<PAGE>
Dreyfus
International
Equity Allocation
Fund
Annual Report
October 31, 1997
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance of the Dreyfus International Equity
Allocation Fund for the 12-month reporting period ended October 31, 1997, as
shown in the following table:
Total Return*
-------------
Investor Shares 1.38%
Restricted Shares 1.64%
The Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE(R)) Index** 4.63%
THE ECONOMY
Continental Europe's current economic climate is best described by
overwhelming confidence that Economic and Monetary Union (EMU) will take place
as scheduled. Success for EMU appeared less likely earlier in the year after the
new French Government raised objections to the agreement. However, most of those
objections have been resolved, and the markets are now priced with the
expectation that EMU will occur as planned. Additionally, it appears that Spain,
Portugal and Italy will be included in the agreement from the onset. The outlook
for Europe on the whole appears favorable. Currently, weak European currencies
continue to stimulate strong demand for European exports.
The economy in the United Kingdom has probably been operating above potential
recently. The U.K. monetary authorities have already raised short-term interest
rates to combat potential inflationary pressure, but we may still see
above-trend growth in the economy into early next year. The possibility of the
Pound joining in the European Currency sooner rather than later has brought bond
yields down and bolstered equity markets to some degree as well.
Economic recovery still has not materialized in Japan. The recent crisis in
the emerging markets of Asia hit Japan at a very bad time. We believe growth
should rebound to healthier levels during fiscal 1998. In the meantime, the
Japanese government appears committed to the path of deregulation, and the
banking sector appears committed to unwinding cross holdings. Both of these
items should promote long-term economic and financial health but have caused
some concern among market participants in the short run.
THE MARKET AND THE PORTFOLIO
As of October 31, 1997, the Fund was diversified among 274 stocks allocated
over the 18 countries that comprise the EAFE(R) Index. Active investment
decisions, based on fundamental principles of investment analysis that examine
the expected returns from each country, adjusted for risk, are rendered on
investment allocations for Japan, the United Kingdom, Germany, France,
Australia, Switzerland and the Netherlands. The remaining countries in the
EAFE(R) Index are generally weighted in the same proportion as their weightings
in the Index.
As of October 31, the Fund's largest overweighted positions as compared to
the EAFE(R) Index were in Switzerland (14.1% vs. 7.3%) and Japan (35.18% vs.
28.7%). The largest underweighted positions were in the United Kingdom (14.97%
vs. 21.1%) and the Netherlands (0.0% vs. 5.6%). These figures, unlike our
Statement of Investments, include futures exposure as well as actual stocks
held. The Fund uses a currency valuation model to determine the timing of
currency hedging. The model considers the differences in real
(inflation-adjusted) interest rates among countries. These differences arise due
to varying monetary policies pursued by the central banks of each country. The
Fund benefited substantially from the appreciation of the U.S. Dollar against
the Deutschmark, the French Franc and the Japanese Yen during a period when the
Fund maintained partially hedged positions against these currencies. However,
the Fund underperformed its objective during the period primarily due to poor
performance in the Japanese equity market, where it maintained a large
overweighting, and strong performance in the U.K. equity market, where it
maintained a large underweighting.
<PAGE>
Looking ahead, we believe the Japanese equity market represents excellent
relative value at current prices. Although economic recovery has not yet gained
a foothold in Japan, long-term prospects for the world's second-largest economy
remain strong. Swiss equities also look attractive even after strong performance
during the recent year. Expected earnings on the Swiss equity market justify the
strong performance and support our expectation that the market will continue to
perform well. On the other hand, earnings on both U.K. and Dutch equities have
not kept pace with price performance in those markets. Both of these markets
continue to look overvalued in our tactical view.
Included in this report is a series of detailed statements about your Fund's
holdings and its financial condition. We hope they are informative. Please know
that we appreciate greatly your continued confidence in the Fund and in The
Dreyfus Corporation.
Very truly yours,
/s/ Charles J. Jacklin
Charles J. Jacklin, Ph.D.
Portfolio Manager
November 18, 1997
San Francisco, CA
* Total return includes reinvestment of dividends and any capital gains paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE(R)) Index is an unmanaged
index composed of a sample of companies representative of the market
structure of European and Pacific Basin countries. The return indicated
includes net dividends reinvested. The Index is the property of Morgan
Stanley & Co. Incorporated.
<PAGE>
Dreyfus International Equity Allocation Fund October 31, 1997
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
INTERNATIONAL EQUITY ALLOCATION FUND INVESTOR SHARES AND
RESTRICTED SHARES AND THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, FAR EAST (EAFE(R)) INDEX
Dollars
$11,628
Dreyfus International
Equity Allocation Fund
(Restricted Shares)
$11,562
Dreyfus International
Equity Allocation Fund
(Investor Shares)
$11,524
Morgan Stanley Capital
International Europe,
Australasia, Far East
(EAFE(R)) Index*
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- --------------------------------------------------------------------------------
Investor Shares* Restricted Shares*
--------------------------------- ----------------------------------
Period Ended 10/31/97 Period Ended 10/31/97
--------------------- ---------------------
1 Year 1.38% 1 Year 1.64%
From Inception (9/15/94) 4.75 From Inception (9/15/94) 4.94
- ------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Investor
shares and Restricted shares of Dreyfus International Equity Allocation Fund
on 9/15/94 (Inception Date) to a $10,000 investment made in the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE(R)) Index on that
date. For comparative purposes, the value of the Index on 8/31/94 is used as
the beginning value on 9/15/94. All dividends and capital gain distributions
are reinvested.
The Fund's objective is to exceed the total return of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE(R)) Index. The
Fund's performance shown in the line graph takes into account all applicable
fees and expenses. The Index, which is the property of Morgan Stanley &
Co. Incorporated, is an unmanaged index composed of a sample of
companies representative of the market structure of European and Pacific
Basin countries and includes net dividends reinvested. The Index does not
take into account charges, fees and other expenses. Further information
relating to Fund performance, including expense reimbursements, if applicable,
is contained in the Financial Highlights section of the Prospectus and
elsewhere in this report.
* Effective August 15, 1997, the Fund's Institutional shares were redesignated
as Investor shares and Retail shares were redesignated as Restricted shares.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Investments October 31, 1997
<TABLE>
<CAPTION>
Common Stocks--78.9% Shares Value
- ------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
Australia--.5% Amcor ........................................ 3,000 $ 14,111
Broken Hill Proprietary....................... 2,529 25,004
Coca-Cola Amatil.............................. 1,027 7,705
ICI Australia................................. 1,000 7,503
Pacific Dunlop................................ 5,912 12,590
Westpac Banking............................... 3,200 18,579
-----------
85,492
-----------
Austria--.2% Oesterreichische Elektrizitaetaetswirtschafts, Cl. A 300 23,836
-----------
Belgium--1.5% Electrabel.................................... 50 11,203
Fortis........................................ 102 19,326
PetroFina..................................... 478 175,696
Solvay........................................ 500 30,080
-----------
236,305
-----------
Denmark--.8% Danisco....................................... 2,280 128,859
-----------
Finland--.4% Kone B........................................ 400 47,880
Nokia AB, Cl. K............................... 200 17,569
-----------
65,449
-----------
France--6.4% Accor......................................... 104 19,341
Axa-UAP....................................... 1,082 74,006
Banque Nationale de Paris..................... 936 41,329
CPR........................................... 200 15,497
Carrefour..................................... 133 69,320
Chargeurs..................................... 10 668
Compagnie de St. Gobain....................... 384 55,056
Compagnie Financiere de Paribas............... 655 47,511
Elf Aquitaine................................. 1,003 124,005
Eridania Beghin-Say........................... 189 27,163
L'OREAL....................................... 209 73,972
L'Air Liquide................................. 432 66,949
Lafarge....................................... 673 41,999
Moulinex...................................... 635(a) 14,294
PSA Peugeot Citroen........................... 200 22,614
Pathe......................................... 10 1,792
Promodes...................................... 95 30,893
Rhone-Poulenc................................. 1,336 58,182
SEFIMEG....................................... 100 6,061
SEITA......................................... 280 8,921
Sagem ........................................ 50 23,359
Salomon....................................... 222 19,759
Sanofi........................................ 429 40,708
Sidel......................................... 212 11,894
Suez Lyonnaise des Eaux....................... 428 44,393
Thomson CSF................................... 869 23,188
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
France (continued) Total B....................................... 12 $ 1,330
Unibail....................................... 85 8,036
Union Immobiliere de France................... 150 10,831
Worms et Compagnie............................ 243 20,828
-----------
1,003,899
-----------
Germany--2.9% AGIV.......................................... 630(a) 13,146
Allianz....................................... 300 66,775
Axa Colonia Konzern........................... 70 6,066
BASF.......................................... 980 33,231
Bayer......................................... 1,000 35,068
Bilfinger & Berger Bau........................ 220 7,894
Brau Und Brunnen.............................. 50(a) 4,260
Continental................................... 600 14,294
Daimler-Benz.................................. 750 50,212
Dresdner Bank................................. 1,260 51,490
Linde......................................... 40 24,113
Muenchener Rueckvesicherungs-Gesellschafts.... 100 29,098
RWE Aktiengesellschaft........................ 1,180 51,162
Schering...................................... 210 20,340
Siemens....................................... 860 52,890
-----------
460,039
-----------
Hong Kong--3.6% Cheung Kong (Holdings)........................ 21,000 146,022
China Light & Power........................... 8,740 46,018
HSBC Holdings................................. 3,042 68,868
Hang Seng Bank................................ 3,400 29,579
Hong Kong & China Gas......................... 49,944 94,331
Hong Kong Telecommunications.................. 23,218 44,454
Shangri-La Asia............................... 42,000 31,242
South China Morning Post(Holdings)............ 82,000 71,074
Sun Hung Kai Properties....................... 4,220 31,118
-----------
562,706
-----------
Italy--3.6% Assicurazioni Generali........................ 2,320 51,799
Banca Commerciale Italiana.................... 22,012 60,354
ENI........................................... 15,400 87,042
Fiat.......................................... 22,000 69,795
Italgas....................................... 22,501 81,073
Mediobanca.................................... 10,000 67,962
Telecom Italia................................ 5,930 37,093
Telecom Italia Mobile......................... 30,680 113,261
-----------
568,379
-----------
Japan--29.9% Ajinomoto..................................... 20,800 188,415
Asahi Chemical Industry....................... 49,900 227,251
Asahi Glass................................... 800 5,385
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
Japan (continued) Bank of Tokyo-Mitsubishi...................... 2,620 $ 34,184
Bridgestone................................... 400 8,643
Canon ........................................ 2,100 50,960
Chudenko...................................... 200 4,870
Chugai Pharmaceutical......................... 400 3,214
Dai-Ichi Kango Bank........................... 210 1,780
Dai Nippon Printing........................... 800 15,956
Daido Steel................................... 200 402
Daikyo........................................ 2,000 3,822
Daishowa Paper Manufacturing.................. 400(a) 2,343
Daiwa House Industry.......................... 8,400 80,977
Denki Kagaku Kougyo........................... 600 1,136
Fuji Bank..................................... 4,900 42,350
Fuji Photo Film............................... 200 7,247
Fujita........................................ 5,000 3,947
Fujitsu....................................... 15,800 173,323
Furukawa Electric............................. 9,000 46,372
Haseko........................................ 12,000(a) 12,466
Hitachi....................................... 13,900 106,852
Honda Motor................................... 400 13,463
House Food Industrial......................... 220 3,785
Industrial Bank of Japan...................... 2,200 21,757
Itochu........................................ 1,500 5,148
Japan Airlines................................ 3,600(a) 13,044
Japan Energy.................................. 600 897
Joyo Bank..................................... 462 2,119
Kajima........................................ 800 3,583
Kamigumi...................................... 400 1,812
Kandenko...................................... 105 711
Kansai Electric Power......................... 9,999 176,996
Kawasaki Steel................................ 16,600 29,108
Kinki Nippon Railway.......................... 995 5,648
Kirin Brewery................................. 7,000 58,755
Komatsu....................................... 600 3,206
Konica........................................ 18,000 89,753
Kumagai-Gumi.................................. 27,000 26,477
Kyocera....................................... 1,200 68,711
Kyushu Electric Power......................... 1 17
Maeda Road Construction....................... 200 1,198
Marubeni...................................... 40,000 124,990
Marudai Food.................................. 200(a) 522
Maruha........................................ 400 698
Marui......................................... 3,000 50,611
Matsushita Electric Industrial................ 10,400 174,587
Mitsubishi Chemical........................... 200 450
Mitsubishi Heavy Industries................... 44,700 219,544
Mitsubishi Trust & Banking.................... 200 2,460
Mitsui & Company.............................. 400 3,035
Mitsui Marine & Fire Insurance................ 600 3,530
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
Japan (continued) Mitsui Trust & Banking........................ 600 $ 2,084
NEC........................................... 800 8,776
Nikon......................................... 5,600 62,362
Nippon Express................................ 8,000 43,082
Nippon Fire & Marine Insurance................ 28,000 107,970
Nippon Light Metal............................ 400 927
Nippon Oil.................................... 800 3,278
Nippon Steel.................................. 5,100 10,511
Nippon Yusen Kaisha........................... 10,800 39,402
Nomura Securities............................. 4,000 46,539
Oji Paper..................................... 30,000 152,082
Orient........................................ 21,000 52,007
Orix.......................................... 1,000 68,312
Osaka Gas..................................... 45,000 99,476
Sakura Bank................................... 28,600 116,701
Sanwa Shutter................................. 200 1,257
Sekisui House................................. 12,000 102,718
Seven-Eleven Japan NPV........................ 119 8,901
Sharp......................................... 8,000 62,162
Shizuoka Bank................................. 400 4,056
Snow Brand Milk Products...................... 500 1,911
Sony.......................................... 940 78,040
Sumitomo Bank................................. 14,307 152,189
Sumitomo Electric Industries.................. 800 10,571
Sumitomo Metal Industries..................... 40,000 80,113
Sumitomo Trust & Banking...................... 850 6,478
Takara Standard............................... 12,000 74,994
Takeda Chemical Industries.................... 1,000 27,258
Tokai Bank.................................... 6,800 39,671
Tokio Marine & Fire Insurance................. 800 7,978
Tokyo Broadcasting System..................... 6,000 102,717
Tokyo Electric Power.......................... 1,272 24,313
Tokyo Gas..................................... 35,000 80,279
Tokyu......................................... 5,820 24,187
Toppan Printing............................... 12,000 150,586
Toray Industries.............................. 21,000 116,928
Toyo Engineering.............................. 5,000 12,590
Toyobo........................................ 1,200 2,154
Toyota Motor.................................. 18,014 501,514
Ube Industries................................ 600 1,207
Yakult Honsha................................. 200 1,660
Yamato Transport.............................. 400 5,086
Yasuda Trust & Banking........................ 23,000 61,356
Yokogawa Electric............................. 2,900 18,437
-----------
4,703,330
-----------
Malaysia--.9% Amsteel....................................... 85,000 27,452
Kemayan....................................... 3,000 1,139
Malayan Banking............................... 7,000 27,004
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
Malaysia (continued) Perusahaan Otomobil Nasional.................. 9,000 $ 21,531
Resorts World................................. 23,000 40,924
Technology Resources Industries............... 1,000 969
Telekom Malaysia.............................. 6,000 15,521
2,153
-----------
136,693
-----------
New Zealand--.4% Fisher & Paykel Industries.................... 18,750 59,498
-----------
Norway--.3% Aker RGI ASA, Series A........................ 2,040 37,492
Aker RGI ASA, Series B........................ 408 6,685
-----------
44,177
-----------
Singapore--1.2% Development Bank of Singapore................. 2,000 18,696
Keppel........................................ 12,500 39,587
Oversea-Chinese Banking....................... 4,800 26,709
Singapore Airlines............................ 9,000 67,536
United Overseas Bank.......................... 5,000 27,663
-----------
180,191
-----------
Spain--3.0% Banco Bilbao Vizcaya.......................... 4,916 131,188
Endesa........................................ 5,600 105,262
Fomento de Construcciones y Contratas......... 1,300 47,712
Repsol........................................ 1,100 46,031
Telefonica de Espana.......................... 4,893 133,259
-----------
463,452
-----------
Sweden--2.9% ABB AB, Series B.............................. 11,142 128,402
Astra, Series A............................... 1,333 21,488
Astra, Series B............................... 5,333 82,418
Esselte, Series B............................. 2,815 61,130
Skandinaviska Enskilda Banken................. 1,700 18,345
Stora Kopparbergs Bergslags Aktiebolag........ 1,000 13,789
Svenska Handelsbanken......................... 600 18,945
Telefonaktiebolget LM Ericsson, Series B...... 2,600 114,309
-----------
458,826
-----------
Switzerland--14.1% ABB........................................... 63 82,166
Adecco........................................ 83 26,415
Alusuisse-Lonza Holding (Bearer Shrs)......... 16 14,285
Alusuisse-Lonza Holding (Regd Shrs)........... 5 4,437
Credit Suisse Group........................... 995 140,311
Danzas Holding................................ 100 20,010
Holderbank Financiere Glarus (Bearer Shrs).... 20 16,112
Holderbank Financiere Glarus (Regd Shrs)...... 22 3,873
Jelmoli Holding............................... 2 1,760
Kuoni Reisen.................................. 1 3,791
Nestle........................................ 204 287,709
Novartis (Bearer Shrs)........................ 50 78,896
Novartis (Regd Shrs).......................... 326 511,040
Roche Holding................................. 36 316,573
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
Switzerland (continued) Roche Holding (Bearer Shrs)................... 8 $ 119,081
SGS Societe Generale de Surveillance Holding.. 2 3,978
SMH (Bearer Shs).............................. 92 12,093
SMH (Regd Shs)................................ 13 7,277
Sairgroup..................................... 12(a) 16,098
Schindler Holding............................. 33 36,436
Schweizerische Bankverein..................... 403 108,407
Schweizerische Rueckversicherungs Gesellschaft 90 135,646
Sulzer........................................ 13 9,508
UBS (Bearer Shs).............................. 121 139,393
UBS(Regd Shs)................................. 90 20,775
Valora Holding................................ 9 1,932
Zurich Verischerungs-Gesellschafts............ 228 94,200
-----------
2,212,202
-----------
United Kingdom--6.3% Allied Irish Banks............................ 11,624 97,653
Arjo Wiggins Appleton......................... 1,933 5,823
B.A.T. Industries............................. 5,000 43,637
BTR........................................... 1,740 5,860
Barclays...................................... 4,281 106,962
Bass.......................................... 400 5,543
British Aerospace............................. 653 17,288
British Airways............................... 510 4,967
British Petroleum............................. 2,059 30,185
British Sky Broadcasting Group................ 980 6,937
British Steel................................. 3,763 9,950
British Telecommunications.................... 9,056 68,653
Cable & Wireless.............................. 550 4,381
Dawson International.......................... 6,075 7,320
Energy Group.................................. 1,333 13,552
Glaxo Wellcome................................ 3,335 71,327
Grand Metropolitan............................ 739 6,654
HSBC Holdings................................. 270 6,710
HSBC Holdings Group........................... 800 18,743
Hanson........................................ 1,667 8,551
Harrisons & Crosfield......................... 8,008 16,953
Imperial Chemical Industries.................. 2,142 31,545
Imperial Tobacco.............................. 1,333 8,053
Kwik Save..................................... 1,275 6,657
Legal & General............................... 7,985 66,146
Lloyds TSB.................................... 1,560 19,449
LucasVarity................................... 1,800 6,160
Marks & Spencer............................... 1,000 10,125
Meyer International........................... 2,343 14,684
National Westminster Bank..................... 2,932 42,050
Northern Foods................................ 6,149 23,771
Rank.......................................... 980 5,461
Redland....................................... 434 2,469
Reuters Holding............................... 700 7,579
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C> <C>
United Kingdom (continued) Rio Tinto..................................... 340 $ 4,370
Royal Bank of Scotland........................ 4,100 43,364
Sears......................................... 5,350 5,372
Sedgwick...................................... 4,166 8,715
SmithKline Beecham............................ 6,284 59,417
Southern Electric............................. 1,922 14,764
Tesco......................................... 116 926
Unigate....................................... 3,984 38,203
Vodafone...................................... 1,120 6,092
Wilson Connelley Holdings..................... 2,180 6,111
Wolseley...................................... 375 3,117
-----------
992,249
-----------
TOTAL COMMON STOCKS
(cost $12,796,953)......................... $12,385,582
===========
Preferred Stocks--.1%
- -------------------------------------------------------------------------------
Germany; Friedrich Grohe
(cost $11,857)............................. 40 $ 11,801
===========
Principal
Short-Term Investments--17.0% Amount
- -------------------------------------------------------------------------------- ----------------
Commercial Paper--10.0% Ford Motor Credit Corp.,
5.66%, 11/3/1997........................... $ 1,577,000 $ 1,577,000
-----------
Repurchase Agreements--5.1% UBS Securities Inc.,
Tri-Party Repurchase Agreement, 5.66% dated
10/31/1997 to be repurchased at
$800,377 on 11/3/1997 collateralized by
$845,000 U.S. Treasury Bills, due 5/28/1998 800,000 800,000
-----------
U.S. Treasury Bills--1.9% 4.95%, 12/11/1997............................. 300,000(b) 298,374
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,675,432).......................... $ 2,675,374
===========
TOTAL INVESTMENTS (cost $15,484,242)........................................... 96.0% $15,072,757
====== ===========
CASH AND RECEIVABLES (NET)..................................................... 4.0% $ 634,054
====== ===========
NET ASSETS..................................................................... 100.0% $15,706,811
====== ===========
<FN>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Held by the custodian in a segregated account as collateral for open
futures positions.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Financial Futures October 31, 1997
<TABLE>
<CAPTION>
Market Value Unrealized
Covered (Depreciation)
Financial Futures Long: Contracts by Contracts Expiration at 10/31/97
- ----------------------- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Australian All Ordinaries........................ 3 $ 132,633 December '97 $ (11,745)
CAC 40........................................... 1 91,940 December '97 (10,372)
Deutsche Akteinindex............................. 4 859,091 December '97 (34,692)
Financial Times Index 100........................ 7 1,359,359 December '97 (66,459)
Nikkei 300....................................... 38 822,144 December '97 (133,100)
---------
$(256,368)
---------
---------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1997
<TABLE>
<CAPTION>
Cost Value
------------ -----------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $15,484,242 $15,072,757
Cash............................................. 21,544
Cash denominated in foreign currencies........... 47,792 48,964
Receivable for investment securities sold........ 661,750
Dividends and interest receivable................ 45,906
Receivable for futures variation margin--Note 1(d) 26,574
Net unrealized appreciation on forward
currency exchange contracts--Note 1(e)......... 17,497
Receivable for shares of Capital Stock subscribed 500
-----------
15,895,492
-----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 19,104
Due to Distributor............................... 11
Payable for investment securities purchased...... 169,566
-----------
188,681
-----------
NET ASSETS..................................................................... $15,706,811
-----------
-----------
REPRESENTED BY: Paid-in capital.................................. $14,387,112
Accumulated undistributed investment income--net. 436,844
Accumulated net realized gain (loss) on investments
and foreign currency transactions.............. 1,532,115
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions
[including ($256,368) net unrealized
(depreciation) on financial futures]........... (649,260)
-----------
NET ASSETS..................................................................... $15,706,811
-----------
-----------
NET ASSET VALUE PER SHARE
-------------------------
Investor Restricted
Shares Shares
------------ ------------
Net Assets..................................................................... $1,374,793 $14,332,018
Shares Outstanding............................................................. 129,141 1,345,908
NET ASSET VALUE PER SHARE...................................................... $10.65 $10.65
------ ------
------ ------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Operations Year Ended October 31, 1997
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends (net of $38,403 foreign taxes
withheld at source)...................... $ 242,272
Interest................................... 152,513
----------
Total Income............................. $ 394,785
EXPENSES: Management fee--Note 2(a).................. 235,093
Distribution fees (Investor Shares)--Note 2(b) 3,694
Loan commitment fees--Note 4............... 216
----------
Total Expenses........................... 239,003
----------
INVESTMENT INCOME--NET................................................... 155,782
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments
and foreign currency transactions ....... $1,045,481
Net realized gain (loss) on forward
currency exchange contracts ............. 265,252
Net realized gain (loss) on financial futures 687,220
----------
Net Realized Gain (Loss)................. 1,997,953
Net unrealized appreciation (depreciation)
on investments and foreign currency transactions
[including ($315,971) net unrealized (depreciation)
on financial futures].................... (1,612,261)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 385,692
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 541,474
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997(1) October 31, 1996(2)
------------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income--net...................................................... $ 155,782 $ 56,197
Net realized gain (loss) on investments..................................... 1,997,953 1,301,020
Net unrealized appreciation (depreciation) on investments................... (1,612,261) 864,038
------------ -----------
Net Increase (Decrease) in Net Assets Resulting from Operations......... 541,474 2,221,255
------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Investor shares........................................................... (1,303) (24,383)
Restricted shares......................................................... (63,926) (116,090)
Net realized gain on investments:
Investor shares........................................................... (79,359) (73,149)
Restricted shares......................................................... (1,024,490) (241,414)
------------ -----------
Total Dividends......................................................... (1,169,078) (455,036)
------------ -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor shares........................................................... 2,811,365 4,048,327
Restricted shares......................................................... 9,293,479 5,893,163
Dividends reinvested:
Investor shares........................................................... 80,167 92,802
Restricted shares......................................................... 1,051,195 325,030
Cost of shares redeemed:
Investor shares........................................................... (3,050,913) (7,131,303)
Restricted shares......................................................... (14,113,892) (1,993,211)
------------ -----------
Increase (Decrease) in Net Assets from Capital Stock Transactions....... (3,928,599) 1,234,808
------------ -----------
Total Increase (Decrease) in Net Assets............................... (4,556,203) 3,001,027
NET ASSETS:
Beginning of Period......................................................... 20,263,014 17,261,987
------------ -----------
End of Period............................................................... $ 15,706,811 $20,263,014
------------ -----------
------------ -----------
Undistributed investment income--net.......................................... $ 436,844 $ 346,291
------------ -----------
Shares Shares
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Investor Shares
---------------
Shares sold................................................................. 253,136 366,693
Shares issued for dividends reinvested...................................... 7,577 9,080
Shares redeemed............................................................. (271,952) (639,858)
------------ -----------
Net Increase (Decrease) in Shares Outstanding........................... (11,239) (264,085)
------------ -----------
------------ -----------
Restricted Shares
-----------------
Shares sold................................................................. 827,587 529,510
Shares issued for dividends reinvested...................................... 99,545 31,835
Shares redeemed............................................................. (1,262,421) (182,281)
------------ -----------
Net Increase (Decrease) in Shares Outstanding........................... (335,289) 379,064
------------ -----------
------------ -----------
<FN>
- --------------
(1) Effective August 15, 1997, Institutional Class shares were redesignated as
Investor shares and Retail Class shares were redesignated as Restricted
shares.
(2) Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares and CLass R shares were redesignated as Retail shares.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Investor Shares
---------------------------------------------
Year Ended October 31,
---------------------------------------------
PER SHARE DATA: 1997(1) 1996(2) 1995 1994(3,4)
------- ------- ------ ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................... $11.12 $10.11 $10.06 $10.00
------ ------ ------ ------
Investment Operations:
Investment income (loss)--net.............................. .05 (.12) .01 .01
Net realized and unrealized gain (loss) on investments..... .10 1.37 .06 .05
------ ------ ------ ------
Total from Investment Operations........................... .15 1.25 .07 .06
------ ------ ------ ------
Distributions:
Dividends from investment income--net...................... (.01) (.06) (.02) --
Dividends from net realized gain on investments............ (.61) (.18) -- --
------ ------ ------ ------
Total Distributions........................................ (.62) (.24) (.02) --
------ ------ ------ ------
Net asset value, end of period............................. $10.65 $11.12 $10.11 $10.06
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN....................................... 1.38% 12.62% .67% .60%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... 1.50% 1.71% 1.75% .39%(5)
Ratio of net investment income to average net assets....... .62% .03% .04% .44%(5)
Portfolio Turnover Rate.................................... 7.39% 34.24% 64.85% --
Average commission rate paid(6)............................ $.0287 $.0219 -- --
Net Assets, end of period (000's Omitted).................. $1,375 $1,561 $4,088 $71
<FN>
- --------------
(1) Effective August 15, 1997, Institutional Class shares were redesignated as
Investor shares.
(2) Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares.
(3) The Fund commenced operations on August 12, 1994.
(4) 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.
(5) Not annualized.
(6) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and
sales of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Financial Highlights (continued)
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Restricted Shares
----------------------------------------------
Year Ended October 31,
----------------------------------------------
PER SHARE DATA: 1997(1) 1996(2) 1995 1994(3,4,5)
------- ------- ------ -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period...................... $11.12 $10.12 $10.06 $10.00
------ ------ ------ ------
Investment Operations:
Investment income--net.................................... .10 .04 .06 .02
Net realized and unrealized gain (loss) on investments.... .08 1.23 .02 .04
------ ------ ------ ------
Total from Investment Operations.......................... .18 1.27 .08 .06
------ ------ ------ ------
Distributions:
Dividends from investment income--net..................... (.04) (.09) (.02) --
Dividends from net realized gain on investments........... (.61) (.18) -- --
------ ------ ------ ------
Total Distributions....................................... (.65) (.27) (.02) --
------ ------ ------ ------
Net asset value, end of period............................ $10.65 $11.12 $10.12 $10.06
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN...................................... 1.64% 12.80% .81% .60%(6)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................... 1.25% 1.43% 1.50% .33%(6)
Ratio of net investment income to average net assets...... .86% .36% .52% .49%(6)
Portfolio Turnover Rate................................... 7.39% 34.24% 64.85% --
Average commission rate paid(7)........................... $.0287 $.0219 -- --
Net Assets, end of period (000's Omitted)................. $14,332 $18,702 $13,174 $11,844
<FN>
- ------------
(1) Effective August 15, 1997, Retail Class shares were redesignated as
Restricted shares.
(2) Effective July 15, 1996, Class R shares were redesignated as Retail shares.
(3) The Fund commenced operations on August 12, 1994.
(4) 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.
(5) Effective October 17, 1994, the Fund's Trust shares were redesignated as
Class R shares.
(6) Not annualized.
(7) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and
sales of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus International Equity Allocation 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
exceed the total return of the Morgan Stanley Capital International-Europe
Australia Far East (MSCI EAFE) Index. The Dreyfus Corporation ("Manager")
serves as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A. ("Mellon Bank") 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. Effective August 15, 1997, Institutional shares were
redesignated as Investor shares and Retail shares were redesignated as
Restricted shares. The Fund is authorized to issue 60 million of $.001 par value
Capital Stock. The Fund currently offers two classes of shares: Investor (24
million shares authorized) and Restricted (36 million shares authorized).
Restricted shares are offered to any investor and Investor shares are offered
only to clients of banks, securities brokers or dealers and other financial
institutions (collectively, Service Agents) that have entered into selling
agreements with the Distributor. Other differences between the two classes
include the services offered to and the expenses borne by each class.
As of October 31, 1997, MBIC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 545,895 shares of the Funds Restricted class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked priced is used for valuation purposes. Bid
price is used when no asked price is available. Investments denominated in
foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the forward rate.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(C) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in the market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions, the difference between the amount of
dividends,
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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.
(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 depreciation are set forth in the Statement of Financial Futures.
(E) FORWARD CURRENCY EXCHANGE CONTRACTS: The Fund enters into forward
currency exchange contracts in order to hedge its exposure to changes in foreign
currency exchange rates on its foreign portfolio holdings and to settle foreign
currency transactions. When executing forward currency exchange contracts, the
Fund is obligated to buy or sell a foreign currency at a specified rate on a
certain date in the future. With respect to sales of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract increases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
decreases between those dates. With respect to purchases of forward currency
exchange contracts, the Fund would incur a loss if the value of the contract
decreases between the date the forward contract is opened and the date the
forward contract is closed. The Fund realizes a gain if the value of the
contract increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency exchange
contracts which is typically limited to the unrealized gain on each open
contract. In addition, the following summarizes open forward currency exchange
contracts at October 31, 1997:
<TABLE>
<CAPTION>
Foreign Unrealized
Currency Appreciation
Forward Currency Exchange Contracts Amounts Proceeds Value (Depreciation)
- ----------------------------------- -------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sales:
- ------
Japanese Yen, expiring 12/18/97.................. 203,035,700 $1,695,780 $1,697,907 $ (2,127)
Swiss Francs, expiring 12/23/97.................. 2,380,400 1,658,237 1,710,176 (51,939)
Purchases: Cost
- ---------- --------------
Australian Dollars, expiring 1/5/98.............. 200,950 144,870 141,333 (3,537)
British Pounds, expiring 12/23/97................ 884,450 1,421,717 1,477,031 55,314
French Francs, expiring 1/5/98................... 607,500 102,949 105,586 2,637
German Deutschmarks, expiring 12/23/97........... 1,569,800 895,838 912,987 17,149
-------
TOTAL......................................... $17,497
-------
-------
</TABLE>
(F) DISTRIBUTIONS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, it is the policy of the
Fund not to distribute such gain.
(G) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $949,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1997. The amount
of this loss which can be utilized in subsequent years is subject to an annual
limitation due to the Fund's merger with Dreyfus Laurel International Fund. If
not applied, $922,000 of the carryover expires in fiscal 2000 and $27,000
expires in fiscal 2002.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. The Manager also directs
the investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.25% of the value of the Fund's average daily net assets. 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,
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.
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 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 the average daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation, an affiliate of the
Manager, for shareholder servicing activities and the Distributor for activities
primarily intended to result in the sale of Investor shares. The Restricted
shares bear no distribution fee. During the period ended October 31, 1997, the
Fund was charged $3,694 for the Investor shares pursuant to the 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.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, financial futures and forward currency exchange
contracts, during the period ended October 31, 1997, amounted to $1,146,925 and
5,380,159, respectively.
At October 31, 1997, accumulated net unrealized depreciation on investments,
financial futures and forward currency exchange contracts was $650,356,
consisting of $2,340,506 gross unrealized appreciation and $2,990,862 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 International Equity Allocation Fund
- --------------------------------------------------------------------------------
Independent Auditors' Report
THE BOARD OF DIRECTORS AND SHAREHOLDERS
THE DREYFUS/LAUREL FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments and statement of financial futures, of
Dreyfus International Equity Allocation Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 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 International Equity Allocation 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
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------------
Important Tax Information (Unaudited)
In accordance with Federal tax law, the Fund elects to provide each
shareholder with their portion of the Fund's foreign taxes paid and the income
sourced from foreign countries. Accordingly, the Fund hereby makes the following
designations regarding its fiscal year ended October 31, 1997:
-- the total amount of taxes paid to foreign countries was $38,403.
-- the total amount of income sourced from foreign countries was $162,308.
As required by Federal tax law rules, shareholders will receive notification
of their proportionate share of foreign taxes paid and foreign sourced income
for the 1997 calendar year with Form 1099-DIV which will be mailed by January
31, 1998. For Federal tax purposes the Fund hereby designates $.249 per share as
a long-term capital gain distribution paid on December 18, 1996.
<PAGE>
Dreyfus International Equity
Allocation Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02109
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 323/723AR9710
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
INTERNATIONAL EQUITY ALLOCATION FUND INVESTOR SHARES AND
RESTRICTED SHARES AND THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, FAR EAST (EAFE(R)) INDEX
EXHIBIT A:
MORGAN
DREYFUS DREYFUS STANLEY
INTERNATIONAL INTERNATIONAL CAPITAL
EQUITY EQUITY INTERNATIONAL
ALLOCATION ALLOCATION EUROPE,
FUND FUND AUSTRALASIA,
PERIOD (INVESTOR (RESTRICTED FAR EAST
SHARES) SHARES) (EAFE(R)) INDEX*
9/15/94 10,000 10,000 10,000
10/31/94 10,060 10,060 10,008
10/31/95 10,128 10,142 9,971
10/31/96 11,405 11,440 11,014
10/31/97 11,562 11,628 11,524
* Source: Lipper Analytical Services, Inc.
