<PAGE>
Dreyfus
Disciplined
Intermediate
Bond Fund
Semi-Annual
Report
April 30, 1998
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for the Dreyfus Disciplined
Intermediate Bond Fund for its semi-annual reporting period ended April 30,
1998, as shown in the following table:
<TABLE>
<CAPTION>
Income Dividends Annualized
Total Return* (Approximate Per Share) Distribution Rate (Per Share)**
------------ ---------------------- -----------------------------
<S> <C> <C> <C>
Investor Shares 3.48% $.362 5.79%
Restricted Shares 3.53% $.377 6.05%
Lehman Brothers
Aggregate Bond Index*** 3.59%
</TABLE>
The Economy
The United States is now in the eighth year of economic expansion. Inflation
continues to rise at the slowest pace since 1964 and the unemployment rate has
fallen to a level not seen in 25 years. Not surprisingly, consumer confidence
has soared. Along with continued evidence of the robustness of the economy have
come heightened expectations that the Federal Reserve Board will raise interest
rates in a preemptive move to avoid a reignition of inflation. The last increase
in short-term rates came in March 1997 when the Federal Open Market Committee
(the policy-making arm of the Fed) hiked the target rates for Federal Funds by
one quarter of a percent to 5.5%. (The Federal Funds rate is the rate of
interest that banks charge one another for overnight loans.)
Inflation has remained benign on all fronts, even in the tight labor market,
an area closely watched by the Fed for signs of incipient inflation. The Labor
Department's Employment Cost Index (ECI), a measure of wage, salary and benefit
costs, suggests that wage inflation so far is not a problem. In fact, the first
quarter increase in the ECI (0.7%) was its smallest quarterly rise in two years.
Another inflation gauge, the broad-based Gross Domestic Product Price Deflator,
rose at an annual rate of only 0.9% in the first quarter, its lowest rate since
1964. Inflation as measured by the Consumer Price Index has been similarly tame.
Prices at the consumer level have risen at an annual rate of about 1.5% over the
reporting period. The lack of inflation has been even more dramatic at the
production level of the economy where prices have fallen: For the 12 months
ended March 31, the Producer Price Index declined 1.8%. Such a generally tepid
price environment has been partly fostered by the economic problems in Asia
which have suppressed worldwide demand for commodities, particularly oil.
Reflecting a level of confidence not seen in three decades, consumers
increased their spending over the reporting period, the first-quarter rate
rising at the fastest pace in six years. Not surprisingly, the growth rate in
new-home construction over the reporting period was the strongest in four years.
Plentiful and well-paying jobs (total wage and salary income is 7% higher than a
year ago), low interest rates, the absence of inflation and investment market
gains have resulted in a financially healthy consumer with a corresponding
propensity to spend. Strong domestic demand for lower-priced imports has
contributed further to the quiescent inflation environment while offsetting the
drag on the economy resulting from the Asian financial crisis. It is still
widely expected that the Asian economic slowdown will have a further dampening
effect on the U. S. economy. Although the surge in domestic spending has masked
the full impact of the fall in Asian demand, our trade deficit has reached a
ten-year high, a dramatic sign of deterioration. Expectation of an economic
slowdown is another reason why the Fed has been reluctant to raise short-term
interest rates.
The production side of the economy has remained robust. Factory utilization
has been high, production rates strong, and while exports to Asia have fallen
sharply, they are growing in the rest of the world. Such resilience has been
characteristic of one of the longest, most healthy economic advances in our
history. Yet we remain mindful that the concept of an economic cycle is not
dead, nor is inflation, and we are alert for indications of a resurgence in
price pressures.
<PAGE>
The Market Environment/Portfolio Overview
Interest rates as measured by 10-year Treasuries declined 16 basis points
early in the reporting period in continuing reaction to the Asian financial
crisis. Since year-end, rates have remained stable, although there has been
intra-period volatility. By the end of April, the yield curve was flat; only 10
basis points separated the yields of two-year and ten-year Treasury securities.
The strong U.S. economy, an expected Federal budget surplus, and continuing
low inflation explain the current low yields. We believe that it is unlikely
this year that we will see the precipitous decline in interest rates that
occurred last year and so far, rates have remained in a narrow band. The
question remains what monetary action the Federal Reserve will take, given its
commitment to price stability and the continued strength of the U.S. economy.
The demand for dollar-denominated assets has been strong throughout the
reporting period as a result of the Asian financial crisis. So far the Federal
Reserve has been reluctant to raise short-term interest rates for fear of
roiling international markets. Yet if our economy continues to be robust and
price pressures recur, tightening monetary action by the Fed seems inevitable.
At the beginning of the reporting period, the Fund was positioned longer than
the Lehman Brothers Aggregate Bond Index (a duration of 4.95 years for the Fund
compared to 4.4 years for the Index) in seeking to take advantage of falling
interest rates. Interest rates did decline modestly in the latter part of the
fourth quarter due to concerns about Asia and the decline in the Federal budget
deficit. In January and February, believing that interest rates might rise, we
shortened our duration by increasing our exposure to mortgage-backed securities,
agency bonds and cash. This strategy proved correct and we remained similarly
defensive at the end of the reporting period.
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/ Ridgway Powell
Ridgway Powell
Portfolio Manager
May 18, 1998
New York, New York
* Total return includes reinvestment of dividends and any capital gains paid.
** Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset
value per share at the end of the period.
*** SOURCE: LEHMAN BROTHERS -- The Lehman Brothers Aggregate Bond Index is a
widely accepted unmanaged index of corporate, government and government
agency debt instruments, mortgage-backed securities and asset-backed
securities. Reflects reinvestment of dividends and capital gains.
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Statement of Investments April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes--94.9% Amount Value
- ------------------------------------------------------------------------------- ---------------- --------------
<S> <C> <C> <C>
Banking--3.0% First Union National Bank of North Carolina,
Sub. Notes, 6.18%, 2006.................... $ 2,250,000 $ 2,244,254
National Australia Bank,
Sub. Notes, 6.40%, 2007.................... 2,250,000 (a) 2,255,135
-------------
4,499,389
-------------
Collateralized
Mortgage Obligations--.1% Countrywide Funding,
Mortgage Pass-Through Ctfs.,
Ser. 1994-10, Cl. A-5, 6%, 2009............ 161,401 160,521
-------------
Commercial Mortgage
Obligations--2.6% Asset Securitization,
Commercial Mortgage Pass-Through Ctfs.:
Ser. 1995-MD IV, Cl. A-1, 7.10%, 2029... 698,574 727,601
Ser. 1997-D4, Cl. A-CS1, 1.267%, 2029
(Interest only Obligation)............ 17,694,216 (a,b) 624,827
GS Mortgage Securities II,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1997-GL1, Cl. A-2B, 6.86%, 2030....... 1,500,000 1,544,063
Merrill Lynch Mortgage Investors,
Mortgage Pass-Through Ctfs.,
Ser. 1997-C1, Cl. A-3, 7.12%, 2029......... 1,000,000 1,048,420
-------------
3,944,911
-------------
Consumer--1.2% News America Holdings,
Gtd. Sr. Deb., 8%, 2016.................... 1,750,000 1,895,423
-------------
Finance--9.8% ERP Operating L.P.,
Notes, 7.57%, 2006......................... 2,250,000 (c) 2,415,422
Ford Motor Credit,
Notes, 6.25%, 2005......................... 2,225,000 2,216,020
Green Tree Financial,
Medium-Term Notes, Ser. A, 6.50%, 2002..... 1,425,000 1,397,081
J.P. Morgan & Co.,
Sub. Notes, 6.70%, 2007.................... 2,250,000 2,295,810
Lehman Brothers,
Sr. Sub. Notes, 7.36%, 2003................ 2,250,000 2,353,498
Markel,
Notes, 7.25%, 2003......................... 360,000 374,286
NYNEX Capital Funding,
Gtd. Medium-Term Notes, 7.63%, 1999........ 2,250,000 (a,d) 2,607,957
Salomon,
Medium-Term Floating-Rate Notes,
Ser. D, 5.582%, 1999....................... 1,230,000 (a) 1,226,242
-------------
14,886,316
-------------
</TABLE>
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Statement of Investments April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ---------------- --------------
<S> <C> <C> <C>
Finance/Asset Backed--3.2% CitiBank Credit Card Master Trust I,
Credit Card Participation Ctfs.,
Ser. 1997-3, Cl. A, 6.839%, 2004........... $ 1,500,000 $ 1,517,265
Green Tree Financial,
Manufactured Housing Contract
Pass-Through Ctfs.,
Ser. 1996-10, Cl. A5, 6.83%, 2028.......... 1,000,000 1,019,450
NationsBank Auto Grantor Trust 1995-A,
Asset Backed Ctfs., Cl. A, 5.85%, 2002..... 32,439 32,477
Premier Auto Trust 1996-2,
Asset Backed Notes, Cl. A-4, 6.575%, 2000.. 1,000,000 1,010,040
WFS Financial Owner Trust,
Auto Receivable Backed Notes,
Ser. 1996-D, Cl. A3, 6.05%, 2001........... 1,263,113 1,266,499
-------------
4,845,731
-------------
Foods/Beverages--1.0% Dole Foods,
Notes, 6.75%, 2000......................... 1,500,000 1,519,358
-------------
Foreign/Yankee--6.0% ABN AMRO Bank N.V.,
Sub. Notes, 7.25%, 2005.................... 2,250,000 2,356,605
Hanson Overseas B.V.,
Gtd. Sr. Notes, 7.375%, 2003............... 2,250,000 2,355,966
Midland Bank plc,
Sub. Notes, 7.65%, 2007.................... 2,250,000 (e) 2,436,777
Province of Quebec,
Deb., 7.295%, 2006......................... 1,000,000 (f) 1,094,421
Smurfit Capital Funding plc
(Gtd. by Jefferson Smurfit Group plc),
Deb., 7.50%, 2025.......................... 750,000 789,790
-------------
9,033,559
-------------
Healthcare--.4% Columbia/HCA Healthcare,
Notes, 6.91%, 2005......................... 625,000 587,546
-------------
Hotels/Motels--1.3% Hilton Hotels,
Sr. Notes, 7%, 2004........................ 2,000,000 1,986,972
-------------
Industrial--2.4% Cable & Wireless Communications,
Notes, 6.625%, 2005........................ 330,000 332,703
Coca Cola Enterprises,
Notes, 6.375%, 2001........................ 1,025,000 1,036,549
WMX Technologies,
Notes, 7.10%, 2003......................... 2,250,000 (g) 2,345,522
-------------
3,714,774
-------------
</TABLE>
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ---------------- --------------
<S> <C> <C> <C>
Leisure-Travel--.8% Royal Caribbean Cruises,
Deb., 7.50%, 2027.......................... $ 1,250,000 $ 1,280,016
--------------
Municipal Obligations --.3% Atlanta & Fulton County, Ga. Recreation Authority,
Revenue Bonds, 7%, 2028.................... 400,000 399,500
-------------
Transportation--1.2% American Airlines Pass-Through Trusts,
Pass Through Ctfs., Ser. 1991-A, 9.71%, 2007 1,068,387 1,214,895
Norfolk Southern,
Notes, 7.35%, 2007......................... 500,000 531,951
-------------
1,746,846
-------------
U. S. Government/
Agencies--8.2% Federal Home Loan Mortage Corp.,
Deb. :
6.375%, 3/9/2005........................ 2,000,000 2,004,660
6.542%, 3/19/2008....................... 2,000,000 1,988,620
Federal National Mortgage Association,
Medium-Term Notes:
6.18%, 2002............................. 2,435,000 2,434,878
6.36%, 2002............................. 2,500,000 2,520,350
6.56%, 2007............................. 1,500,000 1,515,750
6.16%, 2007............................. 2,000,000 2,021,500
-------------
12,485,758
-------------
U.S. Government Agencies/
Mortgage Backed--20.8% Federal Home Loan Mortage Corp.,
Multiclass Mortgage Participation Ctfs.,
REMIC:
Ser. 1453, Cl. S, 6.797%, 2000.......... 574,683 (h) 574,395
Ser. 1660, C1. H, 6.50%, 2009........... 2,570,000 2,573,958
Federal National Mortgage Association:
6.50%, 11/1/2027........................... 2,462,267 2,441,830
7%, 6/1/2009-10/1/2027..................... 5,098,289 5,184,493
REMIC Trust, Pass-Through Ctfs.
(collateralized by FNMA Pass-Through Ctfs.):
Ser. 1997-30, Cl. VG, 7%, 2012........ 2,000,000 2,031,198
Ser. 1998-M2, Cl. B, 6.247%, 2021..... 1,500,000 1,481,055
Government National Mortgage Association I:
6%, 10/15/2008-10/31/2012.................. 3,290,544 (i) 3,273,147
6.50%, 2/15/2024-7/15/2024................. 3,738,161 3,725,975
7%,10/15/2023-12/15/2023................... 3,210,368 3,267,546
7.50%, 12/15/2028.......................... 5,885,327 6,072,893
8%, 2/15/2008.............................. 894,115 947,477
-------------
31,573,967
-------------
</TABLE>
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ---------------- --------------
<S> <C> <C> <C>
U.S. Government--32.6% U.S. Treasury Bonds:
7.875%, 2/15/2021.......................... $ 6,750,000 $ 8,261,595
12%, 8/15/2013............................. 3,750,000 5,498,438
U.S. Treasury Notes:
6%, 8/15/2000.............................. 10,500,000 10,587,990
6.50%, 8/31/2001........................... 10,500,000 10,769,745
6.625%, 4/30/2002.......................... 8,250,000 8,528,190
7%, 7/15/2006.............................. 3,500,000 3,777,795
U.S. Treasury Principal Strips,
Zero Coupon, 8/15/2004..................... 3,000,000 2,104,200
-------------
49,527,953
-------------
TOTAL BONDS AND NOTES
(cost $142,582,744)........................ $144,088,540
=============
Short-Term Investments--4.2%
- -------------------------------------------------------------------------------------------------------------------------------
Commercial Paper--.3% General Motors Acceptance Corp.,
5.537%, 5/18/1998.......................... $ 393,000 $ 393,000
-------------
Repurchase Agreement--3.9% J. P. Morgan Securities, 5.51%,
Dated 4/30/1998, due 5/1/1998 in the amount
of $5,926,907 (fully collateralized by
$4,940,000 U.S.Treasury Bonds, 10.75%,
2/15/2003 value $5,050,024)................ 5,926,000 5,926,000
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $6,319,000).......................... $ 6,319,000
=============
TOTAL INVESTMENTS (cost $148,901,744).......................................... 99.1% $ 150,407,540
======= =============
CASH AND RECEIVABLES (NET)..................................................... .9% $ 1,407,253
======= =============
NET ASSETS..................................................................... 100.0% $ 151,814,793
======= =============
</TABLE>
Notes to Statement of Investments:
- ------------------------------------------------------------------------------
(a) Variable rate security-interest rate subject to periodic change.
(b) Reflects notional face.
(c) Reflects date security can be redeemed at holders' option; the stated
maturity date is 8/15/2026.
(d) Reflects date security can be redeemed at holders' option; the stated
maturity date is 10/15/2009.
(e) Reflects date security can be redeemed at holder's option; the stated
maturity date is 5/1/2025.
(f) Reflects first date security can be redeemed at holders' option; the stated
maturity is 7/22/2026.
(g) Reflects date security can be redeemed at holders' option; the stated
maturity date is 8/15/2026.
(h) Inverse floater security-interest rate subject to periodic change.
(i) Partially purchased on a forward commitment basis.
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of
Investments--Note 1(c)......................... $148,901,744 $150,407,540
Cash............................................. 386,534
Receivable for investment securities sold........ 2,316,147
Interest receivable.............................. 1,720,086
------------
154,830,307
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 67,367
Due to Distributor............................... 60
Payable for investment securities purchased...... 2,689,274
Payable for shares of Capital Stock redeemed..... 258,813
------------
3,015,514
------------
NET ASSETS..................................................................... $151,814,793
============
REPRESENTED BY: Paid-in capital.................................. $149,407,280
Accumulated net realized gain (loss) on investments 901,717
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3......................... 1,505,796
------------
NET ASSETS..................................................................... $151,814,793
============
</TABLE>
NET ASSET VALUE PER SHARE
-------------------------
<TABLE>
<CAPTION>
Investor Restricted
Shares Shares
------------ ------------
<S> <C> <C>
Net Assets..................................................................... $ 546,473 $151,268,320
Shares Outstanding............................................................. 43,419 12,019,955
NET ASSET VALUE PER SHARE...................................................... $12.59 $12.58
====== ======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Statement of Operations Six Months Ended April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income.................................... $4,423,629
EXPENSES: Management fee--Note 2(a).......................... $ 369,199
Distribution fees (Institutional shares)--Note 2(b) 615
Loan commitment fees--Note 4....................... 370
----------
Total Expenses................................... 370,184
----------
INVESTMENT INCOME--NET........................................................... 4,053,445
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments............ $1,010,088
Net unrealized appreciation (depreciation)
on investments................................... (391,667)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS........................... 618,421
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. $4,671,866
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998 Year Ended
(Unaudited) October 31, 1997
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 4,053,445 $ 4,886,568
Net realized gain (loss) on investments................................ 1,010,088 536,132
Net unrealized appreciation (depreciation) on investments.............. (391,667) 1,317,452
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations..... 4,671,866 6,740,152
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Investor shares..................................................... (14,220) (8,096)
Restricted shares................................................... (4,039,225) (4,880,158)
------------ ------------
Total Dividends.................................................. (4,053,445) (4,888,254)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor shares..................................................... 438,117 219,869
Restricted shares................................................... 51,756,441 54,972,784
Dividends reinvested:
Investor shares..................................................... 12,791 4,985
Restricted shares................................................... 1,853,348 2,057,870
Cost of shares redeemed:
Investor shares..................................................... (222,665) (40,510)
Restricted shares................................................... (11,647,113) (8,653,765)
------------ ------------
Increase (Decrease) in Net Assets from Capital Stock Transactions... 42,190,919 48,561,233
------------ ------------
Total Increase (Decrease) in Net Assets.......................... 42,809,340 50,413,131
NET ASSETS:
Beginning of Period.................................................... 109,005,453 58,592,322
------------ ------------
End of Period.......................................................... $151,814,793 $109,005,453
============ ============
CAPITAL SHARE TRANSACTIONS:
<CAPTION>
Investor Shares Shares Shares
--------------- ------------ ------------
<S> <C> <C>
Shares sold............................................................ 34,726 17,954
Shares issued for dividends reinvested................................. 1,016 405
Shares redeemed........................................................ (17,670) (3,304)
------------ ------------
Net Increase (Decrease) in Shares Outstanding.................... 18,072 15,055
============ ============
Restricted Shares
Shares sold............................................................ 4,111,968 4,463,067
Shares issued for dividends reinvested................................. 147,235 167,445
Shares redeemed........................................................ (922,264) (702,920)
------------ ------------
Net Increase (Decrease) in Shares Outstanding.................... 3,336,939 3,927,592
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Capital Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Investor Shares Restricted Shares
----------------------------------- -----------------------------------
Six Months Year Ended Six Months Year Ended
Ended October 31, Ended October 31,
April 30, 1998 ------------------- April 30, 1998 -------------------
PER SHARE DATA: (Unaudited) 1997 1996(2,3) (Unaudited) 1997(1) 1996(2,3)
-------------- ------------------- -------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..... $12.52 $12.29 $12.50 $12.52 $12.29 $12.50
------ ------ ------ ------ ------ ------
Investment Operations:
Investment income--net................... .36 .74 .71 .38 .77 .74
Net realized and unrealized gain (loss)
on investments........................ .07 .23 (.21) .06 .23 (.21)
------ ------ ------ ------ ------ ------
Total from Investment Operations......... .43 .97 .50 .44 1.00 .53
------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net.... (.36) (.74) (.71) (.38) (.77) (.74)
------ ------ ------ ------ ------ ------
Net asset value, end of period........... $12.59 $12.52 $12.29 $12.58 $12.52 $12.29
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN..................... 7.02%(4) 8.21% 4.18% 7.12%(4) 8.49% 4.45%
RATIOS/SUPPLEMENTALDATA:
Ratio of expenses to average net assets .80%(4) .80% .79% .55%(4) .55% .55%
Ratio of net investment income to
average net assets.................... 5.78%(4) 6.01% 5.61% 6.04%(4) 6.31% 6.29%
Portfolio Turnover Rate.................. 76.71%(5) 143.91% 198.16% 76.71%(5) 143.91% 198.16%
Net Assets, end of period (000's Omitted) $546 $317 $126 $151,268 $108,688 $58,466
<FN>
- ---------------
(1) Effective August 15, 1997, Retail shares were redesignated as Restricted
shares.
(2) From November 1, 1995 (commencement of operations) to October 31, 1996.
(3) Effective July 15, 1996, Investor Class shares were redesignated as
Institutional shares and Class R shares were redesignated as Retail shares.
(4) Annualized.
(5) Not annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Disciplined Intermediate Bond Fund (the "Fund") is a separate
diversified series of The Dreyfus/Laurel Funds, Inc. (the "Company") which is
registered under the Investment Company Act of 1940 ("Act") as an open-end
management investment company and operates as a series company currently
offering eighteen series including the Fund. The Fund's investment objective is
to outperform the Lehman Brothers Aggregate Bond Index, while maintaining a
similar level of risk, by investing primarily in domestic and foreign
investment-grade debt securities and by actively managing bond market and
maturity exposure. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares, which are sold to the public without a sales charge. The Fund
is authorized to issue 100 million of $.001 par value Capital Stock in each of
the following classes of shares: Investor and Restricted. Investor shares are
offered only to the clients of banks, securities brokers or dealers and other
financial institutions (collectively, Service Agents) that have entered into
selling agreements with the Fund's distributor. Restricted shares are offered to
any investor. Other differences between the classes include the services offered
to and the expenses borne by each class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (excluding short-term
investments, other than U.S. Treasury Bills) are valued each business day by an
independent pricing service ("Service") approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Short-term investments, excluding U.S. Treasury Bills are carried at amortized
cost, which approximates value.
(b) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(c) Repurchase agreements: The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund,
through its custodian and sub-custodian, takes possession of an underlying
debt obligation subject to an obligation of the seller to repurchase, and
the Fund to resell, the obligation at an agreed-upon price and time,
thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral
is at least equal, at all times, to the total amount of the repurchase
obligation, including interest. In the event of a counter party default, the
Fund has the right to use the collateral to offset losses incurred. There is
potential loss to
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
the Fund in the event the Fund is delayed or prevented from exercising its
rights to dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period while the
Fund seeks to assert its rights. The Fund's manager, acting under the
supervision of the Board of Directors, reviews the value of the collateral and
the creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements to evaluate potential risks.
(d) Dividends to shareholders: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code. To the extent
that net realized capital gain can be offset by capital loss carryovers, it is
the policy of the Fund not to distribute such gain.
(e) Federal income taxes: It is the policy of the Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $82,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1998. If not
applied, the carryover expires in fiscal 2004.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(a) Investment Management Fee: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. The Manager also directs
the investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .55% of the value of the Fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the Fund except brokerage fees,
taxes, interest, 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. (The
$1,000 attendance fee and reimbursement of meeting expenses are also borne pro
rata by Dreyfus High Yield Strategies Fund.) These fees and expenses are charged
and allocated to each series based on net assets. Amounts required to be paid by
the Company directly to the non-interested Directors, that would be applied to
offset a portion of the management fee payable to the Manager, are in fact paid
directly by the Manager to the non-interested Directors.
(b) Distribution 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
<PAGE>
Dreyfus Disciplined Intermediate Bond Fund
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
shares bear no distribution fee. During the period ended April 30, 1998,
Investor shares were charged $615 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.
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales (including paydowns) of investment
securities, excluding short-term securities, during the period ended April 30,
1998, amounted to $135,923,303 and $98,770,757, respectively.
At April 30, 1998, accumulated net unrealized appreciation on investments was
$1,505,796 consisting of $1,819,866 gross unrealized appreciation and $314,070
gross unrealized depreciation.
At April 30, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
NOTE 4--BankLine 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. During the period ended April
30, 1998, the Fund did not borrow under the Facility.
<PAGE>
Dreyfus Disciplined Intermediate
Bond Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 302/702SA984
