<PAGE>
Annual Report
- -------------------------------------------------------------------------------
Dreyfus Premier
Small Company
Stock Fund
- -------------------------------------------------------------------------------
October 31, 1997
[LOGO]
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for Dreyfus Premier Small Company
Stock Fund for the 12-month reporting period ended October 31, 1997, as shown in
the following table:
Total Return*
____________
Class A 30.73%
Class B 29.72%
Class C 29.79%
Class R 31.04%
Russell 2500 Index** 29.12%
The total return of each class of the Fund exceeded the total return of the
Russell 2500 Index, the Fund's benchmark, for the same time period, not taking
into account the maximum front-end sales load applicable to Class A shares or
the contingent deferred sales charge applicable to Class B and Class C shares.
(The difference in performance among the Fund's share classes is attributable to
differences in fees and expenses.)
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 (the "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
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 Standard & Poor's 500 Composite Stock Price Index (the "S&P
500 Index") 29.96%, the Nasdaq Composite 30.43%, the Russell 2000 Index 27.52%
and the Russell 2500 Index 29.12%. These were the gains after the drop that
occurred in the last week in October, and before counting the rebounds that
occurred in the first week of November.
<PAGE>
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 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 fell 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 the market averages.
Portfolio Focus
Since our April 30, 1997 semi-annual report, the Fund's performance has been
strong compared to its Russell 2500 benchmark and compared to larger cap stocks
as measured by the S&P 500 Index.
For the six months ended October 31, 1997, the Fund's R shares produced a
total return of 25.90% compared to 24.14% for the Russell 2500 Index. That
showing was significantly better than the Class R shares' 4.08% increase in the
first half of the 1997 fiscal year. Small to midcap stocks outperformed large
stocks as the S&P 500 Index rose 15.16% for the six months ended October 31.
(See the table in our opening paragraph for the annual figures. The S&P 500
Index had a total return for the annual period of 32.10%, outperforming the
Russell 2500 Index and each of the Fund's share classes.)
There were several reasons for the Fund's strong performance in the second
half of its fiscal year.
First, smaller cap earnings generally exceeded expectations. This occurred at
the same time that earnings for the companies included within the S&P 500 Index
grew more slowly. A strong U.S. dollar hurt foreign sales and restructuring
benefits for many companies seemed to have peaked. Smaller cap companies
continued to grow faster than larger cap companies in the third calendar quarter
as the Southeast Asian currency turmoil started to inflict its damage on many
multinationals.
Second, the "Taxpayer Relief Act of 1997" this past June lowered the capital
gains tax rate on securities from 28% to 20%. Lower capital gains taxes
traditionally benefit high growth companies. Dividends and regular income are
now taxed up to nearly twice the capital gains rate, which is the largest tax
differential between a capital gain and a dividend in nearly twenty years.
<PAGE>
Second, smaller cap stocks were selling at relatively low valuation levels
this spring following a year of considerable underperformance compared to the
S&P 500 Index. Such underperformance and attractive valuations could not endure
with the previously mentioned profits improvement.
In this favorable environment, our portfolio was able to fully participate in
the smaller cap rally and outperform its benchmark.
Diversification enhanced performance as some of our best performing stocks
included Morningstar Group, Chancellor Media, Cl.A, General Nutrition and CMAC
Investment, representing several portfolio sectors and industries. Oil service
was a particularly rewarding sector. That industry contributed nearly 200 basis
points of positive performance to the portfolio. Noble Drilling, Nabors
Industries and Smith International were outstanding performers all year and were
beneficiaries of a strong pickup in domestic drilling activities.
Takeovers and mergers continued to contribute meaningfully to overall
performance. Besides the previously mentioned Morningstar Group, which will be
acquired by Suiza Foods, RCSB Financial, ONBANCorp, USLIFE, AmeriSource Health,
Cl.A, Beacon Properties, Wyle Electronics, and Cairn Energy USA have been, or
are in the process of being, acquired by another company at a significant
premium to the prevailing stock price.
We finally eliminated the rest of our Tellabs position. It had been the
Fund's biggest winner over the last three years as it soared more than tenfold
from our original purchase price. At over $10 billion in market-capitalization,
the company was no longer appropriate for our portfolio.
Underperforming stocks were Chesapeake Energy, Komag, and Fila Holdings,
A.D.S. Chesapeake suffered from a write-down of its natural gas reserves and
Fila Holdings, A.D.S. was hurt by an unsuccessful athletic shoe line in a more
competitive market. Both issues were eliminated. Komag remains in our portfolio
for the time being as the slowdown in disk drive sales appears more
industry-related than company-specific.
We are optimistic that smaller cap issues will continue to fare well compared
to large cap issues and that our disciplined investment process can continue to
serve our shareholders well. We believe that unless there is a sudden economic
slowdown, smaller cap profits can still outpace those of large cap companies and
they are unlikely to be as buffeted by the problems in Southeast Asia and the
limitations of a stronger U.S. dollar. Moreover, we believe that stock price
valuations for our universe remain appealing relative to the large caps.
Sincerely,
Anthony J. Galise James C. Wadsworth
Portfolio Managers
November 18, 1997
Pittsburgh, PA
* Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B and Class C shares.
** Source: THE FRANK RUSSELL COMPANY--Reflects the reinvestment of income
dividends and where applicable capital gain distributions. The Russell 2500
Index is a widely accepted measure of small-cap stock performance.
<PAGE>
Dreyfus Premier Small Company Stock Fund October 31, 1997
- -------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER SMALL
COMPANY STOCK FUND CLASS A SHARES AND CLASS R SHARES AND THE RUSSELL 2500 INDEX
Dollars
$20,597
Dreyfus Premier Small
Company Stock Fund
(Class R Shares)
$19,275
Dreyfus Premier Small
Company Stock Fund
(Class A Shares)
$18,457
Russell 2500 Index*
[INSERT PLOT POINTS HERE!!!!]
*Source: The Frank Russell Company
Average Annual Total Returns
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
- -------------------------------------------------------------- -------------------------------------------------------------
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
Period Ended 10/31/97 Sales Charge Sales Charge (5.75%) Period Ended 10/31/97 Redemption Redemption*
- --------------------- --------------- -------------------- --------------------- ------------ ---------------------
<C> <C> <C> <C> <C> <C>
1 Year 30.73% 23.24% 1 Year 29.72% 25.72%
From Inception (9/2/94) 25.41 23.08 From Inception (12/19/94) 29.67 29.03
<CAPTION>
Class C Shares Class R Shares
- -------------------------------------------------------------- -------------------------------------------------------------
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming No Charge Upon
Period Ended 10/31/97 Redemption Redemption** Period Ended 10/31/97
- --------------------- --------------- -------------------- ---------------------
<C> <C> <C> <C> <C>
1 Year 29.79% 28.79% 1 Year 31.04%
From Inception (12/19/94) 29.70 29.70 From Inception (9/2/94) 25.69
<FN>
- -----------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A
shares and Class R shares of Dreyfus Premier Small Company Stock Fund on 9/2/94
(Inception Date) to a $10,000 investment made in the Russell 2500 Index on that
date. For comparative purposes, the value of the Index on 8/31/94 is used as the
beginning value on 9/2/94. All dividends and capital gain distributions are
reinvested. Performance for Class B and Class C shares will vary from the
performance of both Class A and Class R shares shown above due to differences in
charges and expenses.
The Fund's performance shown in the line graph takes into account the
maximum initial sales charge on Class A shares and all other applicable fees and
expenses on Class A and Class R shares. The Russell 2500 Index is an unmanaged
index and is composed of the 2,500 smallest companies in the Russell 3000 Index.
The Russell 3000 Index is composed of 3,000 of the largest U.S. companies by
market capitalization. The Index does not take into account charges, fees and
other expenses. Further information relating to Fund performance, including
expense reimbursements, if applicable, is contained in the Financial Highlights
section of the Prospectus and elsewhere in this report.
* The maximum contingent deferred sales charge for Class B shares is 4% and
is reduced to 0% after six years.
** The maximum contingent deferred sales charge for Class C shares is 1%
for shares redeemed within one year of the date of purchase.
</TABLE>
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Statement of Investments October 31, 1997
<TABLE>
<CAPTION>
Common Stocks--97.6% Shares Value
- ------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Basic Industries--6.1% ACX Technologies.............................. 62,350(a) $ 1,640,584
American Building............................. 23,910(a) 669,480
AptarGroup.................................... 24,910 1,368,493
Cabot......................................... 66,680 1,637,828
Caraustar Industries.......................... 34,770 1,195,219
Clayton Homes................................. 91,066 1,496,897
Cytec Industries.............................. 52,190(a) 2,544,263
Jacobs Engineering Group...................... 27,580(a) 744,660
Medusa........................................ 30,340 1,281,865
Potash Saskatchewan........................... 26,907 2,204,692
Triangle Pacific.............................. 29,740(a) 973,985
Unisource Worldwide........................... 71,700 1,169,606
------------
16,927,572
------------
Capital Spending--24.2% AGCO ........................................ 73,560 2,133,240
Adaptec....................................... 51,290(a) 2,484,359
Altron........................................ 52,360(a) 831,215
Analysts International........................ 24,820 1,120,003
Atmel......................................... 63,590(a) 1,645,391
CIDCO ........................................ 65,400(a) 1,218,075
Cognex........................................ 36,940(a) 988,145
Cognos........................................ 59,600(a) 1,363,350
DT Industries................................. 34,500 1,035,000
Dallas Semiconductor.......................... 37,640 1,839,655
Duke Realty Investments....................... 59,900 1,347,750
ECI Telecommunications........................ 47,380 1,308,873
ENCAD ........................................ 50,500(a) 1,641,250
Electroglas................................... 59,970(a) 1,139,430
Electronics For Imaging....................... 61,300(a) 2,865,775
Galilieo International........................ 57,000(a) 1,432,125
Glenayre Technologies......................... 63,800(a) 829,400
Hadco......................................... 37,240(a) 2,062,165
HealthCare COMPARE............................ 38,000(a) 2,042,500
Hummingbird Communications.................... 49,810(a) 1,780,708
Intuit........................................ 61,000(a) 1,990,125
Kennametal.................................... 36,370 1,763,945
Komag ........................................ 71,500(a) 1,237,844
Mutual Risk Management........................ 103,260 2,678,306
Olsten........................................ 94,500 1,441,125
Pittston Brinks Group......................... 60,110 2,171,473
Plantronics................................... 48,920(a) 1,803,925
Regis......................................... 44,710 1,073,040
Rental Service............................... 44,800(a) 1,198,400
Rohr.......................................... 45,230(a) 1,371,034
Silicon Valley Group.......................... 88,130(a) 2,533,738
Sirrom Capital................................ 50,660 2,551,998
Sotheby's Holdings, Cl. A..................... 73,610 1,380,187
Sterling Commerce............................. 52,460(a) 1,741,016
</TABLE>
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Capital Spending (continued) Sterling Software............................. 52,810(a) $ 1,802,141
SunGuard Data Systems......................... 95,460(a) 2,255,243
Tech Data..................................... 58,490(a) 2,602,805
Thiokol....................................... 12,090 1,106,991
Waters........................................ 36,200(a) 1,592,800
Zebra Technologies, Cl. A..................... 50,390(a) 1,574,687
------------
66,979,232
------------
Consumer Cyclical--15.0% Apple South................................... 39,600 737,550
BJ's Wholesale Club........................... 48,130(a) 1,389,754
Borg-Warner Automotive........................ 24,940 1,359,230
Breed Technologies............................ 59,490 1,312,498
Cannondale.................................... 54,300(a) 1,201,387
Chancellor Media, Cl. A....................... 50,800(a) 2,787,650
CompUSA....................................... 75,700(a) 2,479,175
Devon Group................................... 31,160(a) 1,223,030
Ethan Allen Interiors......................... 37,400 1,325,363
Fingerhut Cos................................. 111,640 2,470,035
General Nutrition............................. 104,250(a) 3,283,875
Harman International.......................... 27,125 1,464,750
Interface, Cl. A.............................. 58,490 1,688,899
Interstate Hotels............................. 38,510(a) 1,184,182
Promus Hotel.................................. 38,200(a) 1,499,350
Regal Cinemas................................. 84,705(a) 1,948,215
Reynolds & Reynolds, Cl. A.................... 55,120 943,930
Richfood Holdings............................. 35,115 847,149
Ryan's Family Steak House..................... 147,920(a) 1,275,810
Speedway Motorsports.......................... 46,600(a) 1,115,487
Tommy Hilfiger................................ 29,440(a) 1,164,720
U.S. Industries............................... 51,850 1,393,468
U.S. Office Products.......................... 55,290(a) 1,727,813
Wallace Computer Services..................... 54,820 2,107,144
Warnaco Group, Cl. A.......................... 50,850 1,436,513
Zale.......................................... 77,890(a) 1,966,723
------------
41,333,700
------------
Consumer Staples--3.3% Central Garden & Pet.......................... 60,100(a) 1,577,625
Consolidated Cigar Holdings, Cl. A............ 47,200(a) 1,852,600
Dial.......................................... 76,000 1,282,500
Morningstar Group............................. 63,220(a) 2,702,655
Robert Mondavi, Cl. A......................... 30,700(a) 1,559,944
------------
8,975,324
------------
Energy--8.1% Benton Oil & Gas.............................. 103,510(a) 2,083,139
Cairn Energy USA.............................. 70,940(a) 993,160
Devon Energy.................................. 42,600 1,906,350
Holly......................................... 28,240 748,360
</TABLE>
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Energy (continued) KN Energy..................................... 28,640 $ 1,245,840
Nabors Industries............................. 72,810(a) 2,994,311
Newfield Exploration.......................... 48,300(a) 1,310,138
Noble Drilling................................ 87,930(a) 3,127,011
Pacific Enterprises........................... 77,370 2,529,032
Smith International........................... 33,960(a) 2,589,450
Ultramar Diamond Shamrock..................... 52,400 1,617,850
WICOR ........................................ 29,940 1,291,162
------------
22,435,803
------------
Health Care--8.6% AmeriSource Health, Cl. A..................... 57,590(a) 3,419,406
ESC Medical Systems........................... 31,300(a) 1,228,525
Lincare Holdings.............................. 48,890(a) 2,621,726
Orthodontic Centers of America................ 112,000(a) 1,939,000
Physician Sales & Services.................... 111,700(a) 2,736,650
Prime Medical Services........................ 35,990(a) 476,868
Quorum Health Group........................... 73,650(a) 1,786,013
Safeskin...................................... 45,300(a) 2,055,487
Universal Health Services, Cl. B.............. 54,540(a) 2,403,169
Vencor........................................ 60,373(a) 1,630,071
Watson Pharmaceuticals........................ 111,460(a) 3,538,855
------------
23,835,770
------------
Interest Sensitive--19.8% AMBAC ........................................ 42,700 1,804,075
AMRESCO....................................... 70,540(a) 2,213,192
AmeriCredit................................... 37,100(a) 1,078,219
Amerin........................................ 50,900(a) 1,164,338
Bank United, Cl. A............................ 34,110 1,432,620
Beacon Properties............................. 42,725 1,799,791
CMAC Investment............................... 64,120 3,506,562
Cali Realty................................... 46,170 1,869,885
City National................................. 73,010 2,194,863
Cullen Frost Bankers.......................... 49,190 2,484,095
EVEREN Capital................................ 34,960 1,319,740
Edwards (A.G.)................................ 59,085 1,938,727
Equity Residential Properties Trust........... 34,040 1,719,020
FelCor Suite Hotels........................... 34,200 1,252,575
First Tennessee National...................... 34,960 2,014,570
Franchise Finance Corp. of America............ 45,830 1,182,987
Health Care Property Investors................ 37,850 1,452,494
Hibernia, Cl. A............................... 111,100 1,978,969
Highwoods Properties.......................... 39,900 1,376,550
Mid Ocean..................................... 33,110 2,148,011
Money Store................................... 91,670 2,601,136
ONBANCorp..................................... 36,070 2,342,296
Old Kent Financial............................ 32,324 2,040,452
Pacific Century Financial..................... 36,690 1,848,259
</TABLE>
<PAGE>
Dreyfus Premier Small Company Stock Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Interest Sensitive (continued) Pacific Gulf Properties....................... 65,800 $ 1,488,725
People's Bank................................. 45,960 1,505,190
Reliance Group Holdings....................... 117,370 1,481,796
Southern Pacific Funding...................... 45,700(a) 599,813
TCF Financial ................................ 34,500 1,962,187
United Cos. Financial......................... 39,140 990,731
Washington Federal............................ 60,529 1,785,605
------------
54,577,473
------------
Mining And Metals--3.5% Brush Wellman................................. 40,900 984,156
Cable Design Technologies..................... 33,110(a) 1,299,568
IMCO Recycling................................ 59,580 1,083,611
Philip Services............................... 184,250(a) 3,224,375
Titanium Metals............................... 54,600(a) 1,706,250
TubosDeAceroMex, A.D.R........................ 73,300(a) 1,479,744
------------
9,777,704
------------
Transportation--2.3% Air Express International..................... 35,965 1,101,428
America West Holdings, Cl. B.................. 119,540(a) 1,770,686
Illinois Central.............................. 40,950 1,458,844
Pittston Burlington Group..................... 36,570 994,247
Teekay Shipping............................... 33,500 1,072,000
------------
6,397,205
------------
Utilities--6.7% CalEnergy..................................... 70,640(a) 2,419,420
Calpine....................................... 64,700(a) 1,027,112
Centerior Energy.............................. 125,600 1,632,800
DQE........................................... 55,070 1,703,728
Illinova...................................... 68,130 1,515,893
LCI International............................. 51,490(a) 1,332,304
MidAmerican Energy Holdings................... 82,554 1,475,653
NIPSCO Industries............................. 38,500 1,691,594
Pinnacle West Capital......................... 58,290 2,029,220
Tel-Save Holdings............................. 94,300(a) 2,027,450
Transaction Network Services.................. 101,100(a) 1,680,787
------------
18,535,961
------------
TOTAL COMMON STOCKS
(cost $224,322,109)........................ $269,775,744
------------
------------
</TABLE>
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1997
<TABLE>
<CAPTION>
Principal
Short-Term Investments--2.3% Amount Value
- ------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Repurchase Agreements: Goldman Sachs & Co., Tri-Party Repurchase
Agreement, 5.67% dated 10/31/1997 to be
repurchased at $6,250,509 on 11/3/97,
collateralized by $6,258,000 U.S. Treasury Index
Inflation Notes, 5.875% due 7/31/1999
(cost $6,247,557).......................... $ 6,247,557 $ 6,247,557
------------
------------
TOTAL INVESTMENTS (cost $230,569,666).......................................... 99.9% $276,023,301
------ ------------
------ ------------
CASH AND RECEIVABLES (NET)..................................................... .1% $ 361,668
------ ------------
------ ------------
NET ASSETS..................................................................... 100.0% $276,384,969
------ ------------
------ ------------
<FN>
Notes to Statement of Investments:
- -------------------------------------------------------------------------------
(a) Non-income producing.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock 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 $230,569,666 $276,023,301
Cash............................................. 738,256
Receivable for shares of Capital Stock subscribed 969,183
Dividends and interest receivable................ 210,248
------------
277,940,988
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 333,528
Due to Distributor............................... 5,087
Payable for investment securities purchased...... 1,108,735
Payable for shares of Capital Stock redeemed..... 108,669
------------
1,556,019
------------
NET ASSETS..................................................................... $276,384,969
------------
------------
REPRESENTED BY: Paid-in capital.................................. $217,349,151
Accumulated investment (loss).................... (136,136)
Accumulated net realized gain (loss) on investments 13,718,319
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3.......................... 45,453,635
------------
NET ASSETS..................................................................... $276,384,969
------------
------------
</TABLE>
NET ASSET VALUE PER SHARE
--------------------------
<TABLE>
<CAPTION>
Class A Class B Class C Class R
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Net Assets..................................... $9,189,687 $19,256,858 $3,646,646 $244,291,778
Shares Outstanding............................. 486,422 1,040,084 196,878 12,886,413
NET ASSET VALUE PER SHARE...................... $18.89 $18.51 $18.52 $18.96
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Statement of Operations Year Ended October 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $7,986 foreign taxes
withheld at source)...................... $ 2,090,005
Interest................................... 269,778
------------
Total Income............................. $ 2,359,783
EXPENSES: Management fee--Note 2(a)................... 2,337,782
Distribution and service fees--Note 2(b).... 130,965
Loan commitment fees--Note 4................ 2,289
------------
Total Expenses........................... 2,471,036
-----------
INVESTMENT (LOSS)........................................................ (111,253)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments.... $13,719,411
Net unrealized appreciation (depreciation)
on investments........................... 35,272,690
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 48,992,101
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $48,880,848
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income (loss)--net........................................... $ (111,253) $ 32,164
Net realized gain (loss) on investments................................ 13,719,411 6,007,705
Net unrealized appreciation (depreciation) on investments.............. 35,272,690 6,376,076
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 48,880,848 12,415,945
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class R shares...................................................... -- (74,620)
Net realized gain on investments:
Class A shares...................................................... (199,136) (46,945)
Class B shares...................................................... (233,749) (70,569)
Class C shares...................................................... (29,222) (5,415)
Class R shares...................................................... (5,553,471) (1,525,133)
------------ ------------
Total Dividends.................................................. (6,015,578) (1,722,682)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................... 7,756,378 2,878,911
Class B shares...................................................... 13,645,665 6,644,770
Class C shares...................................................... 3,378,302 566,377
Class R shares...................................................... 109,886,175 66,544,296
Dividends reinvested:
Class A shares...................................................... 176,180 38,169
Class B shares...................................................... 213,766 35,174
Class C shares...................................................... 12,117 2,374
Class R shares...................................................... 4,568,652 1,284,178
Cost of shares redeemed:
Class A shares...................................................... (4,230,344) (733,226)
Class B shares...................................................... (1,446,495) (3,370,585)
Class C shares...................................................... (502,107) (240,657)
Class R shares...................................................... (21,178,571) (9,724,649)
------------ ------------
Increase (Decrease) in Net Assets from Capital Stock Transactions 112,279,718 63,925,132
------------ ------------
Total Increase (Decrease) in Net Assets....................... 155,144,988 74,618,395
NET ASSETS:
Beginning of Period.................................................... 121,239,981 46,621,586
------------ ------------
End of Period.......................................................... $276,384,969 $121,239,981
------------ ------------
------------ ------------
Distributions in excess of investment income (Investment loss)--net........ $ (136,136) $ (24,883)
------------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock 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............................................................ 466,115 199,489
Shares issued for dividends reinvested................................. 11,606 2,890
Shares redeemed........................................................ (248,004) (49,482)
---------- ---------
Net Increase (Decrease) in Shares Outstanding 229,717 152,897
---------- ---------
---------- ---------
Class B
Shares sold............................................................ 802,692 464,654
Shares issued for dividends reinvested................................. 14,270 2,675
Shares redeemed........................................................ (86,680) (236,062)
---------- ---------
Net Increase (Decrease) in Shares Outstanding 730,282 231,267
---------- ---------
---------- ---------
Class C
Shares sold............................................................ 191,557 39,491
Shares issued for dividends reinvested................................. 809 180
Shares redeemed........................................................ (29,834) (16,584)
---------- ---------
Net Increase (Decrease) in Shares Outstanding 162,532 23,087
---------- ---------
---------- ---------
Class R
Shares sold............................................................ 6,439,905 4,605,951
Shares issued for dividends reinvested................................. 300,569 96,979
Shares redeemed........................................................ (1,260,471) (662,887)
---------- ---------
Net Increase (Decrease) in Shares Outstanding 5,480,003 4,040,043
---------- ---------
---------- ---------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<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....................... $15.13 $13.09 $10.07 $10.00
------ ------ ------ ------
Investment Operations:
Investment income (loss)--net............................... (.04) (.02) .02 .01
Net realized and unrealized gain (loss) on investments..... 4.52 2.48 3.03 .06
------ ------ ------ ------
Total from Investment Operations........................... 4.48 2.46 3.05 .07
------ ------ ------ ------
Distributions:
Dividends from investment income--net....................... -- -- (.03) --
Dividends from net realized gain on investments............ (.72) (.42) -- --
------ ------ ------ ------
Total Distributions:....................................... (.72) (.42) (.03) --
------ ------ ------ ------
Net asset value, end of period............................. $18.89 $15.13 $13.09 $10.07
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN(3).................................... 30.73% 19.22% 30.31% .70%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... 1.50% 1.50% 1.50% .25%(4)
Ratio of net investment income (loss) to average net assets (.35%) (.16%) .10% .14%(4)
Portfolio Turnover Rate.................................... 39.18% 49.03% 56.00% 8.00%(4)
Average commission rate paid (5)........................... $.0561 $.0528 -- --
Net Assets, end of period (000's Omitted).................. $9,190 $3,884 $1,359 $60
<FN>
- ----------------------
(1) The Fund commenced operations and commenced selling Investor shares on
September 2, 1994. Effective October 17, 1994, the Fund's Investor shares
were redesignated as Class A shares.
(2) Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager.
(3) Exclusive of sales load.
(4) Not annualized.
(5) 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 Small Company Stock Fund
- -------------------------------------------------------------------------------
Financial Highlights (continued)
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<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...................................... $14.95 $13.05 $ 9.49
------ ------ ------
Investment Operations:
Investment income (loss)--net.............................................. (.03) (.07) (.03)
Net realized and unrealized gain (loss) on investments.................... 4.31 2.39 3.59
------ ------ ------
Total from Investment Operations.......................................... 4.28 2.32 3.56
------ ------ ------
Distributions:
Dividends from net realized gain on investments........................... (.72) (.42) --
------ ------ ------
Net asset value, end of period............................................ $18.51 $14.95 $13.05
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN...................................................... 29.72% 18.17% 37.51%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... 2.25% 2.25% 1.95%(2)
Ratio of net investment income (loss) to average net assets............... (1.02%) (.93%) (.56%)(2)
Portfolio Turnover Rate................................................... 39.18% 49.03% 56.00%
Average commission rate paid(3)........................................... $.0561 $.0528 --
Net Assets, end of period (000's Omitted)................................. $19,257 $4,633 $1,025
<FN>
- -----------------------
(1) The Fund commenced selling Class B shares on December 19, 1994.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock Fund
- ------------------------------------------------------------------------------
Financial Highlights (continued)
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<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...................................... $14.95 $13.04 $ 9.49
------ ------ ------
Investment Operations:
Investment income (loss)--net.............................................. .01 (.09) (.01)
Net realized and unrealized gain (loss) on investments.................... 4.28 2.42 3.56
------ ------ ------
Total from Investment Operations.......................................... 4.29 2.33 3.55
------ ------ ------
Distributions:
Dividends from net realized gain on investments........................... (.72) (.42) --
------ ------ ------
Net asset value, end of period............................................ $18.52 $14.95 $13.04
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN...................................................... 29.79% 18.27% 37.41%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... 2.25% 2.25% 1.14%(2)
Ratio of net investment income (loss) to average net assets............... (1.01%) (.93%) (.33%)(2)
Portfolio Turnover Rate................................................... 39.18% 49.03% 56.00%
Average commission rate paid(3)........................................... $.0561 $.0528 --
Net Assets, end of period (000's Omitted)................................. $3,647 $514 $147
<FN>
- ----------------------
(1) The Fund commenced selling Class C shares on April 30, 1995.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
Financial Highlights (continued)
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class R 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....................... $15.15 $13.10 $10.07 $10.00
------ ------ ------ ------
Investment Operations:
Investment income--net...................................... -- .01 .04 .02
Net realized and unrealized gain (loss) on investments..... 4.53 2.48 3.04 .05
------ ------ ------ ------
Total from Investment Operations:.......................... 4.53 2.49 3.08 .07
------ ------ ------ ------
Distributions:
Dividends from investment income--net....................... -- (.02) (.05) --
Dividends from net realized gain on investments............ (.72) (.42) -- --
------ ------ ------ ------
Total Distributions:....................................... (.72) (.44) (.05) --
------ ------ ------ ------
Net asset value, end of period............................. $18.96 $15.15 $13.10 $10.07
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN....................................... 31.04% 19.43% 30.70% .70%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... 1.25% 1.25% 1.25% .21%(3)
Ratio of net investment income to average net assets....... .02% .09% .35% .18%(3)
Portfolio Turnover Rate.................................... 39.18% 49.03% 56.00% 8.00%(3)
Average commission rate paid (4)........................... $.0561 $.0528 -- --
Net Assets, end of period (000's Omitted).................. $244,292 $112,209 $44,091 $10,747
<FN>
- --------------------------
(1) The Fund commenced operations and commenced selling Trust shares on
September 2, 1994. Effective October 17, 1994, the Fund's Trust shares were
redesignated as Class R shares.
(2) Effective October 17, 1994, The Dreyfus Corporation serves as the Funds'
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager.
(3) Not annualized.
(4) For fiscal year beginning November 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of investment securities.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier Small Company Stock Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Small Company Stock 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 consistently exceed the total return
performance of the Russell 2500(TM) Stock Index while maintaining a similar
level of risk. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
On January 31, 1997, the Fund's Directors approved a change to the Fund's
name, effective March 1, 1997, from "Premier Small Company Stock Fund" to
"Dreyfus Premier Small Company Stock Fund."
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares. The Fund is authorized to issue 168 million of $.001 par
value Capital Stock. The Fund currently offers four classes of shares: Class A
(27 million shares authorized), Class B (50 million shares authorized), Class C
(50 million shares authorized) and Class R (41 million shares authorized). Class
A, Class B and Class C shares are sold primarily to retail investors through
financial intermediaries and bear a distribution fee and/or service fee. Class A
shares are sold with a front-end sales charge 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 or service fees. Class R shares are offered without a front-end
sales load or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution and service fees and voting rights on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at the last
sales price on the securities exchange on which such securities are primarily
traded or at the last sales price on the national securities market. Securities
not listed on an exchange or the national securities market, or securities for
which there were no transactions, are valued at the average of the most recent
bid and asked prices. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
(b) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(c) Repurchase agreements: The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund,
through its custodian and sub-custodian, takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Fund's holding
period. The value of the collateral is at least equal, at all times, to the
total amount of the repurchase obligation, including interest. In the event
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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) Distributions to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net , if any, are declared and paid on a
quarterly basis. Dividends from net realized capital gain are normally declared
and paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
(e) Federal income taxes: It is the policy of the Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
NOTE 2--Investment Management Fee And Other Transactions With Affiliates:
(a) Investment management fee: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. The Manager also directs
the investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.25% of the value of the Fund' average daily net assets. Out of
its fee, the Manager pays all of the expenses of the Fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
service fees, fees and expenses of non-interested Directors (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to reduce
its fee in an amount equal to the Fund's allocable portion of fees and expenses
of the non-interested Directors (including counsel). Each director receives
$27,000 per year, $1,000 for each Board meeting attended and $750 for each Audit
Committee meeting attended and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional annual fee of $25,000
per year. These fees pertain to the following funds: The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel Funds
Trust. These fees and expenses are charged and allocated to each series based on
net assets. Amounts required to be paid by the Company directly to the
non-interested Directors, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Directors.
(b) Distribution and service plan: Under the Fund's 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 distribution 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
<PAGE>
Dreyfus Premier Small Company Stock Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 $16,771, $75,346 and
$10,299 for Class A, Class B and Class C shares, respectively, pursuant to the
distribution plan. During the period ended October 31, 1997, the Fund was
charged $25,116 and $3,433 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 the majority of those
Directors who are not "interested persons" of the Company and who have no direct
or indirect financial interest in the operation of the Plan or in any agreement
related to the Plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1997
amounted to $174,637,190 and $71,557,647, respectively.
At October 31, 1997, accumulated net unrealized appreciation on investments
was $45,453,635, consisting of $51,103,561 gross unrealized appreciation and
$5,649,926 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 Small Company Stock Fund
- -------------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier Small Company Stock
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 Small Company Stock 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 $.450 per share as a
long-term capital gain distribution of the $.715 per share paid on December
13, 1996.
The Fund also designates 39.73% 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 returns. *
<PAGE>
Dreyfus Premier Small Company
Stock Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 385/685AR9710
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS PREMIER SMALL COMPANY STOCK FUND CLASS A
SHARES AND CLASS R SHARES AND THE RUSSELL 2500 INDEX
EXHIBIT A:
DREYFUS DREYFUS
PREMIER PREMIER
SMALL SMALL
COMPANY COMPANY
STOCK STOCK
FUND FUND RUSSELL
PERIOD (CLASS A (CLASS R 2500
SHARES) SHARES) INDEX*
9/2/94 9,425 10,000 10,000
10/31/94 9,491 10,070 9,915
10/31/95 12,368 13,162 12,033
10/31/96 14,744 15,719 14,294
10/31/97 19,275 20,597 18,457
*Source: The Frank Russell Company
