis.
European markets, of course, reacted to the Asian weakness, but less severely,
because their economies are more stable. In the U.S., the sharp price drop,
followed by a vigorous rebound, reflected an economy with much greater
underlying strength.
The influx of investors into stocks when the market fell was a good augury
for the future. The American investing public appears to be convinced that
equities are a good place to put money for the long term when their prices are
attractive, despite the recent volatility of market averages.
Portfolio Focus -- General
The Dreyfus Premier Balanced Fund provided returns in excess of its
investment objective for the year ended October 31, 1997. The Fund makes
strategic asset shifts based upon analysis of the relative value of stocks
compared to bonds as well as the active management of both the stocks and bonds
within the Fund.
The Fund's allocation to stocks was higher than the normal 60% target through
late June 1997. At that point in time, equity exposure was reduced to normal due
primarily to a significant increase in stock market valuation. As of August 13,
we reduced the Fund's equity exposure a second time to approximately 45%, with
the resulting allocation tilted toward bonds. During the year ending October 31,
1997, the Fund's overall asset allocation was tilted toward the better
performing asset class in eight of the 12 months relative to the Fund's normal
benchmark; this asset strategy provided a significant contribution to the Fund's
favorable performance.
Portfolio Focus -- Stocks
The Fund's stock component outperformed the market as measured by the S&P 500
Index: 33.98% versus 32.10% for the 12-month period. The portfolio construction
techniques that are utilized ensure broad diversification with exposure to all
economic sectors. Stocks are selected based upon favorable earning profiles in
conjunction with attractive
<PAGE>
price-based characteristics. The largest contribution to the equity performance
was provided by security selection within the interest-sensitive and capital
spending sectors.
Portfolio Focus -- Bonds
During the later portion of the reporting period, fixed income investors
experienced an increase in market volatility. Sparked by lower inflation reports
and tempered economic growth, the bond market rallied in spite of generational
lows in unemployment levels. The yield curve flattened throughout the reporting
period suggesting investors expected the Fed to maintain a neutral monetary
policy for the remainder of 1997. During the last week in October, investors
sought a haven from a general worldwide decline in equity prices and bid up the
prices of bonds even further after an already strong quarter. As a result,
yields on the 10-year Treasury Notes closed the reporting period 86 basis points
lower than from the beginning of the period, at a closing yield level of 5.83%.
For the reporting period the fixed income portion of the Fund held a neutral
duration relative to its fixed income benchmark, the Intermediate
Government/Corporate Bond Index. The fixed income portion of the Fund held a
relatively neutral allocation in government securities (75% for the Fund and 75%
for the Index). The Fund also held a 4.14% allocation in mortgage securities to
enhance the portfolio's overall yield. Until the asset allocation move, the
fixed income portion of the Fund held overweighted positions in corporate
securities in order to take advantage of the improving credit environment that
has been enhanced by strong corporate earnings. This position was pared to
underweight (20% for the Fund and 25% for the Index) after the asset allocation
move, since corporate securities tend to have performance profiles similar to
stock market performance. This shift enhanced performance, especially at the end
of the reporting period as corporate securities underperformed other fixed
income sectors in October in sympathy with stock market volatility.
It is a pleasure and a privilege to serve your investment needs. We will
continue to apply our disciplined approach to seeking a rewarding balance of
investment returns on your behalf.
Sincerely,
/s/ Ronald P. Gala /s/ Laurie Carroll
Ronald P. Gala Laurie Carroll
Portfolio Managers
November 18, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid
without taking 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 shares and Class C shares.
** Under normal circumstances, the Fund invests approximately 60% of its
assets in common stocks and 40% of its assets in 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.
*** SOURCES: (1) LIPPER ANALYTICAL SERVICES, INC. -- The Standard & Poor's
500 Composite Stock Price Index, which is a widely accepted unmanaged index of
U.S. stock market performance. (2) LEHMAN BROTHERS -- The Lehman Brothers
Intermediate Government/Corporate Bond Index, which 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. Reflects reinvestment of dividends and capital gains.
<PAGE>
Dreyfus Premier Balanced Fund October 31, 1997
- -------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS 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
[INSERT GRAPH PLOT POINTS HERE!!!!!!!!]
$21,795
Standard & Poor's 500
Composite Stock
Price Index*
$18,599
Dreyfus Premier
Balanced Fund
(Class R Shares)
$17,703
Hybrid Index***
$16,269
Lipper Balanced Funds
Index*
$12,639
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 Dreyfus
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, the Lipper
Balanced Funds Index and a Hybrid Index, which are 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. Components of the Hybrid Index are reallocated annually. 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.
Dreyfus 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 gain 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 this report.
<PAGE>
Dreyfus Premier Balanced Fund October 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
- ------------------------------------------------------------------------------------------------------------------
Class A Shares
- ------------------------------------------------------------------------------------------------------------------
% Return
Reflecting
% Return Without Maximum Initial
Period Ended 10/31/97 Sales Charge Sales Charge (5.75%)
- --------------------- --------------- --------------------
<C> <C> <C>
1 Year 25.24% 18.01%
From Inception (4/14/94) 19.56 17.60
<CAPTION>
Class B Shares
- ------------------------------------------------------------------------------------------------------------------
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming No Charge Upon
Period Ended 10/31/97 Redemption Redemption*
- --------------------- --------------- --------------------
<C> <C> <C>
1 Year 24.27% 20.27%
From Inception (12/19/94) 22.79 22.08
<CAPTION>
Class C Shares
- ------------------------------------------------------------------------------------------------------------------
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming No Charge Upon
Period Ended 10/31/97 Redemption Redemption**
- --------------------- --------------- --------------------
<C> <C> <C>
1 Year 24.41% 23.41%
From Inception (12/19/94) 22.90 22.90
<CAPTION>
Class R Shares
- ------------------------------------------------------------------------------------------------------------------
Period Ended 10/31/97
- ---------------------
<C> <C>
1 Year 25.56%
From Inception (9/15/93) 16.21
<FN>
* 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>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Investments October 31, 1997
<TABLE>
<CAPTION>
Common Stocks--48.7% Shares Value
- -------------------------------------------------------------------------------- --------- -------------
<S> <C> <C>
Basic Industries--2.1% Dow Chemical.................................. 5,700 $ 517,275
duPont (E.I.) de Nemours & Co................. 23,100 1,313,812
Fort James.................................... 20,762 823,992
International Paper........................... 5,700 256,500
Morton International.......................... 10,200 336,600
Owens-Illinois.............................(a) 8,400 289,800
Potash Corporation of Saskatchewan............ 5,700 467,044
-------------
4,005,023
-------------
Capital Spending--11.7% Adaptec....................................(a) 11,700 566,719
Altera.....................................(a) 5,400 239,625
American Power Conversion..................(a) 11,700 318,825
BMC Software...............................(a) 6,000 362,250
Caterpillar................................... 27,300 1,399,125
Ceridian...................................(a) 8,100 316,406
Cisco Systems..............................(a) 23,100 1,894,922
Cognizant..................................... 8,100 317,419
Compaq Computer............................... 22,200 1,415,250
Cummins Engine................................ 4,500 274,219
Deere & Co.................................... 15,900 836,738
General Dynamics.............................. 4,500 365, 344
General Electric.............................. 27,000 1,743,188
HFS........................................(a) 4,800 338,400
HealthCare COMPARE.........................(a) 5,700 306,375
Hewlett-Packard............................... 9,900 610,706
Ingersoll-Rand................................ 10,350 403,003
Intel......................................... 22,200 1,709,400
International Business Machines............... 15,600 1,529,775
Lexmark International Group, Cl.A..........(a) 9,000 275,062
Lucent Technologies........................... 10,200 840,863
Microsoft..................................(a) 22,200 2,886,000
Northrop Grumman.............................. 2,100 229,425
Parker-Hannifin............................... 18,450 771,441
Philips Electronics, N.V. (New York Shares)... 3,300 258,637
Raychem....................................... 3,000 271,687
Sun Microsystems...........................(a) 10,800 369,900
Tellabs....................................(a) 18,600 1,004,400
Thiokol....................................... 3,000 274,687
USA Waste Service..........................(a) 5,100 188,700
United Technologies........................... 7,200 504,000
-------------
22,822,491
-------------
Consumer Cyclical--5.7% Callaway Golf................................. 8,700 280,575
Chrysler...................................... 17,100 602,775
Dayton Hudson................................. 16,800 1,055,250
Dillard's, Cl. A.............................. 5,100 195,712
Federated Department Stores................(a) 24,000 1,056,000
Ford Motor.................................... 18,900 825,694
</TABLE>
<PAGE>
Dreyfus Premier Balanced Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Consumer Cyclical (continued) Gannett....................................... 4,800 $ 252,300
Gap........................................... 13,800 733,988
General Motors................................ 16,800 1,078,350
Goodyear Tire & Rubber........................ 2,700 169,087
King World Productions........................ 6,300 297,675
MGM Grand..................................(a) 5,700 250,088
Magna International, Cl. A.................... 3,300 217,387
Miller (Herman)............................... 4,200 205,275
New York Times, Cl. A......................... 14,700 804,825
Payless ShoeSource.........................(a) 2,400 133,800
Safeway....................................(a) 17,700 1,028,813
Sears, Roebuck & Co........................... 13,500 565,313
TJX........................................... 21,900 648,787
Tommy Hilfiger.............................(a) 5,100 201,769
Tricon Global Restaurants..................... 1,200 36,375
V.F........................................... 5,100 455,812
-------------
11,095,650
-------------
Consumer Staples--5.4% Anheuser-Busch................................ 11,400 455,287
Avon Products................................. 8,700 569,850
Campbell Soup................................. 10,200 525,937
Clorox........................................ 6,600 462,000
Coca-Cola..................................... 23,700 1,339,050
Dean Foods.................................... 1,500 70,969
Dial.......................................... 11,400 192,375
General Mills................................. 11,100 732,600
Heinz (H.J.).................................. 5,700 264,694
Interstate Bakeries........................... 3,600 229,950
Kellogg....................................... 11,400 490,912
Lauder (Estee)................................ 4,200 186,638
Newell........................................ 9,900 379,913
PepsiCo....................................... 12,000 441,750
Philip Morris ................................ 36,000 1,426,500
Procter & Gamble.............................. 13,800 938,400
Quaker Oats................................... 16,200 775,575
Unilever, N.V. (New York Shares)...........(a) 13,200 704,550
Universal Foods............................... 8,000 315,500
-------------
10,502,450
-------------
Energy--4.9% Atlantic Richfield............................ 10,800 888,975
Burlington Resources.......................... 9,000 440,437
Chevron....................................... 19,500 1,617,281
Coastal....................................... 6,900 414,863
Columbia Gas System........................... 4,200 303,450
Diamond Offshore Drilling..................... 9,600 597,600
Exxon......................................... 29,100 1,787,831
NICOR ........................................ 3,300 127,256
Phillips Petroleum............................ 15,300 740,138
</TABLE>
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Energy (continued) Reading & Bates............................(a) 11,700 $ 495,788
Royal Dutch Petroleum (New York Shares)....... 14,400 757,800
Texaco........................................ 12,300 700,331
USX-Marathon Group............................ 17,100 611,325
-------------
9,483,075
-------------
Health Care--5.2% Abbott Laboratories........................... 24,900 1,526,681
Amgen .....................................(a) 16,200 797,850
Becton, Dickinson & Co........................ 6,000 276,375
Biomet........................................ 10,500 261,844
Bristol-Myers Squibb.......................... 9,300 816,075
Health Management Association..............(a) 12,300 299,812
HEALTHSOUTH................................(a) 29,700 759,206
Johnson & Johnson............................. 30,600 1,755,675
Merck & Co.................................... 19,800 1,767,150
Schering-Plough............................... 28,200 1,580,963
Wellpoint Health Networks..................(a) 5,700 260,775
-------------
10,102,406
-------------
Interest Sensitive--8.0% Ahmanson (H.F.) & Co.......................... 10,800 637,200
Allstate...................................... 10,200 845,963
Ambac Financial Group......................... 12,000 507,000
American National Insurance................... 1,500 144,000
BankAmerica................................... 25,200 1,801,800
Bankers Trust New York........................ 6,000 708,000
Bear Stearns ................................. 18,300 726,281
Chase Manhattan............................... 7,500 865,312
Citicorp...................................... 6,300 787,894
Comerica...................................... 6,600 521,812
Conseco....................................... 14,400 628,200
EXEL.......................................... 16,200 979,088
Federal National Mortgage Association......... 17,700 857,344
First Chicago ................................ 15,900 1,156,725
First of America Bank......................... 3,400 189,550
Green Tree Financial.......................... 10,800 454,950
MGIC Investment............................... 9,000 542,812
Norwest....................................... 23,400 750,263
Republic New York............................. 3,000 317,437
SLM Holding................................... 7,200 1,010,700
SouthTrust.................................... 4,200 201,600
Travelers Group............................... 12,600 882,000
-------------
15,515,931
-------------
Mining & Metals--.5% Phelps Dodge.................................. 3,600 267,750
Reynolds Metals............................... 5,100 310,781
USX-U.S. Steel Group.......................... 11,400 387,600
-------------
966,131
-------------
</TABLE>
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Transportation--.8% AMR........................................(a) 1,800 $ 209,588
Burlington Northern Santa Fe.................. 8,400 798,000
Delta Air Lines............................... 4,500 453,375
-------------
1,460,963
-------------
Utilities--4.4% AT&T.......................................... 36,000 1,761,750
Ameritech..................................... 27,000 1,755,000
BellSouth..................................... 23,700 1,121,306
Consolidated Edison........................... 15,900 544,575
DQE........................................... 7,800 241,313
Entergy....................................... 18,000 439,875
LCI International..........................(a) 11,200 289,800
PacifiCorp.................................... 18,300 396,881
Pinnacle West Capital......................... 11,400 396,863
SBC Communications............................ 12,300 782,587
Southern...................................... 9,600 220,200
Vodafone Group, A.D.R......................... 12,600 691,425
-------------
8,641,575
-------------
TOTAL COMMON STOCKS
(cost $73,252,758)......................... $ 94,595,695
-------------
-------------
<CAPTION>
Principal
Bonds & Notes--43.1% Amount
- ------------------------------------------------------------------------------- ----------
<S> <C> <C>
Basic Industries--4.7% Aesop Funding, Notes,
6.40%, 10/20/2003.......................... $ 2,000,000 $ 2,019,218
Amoco, Notes,
6.25%, 10/15/2004.......................... 1,500,000 1,501,650
duPont (E.I.) de Nemours & Co, Notes,
6.50%, 9/1/2002............................ 3,000,000 3,036,456
General Motors Acceptance, Notes,
7.75%, 1/15/1999........................... 500,000 510,131
Norfolk Southern, Notes,
6.70%, 5/1/2000............................ 2,000,000 2,025,238
-------------
9,092,693
-------------
Interest Sensitive--2.8% ABN Amro Bank, Notes,
7.55%, 6/28/2006........................... 700,000 747,373
Citicorp, Notes,
6.60%, 8/1/2000............................ 2,000,000 2,028,228
NBD Bancorp, Notes,
7.125%, 5/15/2007.......................... 1,500,000 1,556,211
Republic New York, Deb.,
9.75%, 12/1/2000........................... 1,000,000 1,104,046
-------------
5,435,858
-------------
</TABLE>
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Principal
Bonds & Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Transportation--1.1% CSX, Deb.,
7.45%, 5/1/2007............................ $ 2,000,000 $ 2,113,838
-------------
U.S. Government &
Agencies--34.5% Federal Home Loan Mortgage Corporation:
5.40%, 11/1/2000........................... 500,000 493,020
7%, 1/1/2012............................... 851,888 864,394
Federal National Mortgage Association:
5.30%, 12/10/1998.......................... 1,000,000 995,223
6.64%, 7/2/2007............................ 2,000,000 2,079,266
Government National Mortgage Association:
6.50%, 1/15/2011........................... 498,056 503,038
6.50%, 3/15/2012........................... 494,141 496,613
6.50%, 3/15/2012........................... 559,946 562,746
7.50%, 4/15/2012........................... 1,055,949 1,086,963
7.50%, 5/15/2012........................... 938,222 965,778
U.S. Treasury Bonds:
11.625%, 11/15/2002........................ 500,000 625,703
12.375%, 5/15/2004......................... 100,000 134,937
U.S. Treasury Notes:
5.875%, 1/31/1999.......................... 2,000,000 2,005,938
7%, 4/15/1999.............................. 1,300,000 1,324,984
6.375%, 5/15/1999.......................... 4,510,000 4,557,919
6.75%, 5/31/1999........................... 2,500,000 2,541,797
6%, 6/30/1999.............................. 4,410,000 4,436,184
6.875%, 7/31/1999.......................... 1,000,000 1,020,000
8%, 8/15/1999.............................. 2,000,000 2,078,438
5.875%, 2/15/2000.......................... 6,300,000 6,327,562
6.875%, 3/31/2000.......................... 2,500,000 2,566,016
6.25%, 8/31/2000........................... 5,710,000 5,789,405
5.75%, 10/31/2000.......................... 1,200,000 1,201,500
5.625%, 11/30/2000......................... 900,000 897,609
5.50%, 12/31/2000.......................... 100,000 99,328
5.25%, 1/31/2001........................... 1,000,000 987,031
6.50%, 5/31/2001........................... 3,650,000 3,737,828
5.875%, 11/30/2001......................... 1,300,000 1,305,484
6.125%, 12/31/2001......................... 4,420,000 4,478,703
6.25%, 6/30/2002........................... 1,410,000 1,436,437
6.375%, 8/15/2002.......................... 1,000,000 1,025,469
5.75%, 8/15/2003........................... 4,500,000 4,485,235
6.50%, 8/15/2005........................... 3,700,000 3,835,860
7%, 7/15/2006.............................. 2,000,000 2,143,438
-------------
67,089,846
-------------
TOTAL BONDS & NOTES
(cost $82,367,317)......................... $ 83,732,235
-------------
-------------
</TABLE>
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Principal
Short-Term Investments--7.9% Amount Value
- ------------------------------------------------------------------------------- ------------- ------------
<S> <C> <C>
Repurchase Agreements--7.6% Goldman, Sachs & Co., Tri-Party Repurchase Agreement
5.67% Dated 10/31/1997,
Due 11/3/1997 in the amount of
$14,739,166 (fully collateralized
by $14,762,000 U.S. Treasury Notes,
5.875%, 7/31/1999, value $15,034,248)...... $ 14,739,166 $ 14,739,166
------------
U.S. Treasury Bills--.3% 4.81%, 12/18/1997..........................(b) 560,000 556,416
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $15,295,799)......................... $ 15,295,582
------------
------------
TOTAL INVESTMENTS (cost $170,915,874).......................................... 99.7% $193,623,512
------- ------------
------- ------------
CASH AND RECEIVABLES (NET)..................................................... .3% $ 625,512
------- ------------
------- ------------
NET ASSETS..................................................................... 100.0% $194,249,024
------- ------------
------- ------------
<FN>
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>
Statement of Financial Futures October 31, 1997
<TABLE>
<CAPTION>
Unrealized
Market Value Appreciation/
Covered (Depreciation)
Financial Futures Purchased: Contracts by Contracts Expiration at 10/31/97
--------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
U.S. Treasury 5 Year Notes....................... 135 $14,634,844 December 1997 $278,438
Financial Futures Sold:
Standard & Poor's 500............................ 20 (9,240,000) December 1997 (43,000)
-----------
$235,438
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1997
<TABLE>
<CAPTION>
Cost Value
------------- ------------
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $170,915,874 $193,623,512
Cash............................................. 26,920
Receivable for investment securities sold........ 1,806,282
Dividends and interest receivable................ 1,591,127
Receivable for shares of Capital Stock subscribed 167,183
------------
197,215,024
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 187,020
Due to Distributor............................... 7,918
Payable for investment securities purchased...... 2,565,129
Payable for futures variation margin--Note 1(d)... 202,621
Payable for shares of Capital Stock redeemed..... 3,148
Commitment fees payable--Note 4................... 164
------------
2,966,000
------------
NET ASSETS..................................................................... $194,249,024
------------
------------
REPRESENTED BY: Paid-in capital.................................. $142,667,152
Accumulated undistributed investment income--net.. 1,480,635
Accumulated net realized gain (loss) on investments 27,158,161
Accumulated net unrealized appreciation (depreciation)
on investments (including $235,438 net unrealized
appreciation on financial futures)--Note 3...... 22,943,076
------------
NET ASSETS..................................................................... $194,249,024
------------
------------
</TABLE>
NET ASSET VALUE PER SHARE
-------------------------
<TABLE>
<CAPTION>
Class A Class B Class C Class R
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net Assets..................................... $14,686,611 $28,939,930 $2,017,462 $148,605,021
Shares Outstanding............................. 968,174 1,913,477 133,079 9,791,380
NET ASSET VALUE PER SHARE...................... $15.17 $15.12 $15.16 $15.18
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Operations Year Ended October 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Interest................................... $ 4,021,132
Cash dividends (net of $16,648 foreign taxes
withheld at source)...................... 1,799,757
------------
Total Income.......................... $ 5,820,889
EXPENSES: Management fee--Note 2(a)................... 1,690,361
Distribution and service fees--Note 2(b).... 208,768
Loan commitment fees--Note 4................ 2,000
------------
Total Expenses........................ 1,901,129
-----------
INVESTMENT INCOME--NET.................................................... 3,919,760
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments.... $ 24,850,073
Net realized gain (loss) on financial futures:
Long transactions........................ 2,707,781
Short transactions....................... (32,783)
------------
Net Realized Gain (Loss).............. 27,525,071
Net unrealized appreciation (depreciation) on
investments [including ($158,362) net unrealized
(depreciation) on financial futures]..... 5,329,817
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 32,854,888
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $36,774,648
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------- -------------
OPERATIONS:
<S> <C> <C>
Investment income--net.................................................. $ 3,919,760 $ 3,110,853
Net realized gain (loss) on investments................................ 27,525,071 14,166,699
Net unrealized appreciation (depreciation) on investments.............. 5,329,817 3,609,857
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 36,774,648 20,887,409
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares...................................................... (154,567) (82,168)
Class B shares...................................................... (141,872) (93,190)
Class C shares...................................................... (5,342) (880)
Class R shares...................................................... (2,982,255) (2,779,831)
Net realized gain on investments:
Class A shares...................................................... (682,485) (12,895)
Class B shares...................................................... (971,412) (23,311)
Class C shares...................................................... (32,594) (93)
Class R shares...................................................... (12,818,245) (630,855)
------------- -------------
Total Dividends.................................................. (17,788,772) (3,623,223)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................... 7,863,931 4,827,120
Class B shares...................................................... 18,369,500 5,867,242
Class C shares...................................................... 1,756,607 220,931
Class R shares...................................................... 69,950,474 91,066,091
Dividends reinvested:
Class A shares...................................................... 760,627 80,519
Class B shares...................................................... 871,660 85,124
Class C shares...................................................... 31,235 935
Class R shares...................................................... 15,788,268 3,412,336
Cost of shares redeemed:
Class A shares...................................................... (1,580,413) (821,065)
Class B shares...................................................... (1,697,888) (790,373)
Class C shares...................................................... (167,194) (3,092)
Class R shares...................................................... (82,080,975) (78,467,084)
------------- -------------
Increase (Decrease) in Net Assets from Capital Stock Transactions 29,865,832 25,478,684
------------- -------------
Total Increase (Decrease) in Net Assets....................... 48,851,708 42,742,870
NET ASSETS:
Beginning of Period.................................................... 145,397,316 102,654,446
------------- -------------
End of Period.......................................................... $ 194,249,024 $ 145,397,316
------------- -------------
------------- -------------
Undistributed investment income--net....................................... $ 1,480,635 $ 844,911
------------- -------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Shares
------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
----------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Class A
<S> <C> <C>
Shares sold................................................................ 562,517 376,308
Shares issued for dividends reinvested..................................... 60,307 6,409
Shares redeemed............................................................ (112,372) (63,542)
------------- ------------
Net Increase (Decrease) in Shares Outstanding... 510,452 319,175
------------- ------------
------------- ------------
Class B
Shares sold................................................................ 1,295,362 459,770
Shares issued for dividends reinvested..................................... 69,418 6,805
Shares redeemed............................................................ (119,340) (60,720)
------------- ------------
Net Increase (Decrease) in Shares Outstanding... 1,245,440 405,855
------------- ------------
------------- ------------
Class C
Shares sold................................................................ 124,488 16,995
Shares issued for dividends reinvested..................................... 2,483 74
Shares redeemed............................................................ (11,240) (238)
------------- ------------
Net Increase (Decrease) in Shares Outstanding... 115,731 16,831
------------- ------------
------------- ------------
Class R
Shares sold................................................................ 5,165,821 6,955,109
Shares issued for dividends reinvested..................................... 1,252,558 274,851
Shares redeemed............................................................ (6,084,742) (5,985,999)
------------- ------------
Net Increase (Decrease) in Shares Outstanding... 333,637 1,243,961
------------- ------------
------------- ------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 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.
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------
Year Ended October 31,
---------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994(1,2)
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................... $13.71 $11.91 $10.08 $ 9.73
------ ------ ------ ------
Investment Operations:
Investment income--net...................................... .34 .31 .28 .11
Net realized and unrealized gain (loss) on investments..... 2.77 1.88 1.82 .34
------ ------ ------ ------
Total from Investment Operations........................... 3.11 2.19 2.10 .45
------ ------ ------ ------
Distributions:
Dividends from investment income--net....................... (.28) (.31) (.27) (.10)
Dividends from net realized gain on investments............ (1.37) (.08) -- --
------ ------ ------ ------
Total Distributions........................................ (1.65) (.39) (.27) (.10)
------ ------ ------ ------
Net asset value, end of period............................. $15.17 $13.71 $11.91 $10.08
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN(3).................................... 25.24% 18.71% 21.17% 4.68%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................... 1.25% 1.25% 1.25% .71%(4,5)
Ratio of net investment income to average net assets....... 2.21% 2.39% 2.65% 1.09%(4,5)
Portfolio Turnover Rate.................................... 98.88% 85.21% 53.20% 83.00%
Average commission rate paid(6)............................ $.0511 $.0540 -- --
Net Assets, end of period (000's Omitted).................. $14,687 $6,275 $1,650 $1,798
<FN>
- ------------------------
(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.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 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.
<TABLE>
<CAPTION>
Class B Shares
-------------------------------
Year Ended October 31,
-------------------------------
PER SHARE DATA: 1997 1996 1995(1)
------ ------ ------
<S> <C> <C> <C>
Net asset value, beginning of period...................................... $13.68 $11.89 $ 9.76
------ ------ ------
Investment Operations:
Investment income--net..................................................... .23 .21 .14
Net realized and unrealized gain (loss) on investments.................... 2.77 1.87 2.11
------ ------ ------
Total from Investment Operations.......................................... 3.00 2.08 2.25
------ ------ ------
Distributions:
Dividends from investment income--net...................................... (.19) (.21) (.12)
Dividends from net realized gain on investments........................... (1.37) (.08) --
------ ------ ------
Total Distributions....................................................... (1.56) (.29) (.12)
------ ------ ------
Net asset value, end of period............................................ $15.12 $13.68 $11.89
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN...................................................... 24.27% 17.76% 23.19%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... 2.00% 2.00% 1.73%(2)
Ratio of net investment income to average net assets...................... 1.47% 1.65% 2.16%(2)
Portfolio Turnover Rate................................................... 98.88% 85.21% 53.20%
Average commission rate paid (3).......................................... $.0511 $.0540 --
Net Assets, end of period (000's Omitted)................................. $28,940 $9,141 $3,118
<FN>
- ------------------------
(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.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 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.
<TABLE>
<CAPTION>
Class C Shares
-------------------------------
Year Ended October 31,
-------------------------------
PER SHARE DATA: 1997 1996 1995(1)
------ ------ ------
<S> <C> <C> <C>
Net asset value, beginning of period...................................... $13.70 $11.90 $ 9.76
------ ------ ------
Investment Operations:
Investment income--net..................................................... .24 .25 .11
Net realized and unrealized gain (loss) on investments.................... 2.78 1.84 2.15
------ ------ ------
Total from Investment Operations.......................................... 3.02 2.09 2.26
------ ------ ------
Distributions:
Dividends from investment income--net...................................... (.19) (.21) (.12)
Dividends from net realized gain on investments........................... (1.37) (.08) --
------ ------ ------
Total Distributions....................................................... (1.56) (.29) (.12)
------ ------ ------
Net asset value, end of period............................................ $15.16 $13.70 $11.90
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN...................................................... 24.41% 17.83% 23.29%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... 2.00% 2.00% 1.73%(2)
Ratio of net investment income to average net assets...................... 1.47% 1.62% 2.16%(2)
Portfolio Turnover Rate................................................... 98.88% 85.21% 53.20%
Average commission rate paid (3).......................................... $.0511 $.0540 --
Net Assets, end of period (000's Omitted)................................. $2,017 $237 $6
<FN>
- -------------------------------
(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.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 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.
<TABLE>
<CAPTION>
Class R Shares
-----------------------------------------------
Year Ended October 31,
-----------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994(1) 1993(2)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $13.72 $11.92 $10.09 $10.18 $10.00
------ ------ ------ ------ ------
Investment Operations:
Investment income--net................................... .36 .34 .31 .20(3) .02
Net realized and unrealized gain (loss) on investments.. 2.79 1.88 1.81 (.13) .16
------ ------ ------ ------ ------
Total from Investment Operations........................ 3.15 2.22 2.12 .07 .18
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net.................... (.32) (.34) (.29) (.16) --
Dividends from net realized gain on investments......... (1.37) (.08) -- -- --
------ ------ ------ ------ ------
Total Distributions..................................... (1.69) (.42) (.29) (.16) --
------ ------ ------ ------ ------
Net asset value, end of period......................... $15.18 $13.72 $11.92 $10.09 $10.18
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN.................................... 25.56% 18.99% 21.46% .68% 1.80%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. 1.00% 1.00% 1.00% 1.04%(5) .15%(4,6,7)
Ratio of net investment income to average net assets.... 2.44% 2.68% 2.89% 2.23% .25%(4,7)
Portfolio Turnover Rate................................. 98.88% 85.21% 53.20% 83.00% --
Average commission rate paid(8)......................... $.0511 $.0540 -- -- --
Net Assets, end of period (000's Omitted)............... $148,605 $129,744 $97,881 $75,720 $28,904
<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 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 ended 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>
See notes to financial statements.
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Balanced Fund (the "Fund") is a series of The Dreyfus/Laurel
Funds, Inc. (the "Company") which 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 seventeen series including 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").
On January 31, 1997, the Fund's Directors approved a change to the Fund's
name, effective March 1, 1997, from "Premier Balanced Fund" to "Dreyfus Premier
Balanced Fund."
Premier Mutual Fund Services, Inc. (the "Distributor") is 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 and bear a distribution fee, while Class B and Class C shares are
subject to a contingent deferred sales charge ("CDSC") and a distribution and
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) 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
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
collateral is at least equal, at all times, to the total amount of the
repurchase obligation, including interest. In the event of a counter party
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 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, 1997, and their related
unrealized appreciation/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 4, 1997, 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 $.1100, $.0813, $.0812 and $.1197 per share, respectively, payable on
November 5, 1997 to shareholders of record on November 4, 1997.
(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, 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
<PAGE>
Dreyfus Premier Balanced Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 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. 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 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, 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, 1997, the Fund was
charged $26,135, $129,187 and $7,788 for Class A, Class B and Class C shares,
respectively, pursuant to the Plan. During the period ended October 31, 1997,
the Fund was charged $43,062 and $2,596 for Class B and Class C shares,
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 and sales of investment securities,
excluding short-term securities and financial futures, during the period ended
October 31, 1997 amounted to $174,436,959 and $152,338,879, respectively.
At October 31, 1997, accumulated net unrealized appreciation on investments
and financial futures was $22,943,076, consisting of $24,295,380 gross
unrealized appreciation and $1,352,304 gross unrealized depreciation.
At October 31, 1997, 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 $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended October
31, 1997, the Fund did not borrow under the Facility.
<PAGE>
Dreyfus 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
Dreyfus Premier Balanced Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 1997, and the related statement of operations for the year then ended, the
statements 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, 1997, by correspondence with the custodian. As to securities
purchased and sold, but not received or delivered, we performed other
appropriate auditing procedures. 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 Premier Balanced Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 1997, the results of its operations for the year then ended, changes in its
net assets for each of the years in the two-year period then ended and its
financial highlights for each of the years or periods indicated herein, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 17, 1997
Important Tax Information (Unaudited)
For Federal tax purposes the Fund hereby designates $1.050 per share as a
long-term capital gain distribution paid on December 13, 1996.
The Fund also designates 19.45% of the ordinary dividends paid during the
fiscal year ended October 31, 1997 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1998 of
the percentage applicable to the preparation of their 1997 income tax return.
<PAGE>
Dreyfus 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. 342/642/652/742AR9710
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS 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
DREYFUS & POOR'S LEHMAN
PREMIER 500 BROTHERS
BALANCED COMPOSITE INTERMEDIATE LIPPER
FUND STOCK GOVERNMENT/ BALANCED
PERIOD (CLASS R PRICE CORPORATE HYBRID FUNDS
SHARES) INDEX* BOND 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 10,260 10,063
10/31/95 12,449 13,297 11,112 12,400 11,833
10/31/96 14,813 16,499 11,758 14,480 13,546
10/31/97 18,599 21,795 12,639 17,703 16,269
*Source: Lipper Analytical Services, Inc.
**Source: Lehman Brothers
***Source: Lipper Analytical Services, Inc. and Lehman Brothers
