Dreyfus Disciplined Smallcap Stock Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
20 Independent Auditors' Report
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Disciplined
Smallcap Stock Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Disciplined Smallcap
Stock Fund, covering the 12-month period from November 1, 1998 through October
31, 1999. Inside, you' ll find valuable information about how the fund was
managed during the reporting period, including a discussion with the fund's
portfolio manager, Gene Cervi.
While the past year was rewarding for many equity investors, small-cap stocks
did not fare as well as other market sectors. When the reporting period began,
the U.S. stock market had just completed a sharp correction caused primarily by
concerns regarding the spread of the global financial crisis in overseas
markets. Soon after the start of 1999, however, those fears abated. In fact, the
U.S. economy remained strong, and investors became concerned that inflationary
pressures might re-emerge. As a result, the Federal Reserve Board raised
short-term interest rates twice during the summer in an effort to forestall a
reacceleration of inflation in a fast-growing economy. In this environment,
equity investors once again preferred the relative predictability of earnings
from large-cap companies.
Despite a brief rally in April and May, small-cap stocks generally failed to
keep pace with their large-cap counterparts. However, some small-cap technology
stocks that were subject to heightened investor speculation were exceptions to
this trend.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Disciplined Smallcap Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Gene Cervi, Portfolio Manager
How did Dreyfus Disciplined Smallcap Stock Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 1999, the fund produced a total return
of 25.50% ,(1) substantially outperforming its benchmark, the Standard & Poor's
SmallCap 600 Index ("S&P 600"), which produced a total return of 12.05% for the
same period.(2)
We attribute the fund' s outperformance to our stock selection strategy,
especially our investment in initial public offerings ("IPOs"). While the
universe of small-cap stocks is vast, encompassing thousands of companies, we
successfully identified a number of promising companies selling at low
valuations.
Still, small-cap stocks as a whole did not do as well as large-cap stocks during
the fiscal year. In a period that included fears of a global recession in 1998
and rising interest rates in 1999, investors generally preferred big household
names with less volatile earnings. However, it is encouraging that small-cap
stocks closed the gap with large-cap stocks in April and May 1999.
What is the fund's investment approach?
The fund invests primarily in a broadly diversified portfolio of small-cap
stocks that blends growth and value investment styles. The stocks are chosen
using a disciplined process that combines computer analysis with human judgment
The computer model identifies and ranks stocks based on financial strength,
relative profit growth and the disparity between stock price and intrinsic
worth. After the computer sifts through thousands of candidates, we select the
most attractive stocks using the insights of our investment analysts. The fund's
portfolio is constructed to have approximately the same sector weightings as the
S&P 600.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
The fund was able to take advantage of a number of Internet-related IPOs that
did very well immediately after going public. Of particular note were companies
that help build the infrastructure of the Internet.
In addition, corporate buyouts figured prominently during the fiscal year. Due
to vigorous competitive bidding, companies such as Wyman-Gordon, an aircraft
supplier, and OmniQuip International, a machinery producer, were acquired at
premiums ranging from double to triple their then prevailing stock prices.
Technology companies involved in semiconductor manufacturing such as Micrel and
Dallas Semiconductor appreciated along with the improving global economic
climate. Other technology stocks began to improve as investors envisioned a
return to profitability when Y2K is finally behind them.
The strong U.S. economy has been a plus for advertiser-supported media companies
such as Cox Radio Cl. A, which owns and operates radio stations, Catalina
Marketing, which offers creative ways to deliver ad messages and promotional
incentives directly to consumers, and Valassis Communications, which provides
coupons and newspaper inserts primarily for the packaged goods industry. These
companies are showing that there can still be a place for traditional print and
broadcast media despite the new world of e-commerce.
The rebounding price of oil powered the energy sector to strong returns,
exemplified by companies such as Barrett Resources, Devon Energy and Marine
Drilling.
Even financial services figured prominently in the fund's strong performance.
While rising interest rates were a negative for the group as a whole, Eaton
Vance, a money management firm, and Legg Mason, a regional brokerage house,
bucked industry trends and produced excellent returns.
Not every stock performed well. Negative investor sentiment towards managed care
providers resulted in poor performance for Universal
Health Services Cl. B, an owner and operator of acute care hospitals. Another
poorly performing stock was Action Performance, which sells souvenirs and
apparel connected to the auto racing industry, a market that has yet to convince
investors that its popularity rivals professional baseball, football or
basketball. Finally, the Internet proved itself to be anything but a sure thing.
Beyond.com, which sells software on the Internet, was a weak performer due to
heavy expenditures needed to build market share.
What is the fund's current strategy?
We have remained consistent in our disciplined focus on small-cap stocks,
generally matching the S& P 600 Index in terms of sector weightings to manage
risk. We try to keep sectors within plus or minus 100 basis points of the Index.
Although our investment model is biased towards value versus growth as an
investment style, we are able to participate in exciting new companies and
technology through our IPO strategy. We believe that our portfolio contains very
attractively priced securities with earnings growth rates often exceeding our
benchmark.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- THE STANDARD & POOR'S SMALLCAP
600 INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF OVERALL SMALL-CAP STOCK
MARKET PERFORMANCE.
The Fund
<TABLE>
<CAPTION>
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Disciplined
Smallcap Stock Fund and the Standard & Poor's SmallCap 600 Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year Inception
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FUND 9/30/98 25.50% 28.22%
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS DISCIPLINED
SMALLCAP STOCK FUND ON 9/30/98 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN
THE STANDARD & POOR'S SMALLCAP 600 INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL
GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. THE STANDARD & POOR'S SMALLCAP 600 INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF SMALL-CAP STOCK MARKET PERFORMANCE. THE INDEX DOES
NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION
RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE,
IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE
IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS--92.8% Shares Value ($)
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ALCOHOL & TOBACCO--1.1%
<S> <C> <C>
Canandaigua Brands, Cl. A 4,200 (a) 254,100
CONSUMER CYCLICAL--12.0%
Alaska Air Group 4,700 (a) 186,825
Ames Department Stores 4,800 (a) 152,100
AnnTaylor Stores 4,000 (a) 170,250
Beyond.com 7,900 (a) 73,075
La-Z-Boy 14,300 260,975
Luby's 18,000 213,750
Pacific Sunwear of California 10,500 (a) 316,969
ShopKo Stores 8,800 (a) 220,550
Too 12,000 192,000
Tower Automotive 13,700 (a) 223,481
Williams-Sonoma 9,000 (a) 483,750
Zale 8,000 (a) 335,000
2,828,725
CONSUMER STAPLES--1.9%
Hain Food Group 7,500 (a) 187,969
Michael Foods 10,400 265,200
453,169
ENERGY--5.8%
Barrett Resources 3,000 (a) 100,687
Devon Energy 9,400 365,425
ENSCO International 15,300 296,438
Marine Drilling Cos. 16,200 (a) 262,237
New Jersey Resources 6,100 248,194
Seitel 11,700 (a) 92,869
1,365,850
HEALTH CARE--7.6%
CONMED 12,400 (a) 309,225
ChiRex 3,700 (a) 104,525
Cooper Cos. 5,300 132,500
IDEC Pharmaceuticals 2,000 (a) 232,375
Jones Pharma 4,500 139,500
King Pharmaceuticals 2,700 (a) 81,675
Ocular Sciences 5,600 (a) 102,900
Owens & Minor 10,700 100,312
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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HEALTH CARE (CONTINUED)
Oxford Health Plans 4,600 (a) 54,338
Patterson Dental 12,200 (a) 549,763
1,807,113
INTEREST SENSITIVE--13.5%
Allied Capital 12,500 250,781
Banknorth Group 11,200 378,350
Cullen/Frost Bankers 17,500 505,312
Eaton Vance 5,400 184,613
Enhance Financial Services Group 7,600 138,700
Financial Security Assurance Holdings 5,300 298,788
Hambrecht & Quist Group 5,500 (a) 271,562
Legg Mason 9,600 349,200
MONY Group 8,100 255,150
RenaissanceRe Holdings 6,100 222,269
Webster Financial 11,700 334,913
3,189,638
PRODUCER GOODS--11.0%
AK Steel Holding 10,300 178,319
Catalytica 12,400 (a) 155,775
Expeditors International of Washington 11,300 422,337
Howmet International 11,900 (a) 175,525
MacDermid 3,200 108,400
Milacron 9,800 161,088
NCI Building Systems 11,600 (a) 183,425
Reliance Steel & Aluminum 14,600 306,600
SPS Technologies 4,300 (a) 133,300
Steel Technologies 6,200 72,462
Terex 5,800 (a) 153,338
Tredegar 8,200 179,887
Wausau-Mosinee Paper 9,400 118,675
Wyman-Gordon 12,200 (a) 240,187
2,589,318
SERVICES--16.3%
Acme Communications 7,200 259,200
Armor Holdings 14,600 (a) 141,438
Catalina Marketing 6,500 (a) 608,563
Citadel Communications 9,000 (a) 434,812
COMMON STOCKS (CONTINUED) Shares Value ($)
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SERVICES (CONTINUED)
Cox Radio, Cl. A 5,400 (a) 378,000
Entercom Communications 4,500 224,156
Martha Stewart Living Omnimedia, Cl. A 1,800 66,375
Ritchie Brothers Auctioneers 8,100 (a) 290,588
Sycamore Networks 3,600 774,000
Valassis Communications 12,100 (a) 520,300
Veritas DGC 9,900 (a) 139,219
3,836,651
TECHNOLOGY--19.8%
Akamai Technologies 2,500 362,969
Benchmark Electronics 11,900 (a) 190,400
CheckFree Holdings 6,200 (a) 231,725
CheckPoint Software Technologies 5,100 (a) 590,006
Concord Communications 3,700 (a) 192,169
Dallas Semiconductor 9,000 529,875
Digital Insight 1,100 43,587
Documentum 8,300 (a) 235,513
Lernout & Hauspie Speech Products 6,800 (a) 228,650
Micrel 12,000 (a) 652,500
Novellus Systems 3,900 (a) 302,250
Sanmina 4,100 (a) 369,256
Sawtek 6,200 (a) 254,200
Semtech 12,500 (a) 478,906
4,662,006
UTILITIES--3.8%
Adelphia Business Solutions 4,300 (a) 122,012
Covad Communications Group 5,100 244,800
NorthPoint Communications Group 3,400 91,162
Sierra Pacific Resources 6,948 156,330
TNP Enterprises 7,000 279,125
893,429
TOTAL COMMON STOCKS
(cost $18,384,538) 21,879,999
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--4.6% Amount ($) Value ($)
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U.S. TREASURY BILLS:
4.75%, 11/18/1999 106,000 105,789
4.88%, 11/26/1999 53,000 52,843
4.50%, 12/9/1999 825,000 821,147
4.67%, 12/16/1999 101,000 100,448
TOTAL SHORT-TERM INVESTMENTS
(cost $1,080,075) 1,080,227
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TOTAL INVESTMENTS (cost $19,464,613) 97.4% 22,960,226
CASH AND RECEIVABLES (NET) 2.6% 622,073
NET ASSETS 100.0% 23,582,299
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 19,464,613 22,960,226
Cash 204,114
Receivable for investment securities sold 503,630
Dividends receivable 6,197
23,674,167
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 26,779
Due to Distributor 89
Payable for investment securities purchased 65,000
91,868
- -------------------------------------------------------------------------------
NET ASSETS ($) 23,582,299
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 20,086,686
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 3,495,613
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NET ASSETS ($) 23,582,299
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SHARES OUTSTANDING
(100 million shares of $.001 par value Common Stock authorized) 1,438,726
NET ASSET VALUE, offering and redemption price per share--Note 2(c)($) 16.39
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends 102,194
Interest 43,902
TOTAL INCOME 146,096
EXPENSES:
Management fee--Note 2(a) 194,972
Distribution fees--Note 2(b) 38,994
Loan commitment fees--Note 4 22
TOTAL EXPENSES 233,988
INVESTMENT (LOSS) (87,892)
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 80,509
Net unrealized appreciation (depreciation) on investments 3,209,491
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3,290,000
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,202,108
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
----------------------------
1999 1998(a)
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OPERATIONS ($):
Investment (loss) (87,892) (1,216)
Net realized gain (loss) on investments 80,509 (49,296)
Net unrealized appreciation (depreciation)
on investments 3,209,491 286,122
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,202,108 235,610
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CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 25,188,670 5,193,055
Cost of shares redeemed (10,237,144) --
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS 14,951,526 5,193,055
TOTAL INCREASE (DECREASE) IN NET ASSETS 18,153,634 5,428,665
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 5,428,665 --
END OF PERIOD 23,582,299 5,428,665
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,691,393 415,726
Shares redeemed (668,393) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,023,000 415,726
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
-----------------------
1999 1998(a)
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C>
Net asset value, beginning of period 13.06 12.50
Investment Operations:
Investment income (loss)--net (.09)(b) --
Net realized and unrealized
gain (loss) on investments 3.42 .56
Total from Investment Operations 3.33 .56
Net asset value, end of period 16.39 13.06
- -------------------------------------------------------------------------------
TOTAL RETURN (%) 25.50 4.48(c)
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 .13(c)
Ratio of net investment (loss)
to average net assets (.56) (.02)(c)
Portfolio Turnover Rate 76.14 2.58(c)
- -------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 23,582 5,429
(A) FROM SEPTEMBER 30, 1998 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C.) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Disciplined Smallcap Stock 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, as amended (the "Act"), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the fund. The fund's investment objective is
to seek investment returns (consisting of capital appreciation and income) that
surpass the Standard & Poor' s SmallCap 600((reg.tm) ) Index. The Dreyfus
Corporation (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. (" Mellon Bank") which is a
wholly-owned subsidiary of Mellon Financial Corporation. 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' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including financial futures)
are valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is used
when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors.
(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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 the fund in the event the fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the fund seeks to assert its
rights. The Manager, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers with which the fund enters into repurchase agreements to evaluate
potential risks.
(d) Financial futures: The fund may invest in financial futures contracts in
order to gain exposure to or protect against changes in the market. The fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. At October 31, 1999,
there were no open financial futures contracts.
(e) Distributions to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "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.
(f) Federal income taxes: It is the policy of the fund to continue to qualify as
a regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
During the period ended October 31, 1999, the fund increased accumulated
undistributed investment income-net by $87,892 and decreased accumulated net
realized gain (loss) on investments by $31,213 and decreased paid-in capital by
$56,679. Net assets were not affected by this reclassification.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(a) Investment management fee: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.25% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
fees and expenses of non-interested The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
fees). Each director receives $40,000 per year, plus $5,000 for each joint Board
meeting of The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal
Funds, and The Dreyfus/Laurel Funds Trust (the "Dreyfus/Laurel Funds") attended,
$2,000 for separate committee meetings attended which are not held in
conjunction with a regularly scheduled board meeting and $500 for Board meetings
and separate committee meetings attended that are conducted by telephone and is
reimbursed for travel and out-of-pocket expenses. The Chairman of the Board
receives an additional 25% of such compensation (with the exception of
reimbursable amounts) . In the event that there is a joint committee meeting of
the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund, the $2,000
fee will be allocated between the Dreyfus/Laurel Funds and the 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 a 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 fund's average daily net assets to compensate Mellon Bank, the Manager or
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and the Distributor for shareholder servicing activities
and expenses primarily intended to result in the sale of fund shares. During the
period ended October 31, 1999, the fund was charged $38,994 pursuant to the
Plan.
(c) A 1% redemption fee is charged and retained by the fund on shares redeemed
within six months following the date of issuance, including redemptions made
through the use of the fund's Exchange privilege.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 1999, amounted to
$24,868,734 and $11,226,601, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments was
$3,495,613, consisting of $4,676,593 gross unrealized appreciation and
$1,180,980 gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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
October 31, 1999, the fund did not borrow under the Facility.
The 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 of Dreyfus
Disciplined Smallcap Stock Fund of The Dreyfus/Laurel Funds, Inc., including the
statement of investments, as of October 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year ended October 31, 1999 and for the period
from September 30, 1998 (commencement of operations) to October 31, 1998. 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, 1999, by correspondence with the custodian and brokers. 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 Disciplined Smallcap Stock Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets and financial highlights for the periods noted above,
in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
For More Information
Dreyfus Disciplined Smallcap 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 041AR9910
<PAGE>
Dreyfus Premier
Small Cap
Value Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
18 Financial Highlights
20 Notes to Financial Statements
26 Independent Auditors' Report
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
Small Cap Value Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Small Cap Value
Fund, covering the 12-month period from November 1, 1998 through October 31,
1999. Inside, you' ll find valuable information about how the fund was managed
during the reporting period, including a discussion with the fund's portfolio
manager, William P. Rydell.
While the past year was rewarding for many equity investors, small-cap stocks
did not fare as well as other market sectors. When the reporting period began,
the U.S. stock market had just completed a sharp correction caused primarily by
concerns regarding the spread of the global financial crisis in overseas
markets. Soon after the start of 1999, however, those fears abated. In fact, the
U.S. economy remained strong, and investors became concerned that inflationary
pressures might re-emerge. As a result, the Federal Reserve Board raised
short-term interest rates twice during the summer in an effort to forestall a
reacceleration of inflation in a fast-growing economy. In this environment,
equity investors once again preferred the relative predictability of earnings
from large-cap companies.
Despite a brief rally in April and May, small-cap stocks generally failed to
keep pace with their large-cap counterparts. However, some small-cap technology
stocks that were subject to heightened investor speculation were exceptions to
this trend.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Small Cap Value Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
William P. Rydell, Portfolio Manager
How did Dreyfus Premier Small Cap Value Fund perform relative to its benchmark?
For the 12-month period ended October 31, 1999, the fund's Class A, B, C and R
shares produced total returns of 2.01%, 1.25%, 1.34% and 2.26%, respectively.(1)
In contrast, the Russell 2000 Value Index, which serves as the fund's benchmark,
produced a total return of 0.72%, while the Russell 2000 Index, which includes
growth as well as value small-cap stocks, provided a total return of 14.87% for
the 12 month reporting period.(2)
The fund outperformed the Russell 2000 Value Index due to strong stock
selection. However, as an investment category, value stocks did not perform as
well as growth, nor did small-cap stocks generally perform as well as large-cap
companies.
Because of their low prices, many small-cap companies merged or were acquired
during the last year. Indeed, the fund benefited from corporate buyouts, mainly
by large-cap companies looking to expand in a particular market niche.
Typically, when a portfolio holding was acquired, the buyer would pay a large
premium, thus generating a gain for the fund.
What is the fund's investment approach?
The fund uses a disciplined investment process that combines fundamental
valuation with a computer model that searches for under- valued stocks. A common
definition of an undervalued stock is one selling at a low price relative to its
profits and prospective earnings growth. Our stock evaluation process uses 14
different characteristics -- including changes in earnings estimates and changes
in price-to-earnings ratios -- to identify value among individual stocks.
Rather than using broad economic or market trends, we select stocks on a
company-by-company basis. To ensure ample diversification, we allocate the
portfolio' s assets among industries and economic sectors The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
in similar proportions as the Russell 2000 Value Index. We generally stay
industry-neutral to prevent the fund from being adversely affected if a
particular industry or sector is out of favor during an investment period. By
maintaining such a neutral stance, stock selection drives the fund' s
performance.
What other factors influenced the fund's performance?
During most of the 12-month reporting period, investors were jittery about the
economic environment, causing them to favor large household name stocks. Last
November, the Asian economic crisis was still causing concerns about a worldwide
recession and deflation, which is why the Federal Reserve Board lowered interest
rates three times in rapid succession. It wasn't until April 1999 that small-cap
value stocks began to perform moderately well when it appeared that economic
growth was accelerating and investor concerns over deflation were waning.
By late spring, however, the U.S. economy appeared in danger of overheating.
Energy prices soared and investors began to worry about inflation, causing the
Fed to raise interest rates in June and August. Rising interest rates and an
upward spike in the Consumer Price Index created new worries for investors.
Homebuilders and financial services stocks were weak for most of the reporting
period, although banks got a boost when Congress voted to repeal the 60-year old
Glass-Steagall Act, which had limited banks from offering certain stock
brokerage and insurance products to the public. In contrast, energy stocks
performed well as oil prices doubled, while many technology companies, such as
economically cyclical semiconductor manufacturers, benefited from the improving
global economy.
What is the fund's current strategy?
Our investment model continues to focus on companies that offer strong dividend
yield, are likely to produce positive earnings surprises and are able to show
positive "economic value added." Dividend yield is defined as a company's
dividend divided by its stock price, and a high dividend yield provides income
to shareholders and can make the stock
price less volatile. A positive earnings surprise is a profit report that beats
the expectations of Wall Street analysts. And economic value added means that a
company's profits exceed its cost of capital. We consider companies that exhibit
any or all of these attributes as very desirable.
Examples of current holdings that fit the fund's strategy include Calpine, an
electric utility that specializes in geothermal sources of power; Roadway
Express, a very profitable trucking company; and Patterson Dental, a provider of
dental products to dental practices which has produced positive earnings
surprises in the past.
One of the fund' s best-performing sectors during the period was technology,
which made up about 9% of the Russell 2000 Value Index as of October 31, 1999.
We continue to emphasize companies that we believe have strong earnings growth
and intrinsic value, such as Check Point Software Technologies, which provides
Internet software for corporations, and CTS Corp., a semiconductor company
serving the various computer equipment markets.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
TOTAL RETURN DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE
IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES
CHARGES ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT RETURN
FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
(2) SOURCE: THE FRANK RUSSELL COMPANY -- REFLECTS THE REINVESTMENT OF INCOME
DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE RUSSELL 2000
INDEX IS A WIDELY RECOGNIZED, UNMANAGED INDEX OF SMALL-CAP STOCK PERFORMANCE.
THE RUSSELL 2000 VALUE INDEX IS AN UNMANAGED INDEX OF SMALL-CAP VALUE STOCK
PERFORMANCE.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Small Cap
Value Fund, Class A shares, Class B shares, Class C shares and Class R shares
and the Russell 2000 Value Index
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN EACH OF THE CLASS A, CLASS
B, CLASS C AND CLASS R SHARES OF DREYFUS PREMIER SMALL CAP VALUE FUND ON 4/1/98
(INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE RUSSELL 2000 VALUE INDEX ON
THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT THE MAXIMUM
INITIAL SALES CHARGE ON CLASS A SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES
CHARGE ON CLASS B AND CLASS C SHARES AND ALL OTHER APPLICABLE FEES AND EXPENSES
ON ALL CLASSES. THE RUSSELL 2000 VALUE INDEX IS AN UNMANAGED INDEX COMPRISED OF
SECURITIES IN THE RUSSELL 2000 INDEX WITH LESS THAN AVERAGE GROWTH ORIENTATION.
COMPANIES WITHIN THE RUSSELL 2000 VALUE INDEX GENERALLY HAVE LOW PRICE-TO-BOOK
AND PRICE-EARNINGS RATIOS. THE RUSSELL 2000 INDEX IS AN UNMANAGED INDEX AND IS
COMPOSED OF THE 2,000 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 RUSSELL 2000 VALUE 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.
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year Inception
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares
<S> <C> <C> <C>
WITH SALES CHARGE (5.75%) 4/1/98 (3.87)% (12.82)%
WITHOUT SALES CHARGE 4/1/98 2.01% (9.53)%
Class B Shares
WITH REDEMPTION((+)) 4/1/98 (2.75)% (12.45)%
WITHOUT REDEMPTION 4/1/98 1.25% (10.17)%
Class C Shares
WITH REDEMPTION((+)(+)) 4/1/98 0.34% (10.12)%
WITHOUT REDEMPTION 4/1/98 1.34% (10.12)%
Class R Shares 4/1/98 2.26% (9.28)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
((+)) 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>
<TABLE>
<CAPTION>
The Fund
STATEMENT OF INVESTMENTS
October 31, 1999
COMMON STOCKS--96.3% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--1.0%
<S> <C> <C>
Coors (Adolph), Cl. B 400 22,200
Universal 2,000 47,000
69,200
CHEMICALS--3.7%
Alltrista 700 (a) 16,056
AptarGroup 500 13,438
Cytec Industries 1,000 (a) 25,813
Gencorp 3,300 37,538
Geon 800 21,000
Grace (W.R.) 2,500 (a) 37,344
H.B. Fuller 400 21,900
Omnova Solution 3,300 (a) 23,100
Spartech 1,700 48,663
244,852
CONSUMER CYCLICAL--11.0%
Alaska Air Group 1,400 (a) 55,650
American Eagle Outfiitters 600 (a) 25,687
Arvin Industries 1,500 42,750
BJ's Wholesale Club 1,300 (a) 40,056
Borg-Warner Automotive 1,600 63,200
Buckle 1,000 (a) 16,500
Department 56 900 (a) 17,100
Ethan Allen Interiors 2,400 85,350
Forward Air 800 (a) 23,550
Fossil 1,500 (a) 41,438
Furniture Brands International 1,900 (a) 36,812
IHOP 900 (a) 16,256
Kellwood 2,200 38,912
Rent-Way 1,700 (a) 28,262
Ross Stores 2,900 59,812
Ryan's Family Steak House 7,400 (a) 77,469
Zale 1,300 (a) 54,437
723,241
CONSUMER STAPLES--2.5%
Corn Products International 900 29,306
J & J Snack Foods 1,100 (a) 21,175
Libbey 600 15,900
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES (CONTINUED)
Performance Food Group 1,100 (a) 29,838
Riviana Foods 2,500 46,875
Universal Foods 1,000 19,125
162,219
ENERGY--9.5%
Atmos Energy 1,800 40,837
Berry Petroleum 1,500 18,750
California Water Service Group 1,000 29,000
Energen 2,600 48,100
Equitable Resources 800 29,200
Helmerich & Payne 4,500 107,156
Mitchell Energy & Development, Cl. A 1,400 33,425
Northwestern 800 18,250
ONEOK 1,300 37,944
Southwestern Energy 2,700 21,600
Swift Energy 1,800 (a) 18,675
Tesoro Petroleum 3,400 (a) 41,225
Valero Energy 800 14,700
Varco International 2,000 (a) 21,125
WICOR 1,000 29,750
Washington Gas Light 4,300 116,906
626,643
HEALTH CARE--3.6%
ALPHARMA, CL. A 600 21,112
Bindley Western Industries 1,500 18,844
Datascope 900 (a) 32,400
Hanger Orthopedic Group 2,000 (a) 24,625
IDEC Pharmaceuticals 200 (a) 23,237
Ocular Sciences 1,850 (a) 33,994
Patterson Dental 700 (a) 31,544
Roberts Pharmaceutical 1,300 (a) 41,925
TLC The Laser Center 600 (a) 10,425
238,106
INTEREST SENSITIVE--22.4%
BSB Bancorp 1,100 24,268
BancorpSouth 2,100 36,487
Banknorth Group 1,600 54,050
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Bradley Real Estate 1,700 28,475
CVB Financial 2,160 55,620
Capital Re 1,600 22,600
Chittenden 800 24,700
City National 900 34,875
Corus Bankshares 1,000 27,437
Cullen/Frost Bankers 3,800 109,725
Dain Rauscher 400 21,475
Doral Financial 2,400 30,750
Downey Financial 2,100 46,462
E.W. Blanch Holdings 300 19,425
Eaton Vance 1,500 51,281
Fidelity National Financial 800 12,550
Financial Security Assurance Holdings 1,300 73,287
First American Financial 1,000 14,812
First Citizens BancShares 100 7,600
Foremost Corp. of America 1,100 31,075
Gallagher (Arthur J.) 1,000 51,750
Harbor Florida Bancshares 1,400 17,588
Harleysville Group 1,800 30,713
Health Care REIT 1,400 25,025
MAF Bancorp 2,100 45,281
MONY Group 1,400 44,100
Medical Assurance 900 (a) 21,037
North Fork Bancorp 2,300 47,581
PartnerRe 1,000 31,187
Peoples Heritage Financial Group 2,900 55,100
Presidential Life 2,500 45,937
Professionals Group 1,300 (a) 31,281
Protective Life 900 32,569
Queens County Bancorp 900 28,294
Radian Group 1,326 70,030
UICI 700 (a) 18,550
Washington Federal 1,290 29,428
Webster Financial 1,700 48,662
Westamerica Bancorp 2,100 72,319
1,473,386
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
MINING & METALS--3.2%
AK Steel Holding 2,500 43,281
Ball 1,300 52,406
Cleveland-Cliffs 1,000 29,875
Commercial Metals 1,700 55,463
Reliance Steel & Aluminum 1,450 30,450
211,475
PRODUCER GOODS--21.0%
Alexander & Baldwin 1,100 26,400
BRE Properties, CL. A 800 18,150
Belden 1,500 27,562
Cabot Industrial Trust 1,700 34,000
Catellus Development 2,000 (a) 23,500
Crane 900 18,394
D.R. Horton 5,600 66,150
Franchise Finance Corp. of America 2,600 56,550
Gables Residential Trust 1,100 26,606
Glatfelter (P.H.) 1,700 24,863
IDEX 2,100 51,713
Integrated Electrical Services 1,600 (a) 17,400
JLG Industries 1,900 24,344
Kaydon 1,000 24,813
Lincoln Electric Holdings 4,200 93,975
M.D.C. Holdings 1,900 29,688
Milacron 1,000 16,438
Nationwide Heath Properties 2,400 39,750
Precision Castparts 600 17,700
Pulte 5,000 100,625
Reckson Associates Realty 1,900 35,150
Roadway Express 2,100 43,838
SEACOR SMIT 600 (a) 27,450
SPS Technologies 1,500 (a) 46,500
Southdown 800 38,650
Steel Technologies 1,600 18,700
Tecumseh Products, Cl. A 700 33,556
Terex 1,500 (a) 39,656
Texas Industries 700 25,069
Thomas Industries 2,400 42,900
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINEUD)
Toll Brothers 1,600 (a) 28,000
Trinity Industries 1,100 32,794
USFreightways 1,500 67,969
U.S. Home 2,500 (a) 70,000
Universal Forest Products 1,800 26,100
Webb (Del) 3,100 68,394
1,383,347
SERVICES--4.9%
Banta 800 18,100
Building One Services 1,300 (a) 14,463
CDI 800 (a) 21,200
CIBER 1,300 (a) 21,206
Consolidated Graphics 900 (a) 18,000
Franklin Covey 1,500 (a) 12,094
Gaylord Entertainment 700 22,794
Harman International Industries 500 20,438
Interim Services 1,400 (a) 23,013
King World Productions 1,700 (a) 65,875
Navigant Consulting 500 (a) 14,281
True North Communications 900 36,281
Wallace Computer Services 1,600 35,400
323,145
TECHNOLOGY--9.0%
AVT 800 (a) 26,800
Apex 1,100 (a) 18,700
CTS 700 39,594
Catapult Communications 1,100 (a) 17,463
Check Point Software Technologies 400 (a) 46,275
Cypress Semiconductor 900 (a) 23,006
ESS Technology 1,700 (a) 22,419
Hadco 600 (a) 22,050
Kimball International 1,300 20,800
Kronos 600 (a) 26,925
Kulicke & Soffa Industries 900 (a) 26,494
L-3 Communications Holding 700 (a) 29,531
Pioneer-Standard Electronics 1,300 16,981
Pittway, CL. A 1,100 36,300
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Plantronics 300 (a) 17,569
Progress Software 600 (a) 20,100
RadiSys 600 (a) 31,800
Rogers 600 (a) 21,750
SCM Microsystems 300 (a) 14,175
Semtech 900 (a) 34,481
Tekelec 1,100 (a) 13,956
ThermoQuest 2,000 (a) 21,000
TranSwitch 950 (a) 44,709
592,878
UTILITIES--4.5%
Calpine 800 (a) 46,100
Cleco 1,000 33,125
Conectiv 1,500 29,251
Idacorp 900 27,169
NSTAR 1,900 72,319
Pacific Gateway Exchange 1,000 (a) 22,750
Public Service Company of New Mexico 3,000 53,625
RGS Energy Group 500 12,469
296,808
TOTAL COMMON STOCKS
(cost $6,818,365) 6,345,300
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--1.1% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
4.40%, 11/4/1999 29,000 28,989
4.40%, 11/12/99 9,000 8,988
4.42%, 12/9/99 38,000 37,822
TOTAL SHORT-TERM INVESTMENTS
(cost $75,793) 75,799
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $6,894,158) 97.4% 6,421,099
CASH AND RECEIVABLES (NET) 2.6% 169,627
NET ASSETS 100.0% 6,590,726
(A) NON-INCOME PRODUCING.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 6,894,158 6,421,099
Cash 115,641
Receivable for shares of Capital Stock subscribed 59,470
Dividends receivable 7,499
6,603,709
- ------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 8,632
Due to Distributor 234
Payable for shares of Capital Stock redeemed 4,117
12,983
- --------------------------------------------------------------------------------
NET ASSETS ($) 6,590,726
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 7,389,110
Accumulated net realized gain (loss) on investments (325,325)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (473,059)
- -------------------------------------------------------------------------------
NET ASSETS ($) 6,590,726
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets ($) 4,431,502 990,260 659,643 509,321
Shares Outstanding 416,818 93,921 62,551 47,805
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 10.63 10.54 10.55 10.65
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $14 foreign taxes withheld at source) 82,589
Interest 6,671
TOTAL INCOME 89,260
EXPENSES:
Management fee--Note 2(a) 68,883
Distribution and service plan fees--Note 2(b) 23,918
Loan commitment fees--Note 4 11
TOTAL EXPENSES 92,812
INVESTMENT (LOSS) (3,552)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (208,895)
Net unrealized appreciation (depreciation) on investments 278,088
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 69,193
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 65,641
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
--------------------------------
1999 1998(a)
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income (loss)--net (3,552) 7,466
Net realized gain (loss) on investments (208,895) (116,430)
Net unrealized appreciation (depreciation)
on investments 278,088 (751,147)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 65,641 (860,111)
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (9,456) --
Class R shares (2,327) --
TOTAL DIVIDENDS (11,783) --
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 1,354,136 3,776,717
Class B shares 575,937 757,342
Class C shares 173,901 711,811
Class R shares 405,000 501,500
Dividends reinvested:
Class A shares 9,165 --
Class R shares 2,327 --
Cost of shares redeemed:
Class A shares (139,346) (18,415)
Class B shares (230,496) (19,532)
Class C shares (135,853) (196)
Class R shares (327,019) --
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 1,687,752 5,709,227
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,741,610 4,849,116
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 4,849,116 --
END OF PERIOD 6,590,726 4,849,116
Undistributed investment income--net -- 7,466
(A) FROM APRIL 1, 1998 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
--------------------------------
1999 1998(a)
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A
Shares sold 125,449 304,913
Shares issued for dividends reinvested 843 --
Shares redeemed (12,631) (1,756)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 113,661 303,157
- -------------------------------------------------------------------------------
CLASS B
Shares sold 54,531 63,366
Shares redeemed (22,016) (1,960)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 32,515 61,406
- ------------------------------------------------------------------------------
CLASS C
Shares sold 15,787 59,648
Shares redeemed (12,867) (17)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,920 59,631
- -------------------------------------------------------------------------------
CLASS R
Shares sold 36,359 40,126
Shares issued for dividends reinvested 214 --
Shares redeemed (28,894) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 7,679 40,126
(A) FROM APRIL 1, 1998 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal period indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Class A Shares Class B Shares
----------------------------------------------------
Year Ended October 31, Year Ended October 31,
----------------------------------------------------
1999 1998(a) 1999 1998(a)
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning
<S> <C> <C> <C> <C>
of period 10.45 12.50 10.41 12.50
Investment Operations:
Investment income (loss)--net .01(b) .03 (.07)(b) (.02)
Net realized and unrealized gain
(loss) on investments .20 (2.08) .20 (2.07)
Total from Investment Operations .21 (2.05) .13 (2.09)
Distributions:
Dividends from investment
income--net (.03) -- -- --
Net asset value, end of period 10.63 10.45 10.54 10.41
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 2.01 (16.40)(d) 1.25 (16.72)(d)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 1.50 .88(d) 2.25 1.32(d)
Ratio of net investment income
(loss) to average net assets .12 .24(d) (.63) (.20)(d)
Portfolio Turnover Rate 53.87 19.72(d) 53.87 19.72(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ X 1,000) 4,432 3,169 990 639
(A) FROM APRIL 1, 1998 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Class C Shares Class R Shares
----------------------------------------------------------
Year Ended October 31, Year Ended October 31,
----------------------------------------------------------
1999 1998(a) 1999 1998(a)
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning
of period 10.41 12.50 10.47 12.50
Investment Operations:
Investment income (loss)--net (.07)(b) (.02) .04(b) .04
Net realized and unrealized gain
(loss) on investments .21 (2.07) .20 (2.07)
Total from Investment Operations .14 (2.09) .24 (2.03)
Distributions:
Dividends from investment
income--net -- -- (.06) --
Net asset value, end of period 10.55 10.41 10.65 10.47
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 1.34(c) (16.72)(c,d) 2.26 (16.24)(d)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 2.25 1.32(d) 1.25 .73(d)
Ratio of net investment income
(loss) to average net assets (.63) (.19)(d) .36 .38(d)
Portfolio Turnover Rate 53.87 19.72 (d) 53.87 19.72(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ X 1,000) 660 621 509 420
(A) FROM APRIL 1, 1998 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Small Cap Value Fund (the "fund") is a separate diversified
series of The Dreyfus/Laurel Funds, Inc. (the "Company") which is registered
under the Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company and operates as a series company currently
offering nineteen series including the fund. The fund's investment objective is
to provide investors with total investment returns that consistently outperform
the Russell 2000 Value Index. The Dreyfus Corporation (the "Manager") serves as
the fund' s investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A. (" Mellon Bank" ) which is a wholly-owned subsidiary of Mellon
Financial Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 100 million shares of $.001 par
value Capital Stock in each of the following classes: Class A, Class B, Class C
and Class R. Class A, Class B and Class C shares are sold primarily to retail
investors through financial intermediaries and bear a distribution fee and/or
service fee. Class A shares are sold with a front-end sales charge and bear a
distribution fee, while Class B and Class C shares are subject to a contingent
deferred sales charge ("CDSC") and bear 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 charge 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.
<TABLE>
<CAPTION>
As of October 31, 1999, MBC Investment Corp., an indirect subsidiary of Mellon
Financial Corporation, held the following shares:
<S> <C> <C> <C>
Class A 280,799 Class C 40,000
Class B 40,000 Class R 40,214
</TABLE>
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
in exchange rates. Such gains and losses are included with net realized and
unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain, 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 of 1986, as amended (the "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 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 $313,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1999. If not
applied, $116,000 carryover expires in fiscal 2006 and $197,000 expires in
fiscal 2007.
During the period ended October 31, 1999, the fund increased accumulated
investment income net by $7,869 and decreased paid-in capital by that amount.
Net assets were not affected by this reclassification.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.25% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
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 fee). Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel
Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund. The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
These fees and expenses are charged and allocated to each series based on net
assets. Amounts required to be paid by the Company directly to the
non-interested Directors, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Directors.
(B) DISTRIBUTION AND SERVICE PLAN: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of their average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B and Class C shares pay the Distributor for distributing their 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 Class B and Class C
shares pay Dreyfus Service Corporation or the Distributor for providing certain
services to the holders of Class B and Class C shares a fee at the annual rate
of .25% of the value of the average daily net assets of Class B and Class C
shares. During the period ended October 31, 1999, Class A, Class B and Class C
shares were charged $8,702, $6,783 and $4,629, respectively, pursuant to the
Plan and Class B and Class C shares were charged $2,261 and $1,543,
respectively, pursuant to the service plan.
Under its terms, the Plan and service 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 or in any agreement
related to the Plan or service plan.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$34 during the period ended October 31, 1999 from commissions earned on sales of
the fund's shares.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 1999, amounted to
$4,949,672 and $2,883,243, respectively.
At October 31, 1999, accumulated net unrealized depreciation on investments was
$473,059, consisting of $408,510 gross unrealized appreciation and $881,569
gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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
October 31, 1999, the fund did not borrow under the Facility.
The 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 of Dreyfus
Premier Small Cap Value Fund of The Dreyfus/Laurel Funds, Inc., including the
statement of investments, as of October 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year ended October 31, 1999 and for the period
from April 1, 1998 (commencement of operations) to October 31, 1998. 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, 1999, by correspondence with the custodian and brokers. 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 Cap Value Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets and financial highlights for the periods noted above,
in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
NOTES
For More Information
Dreyfus Premier Small Cap Value Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 148/158AR9910
Dreyfus Premier
Tax Managed
Growth Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
15 Financial Highlights
17 Notes to Financial Statements
23Independent Auditors Report
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
Tax Managed Growth Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Tax Managed
Growth Fund, covering the 12-month period from November 1, 1998 through October
31, 1999. Inside, you' ll find valuable information about how the fund was
managed during the reporting period, including a discussion with the fund's
portfolio manager, Fayez Sarofim, of Fayez Sarofim & Co., the fund' s
sub-investment adviser.
Despite a relatively weak third quarter of 1999 for the U.S. stock market, the
past year has been rewarding for most equity investors overall. When the
reporting period began, most sectors of the U.S. stock market had completed a
sharp correction caused primarily by concerns regarding the spread of the global
financial crisis in overseas markets. Soon after the start of 1999, however,
those fears abated. In fact, the U.S. economy remained strong, characterized by
low inflation and high levels of consumer spending. These conditions supported
continued strength in the stock market through the spring.
In the summer of 1999, however, the Federal Reserve Board raised short-term
interest rates twice in an effort to forestall inflationary pressures in a
fast-growing economy. Because higher interest rates tend to increase the cost of
capital and make fixed-income securities more competitive relative to equities,
most sectors of the stock market declined. By the end of the 12-month reporting
period, major stock indices had fallen from the record highs reached during the
summer, although stock prices generally were still higher than they were one
year earlier.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Tax Managed Growth Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Fayez Sarofim, Portfolio Manager Fayez Sarofim & Co., Sub-Investment Adviser
How did Dreyfus Premier Tax Managed Growth Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 1999, the fund's total return was
19.64% for Class A shares, 18.81% for Class B shares, 18.74% for Class C shares,
and 19.40% for Class T shares.(1) For the same period, the total return of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), the fund's
benchmark, was 25.66%.(2)
We attribute the fund's relative performance to the narrow base of stocks that
supported the S& P 500 Index' s rise. Much of the Index's advance during the
period was driven by strong performance among a relative handful of
technology-related stocks. Since the Index is more heavily weighted toward such
companies than the fund, the Index produced higher returns than the fund.
What is the fund's investment approach?
The fund invests primarily in large, well-established, multinational growth
companies that we believe are well positioned to weather difficult economic
climates and thrive during favorable times. We focus on purchasing growth stocks
at a price we consider to be justified by a company's fundamentals. The result
is a portfolio of stocks in prominent companies selected for their sustained
patterns of profitability, strong balance sheets, expanding global presence and
above-average growth potential.
At the same time, we manage the portfolio in a manner particularly well suited
to the concerns of tax-conscious investors. Our tax-managed approach is based on
targeting long-term growth rather than short-term profit. We buy and sell
relatively few stocks during the course of the year, in seeking to minimize
investors' tax liabilities and reduce the fund's trading costs. During the
12-month reporting The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
period, the fund maintained a portfolio turnover rate of 1.26%, well within our
goal of an annual portfolio turnover rate below 15% during normal market
conditions.
What other factors influenced the fund's performance?
As we mentioned earlier, most of the benchmark's strong rise was driven by the
performance of an extremely narrow group of technology-related companies. During
the first nine months of 1999, only 11 stocks in the S&P 500 Index accounted for
all of the Index' s return. While the fund benefited from owning significant
positions in a few of these stocks -- such as technology leaders Intel,
Microsoft and Cisco Systems -- our performance relative to our benchmark
suffered because we held fewer of these stocks than the S&P 500 Index.
A wide range of global, domestic and company-specific issues also affected the
fund' s performance. During the first half of the period, global economic
difficulties and weak consumer spending in many foreign markets created
challenging conditions for multinational consumer products companies. During the
second half of the period, rising interest rates took a toll on
interest-rate-sensitive sectors, such as financials and health care. Stocks of
many health care and pharmaceutical companies suffered additionally during the
period due to concerns over expiring drug patents and new U.S. limits on
Medicare reimbursements. Since we allocated more of the fund's assets to health
care, consumer staples and financials than other sectors, these conditions hurt
the fund's overall performance.
What is the fund's current strategy?
Much of the fund' s performance results from our sector selection process, an
analysis designed to identify industries likely to enjoy long-term growth.
During the reporting period, this process led us to maintain the fund's emphasis
on health care, consumer staple and financial industries, and to de-emphasize
commodities and basic industries. Our investment discipline also led us away
from technology companies with stock prices higher than we judged to be
warranted by their financial strength and growth rates.
While our emphasis on health care and consumer staple stocks constrained the
fund' s ability to keep pace with the S&P 500 Index due to the factors described
above, many individual holdings in these sectors performed well. The fund's top
performers included pharmaceutical companies Johnson & Johnson and Bristol-Myers
Squibb, and consumer product companies Wal-Mart Stores and Colgate Palmolive.
Furthermore, despite the challenging interest-rate environment and weakness in
the overall financial sector, our individual holdings of financial stocks
boosted the fund' s performance relative to the S&P 500 Index, as did our
underweighting of the troubled commodities and basic industry sectors.
As of October 31, 1999, the long-term economic trends that have led us to
emphasize health care, financials and consumer staples appeared to us to remain
in place. Specifically, the U.S. economy has continued to perform well. Despite
rising interest rates, inflation remained low while consumer confidence remained
high -- and the global economy demonstrated continuing signs of improvement. As
a result, we have seen little reason to alter our asset allocation strategy. Nor
have we observed changes in company fundamentals that might lead us to make
significant changes among our individual holdings.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGES IN THE
CASE OF CLASS A AND CLASS T SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES
CHARGES IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD
THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS
NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT RETURN FLUCTUATE SUCH
THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX
OF U.S. STOCK MARKET PERFORMANCE.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Tax
Managed Growth Fund Class A shares, Class B shares, Class C shares and Class T
shares and the Standard & Poor's 500 Composite Stock Price Index
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN EACH OF THE CLASS A, CLASS
B, CLASS C AND CLASS T SHARES OF DREYFUS PREMIER TAX MANAGED GROWTH FUND ON
11/4/97 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE STANDARD & POOR'S
500 COMPOSITE STOCK PRICE INDEX ON THAT DATE. FOR COMPARATIVE PURPOSES, THE
VALUE OF THE INDEX ON 10/31/97 IS USED AS THE BEGINNING VALUE ON 11/4/97. ALL
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT THE MAXIMUM
INITIAL SALES CHARGE ON CLASS A AND CLASS T SHARES, THE MAXIMUM CONTINGENT
DEFERRED SALES CHARGE ON CLASS B AND CLASS C SHARES AND ALL OTHER APPLICABLE
FEES AND EXPENSES ON ALL CLASSES. THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET
PERFORMANCE, WHICH 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.
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year Inception
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares
<S> <C> <C> <C>
WITH SALES CHARGE (5.75%) 11/4/97 12.76% 15.57%
WITHOUT SALES CHARGE 11/4/97 19.64% 19.05%
Class B Shares
WITH REDEMPTION ((+)) 11/4/97 14.81% 16.47%
WITHOUT REDEMPTION 11/4/97 18.81% 18.18%
Class C Shares
WITH REDEMPTION ((+)(+)) 11/4/97 17.74% 18.15%
WITHOUT REDEMPTION 11/4/97 18.74% 18.15%
Class T Shares
WITH SALES CHARGE (4.5%) 11/4/97 14.06% 16.06%
WITHOUT SALES CHARGE 11/4/97 19.40% 18.78%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
( (+)) 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>
<TABLE>
<CAPTION>
The Fund
STATEMENT OF INVESTMENTS
October 31, 1999
COMMON STOCKS--96.4% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--4.1%
<S> <C> <C>
DailmerChrysler 55,175 4,289,856
Ford Motor 160,000 8,780,000
General Motors 15,000 1,053,750
14,123,606
BANKING--6.0%
BankAmerica 78,948 5,082,278
Chase Manhattan 100,000 8,737,500
SunTrust Banks 95,000 6,952,812
20,772,590
CAPITAL GOODS--8.2%
AlliedSignal 85,000 4,839,687
Boeing 25,000 1,151,563
Emerson Electric 70,000 4,204,375
General Electric 105,000 14,234,062
Rockwell International 80,000 3,875,000
28,304,687
COMMUNICATIONS--4.8%
Bell Atlantic 35,000 2,272,812
BellSouth 150,000 6,750,000
SBC Communications 146,320 7,453,175
16,475,987
COMPUTERS--9.6%
Cisco Systems 120,000 (a) 8,880,000
Hewlett-Packard 70,000 5,184,375
International Business Machines 75,000 7,378,125
Microsoft 125,000 (a) 11,570,312
33,012,812
ELECTRONICS--6.2%
Conexant Systems 27,500 (a) 2,567,812
Intel 245,000 18,972,188
21,540,000
ENERGY--5.7%
BP Amoco, A.D.S. 130,000 7,507,500
Chevron 40,000 3,652,500
Exxon 55,000 4,073,438
Mobil 40,000 3,860,000
Royal Dutch Petroleum, A.D.R. 12,000 719,250
19,812,688
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCE-MISC.--10.1%
American Express 40,000 6,160,000
Associates First Capital, Cl. A 130,166 4,751,059
Citigroup 190,000 10,283,750
Federal National Mortgage Association 130,000 9,197,500
Goldman Sachs Group 30,000 2,130,000
Merrill Lynch 30,000 2,355,000
34,877,309
FOOD & DRUGS--1.6%
Walgreen 225,000 5,667,188
FOOD, BEVERAGE & TOBACCO--6.3%
Coca-Cola 175,000 10,325,000
PepsiCo 185,000 6,417,187
Philip Morris Cos. 200,000 5,037,500
21,779,687
HEALTH CARE--16.8%
Abbott Laboratories 140,000 5,652,500
American Home Products 100,000 5,225,000
Bristol-Myers Squibb 100,000 7,681,250
Johnson & Johnson 100,000 10,475,000
Merck 145,000 11,536,563
Pfizer 440,000 17,380,000
57,950,313
INSURANCE--3.4%
Berkshire Hathaway, Cl. A 79 (a) 5,048,100
Berkshire Hathaway, Cl. B 15 (a) 31,350
Marsh & McLennan 85,000 6,720,312
11,799,762
MEDIA/ENTERTAINMENT--3.6%
Fox Entertainment Group, Cl. A 120,000 (a) 2,595,000
McDonald's 120,000 4,950,000
Tricon Global Restaurants 12,500 (a) 502,344
Viacom, Cl. B 100,000 (a) 4,475,000
12,522,344
PERSONAL CARE--5.3%
Colgate-Palmolive 90,000 5,445,000
Gillette 125,000 4,523,438
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PERSONAL CARE (CONTINUED)
Procter & Gamble 80,000 8,390,000
18,358,438
PUBLISHING--1.7%
McGraw-Hill Cos. 100,000 5,962,500
RETAIL--2.1%
Wal-Mart Stores 130,000 7,369,375
TRANSPORTATION--.9%
Norfolk Southern 130,000 3,176,875
TOTAL COMMON STOCKS
(cost $291,255,185) 333,506,161
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--.4%
- -----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING:
News A.D.S., Cum., $.4228
(cost $1,391,500) 55,000 1,515,938
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--2.8% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
4.59%, 11/4/1999 622,000 621,764
4.43%, 11/12/1999 2,216,000 2,213,008
4.62%, 11/18/1999 408,000 407,188
4.77%, 11/26/1999 844,000 841,510
4.49%, 12/9/1999 955,000 950,540
4.54%, 12/23/1999 4,616,000 4,586,504
TOTAL SHORT-TERM INVESTMENTS
(cost $9,619,251) 9,620,514
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $302,265,936) 99.6% 344,642,613
CASH AND RECEIVABLES (NET) .4% 1,486,292
NET ASSETS 100.0% 346,128,905
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS..
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 302,265,936 344,642,613
Cash 1,007,107
Receivable for shares of Capital Stock subscribed 960,887
Dividends receivable 426,255
347,036,862
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 480,496
Due to Distributor 47,724
Payable for shares of Capital Stock redeemed 379,737
907,957
- -------------------------------------------------------------------------------
NET ASSETS ($) 346,128,905
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 303,987,778
Accumulated net realized gain (loss) on investments (235,550)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 42,376,677
- -------------------------------------------------------------------------------
NET ASSETS ($) 346,128,905
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class T
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets ($) 82,943,337 192,195,900 62,532,560 8,457,108
Shares Outstanding 4,693,365 11,026,539 3,589,418 480,553
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 17.67 17.43 17.42 17.60
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $29,255 foreign taxes withheld at source) 3,412,239
Interest 342,651
TOTAL INCOME 3,754,890
EXPENSES:
Management fee--Note 2(a) 2,759,427
Distribution and service plan fees--Note 2(b) 2,007,036
Loan commitment fees--Note 4 474
TOTAL EXPENSES 4,766,937
INVESTMENT (LOSS) (1,012,047)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (235,550)
Net unrealized appreciation (depreciation) on investments 35,117,606
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 34,882,056
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 33,870,009
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
--------------------------------
1999 1998(a)
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss) (1,012,047) (33,398)
Net realized gain (loss) on investments (235,550) 3,024
Net unrealized appreciation (depreciation)
on investments 35,117,606 7,259,071
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 33,870,009 7,228,697
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares -- (7,111)
Class T shares -- (767)
TOTAL DIVIDENDS -- (7,878)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 55,621,236 34,492,581
Class B shares 115,526,681 73,204,923
Class C shares 42,487,916 22,099,641
Class T shares 3,980,373 4,773,293
Dividends reinvested:
Class A shares -- 84
Class T shares -- 22
Cost of shares redeemed:
Class A shares (11,628,031) (6,539,758)
Class B shares (14,203,323) (4,239,951)
Class C shares (6,908,718) (1,717,671)
Class T shares (1,137,798) (773,423)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 183,738,336 121,299,741
TOTAL INCREASE (DECREASE) IN NET ASSETS 217,608,345 128,520,560
- ------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 128,520,560 --
END OF PERIOD 346,128,905 128,520,560
(A) FROM NOVEMBER 4, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
---------------------------
1999 1998(a)
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(B)
Shares sold 3,316,225 2,507,883
Shares issued for dividends reinvested -- 7
Shares redeemed (682,806) (447,944)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,633,419 2,059,946
- -------------------------------------------------------------------------------
CLASS B(B)
Shares sold 6,940,466 5,230,565
Shares redeemed (844,926) (299,566)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 6,095,540 4,930,999
- -------------------------------------------------------------------------------
CLASS C
Shares sold 2,553,452 1,569,748
Shares redeemed (412,700) (121,082)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,140,752 1,448,666
- -------------------------------------------------------------------------------
CLASS T
Shares sold 243,702 358,322
Shares issued for dividends reinvested -- 2
Shares redeemed (68,513) (52,960)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 175,189 305,364
(A) FROM NOVEMBER 4, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
(B) DURING THE PERIOD ENDED OCTOBER 31, 1999, 23,432 CLASS B SHARES REPRESENTING
$393,822 WERE AUTOMATICALLY CONVERTED TO 23,192 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal period indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
- --------------------------------------------------------------------------------------
Class A Shares Class B Shares
------------------------------------------------------------------------------
Year Ended October 31, Year Ended October 31,
------------------------------------------------------------------------------
1999 1998(a) 1999 1998(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning
<S> <C> <C> <C> <C>
of period 14.77 12.50 14.67 12.50
Investment Operations:
Investment income (loss)--net .09(b) .05 (.15)(b) (.02)
Net realized and unrealized gain
(loss) on investments 2.81 2.23 2.91 2.19
Total from Investment Operations 2.90 2.28 2.76 2.17
Distributions:
Dividends from investment
income--net -- (.01) -- --
Net asset value, end of period 17.67 14.77 17.43 14.67
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 19.64 18.26(d) 18.81 17.36(d)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 1.35 1.34(d) 2.10 2.09(d)
Ratio of net investment income
(loss) to average net assets .15 .52(d) (.60) (.27)(d)
Portfolio Turnover Rate 1.26 .05(d) 1.26 .05(d)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ X 1,000) 82,943 30,428 192,196 72,347
(A) FROM NOVEMBER 4, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Class C Shares Class T Shares
------------------------------------------------------------------------
Year Ended October 31, Year Ended October 31,
-------------------------------------------------------------------------
1999 1998(a) 1999 1998(a)
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning
<S> <C> <C> <C> <C>
of period 14.66 12.50 14.74 12.50
Investment Operations:
Investment income (loss)--net (.14)(b) (.02) .12(b) .03
Net realized and unrealized gain
(loss) on investments 2.90 2.18 2.74 2.22
Total from Investment Operations 2.76 2.16 2.86 2.25
Distributions:
Dividends from investment
income--net -- -- -- (.01)
Net asset value, end of period 17.42 14.66 17.60 14.74
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 18.74 17.36(d) 19.40 17.97(d)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 2.10 2.09(d) 1.60 1.59(d)
Ratio of net investment income
(loss) to average net assets (.60) (.26)(d) (.10) .25(d)
Portfolio Turnover Rate 1.26 .05(d) 1.26 .05(d)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ X 1,000) 62,533 21,244 8,457 4,501
(A) FROM NOVEMBER 4, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Tax Managed Growth 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, as amended (the "Act"), as an open-end
management investment company and operates as a series company currently
offering nineteen series including the fund. The fund's investment objective is
to provide investors with long-term capital appreciation consistent with
minimizing realized capital gains and taxable current income. The Dreyfus
Corporation (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary
of Mellon Financial Corporation. Fayez Sarofim & Co. ("Sarofim") serves as the
fund's sub-investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 100 million shares of $.001 par
value Capital Stock in each of the following classes of shares: Class A, Class
B, Class C and Class T. Class A, Class B, Class C and Class T 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 and bear a distribution and
service fee. Class T shares are sold with a front-end sales charge and bear a
distribution and service fee. 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(C) FOREIGN CURRENCY TRANSACTIONS: The fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "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 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 $236,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1999. If not
applied, the carryover expires in fiscal 2007.
During the period ended October 31, 1999, the fund increased accumulated
undistributed investment income-net by $1,012,047 and decreased paid-in capital
by that amount. Net assets were not affected by this reclassification.
NOTE 2--Investment Management Fee and Other Transfer With Affiliates:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
at the annual rate of 1.10% of the value of the fund's average daily net assets.
Out of its fee, the Manager pays all of the expenses of the fund except
brokerage fees, taxes, interest, commitment fees, Rule 12b-1 distribution fees
and expenses, service fees 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 fees). Each director
receives $40,000 per year, plus $5,000 for each joint Board meeting of The
Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The
Dreyfus/Laurel Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for
separate committee meetings attended which are not held in conjunction with a
regularly scheduled board meeting and $500 for Board meetings and separate
committee meetings attended that are conducted by telephone and is reimbursed
for travel and out-of-pocket expenses. The Chairman of the Board receives an
additional 25% of such compensation (with the exception of reimbursable amounts)
.. In the event that there is a joint committee meeting of the Dreyfus/Laurel
Funds and the Dreyfus High Yield Strategies Fund, the $2,000 fee will be
allocated between the Dreyfus/Laurel Funds and the 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.
Pursuant to a Sub-Investment Advisory Agreement between the Manager and Sarofim,
the Manager has agreed to pay Sarofim an annual fee of .30 of 1% of the value of
the fund's average daily net assets, payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$628 during the period ended October 31, 1999 from commissions earned on sales
of the fund's shares.
(B) DISTRIBUTION AND SERVICE PLAN: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A may pay annually up to
.. 25% of the value of its average daily net assets to compensate the Distributor
and Dreyfus Service Corporation for shareholder servicing activities and the
Distributor for activities and expenses primarily intended to result in the sale
of Class A shares. Under the Plan, Class B, Class C and Class T shares pay the
Distributor for distributing their shares at an aggregate annual rate of .75%,
.. 75% and .25% of the value of the average daily net assets of Class B, Class C
and Class T shares, respectively. Class B, Class C and Class T shares are also
subject to a service plan adopted pursuant to Rule 12b-1, under which Class B,
Class C and Class T shares pay Dreyfus Service Corporation or the Distributor
for providing certain services to the holders of Class B, Class C and Class T
shares a fee at the annual rate of .25% of the value of the average daily net
assets of Class B, Class C and Class T shares. During the period ended October
31, 1999, Class A, Class B, Class C and Class T shares were charged $154,858
$1,034,191, $327,221 and $18,481, respectively, pursuant to the Plan. During the
period ended October 31, 1999, Class B, Class C and Class T shares were charged
$344,730, $109,074 and $18,481, respectively, pursuant to the service plan.
Under its terms, the Plan and service 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 or in any agreement
related to the Plan or service 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, 1999, amounted to
$182,673,342 and $3,037,760, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments was
$42,376,677, consisting of $53,412,304 gross unrealized appreciation and
$11,035,627 gross unrealized depreciation.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At October 31, 1999, 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 $500 million
redemption credit facility (the" 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
October 31, 1999, the fund did not borrow under the Facility.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of Dreyfus
Premier Tax Managed Growth Fund of The Dreyfus/Laurel Funds, Inc. including the
statement of investments, as of October 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the two years in the period then ended. 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, 1999, by correspondence with the custodian. 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 Tax Managed Growth Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the two years in the period then ended,
in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
The Fund
NOTES
For More Information
Dreyfus Premier Tax Managed Growth Fund
200 Park Avenue
New York, NY 10166
Investment Advisor
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Advisor
Fayez Sarofim & Co.
Two Houston Center
Suite 2907
Houston, TX 77010
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 149/159AR9910
Dreyfus
Disciplined Intermediate
Bond Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments Year 2000 Issues (Unaudited)
and its share price.
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
17 Financial Highlights
19 Notes to Financial Statements
24 Independent Auditor's Report
25 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Disciplined
Intermediate Bond Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Disciplined
Intermediate Bond Fund, covering the 12-month period from November 1, 1998
through October 31, 1999. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund's portfolio manager, Dan Fasciano.
The past 12 months have been highly volatile for most bonds. Although U.S.
Treasury securities began the reporting period in the wake of a rally caused
primarily by a "flight to quality" amid the spread of the global financial
crisis in overseas markets, most higher yielding sectors of the bond market had
declined sharply. The Federal Reserve Board responded to the global financial
crisis last fall by reducing short-term interest rates. Its strategy apparently
was effective, and the U.S. economy remained strong through the remainder of the
reporting period.
Because inflation is more likely to rise in a strong economy, the overall bond
market -- including U.S. Treasury securities -- declined during the first ten
months of 1999. To help forestall a rise of inflation, the Federal Reserve Board
raised short-term interest rates twice during the summer of 1999, effectively
reversing most of last fall's interest-rate cuts. Higher interest rates led to
some erosion of bond prices, especially among the higher yielding market
sectors. In this environment, however, the yields of many higher yielding bonds
- -- including corporate bonds and U.S. government agency securities -- have
recently been quite attractive compared to the yields of U.S. Treasury
securities of comparable maturity.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Disciplined Intermediate Bond Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Dan Fasciano, Portfolio Manager
How did Dreyfus Disciplined Intermediate Bond Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 1999, the fund's Investor shares
produced a total return of -0.69% while its Restricted shares produced a total
return of -0.37% .(1) In contrast, the Lehman Brothers Aggregate Bond Index,
which serves as the fund's benchmark, produced a total return of 0.53% for the
same period.(2) For the reporting period, the annual distribution rate per share
was 5.82% for the fund's Investor shares and 6.07% for its Restricted shares.(3
The primary reason why the fund underperformed its benchmark was the portfolio's
longer-than-average "duration," or greater-than-average sensitivity to changes
in interest rates. In a period of rising interest rates, a longer duration
portfolio generally will decline further in value than a portfolio with a
shorter duration. Offsetting this negative factor was the fund's emphasis on
" spread" sectors, such as corporate bonds and mortgage-backed securities, which
offer a yield spread over U.S. Treasury bonds. For the most part, corporate
bonds and mortgage-backed securities outperformed U.S. Treasury bonds during the
reporting period.
What is the fund's investment approach?
We invest primarily in a mixture of U.S. government bonds, corporate bonds and
mortgage-related securities, keeping the portfolio's average maturity between 3
and 10 years. Compared to U.S. Treasury securities, high-grade corporate bonds
generally offer additional yield in return for some credit risk. Mortgage-backed
securities offer additional yield spreads in exchange for the mortgage holders'
right to refinance their mortgages at any time.
What other factors influenced the fund's performance?
The global economy shifted rather dramatically during the reporting period from
an environment of recession and deflation to one of recovery and price
stability.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
Early in the fiscal period, the Federal Reserve Board completed the third of
three interest-rate reductions to bolster the U.S. economy in the wake of a
global credit crisis. We believed that our trading partners in Asia would not
make a quick economic recovery. In addition, we believed that the U.S. economy
was facing a slowdown in domestic consumer spending and that deflation was more
of a threat than inflation.
Instead, the global financial crisis eased and the Asian economies, led by
Japan, began to show signs of improvement. The U.S. consumer continued to spend,
the price of oil more than doubled, and concerns about inflation returned. On
June 30 and August 24, 1999, the Fed raised short-term rates a total of 0.50%.
Meanwhile, the benchmark 30-year U.S. Treasury bond yield rose from 4.7% to 6.3%
during the fiscal period. The strengthening global economy caused corporate
bonds to outperform U.S. Treasury bonds, as investors became less concerned
about credit risk.
Another factor affected the corporate bond market in 1999: Y2K. Investors
expected that corporations would try to get all of their bond issuance for the
year accomplished by the end of September, 1999. In doing so, companies would be
better positioned to concentrate on making sure that their computer systems
worked properly during the Y2K transition. Although the excess supply in the
first nine months wasn' t nearly as great as expected, bond yields were still
higher than they otherwise would have been as companies competed for investors.
In the case of mortgage-backed securities, as interest rates rose during the
period, it prompted these securities to perform well primarily because the
likelihood of refinancing diminished.
What is the fund's current strategy?
While we continue to invest in U.S. government bonds, mortgage-backed securities
and investment grade corporate bonds, we have begun to emphasize investment
grade corporate bonds of slightly lower quality to obtain higher yields. We
believe that in a strong economic environment, the additional credit risk is
minimal, particularly since we own a highly diversified portfolio of carefully
analyzed bonds. Often, these lesser-known bonds offer higher yields simply
because they are not followed by as many Wall Street analysts as the blue chip
bonds.
In the mortgage area, the fund continues to enjoy particularly good returns with
commercial mortgage-backed securities that are backed by such assets as large
office buildings. These securities are often rated AAA because the value of the
property used as collateral is nearly double the amount of the debt.
As far as duration is concerned, we continue to hold a portfolio that is
slightly longer than the Lehman Brothers Aggregate Bond Index -- although not as
comparatively long as it was early in 1999. We believe that this is a prudent
strategy given that yields on some corporate bonds are approaching 8%.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
(2) 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. IT
REFLECTS THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
(3) DISTRIBUTION RATE PER SHARE IS BASED UPON DIVIDENDS PER SHARE PAID FROM NET
INVESTMENT INCOME DURING THE PERIOD, DIVIDED BY THE NET ASSET VALUE PER SHARE AT
THE END OF THE PERIOD, ADJUSTED FOR ANY CAPITAL GAIN DISTRIBUTIONS.
The Fund
<TABLE>
<CAPTION>
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Disciplined
Intermediate Bond Fund Investor Shares and Restricted Shares and the Lehman
Brothers Aggregate Bond Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTOR SHARES 11/1/95 (0.69)% 5.05%
RESTRICTED SHARES 11/1/95 (0.37)% 5.30%
(+) SOURCE: BLOOMBERG L.P.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</TABLE>
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN EACH OF THE INVESTOR
SHARES AND RESTRICTED SHARES OF DREYFUS DISCIPLINED INTERMEDIATE BOND FUND ON
11/1/95 TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS AGGREGATE BOND INDEX
ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF CORPORATE, U.S. GOVERNMENT AND U.S. GOVERNMENT
AGENCY DEBT INSTRUMENTS, MORTGAGED-BACKED SECURITIES, AND ASSET-BACKED
SECURITIES. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES--97.0% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES & EQUIPMENT--.5%
Hertz,
<S> <C> <C>
Notes, 6.25%, 2009 1,500,000 1,393,524
BANKING--3.2%
First Union National Bank of Florida,
Medium-Term Notes, 6.18%, 2006 2,250,000 (a) 2,123,086
Fleet Financial Group,
Notes, 6.375%, 2008 4,250,000 4,004,499
U.S. Bank, N.A.,
Sub. Notes, 5.7%, 2008 1,500,000 1,350,451
U.S. Bank N.A. of Minneapolis, MN.,
Sub. Notes, 6.3%, 2008 1,000,000 926,888
8,404,924
COLLATERALIZED MORTGAGE OBLIGATIONS--3.4%
Countrywide Funding,
Ser. 1994-10, Cl. A5, 6%, 2009 75,951 75,613
Federal Home Loan Mortgage Corp.,
Multiclass Mortgage Participation Ctfs., REMIC:
Ser. 1660, Cl. H, 6.5%, 2009 2,570,000 2,549,655
Ser. 2123, Cl. PE, 6%, 2027 2,000,000 1,835,802
Federal National Mortgage Association,
REMIC Trust, Pass-Through Ctfs.
(collateralized by FNMA Pass-Through Ctfs.):
Ser. 1998-M2, Cl. B, 6.247%, 2021 1,500,000 1,460,437
Ser. 1999-54, Cl. PG, 6.5%, 2029 3,000,000 2,865,937
8,787,444
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--1.3%
Asset Securitization:
Ser. 1995-MD IV, Cl. A1, 7.1%, 2029 677,880 675,545
Ser. 1997-D4, Cl. A-CS1, 1.538%, 2029
(Interest Only Obligation) 12,978,763 (b,c) 304,190
GS Mortgage Securities II,
Ser. 1998-GLII, Cl. A2, 6.562%, 2031 2,500,000 2,354,475
3,334,210
CONSUMER--2.6%
Safeway Stores:
Notes, 6.05%, 2003 2,500,000 2,409,502
Notes, 7%, 2002 1,500,000 1,498,687
Service International,
Notes, 6%, 2005 3,500,000 2,714,467
6,622,656
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCE--4.7%
Ford Motor Credit,
Sr. Notes, 5.75%, 2004 3,000,000 2,878,809
Lehman Brothers,
Notes, 7.36%, 2003 3,000,000 3,020,088
Merrill Lynch,
Notes, 6%, 2004 2,725,000 2,623,347
NYNEX Capital Funding,
Medium-Term Notes, 8.23%, 2009 3,500,000 3,718,029
12,240,273
FINANCE/ASSET-BACKED--3.4%
American Airlines Pass-Through Trusts,
Pass-Through Ctfs.,
Ser. 1991-A1, 9.71%, 2007 956,059 1,028,423
Chemical Master Credit Card Trust I,
Asset-Backed Ctfs.,
Ser. 1995-3, Cl. A, 6.23%, 2005 3,000,000 2,964,300
CitiBank Credit Card Master Trust I,
Asset-Backed Ctfs.:
Ser. 1997-3, Cl. A, 6.839%, 2004 1,500,000 1,503,277
Ser. 1999-1, Cl. A, 5.5%, 2006 3,250,000 3,099,492
Premier Auto Trust 1996-2,
Asset-Backed Notes,
Cl. A-4, 6.575%, 2000 232,288 232,579
8,828,071
FINANCIAL SERVICES--3.4%
Associates, N.A.:
Deb., 6.95%, 2018 4,500,000 4,280,107
Notes, 7.75%, 2000 1,500,000 (d) 1,539,771
GMAC,
Floating Rate Notes, 6.335%, 2004 3,000,000 (c) 2,989,458
8,809,336
FOOD & BEVERAGES--.7%
Dole Foods:
Notes, 6.75%, 2000 1,000,000 1,000,830
Notes, 6.375%, 2005 750,000 708,095
1,708,925
FOREIGN/YANKEE--5.2%
ABN AMRO Bank:
Sub. Notes, 7.55%, 2006 1,125,000 1,140,319
Sub. Notes, 7.125%, 2007 1,125,000 1,108,109
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN/YANKEE (CONTINUED)
Cable & Wireless Communications,
Notes, 6.75%, 2008 3,000,000 3,050,067
Hanson Overseas,
Sr. Notes, 6.75%, 2005 1,500,000 1,466,937
Midland Bank,
Sub. Notes, 7.65%, 2007 1,500,000 (e) 1,522,470
National Australia Bank,
Sub. Notes, 6.4%, 2007 4,250,000 (c) 4,182,132
Province of Quebec,
Medium-Term Notes, 7.295%, 2006 1,000,000 (f) 1,000,468
13,470,502
HOTELS & MOTELS--.5%
Hilton Hotels,
Notes, 7%, 2004 1,280,000 1,216,088
INDUSTRIAL--6.2%
Coca Cola Enterprises,
Notes, 6.375%, 2001 1,025,000 1,024,530
Cox Communications,
Notes, 6.5%, 2002 2,750,000 2,723,759
Crown Cork & Seal,
Notes, 8.375%, 2005 1,350,000 1,388,881
General Motors,
Notes, 6.75%, 2028 1,500,000 1,363,729
IBM,
Deb., 6.5%, 2028 1,000,000 916,648
News America Holdings,
Deb., 8.25%, 2018 2,750,000 2,769,726
Royal Caribbean Cruises,
Sr. Notes, 7.5%, 2027 1,250,000 1,139,214
WMX Technologies,
Sr. Notes, 7.1%, 2003 5,050,000 (g) 4,615,892
15,942,379
INSURANCE--.9%
American General,
Sr. Notes, 6.625%, 2029 2,500,000 2,212,087
REAL ESTATE INVESTMENT TRUSTS--1.5%
ERP Operating,
Notes, 7.57%, 2006 1,125,000 (g) 1,100,646
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
HRPT Properties Trust,
Sr. Notes, 6.875%, 2002 3,000,000 2,892,585
3,993,231
RETAIL--1.4%
Federated Department Stores,
Notes, 6.3%, 2009 2,250,000 2,081,824
Wal-Mart Stores,
Sr. Notes, 6.875%, 2009 1,600,000 1,609,018
3,690,842
TELECOMMUNICATION/CARRIERS--2.7%
AT&T,
Notes, 6%, 2009 1,500,000 1,390,305
GTE North:
Deb., 6.9%, 2008 1,250,000 1,234,066
Ser. H, Deb., 5.65%, 2008 1,250,000 1,139,171
Sprint Capital,
Notes, 6.125%, 2008 3,500,000 3,250,838
7,014,380
U.S. GOVERNMENT AGENCIES-- 6.9%
Federal Home Loan Mortgage Corp.:
Notes, 6.45%, 2009 2,000,000 1,904,660
Notes, 6.875%, 2009 5,000,000 4,980,700
Federal National Mortgage Association:
Bonds, 6.25%, 2029 4,500,000 4,156,042
Medium-Term Notes, 6.36%, 2002 2,500,000 2,504,150
Notes, 5.625%, 2004 1,500,000 1,454,706
Notes, 7.1%, 2004 2,750,000 2,762,424
17,762,682
U.S. GOVERNMENT--11.5%
U.S. Treasury Bonds,
7.875%, 2/15/2021 5,500,000 6,357,505
U.S. Treasury Coupon Strips,
0%, 2/15/2017 3,700,000 1,198,097
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT (CONTINUED)
U.S. Treasury Notes:
6%, 8/15/2009 4,750,000 4,745,962
6.5%, 10/15/2006 11,500,000 11,704,930
6.625%, 4/30/2002 5,750,000 5,852,120
29,858,614
U.S. GOVERNMENT AGENCIES/MORTGAGE-BACKED--35.5%
Federal Home Loan Mortgage Corp.:
6.505%, 3/1/2029--8/1/2029 11,840,950 11,362,289
7%, 2/1/2029 6,463,156 6,358,130
8.5%, 6/1/2018 8,855,197 9,347,722
Federal National Mortgage Association:
6%, 2/1/2029 4,873,195 4,544,255
6.5%, 12/1/2028 4,327,430 4,152,948
7%, 6/1/2009 1,445,591 1,450,101
7.5%, 10/1/2029 7,200,002 7,218,001
8%, 2/1/2013-11/15/2029 10,676,922 (h) 10,894,040
Government National Mortgage Association I:
6%, 11/15/2008-11/15/2029 11,079,269 (h) 10,392,214
6.5%, 2/15/2024-5/15/2028 10,136,176 9,707,292
7%, 10/15/2023-12/15/2023 2,466,173 2,436,688
7.5%, 3/15/2027 3,491,680 3,504,774
8%, 5/15/2007-4/15/2008 10,127,011 10,400,658
91,769,112
UTILITIES--1.5%
K N Energy,
Sr. Notes, 6.45%, 2001 4,000,000 3,960,044
TOTAL BONDS AND NOTES
(cost $257,846,331) 251,019,324
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--4.4% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--2.6%
General Electric Capital,
5.314%, 11/22/1999 6,800,000 6,800,000
REPURCHASE AGREEMENTS--1.8%
Bear Stearns & Co., 5.2%
Dated 10/29/1999, due 11/1/1999 in the
amount of $4,674,025 (fully collateralized by
$4,830,000 U.S. Treasury Bills, 1/27/2000
value $4,770,591) 4,672,000 4,672,000
TOTAL SHORT-TERM INVESTMENTS
(cost $11,472,000) 11,472,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $269,318,331) 101.4% 262,491,324
LIABILITIES, LESS CASH AND RECEIVABLES (1.4%) (3,770,226)
NET ASSETS 100.0% 258,721,098
(A) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 2/15/2036.
(B ) NOTIONAL FACE AMOUNT SHOWN.
(C ) VARIABLE RATE SECURITY-INTEREST RATE SUBJECT TO PERIODIC CHANGE.
(D ) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 2/15/2005.
(E ) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 5/1/2025.
(F ) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 7/22/2026.
(G ) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 8/15/2026.
(H ) PARTIALLY PURCHASED ON A FORWARD COMMITMENT BASIS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(c) 269,318,331 262,491,324
Cash 129,334
Receivable for investment securities sold 9,459,897
Interest receivable 3,274,794
Paydowns receivable 1,347
275,356,696
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 119,148
Due to Distributor 143
Payable for investment securities purchased 16,502,307
Payable for shares of Capital Stock redeemed 14,000
16,635,598
- -------------------------------------------------------------------------------
NET ASSETS ($) 258,721,098
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 268,824,312
Accumulated undistributed investment income--net 88,736
Accumulated net realized gain (loss) on investments (3,364,943)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (6,827,007)
- -------------------------------------------------------------------------------
NET ASSETS ($) 258,721,098
NET ASSET VALUE PER SHARE
Investor Restricted
Shares Shares
- -------------------------------------------------------------------------------
Net Assets ($) 2,244,353 256,476,745
Shares Outstanding 188,300 21,532,484
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 11.92 11.91
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 14,197,513
EXPENSES:
Management fee--Note 2(a) 1,194,794
Distribution fees (Investor Shares)--Note 2(b) 4,515
Loan commitment fees--Note 4 842
TOTAL EXPENSES 1,200,151
INVESTMENT INCOME--NET 12,997,362
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (3,336,362)
Net unrealized appreciation (depreciation) on investments (10,412,217)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (13,748,579)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (751,217)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended October 31,
-----------------------------------
1999 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 12,997,362 8,908,277
Net realized gain (loss) on investments (3,336,362) 2,343,195
Net unrealized appreciation (depreciation)
on investments (10,412,217) 1,687,747
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (751,217) 12,939,219
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (103,206) (37,690)
Restricted shares (12,833,622) (8,842,385)
Net realized gain on investments:
Investor shares (19,420) --
Restricted shares (2,243,985) --
TOTAL DIVIDENDS (15,200,233) (8,880,075)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Investor shares 2,504,041 1,363,480
Restricted shares 124,388,414 77,712,955
Dividends reinvested:
Investor shares 99,791 34,916
Restricted shares 6,623,316 3,916,055
Cost of shares redeemed:
Investor shares (1,665,390) (294,657)
Restricted shares (28,301,206) (24,773,764)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 103,648,966 57,958,985
TOTAL INCREASE (DECREASE) IN NET ASSETS 87,697,516 62,018,129
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 171,023,582 109,005,453
END OF PERIOD 258,721,098 171,023,582
Undistributed investment income--net 88,736 28,202
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------
Year Ended October 31,
---------------------------------
1999 1998
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
INVESTOR SHARES
Shares sold 204,113 106,920
Shares issued for dividends reinvested 8,080 2,742
Shares redeemed (135,617) (23,285)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 76,576 86,377
- -------------------------------------------------------------------------------
RESTRICTED SHARES
Shares sold 10,113,315 6,153,064
Shares issued for dividends reinvested 535,682 308,516
Shares redeemed (2,309,550) (1,951,559)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 8,339,447 4,510,021
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
---------------------------------------------------------
INVESTOR SHARES 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C>
Net asset value, beginning of period 12.87 12.52 12.29 12.50
Investment Operations:
Investment income--net .70 .72 .74 .71
Net realized and unrealized gain (loss)
on investments (.79) .35 .23 (.21)
Total from Investment Operations (.09) 1.07 .97 .50
Distributions:
Dividends from investment income--net (.70) (.72) (.74) (.71)
Dividends from net realized gain
on investments (.16) -- -- --
Total Distributions (.86) (.72) (.74) (.71)
Net asset value, end of period 11.92 12.87 12.52 12.29
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (.69) 8.80 8.21 4.18
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .80 .80 .80 .79
Ratio of net investment income to average
net assets 5.74 5.68 6.01 5.61
Portfolio Turnover Rate 114.24 106.93 143.91 198.16
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,244 1,438 317 126
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
------------------------------------------------------------
RESTRICTED SHARES 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.85 12.52 12.29 12.50
Investment Operations:
Investment income--net .73 .76 .77 .74
Net realized and unrealized gain (loss)
on investments (.78) .32 .23 (.21)
Total from Investment Operations (.05) 1.08 1.00 .53
Distributions:
Dividends from investment income--net (.73) (.75) (.77) (.74)
Dividends from net realized gain
on investments (.16) -- -- --
Total Distributions (.89) (.75) (.77) (.74)
Net asset value, end of period 11.91 12.85 12.52 12.29
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (.37) 8.90 8.49 4.45
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .55 .55 .55 .55
Ratio of net investment income to average
net assets 5.99 5.95 6.31 6.29
Portfolio Turnover Rate 114.24 106.93 143.91 198.16
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 256,477 169,585 108,688 58,466
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
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, as amended (the "Act"), as
an open-end management investment company and operates as a series company
currently offering nineteen 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 (the "Manager") serves as the
fund' s investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation.
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 to any investor. Restricted 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. 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 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 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 of 1986, as amended (the
" 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 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 $3,138,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1999. If not
applied, the carrryover expires in fiscal 2007.
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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
fees). Each director receives $40,000 per year, plus $5,000 for each joint Board
meeting of The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal
Funds, and The Dreyfus/Laurel Funds Trust (the "Dreyfus/Laurel Funds") attended,
$2,000 for separate committee meetings attended which are not held in
conjunction with a regularly scheduled board meeting and $500 for Board meetings
and separate committee meetings attended that are conducted by telephone and is
reimbursed for travel and out-of-pocket expenses. The Chairman of the Board
receives an additional 25% of such compensation (with the exception of
reimbursable amounts) . In the event that there is a joint committee meeting of
the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund, the $2,000
fee will be allocated between the Dreyfus/Laurel Funds and the 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 shares bear no distribution fee.
During the period ended October 31, 1999, Investor shares were charged $4,515
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 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 October 31,
1999, amounted to $353,073,468 and $256,721,721, respectively.
At October 31, 1999, accumulated net unrealized depreciation on investments was
$6,827,007, consisting of $573,936 gross unrealized appreciation and $7,400,943
gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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
October 31, 1999, the fund did not borrow under the Facility.
The 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 of Dreyfus
Disciplined Intermediate Bond Fund of The Dreyfus/Laurel Funds, Inc., including
the statement of investments, as of October 31, 1999, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the four years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Disciplined Intermediate Bond Fund of The Dreyfus/Laurel Funds, Inc. as
of October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the four years in the period then
ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby designates .0582 per share
as a long-term capital gain distribution of the $.1642 per share paid on
December 1, 1998.
The Fund
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 302/702AR9910
Dreyfus
Money Market
Reserves
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
15 Notes to Financial Statements
20 Independent Auditors' Report
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus
Money Market Reserves
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Money Market Reserves,
covering the 12-month period from November 1, 1998 through October 31, 1999.
Inside, you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio manager,
David Hertan.
When the reporting period began, the U.S. financial markets were experiencing
the aftermath of a sharp correction caused primarily by the spread of the global
financial crisis overseas. The Federal Reserve Board responded to the crisis
last fall by reducing short-term interest rates, which also reduced money market
yields.
The Fed' s strategy apparently was effective, and the U.S. economy remained
strong through the remainder of the reporting period. Investors had become
concerned that strong economic growth in the United States might rekindle
dormant inflationary pressures. As a result, after remaining relatively steady
during the first quarter of 1999, yields on money market securities rose during
the second and third quarters in response to expectations that the Federal
Reserve Board might raise short-term interest rates. In fact, the Federal
Reserve Board raised rates twice during the summer of 1999 in an attempt to
forestall a potential resurgence of inflationary pressures. This increase
effectively reversed most of last fall's interest-rate cuts, and led to higher
yields on most money market securities.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Money Market Reserves.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
David Hertan, Portfolio Manager
How did Dreyfus Money Market Reserves perform during the period?
For the 12-month period ended October 31, 1999, Dreyfus Money Market Reserves'
Investor shares produced a yield of 4.54% while its Class R shares produced a
yield of 4.74% . After taking into account the effect of compounding, the
effective yields for Investor shares and Class R shares were 4.64% and 4.84%,
respectively.(1)
For the 12-month period ended October 31, 1999, the fund's Investor shares
provided a total return of 4.64%.(2) This compared to the Lipper Money Market
Funds category average total return of 4.41% for the same time period.(3) For
the same 12-month period, the fund's Class R shares provided a total return of
4.84% ,(2) compared to the Lipper Institutional Money Market Funds category
average total return of 4.85%.(3)
We attribute the fund's performance to the fact that we maintained a relatively
long average maturity in the portfolio during the first half of the period,
which enabled us to lock in higher returns when interest rates were declining.
Conversely, as interest rates were rising during the second half of the period,
we shortened the fund's average maturity and were able to capture higher yields
as they became available.
What is the fund's investment approach?
Our goal is to provide shareholders with an investment vehicle that offers a
high level of income, a stable net asset value and a portfolio of securities
that are very liquid in nature; that is, they can be converted to cash quickly.
To pursue that goal, we invest in a diversified portfolio of high quality
short-term debt securities, such as those issued by the United States government
or its agencies, certificates of deposit issued by banks, repurchase agreements
with securities dealers, and commercial paper issued by corporations. Generally,
the fund is required to invest at least 95% of its assets in the securities of
issuers The Fund
DISCUSSION OF FUND PERFORMANCE (continued)
with the highest credit rating or the unrated equivalent as determined by
Dreyfus. It is also required to maintain an average dollar-weighted portfolio
maturity of 90 days or less.
What other factors influenced the fund's performance?
During the past year, the returns offered by money market securities such as
those held in this fund have fluctuated. That's because interest rates, which
generally determine the returns for these types of investments, also fluctuated
during the period.
At the beginning of the fund's 12-month reporting period, the global equity
markets were in the midst of a crisis that created a "flight to quality" in
which many investors flocked to the safety provided by U.S. Treasury securities.
In an effort to stimulate global economic growth, the Federal Reserve Board
lowered short-term interest rates by a total of 75 basis points in three
separate moves in October and November, 1998. However, by the end of the year
and into the first quarter of 1999, many industry analysts were surprised to see
signs that the Asian economies were beginning to recover. As a result, investors
became concerned that the Federal Reserve Board might take back some of last
fall' s interest-rate cuts.
Toward the end of the second quarter, the global economy appeared to be
recovering. Commodity prices, particularly oil prices, began to climb, signaling
the end of the "flight to quality" for U.S. bond market investors as they became
more comfortable holding riskier assets. As a result, prices on U.S. Treasury
bonds began to fall.
By the end of the third quarter, commodity prices had leveled off and the U.S.
Treasury market stabilized. Because of a stronger global economy and potential
inflationary pressures, the Federal Reserve Board raised short-term interest
rates twice during the summer. An additional rate hike was expected in November,
which would effectively offset all of last fall' s rate cuts.
What is the fund's current strategy?
As of the end of the reporting period, the largest portion of the fund's assets
was invested in floating-rate notes, followed by foreign bank obligations,
commercial paper, short-term bank notes and time deposits. We trimmed our
commercial paper and CD exposure during the period, choosing instead to deploy
those assets into adjustable-rate notes. Commonly referred to as floating-rate
notes, adjustable-rate notes are bonds that have a variable interest rate that
is linked to a money market index, such as U.S. Treasury bill rates. The benefit
to owning these bonds is that they provide the fund with protection against
rising interest rates. Most recently, in the rising interest-rate environment,
adjustable-rate notes have been particularly beneficial for the fund.
November 15, 1999
(1) Past performance is no guarantee of future results. Yields fluctuate.
Effective yield is based upon dividends declared daily and reinvested monthly.
An investment in the fund is not insured or guaranteed by the FDIC or any other
government agency. Although the fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
fund.
(2) Total return includes reinvestment of dividends.
(3) Source: Lipper Analytical Services, Inc.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--27.6% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Bank of America NT & SA (Yankee)
<S> <C> <C>
5.85%, 1/31/2000 7,100,000 7,100,176
Bank of Nova Scotia (Yankee)
5.20%-5.83%, 1/18/2000-3/27/2000 14,100,000 14,099,475
Bank of Scotland (Yankee)
5.17%-5.48%, 4/6/2000-10/2/2000 10,100,000 10,097,169
Bayerische Hypo-Und Vereinsbank (Yankee)
5.05%, 2/7/2000 11,600,000 11,598,949
Commerzbank AG (Yankee)
5.10%, 1/13/2000 15,000,000 14,999,132
Credit Communal de Belgique
5.24%-5.87%, 1/18/2000-5/15/2000 15,000,000 14,997,781
Deutsche Bank AG (Yankee)
5.00%, 2/2/2000 15,000,000 14,999,262
Dresdner Bank AG (Yankee)
5.56%, 1/10/2000 15,000,000 15,000,000
First National Bank of Maryland (Yankee)
5.35%, 8/7/2000 12,000,000 11,996,631
Rabobank Nederland N.V. (Yankee)
5.10%, 4/17/2000 10,100,000 10,097,984
Royal Bank of Canada (Yankee)
5.64%, 6/14/2000 10,000,000 9,998,219
Svenska Handelsbanken NY (Yankee)
5.00%, 2/2/2000 9,000,000 8,999,557
Toronto-Dominion Bank (Yankee)
5.20%, 3/24/2000 5,000,000 4,999,240
Westpac Banking Corp. (Yankee)
5.08%-6.05%, 2/11/2000-10/2/2000 30,000,000 29,984,485
TOTAL NEGOTIABLE CERTIFICATES OF DEPOSIT
(cost $178,968,060) 178,968,060
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--17.6%
- -----------------------------------------------------------------------------------------------------------------------------------
BBL North America Funding Corp.
5.89%, 1/31/2000 15,000,000 14,781,600
BOC Group Inc.
5.37%, 11/1/1999 17,000,000 17,000,000
Bradford & Bingley Building Society
5.85%, 1/19/2000 15,000,000 14,812,046
Case Equipment Loan Trust
5.35%, 11/16/1999 5,000,000 4,988,896
Fountain Square Commercial Funding Corp.
5.40%-5.41%, 11/10/1999-11/16/1999 12,359,000 12,335,766
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Halifax Bank PLC
5.41%, 11/9/1999 20,000,000 19,976,133
U.S. West Communications
5.40%, 11/1/1999 30,000,000 30,000,000
TOTAL COMMERCIAL PAPER
(cost $113,894,441) 113,894,441
- -----------------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--38.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Abbey National Treasury Services
5.50%, 5/1/2000 10,000,000 (a) 9,996,777
Associates Corp. of North America
4.95%, 6/15/2000 12,000,000 12,066,610
AT&T Corp.
6.18%, 7/13/2000 15,000,000 (a) 14,995,820
BankAmerica Corp.
5.02%, 4/17/2000 250,000 (a) 250,152
Caisse Centrale Du Quebec
5.42%-5.44%, 5/15/2000 17,000,000 (a) 16,999,657
Caterpillar Financial Services
6.09%, 6/8/2000 1,000,000 (a) 1,000,340
Chase Manhattan Corp.
5.42%, 1/20/2000 15,000,000 (a) 15,000,179
Chrysler Financial Co. LLC
5.40%, 5/11/2000 10,000,000 (a) 9,998,585
CIT Group Holdings Inc.
5.04%-5.06%, 5/26/2000-6/2/2000 7,000,000 7,044,986
Comerica Bank
5.45%, 4/17/2000 15,000,000 (a) 14,996,716
Daimler-Benz North America Corp.
5.38%, 6/30/2000 15,000,000 (a) 14,993,161
First Chicago Corp.
5.52%, 9/5/2000 12,115,000 (a) 12,112,794
First Union National Bank
6.18%, 4/20/2000 5,000,000 (a) 5,002,297
Ford Motor Credit Corp.
5.50%-5.77%, 4/17/2000-6/8/2000 3,100,000 (a) 3,103,856
General Electric Cap. Corp.
6.13%, 4/12/2000 15,000,000 (a) 15,000,000
Glaxo Wellcome PLC
5.23%, 5/31/2000 4,645,000 4,675,336
Homeside Lending
5.66%, 8/16/2000 14,875,000 (a) 14,868,898
The Fund
STATEMENT OF INVESTMENTS (continued)
Principal
CORPORATE NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Key Bank N.A.
6.16%, 1/28/2000 2,000,000 (a) 2,000,082
Merrill Lynch & Company
5.48%, 5/22/2000 15,000,000 (a) 14,998,082
Morgan Stanley, Dean Witter, Discover & Co.
5.37%-6.13%, 2/1/2000-4/3/2000 4,800,000 (a) 4,803,545
National Rural Utilities Corp.
4.88%-5.41%, 11/18/1999-11/23/1999 17,700,000 (a) 17,701,102
NationsBank Corp.
5.57%,11/18/1999 15,000,000 (a) 15,000,903
Norwest Financial Inc.
5.48%, 7/7/2000 10,000,000 (a) 9,996,325
Wells Fargo & Co.
5.15%-5.75%, 4/10/2000 10,000,000 (a) 9,982,483
TOTAL CORPORATE NOTES
(cost $246,588,686) 246,588,686
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BANK NOTES--14.0%
- -----------------------------------------------------------------------------------------------------------------------------------
American Express Century Bank
5.50%, 2/14/2000 15,000,000 15,000,000
Branch Bank & Trust Co.
5.44%-5.66%, 3/1/2000-9/15/2000 15,900,000 15,896,868
First National Bank of Maryland
5.06%, 1/10/2000 4,400,000 4,400,081
First Union National Bank
5.50%, 5/17/2000 9,000,000 9,000,000
Fleet National Bank
5.44%, 3/15/2000 15,900,000 15,897,681
Huntington National Bank
5.44%, 3/3/2000 15,800,000 15,797,907
Key Bank N.A.
5.62%, 5/15/2000 15,000,000 15,000,000
TOTAL SHORT-TERM BANK NOTES
(cost $90,992,537) 90,992,537
Principal
TIME DEPOSITS--1.5% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
AmSouth Bank - Alabama (Grand Cayman)
5.19%, 11/1/1999
(cost $9,675,000) 9,675,000 9,675,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $640,118,724) 98.8% 640,118,724
CASH AND RECEIVABLES (NET) 1.2% 7,863,790
NET ASSETS 100.0% 647,982,514
(a) Variable interest rate--subject to periodic change.
See notes to financial statements.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 640,118,724 640,118,724
Cash 652,779
Interest receivable 7,541,970
648,313,473
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 330,080
Due to Distributor 879
330,959
- -------------------------------------------------------------------------------
NET ASSETS ($) 647,982,514
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 648,003,753
Accumulated net realized gain (loss) on investments (21,239)
- -------------------------------------------------------------------------------
NET ASSETS ($) 647,982,514
NET ASSET VALUE PER SHARE
Investor Class R
Shares Shares
- -------------------------------------------------------------------------------
Net Assets ($) 347,596,323 300,386,191
Shares Outstanding 347,607,458 300,396,295
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 1.00 1.00
See notes to financial statements.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 33,700,666
EXPENSES:
Management fee--Note 2(a) 3,215,858
Distribution fees (Investor Shares)--Note 2(b) 690,755
TOTAL EXPENSES 3,906,613
INVESTMENT INCOME--NET 29,794,053
- -------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b) ($): 1,215
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 29,795,268
See notes to financial statements.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
------------------------------------
1999 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 29,794,053 25,634,106
Net realized gain (loss) on investments 1,215 84
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 29,795,268 25,634,190
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (15,677,015) (12,677,662)
Class R shares (14,117,038) (12,956,444)
TOTAL DIVIDENDS (29,794,053) (25,634,106)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Investor shares 901,165,096 808,775,870
Class R shares 887,124,611 511,465,128
Dividends reinvested:
Investor shares 15,260,680 12,280,513
Class R shares 7,024,686 6,738,120
Cost of shares redeemed:
Investor shares (870,302,688) (724,433,279)
Class R shares (843,178,882) (500,821,747)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 97,093,503 114,004,605
TOTAL INCREASE (DECREASE) IN NET ASSETS 97,094,718 114,004,689
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 550,887,796 436,883,107
END OF PERIOD 647,982,514 550,887,796
See notes to financial statements.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information reflects financial results for a
single fund share. Total return shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the fund's
financial statements.
Year Ended October 31,
-------------------------------------------------------------------
INVESTOR SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .045 .050 .049 .048 .052
Distributions:
Dividends from investment income--net (.045) (.050) (.049) (.048) (.052)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.64 5.13 5.04 4.94 5.28
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .70 .70 .70 .70 .70
Ratio of net investment income
to average net assets 4.54 5.01 4.95 4.84 5.25
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 347,596 301,473 204,851 144,168 161,819
See notes to financial statements.
The Fund
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31,
-----------------------------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .047 .052 .051 .050 .053
Distributions:
Dividends from investment income--net (.047) (.052) (.051) (.050) (.053)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.84 5.34 5.25 5.16 5.44
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 .50 .50 .50 .50
Ratio of net investment income
to average net assets 4.74 5.21 5.13 5.01 5.40
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 300,386 249,415 232,032 170,409 139,787
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Money Market Reserves (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, as amended (the "Act" ), as an open-end
management investment company and operates as a series company currently
offering nineteen series including the fund. The fund's investment objective is
to seek a high level of current income consistent with stability of principal by
investing in high-grade money market instruments. The Dreyfus Corporation (the
" Manager" ) serves as the fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon
Financial Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 2 billion of $.001 par value
Capital Stock in each of the following classes of shares: Investor and Class R.
Investor shares are sold primarily to retail investors and bear a distribution
fee. Class R shares are sold primarily to bank trust departments and other
financial service providers (including Mellon Bank, N.A. and its affiliates)
acting on behalf of customers having a qualified trust or investment account or
relationship at such institution, and bear no distribution fee. Each class of
shares has identical rights and privileges, except with respect to the
distribution fee 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 amortized cost
in accordance with Rule 2a-7 of the Act, which has been
The Fund
NOTES TO FINANCIAL STATEMENTS (continued)
determined by the fund's Board of Directors to represent the fair value of the
fund's investments.
It is the fund's policy to maintain a continuous net asset value per share of
$1.00 for the fund; the fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the fund will be able to maintain a stable net asset
value per share of $1.00.
(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. Interest income,
adjusted for amortization of premiums and discounts on investments, is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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 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: 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 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 of 1986, as
amended (the "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 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 $21,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1999. If not applied, $8,000
of the carryover expires in fiscal 2003 and $13,000 expires in fiscal 2005.
At October 31, 1999, 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 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, The Fund
NOTES TO FINANCIAL STATEMENTS (continued)
at the annual rate of .50% 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, 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 fees) . Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel
Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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, Investor shares 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. During the period
October 31, 1999, Investor shares were charged $690,755 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 or in any agreement related to
the Plan.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. During the period ended October 31, 1999, the fund did not borrow
under the line of credit.
The 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 of Dreyfus
Money Market Reserves of The Dreyfus/Laurel Funds, Inc., including the statement
of investments, as of October 31, 1999, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. 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, 1999, by correspondence with the custodian. 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 Money Market Reserves of The Dreyfus/Laurel Funds, Inc. as of October
31, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
For More Information
Dreyfus Money Market Reserves
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 317/717AR9910
Dreyfus Premier
Large Company
Stock Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments Year 2000 Issues (Unaudited)
and its share price.
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
18 Financial Highlights
22 Notes to Financial Statements
28 Independent Auditors' Report
29 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
Large Company Stock Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Large Company
Stock Fund, covering the 12-month period from November 1, 1998 through October
31, 1999. Inside, you' ll find valuable information about how the fund was
managed during the reporting period, including a discussion with the fund's
portfolio manager, Bert J. Mullins.
Despite a relatively weak third quarter of 1999 for the U.S. stock market, the
past year has been rewarding for most equity investors overall. When the
reporting period began, most sectors of the U.S. stock market had completed a
sharp correction caused primarily by concerns regarding the spread of the global
financial crisis in overseas markets. Soon after the start of 1999, however,
those fears abated. In fact, the U.S. economy remained strong, characterized by
low inflation and high levels of consumer spending. These conditions supported
continued strength in the stock market through the spring.
In the summer of 1999, however, the Federal Reserve Board raised short-term
interest rates twice in an effort to forestall inflationary pressures in a
fast-growing economy. Because higher interest rates tend to increase the cost of
capital and make fixed-income securities more competitive relative to equities,
most sectors of the stock market declined. By the end of the 12-month reporting
period, major stock indices had fallen from the record highs reached during the
summer, although stock prices generally were still higher than they were one
year earlier.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Large Company Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Bert J. Mullins, Portfolio Manager
How did Dreyfus Premier Large Company Stock Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 1999, the fund's total return was
23.86% % for Class A shares, 22.91% for Class B shares, 22.97% for Class C
shares, and 24.16% for Class R shares.(1) For the same period, the total return
of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), the
fund's benchmark, was 25.66%.(2)
The public offering of the fund's Class T shares commenced on August 16, 1999.
From August 16, 1999 through October 31, 1999, the fund produced a total return
of 1.66% for Class T shares.(1)
We attribute the fund's underperformance of the S&P 500 Index to the narrow base
of stocks that supported the rise. Much of the market's advance during the
period was driven by strong performance among a relative handful of very large
growth stocks. Since the S& P 500 Index is heavily weighted toward just such
companies, the Index rose more than most portfolios that did not focus on those
specific stocks.
What is the fund's investment approach?
Dreyfus Premier Large Company Stock Fund invests primarily in a diversified
portfolio of large companies that meet our strict standards for value and
growth. We identify potential investments through a quantitative analytic
process that sifts through approximately 2,000 stocks in search of those that
are not only undervalued according to our criteria, but that also exhibit
improving earnings momentum. A team of experienced analysts examines the
fundamentals of the top-ranked candidates. Armed with these analytical insights,
the portfolio manager decides which stocks to purchase, and whether any current
holdings should be sold.
In addition to identifying attractive investment opportunities, our approach is
designed to limit the risks associated with market timing The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
and sector and industry exposure. Market timing refers to the practice of
attempting to benefit from gains and declines in the overall market by adjusting
the percentage of a fund's assets that are invested in the market at any one
time. We do not believe that the advantages of attempting to time the market or
rotate in and out of various industry sectors outweigh the risks of such moves.
Instead, our goal is to neutralize these risks by being fully invested and
remaining industry and sector neutral in relation to the S&P 500 Index.
The result is a broadly diversified portfolio of carefully selected stocks. At
the end of the recent 12-month period, the fund held positions in more than 150
stocks across 10 economic sectors. Our 10 largest holdings accounted for less
than 25% of the portfolio, so that the fund's performance was not overly
dependent on any one stock, but was determined by a large number of securities.
What other factors influenced the fund's performance?
As we mentioned earlier, the strong rise of the benchmark was driven by the
performance of an extremely narrow group of companies. During the first nine
months of 1999, only 11 stocks in the S&P 500 Index accounted for all of the
Index' s return. While the fund benefited from owning significant positions in
several of these stocks -- such as Cisco Systems, Wal-Mart Stores, and EMC --
others failed to meet our investment criteria. Our performance relative to our
benchmark suffered because we did not own these other stocks.
The fund' s relative performance also suffered due to the high volatility of
stock prices during the period. Uncertainties regarding the sustainability of
U.S. economic growth during the first half of the period and rising interest
rates during the second half of the period precipitated sudden swings in
investor sentiment. As a result, stock prices rose and fell sharply, often
moving several percentage points up or down over the course of a few days, only
to move just as sharply in the opposite direction the following week. Since our
quantitative model depends on using data from one month to identify stocks that
will
outperform during the next, a high level of market volatility from month to
month reduces the effectiveness of our approach.
What is the fund's current strategy?
We continue to adhere to our disciplined investment process, which seeks to
identify stocks that have a favorable combination of undervaluation and
improving earnings momentum. Our philosophy in seeking consistent high returns
is to construct a portfolio of these stocks in a way that also manages
unnecessary investment risks. The fund is always fully invested, industry and
sector neutral versus the S&P 500 Index, and highly diversified.
November 15, 1999
(1) 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 AND CLASS T SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES
CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD
THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT RETURN FLUCTUATE
SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. - REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED,
UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Large
Company Stock Fund Class A and Class R shares and the Standard & Poor's 500
Composite Stock Price Index
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN CLASS A AND CLASS R SHARES
OF DREYFUS PREMIER LARGE COMPANY STOCK FUND ON 9/2/94 (INCEPTION DATE) TO A
$10,000 INVESTMENT MADE IN THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE 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, CLASS C AND CLASS T
SHARES SHARES WILL VARY FROM THE PERFORMANCE OF 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. THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE, WHICH 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.
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
<S> <C> <C> <C> <C>
WITH SALES CHARGE (5.75%) 9/2/94 16.72% 23.02% 22.12%
WITHOUT SALES CHARGE 9/2/94 23.86% 24.49% 23.53%
CLASS B SHARES
WITH REDEMPTION* 1/16/98 18.91% -- 18.65%
WITHOUT REDEMPTION 1/16/98 22.91% -- 20.59%
CLASS C SHARES
WITH REDEMPTION** 1/16/98 21.97% -- 20.59%
WITHOUT REDEMPTION 1/16/98 22.97% -- 20.59%
CLASS R SHARES 9/2/94 24.16% 24.79% 23.81%
- -----------------------------------------------------------------------------------------------------------------------------------
Actual Aggregate Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS T SHARES
WITH SALES CHARGE (4.5%) 8/16/99 -- -- (2.92)%
WITHOUT SALES CHARGE 8/16/99 -- -- 1.66%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* 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>
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
COMMON STOCKS--98.4% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--1.2%
<S> <C> <C>
Anheuser-Busch Cos. 15,340 1,101,604
Philip Morris Cos. 35,110 884,333
1,985,937
CONSUMER CYCLICAL--9.3%
Best Buy 13,380 (a) 743,426
Dayton Hudson 14,140 913,797
Delphi Automotive Systems 22,565 370,912
Eastman Kodak 7,910 545,296
Federated Department Stores 11,840 (a) 505,420
Ford Motor 19,380 1,063,478
General Motors 12,130 852,133
Kroger 26,220 (a) 545,704
Limited 21,700 892,412
Lowe's Cos. 12,740 700,700
McDonald's 19,130 789,113
Safeway 13,500 (a) 476,719
Staples 23,960 (a) 531,613
TJX Cos. 29,660 804,528
Tandy 12,940 814,411
US Airways Group 12,090 (a) 338,520
Wal-Mart Stores 73,080 4,142,723
15,030,905
CONSUMER STAPLES--6.2%
Coca-Cola 23,800 1,404,200
ConAgra 20,640 537,930
Dial 18,400 430,100
Fortune Brands 13,800 489,037
General Mills 7,580 660,881
Nabisco Holdings, Cl. A 12,200 455,975
PepsiCo 35,790 1,241,466
Procter & Gamble 24,270 2,545,316
Quaker Oats 10,550 738,500
Ralston-Purina Group 22,560 709,230
Unilever, N.V. (New York Shares) 11,752 783,712
9,996,347
ENERGY--6.2%
Atlantic Richfield 15,930 1,484,477
Coastal 18,250 768,781
COMMON STOCKS (CONTINUED) Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
Columbia Energy Group 11,880 772,200
Diamond Offshore Drilling 26,510 841,692
Enron 22,710 906,981
Occidental Petroleum 17,710 404,009
Royal Dutch Petroleum (New York Shares) 54,360 3,258,203
Texaco 21,680 1,330,610
Tidewater 8,570 257,100
10,024,053
HEALTH CARE--10.1%
American Home Products 19,500 1,018,875
Amgen 17,760 (a) 1,416,360
Bausch & Lomb 6,820 368,280
Bristol-Myers Squibb 33,490 2,572,451
Cardinal Health 7,200 310,500
Elan, A.D.S. 26,850 (a) 691,387
Immunex 6,920 (a) 435,960
Lilly (Eli) & Co. 25,160 1,732,895
MedImmune 2,900 (a) 324,800
Medtronic 27,420 949,417
Merck & Co. 17,100 1,360,519
Pharmacia & Upjohn 14,800 798,275
Schering-Plough 37,730 1,867,635
United HealthCare 7,080 365,948
Warner-Lambert 28,040 2,237,943
16,451,245
INTEREST SENSITIVE--19.0%
Ace 16,290 316,637
Allstate 30,882 887,857
Ambac Financial Group 7,010 418,847
American General 4,990 370,196
American International Group 6,653 684,843
Bank One 46,543 1,748,271
CIGNA 6,770 506,057
Chase Manhattan 23,570 2,059,429
Citigroup 62,110 3,361,704
Edwards (A.G.) 16,570 498,136
Fannie Mae 18,370 1,299,677
Fleet Boston 38,400 1,675,200
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
General Electric 49,050 6,649,341
Hartford Financial Services Group 15,300 792,731
Lehman Brothers Holdings 9,680 713,295
MBNA 29,420 812,728
Merrill Lynch 10,880 854,080
Morgan Stanley Dean Witter & Co. 11,520 1,270,800
Old Republic International 10,090 138,107
PNC Bank 11,780 702,383
SLM Holding 13,610 666,039
SouthTrust 20,980 839,200
Summit Bancorp 8,220 284,618
SunTrust Banks 8,190 599,406
Torchmark 8,970 279,752
Washington Mutual 11,022 396,103
Wells Fargo 40,390 1,933,671
30,759,108
PRODUCER GOODS--8.4%
Alcan Aluminium 7,020 231,221
Alcoa 12,180 739,935
AlliedSignal 17,050 970,784
Boeing 14,350 660,997
Burlington Northern Santa Fe 14,650 466,969
Canadian National Railway 9,580 292,190
Champion International 9,440 545,750
Deere & Co. 10,300 373,375
duPont (E.I.) deNemours & Co. 13,790 888,593
General Dynamics 8,080 447,935
Ingersoll-Rand 10,490 548,102
International Paper 10,800 568,350
Kerr-McGee 6,840 367,650
Martin Marietta Materials 6,100 237,519
Minnesota Mining & Manufacturing 8,830 839,402
Northrop Grumman 4,900 268,888
PPG Industries 11,080 671,725
Rohm & Haas 10,180 389,385
Southdown 10,260 495,686
Tyco International 59,960 2,394,653
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
USX-U.S. Steel Group 8,540 218,304
Union Carbide 5,000 305,000
United Technologies 10,790 652,795
13,575,208
SERVICES--7.4%
America Online 21,040 (a) 2,728,625
Carnival 14,750 656,375
Clear Channel Communications 7,300 (a) 586,737
Fox Entertainment Group, Cl. A 18,220 394,007
Infinity Broadcasting, Cl. A 17,380 600,696
MediaOne Group 5,190 (a) 368,814
Omnicom Group 9,930 873,840
Time Warner 27,010 1,882,259
Tribune 15,670 940,200
Valassis Communications 6,840 (a) 294,120
Viacom, Cl. B 25,110 (a) 1,123,673
Vodafone AirTouch, A.D.R. 33,600 1,610,700
12,060,046
TECHNOLOGY--21.6%
Altera 8,200 (a) 398,725
Applied Materials 9,650 (a) 866,691
BMC Software 14,710 (a) 944,198
Cisco Systems 56,000 (a) 4,144,000
Corning 8,090 636,076
Dell Computer 43,860 (a) 1,759,882
EMC 22,120 (a) 1,614,760
General Instrument 8,970 (a) 482,698
Intel 34,700 2,687,081
International Business Machines 23,290 2,291,154
Lexmark International Group, Cl. A 12,020 (a) 938,311
Linear Technology 6,000 419,625
Lucent Technologies 47,030 3,021,678
Maxim Integrated Products 8,210 (a) 648,077
Microsoft 75,250 (a) 6,965,328
Motorola 12,330 1,201,404
Nokia, A.D.S. 7,220 834,361
Oracle 29,940 (a) 1,424,021
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Qwest Communications International 11,508 (a) 414,288
Solectron 8,500 (a) 639,625
Sun Microsystems 16,530 (a) 1,749,081
Tellabs 14,590 (a) 922,818
35,003,882
UTILITIES--9.0%
AT&T 54,270 2,537,122
Bell Atlantic 23,348 1,516,161
Edison International 15,900 471,037
Florida Progress 10,840 496,607
GPU 14,330 486,324
GTE 13,310 998,250
MCI WorldCom 36,670 (a) 3,146,744
PECO Energy 11,500 439,156
Pinnacle West Capital 6,130 226,044
Public Service Enterprise Group 11,230 444,287
SBC Communications 49,745 2,533,906
Telefonos de Mexico, Cl. L, A.D.S. 7,590 648,945
Texas Utilities 15,970 618,838
14,563,421
TOTAL COMMON STOCKS
(cost $129,382,033) 159,450,152
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--1.3% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Goldman Sachs & Co., Tri-Party Repurchase
Agreement, 5.18% dated 10/29/1999, due 11/1/1999
in the amount of $2,000,863 (fully collateralized
by $2,026,000 U.S. Treasury Notes,
5.625%, 2/28/01, value $2,040,039)
(cost $2,000,000) 2,000,000 2,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $131,382,033) 99.7% 161,450,152
CASH AND RECEIVABLES (NET) .3% 556,946
NET ASSETS 100.0% 162,007,098
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1 (c) 131,382,033 161,450,152
Cash 440,491
Receivable for investment securities sold 4,766,625
Receivable for shares of Capital Stock subscribed 577,597
Dividends and interest receivable 108,070
167,342,935
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 175,902
Due to Distributor 14,085
Payable for investment securities purchased 4,849,962
Payable for shares of Capital Stock redeemed 295,888
5,335,837
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 162,007,098
- ------------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 132,433,530
Accumulated net realized gain (loss) on investments (494,551)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 30,068,119
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 162,007,098
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R Class T
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets ($) 51,926,295 55,288,629 23,248,660 31,503,062 40,452
Shares Outstanding 2,166,550 2,328,067 978,911 1,314,234 1,688
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE ($) 23.97 23.75 23.75 23.97 23.96
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $26,363 foreign taxes withheld at source) 1,488,325
Interest 59,629
TOTAL INCOME 1,547,954
EXPENSES:
Management fee--Note 2(a) 1,087,286
Distribution and service fees--Note 2(b) 581,475
Interest expense--Note 4 523
Loan commitment fees--Note 4 267
TOTAL EXPENSES 1,669,551
INVESTMENT (LOSS) (121,597)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (282,289)
Net unrealized appreciation (depreciation) on investments 21,415,606
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 21,133,317
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 21,011,720
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-----------------------------------
1999(a) 1998(b,c)
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income (loss)--net (121,597) 326,686
Net realized gain (loss) on investments (282,289) 4,316,638
Net unrealized appreciation (depreciation)
on investments 21,415,606 2,622,112
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 21,011,720 7,265,436
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (52,833) (82,865)
Class B shares -- (3,637)
Class C shares -- (746)
Class R shares (109,997) (314,980)
Net realized gain on investments:
Class A shares (1,520,037) (402,127)
Class B shares (912,663) --
Class C shares (291,767) --
Class R shares (1,678,760) (1,808,389)
TOTAL DIVIDENDS (4,566,057) (2,612,744)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 31,597,928 24,218,455
Class B shares 40,780,563 15,700,710
Class C shares 20,617,520 3,224,367
Class R shares 1,231,238 4,852,159
Class T shares 38,917 --
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
-----------------------------------
1999(a) 1998(b,c)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS (CONTINUED) ($):
Dividends reinvested:
Class A shares 1,351,183 454,358
Class B shares 795,685 2,913
Class C shares 187,918 346
Class R shares 1,549,773 1,865,201
Cost of shares redeemed:
Class A shares (12,114,117) (6,787,604)
Class B shares (4,710,006) (1,148,312)
Class C shares (2,299,576) (49,016)
Class R shares (6,383,006) (8,747,836)
Class T shares (412) --
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 72,643,608 33,585,741
TOTAL INCREASE (DECREASE) IN NET ASSETS 89,089,271 38,238,433
- -------------------------------------------------------------------------------
NET ASSETS ($)
Beginning of Period 72,917,827 34,679,394
END OF PERIOD 162,007,098 72,917,827
Undistributed investment income--net -- 45,739
A FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1999
FOR CLASS T SHARES.
B EFFECTIVE JANUARY 16, 1998, INVESTOR SHARES AND RESTRICTED SHARES WERE
REDESIGNATED CLASS A SHARES AND CLASS R SHARES, RESPECTIVELY.
C FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1998
FOR CLASS B AND CLASS C SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
----------------------------------
1999(a) 1998(b)
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(C)
Shares sold 1,393,914 1,208,092
Shares issued for dividends reinvested 64,384 24,814
Shares redeemed (535,102) (343,737)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 923,196 889,169
- -------------------------------------------------------------------------------
CLASS B(C)
Shares sold 1,791,184 764,145
Shares issued for dividends reinvested 37,850 142
Shares redeemed (207,883) (57,371)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,621,151 706,916
- -------------------------------------------------------------------------------
CLASS C
Shares sold 917,025 157,154
Shares issued for dividends reinvested 8,996 16
Shares redeemed (101,830) (2,451)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 824,191 154,719
- -------------------------------------------------------------------------------
CLASS R
Shares sold 55,010 251,556
Shares issued for dividends reinvested 73,922 102,492
Shares redeemed (279,459) (437,726)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (150,527) (83,678)
- -------------------------------------------------------------------------------
CLASS T
Shares sold 1,705 --
Shares redeemed (17) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,688 --
(A) FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1999
FOR CLASS T SHARES.
(B)FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1998 FOR CLASS B AND CLASS C SHARES..
(C) DURING THE PERIOD ENDED OCTOBER 31, 1999, 8,795 CLASS B SHARES REPRESENTING
$198,413 WERE AUTOMATICALLY CONVERTED TO 8,746 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
-----------------------------------------------------------------
CLASS A SHARES 1999 1998(a) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 20.45 18.23 14.49 12.00 9.95
Investment Operations:
Investment income--net .03(b) .07 .20 .27 .22
Net realized and unrealized gain (loss)
on investments 4.68 3.39 4.26 2.54 2.05
Total from Investment Operations 4.71 3.46 4.46 2.81 2.27
Distributions:
Dividends from investment income--net (.04) (.15) (.20) (.20) (.22)
Dividends from net realized gain
on investments (1.15) (1.09) (.52) (.12) --
Total Distributions (1.19) (1.24) (.72) (.32) (.22)
Net asset value, end of period 23.97 20.45 18.23 14.49 12.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 23.86(c) 19.85(c) 32.01 23.87 23.20
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.15 1.15 1.15 1.15 1.15
Ratio of net investment income
to average net assets .13 .52 1.23 1.81 2.32
Portfolio Turnover Rate 49.42 81.27 37.17 44.33 37.57
Net Assets, end of period ($ x 1,000) 51,926 25,421 6,456 4,599 1,714
(A) EFFECTIVE JANUARY 16, 1998, INVESTOR SHARES WERE REDESIGNATED AS CLASS A SHARES.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
Class B Shares Class C Shares
----------------------------------------------------
Year Ended October 31, Year Ended October 31,
----------------------------------------------------
1999 1998(a) 1999 1998(a)
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C>
Net asset value, beginning of period 20.38 17.93 20.38 17.93
Investment Operations:
Investment income (loss)--net (.14)(b) (.02) (.15)(b) (.02)
Net realized and unrealized gain (loss)
on investments 4.66 2.48 4.67 2.48
Total from Investment Operations 4.52 2.46 4.52 2.46
Distributions:
Dividends from investment income--net -- (.01) -- (.01)
Dividends from net realized gain
on investments (1.15) -- (1.15) --
Total Distributions (1.15) (.01) (1.15) (.01)
Net asset value, end of period 23.75 20.38 23.75 20.38
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 22.91 13.76(d) 22.97 13.70(d)
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.90 1.51(d) 1.90 1.51(d)
Ratio of net investment income (loss)
to average net assets (.63) (.24)(d) (.64) (.24)(d
Portfolio Turnover Rate 49.42 81.27 49.42 81.27
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 55,289 14,410 23,249 3,154
(A) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
-----------------------------------------------------------------
CLASS R SHARES 1999 1998(a) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 20.44 18.23 14.49 12.00 9.95
Investment Operations:
Investment income--net .09(b) .17 .23 .21 .28
Net realized and unrealized gain (loss)
on investments 4.67 3.33 4.27 2.63 2.02
Total from Investment Operations 4.76 3.50 4.50 2.84 2.30
Distributions:
Dividends from investment income--net (.08) (.20) (.24) (.23) (.25)
Dividends from net realized gain
on investments (1.15) (1.09) (.52) (.12) --
Total Distributions (1.23) (1.29) (.76) (.35) (.25)
Net asset value, end of period 23.97 20.44 18.23 14.49 12.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 24.16 20.10 32.25 24.18 23.48
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .90 .90 .90 .90 .90
Ratio of net investment income
to average net assets .40 .85 1.46 2.06 2.57
Portfolio Turnover Rate 49.42 81.27 37.17 44.33 37.57
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 31,503 29,933 28,224 13,387 4,509
(A) EFFECTIVE JANUARY 16, 1998, RESTRICTED SHARES WERE REDESIGNATED AS CLASS R SHARES.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Year Ended October 31,
CLASS T SHARES 1999(a)
- -------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 23.57
Investment Operations:
Investment (loss)--net (.01)(b)
Net realized and unrealized gain (loss)
on investments .40
Total from Investment Operations .39
Net asset value, end of period 23.96
- -------------------------------------------------------------------------------
TOTAL RETURN (%) 1.66(c,d)
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .30(d)
Ratio of net investment (loss)
to average net assets (.11)(d)
Portfolio Turnover Rate 49.42
- -------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 40
(A) FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Large Company Stock 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, as amended (the "Act"), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the fund. The fund's investment objective is
to seek investment returns (including capital appreciation and income) that are
consistently superior to the Standard & Poor's 500 Composite Stock Price Index.
The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser.
The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank"), which
is a wholly-owned subsidiary of Mellon Financial Corporation.
On July 29, 1999, the Board of Directors approved the addition of Class T
shares, which became effective August 16, 1999.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 100 million of $.001 par value
Capital Stock in each of the following classes of shares: Class A, Class B,
Class C, Class R and 200 million of $.001 par value Capital Stock of Class T
shares. Class A, Class B, Class C and Class T shares are sold primarily to
retail investors through financial intermediaries and bear a distribution fee
and /or service fee. Class A and Class T shares are sold with a front-end sales
charge, while Class B and Class C shares are subject to a contingent deferred
sales charge (" CDSC" ). 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 an
investment account or relationship at such institution and bear no distribution
or service fees. Class R shares are offered without a front end sales charge 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 Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 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 of 1986, as
amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
During the period ended October 31, 1999, the fund increased accumulated
investment income-net by $238,688 and decreased accumulated net realized gain
(loss) on investments by $117,020 and paid-in capital by $121,668. Net assets
were not affected by the reclassification.
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 .90% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
service fees, fees and expenses of non-interested Directors (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to reduce
its fee in an amount equal to the fund' s allocable portion of fees and expenses
of the non-interested Directors (including counsel) . Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel
Funds Trust (the " Dreyfus/Laurel Funds" ) attended, $2,000 for separate
committee meetings attended which are not held in conjunction with a regularly
scheduled board meeting and $500 for Board meetings and separate committee
meetings attended that are conducted by telephone and is reimbursed for travel
and out-of-pocket expenses. The Chairman of the Board receives an additional 25%
of such compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$4,986 during the period ended October 31, 1999 from commissions earned on sales
of the fund shares.
The Fund
NOTES TO FINANCIAL STATEMENTS) (CONTINUED)
(b) Distribution and service plan: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of their average daily net assets to compensate the Distributor and
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and the Distributor for activities and expenses primarily
intended to result in the sale of Class A shares. Under the Plan, Class B, Class
C and Class T shares may pay the Distributor for distributing their shares at an
aggregate annual rate of .75% of the value of the average daily net assets of
Class B and Class C shares and .25% of the average daily net assets of Class T
shares. The Distributor may pay one or more agents in respect of advertising,
marketing and other distribution services for Class T shares and determines the
amounts, if any, to be paid to agents and the basis on which such payments are
made. Class B shares, Class C and Class T shares are also subject to a service
plan adopted pursuant to Rule 12b-1, under which Class B, Class C and Class T
shares pay Dreyfus Service Corporation or the Distributor for providing services
to the holders of Class B, Class C and Class T shares a fee at the annual rate
of .25% of the value of the average daily net assets of Class B, Class C and
Class T shares. During the period ended October 31, 1999, Class A, Class B,
Class C and Class T shares were charged $99,385, $252,960, $108,600 and $5,
respectively, pursuant to the Plan and Class B, Class C and Class T shares were
charged $84,320, $36,200 and $5, respectively, pursuant to the service plan.
Under its terms, the Plan and service 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 had no
direct or indirect financial interest in the operation of or in any agreement
related to the Plan or service plan.
(c) Brokerage commissions: During the period ended October 31, 1999, the fund
incurred total brokerage commissions of $166,866, of which $30,728 was paid to
Dreyfus Investment Services Corporation, a wholly-owned subsidiary of Mellon
Financial Corporation.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 1999, amounted to
$124,331,347 and $58,644,849, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments was
$30,068,119, consisting of $33,920,925 gross unrealized appreciation and
$3,852,806 gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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.
The average daily amount of borrowings outstanding under the Facility during the
period ended October 31, 1999 was approximately $9,900, with a related weighted
average annualized interest rate of 5.30%.
The 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 of Dreyfus
Premier Large Company Stock Fund of The Dreyfus/Laurel Funds, Inc., including
the statement of investments, as of October 31, 1999, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Large Company Stock Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $1.199 per share as a
long-term capital gain distribution paid on December 18, 1998 and also
designates $.034 per share as long-term capital gain distribution paid on August
5, 1999.
The fund also designates 100% of the ordinary dividends paid during the fiscal
year ended October 31, 1999 as qualifying for the corporate dividends received
deduction. Shareholders will receive notification in January 2000 of the
percentage applicable to the preparation of their 1999 income tax returns.
The Fund
For More Information
Dreyfus Premier Large 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 318/228AR9910
Dreyfus
Municipal Reserves
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
17 Financial Highlights
19 Notes to Financial Statements
23 Independent Auditors' Report
24 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus
Municipal Reserves
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Municipal Reserves,
covering the 12-month period from November 1, 1998 through October 31, 1999.
Inside, you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio manager,
John Flahive.
When the period began, investors were concerned that financial crises in
overseas markets might adversely affect economies in the U.S. and abroad. In
response, the Federal Reserve Board reduced short-term interest rates last fall
in an attempt to stimulate economic growth. Its strategy apparently worked,
because signs of renewed economic strength became evident early in 1999, fueling
fears that inflationary pressures might re-emerge. The Federal Reserve then
reversed course, raising short-term interest rates twice during the summer of
1999 and effectively eliminating most of last fall's interest-rate cuts.
Tax-exempt money market yields were also influenced by supply-and-demand
factors. Strong economic conditions have curtailed many municipalities' need to
borrow over the short term, reducing the available supply of tax-exempt money
market securities. Yet investor demand remained strong from individuals seeking
to minimize their tax liabilities. This imbalance helped constrain the rise of
tax-exempt money market yields relative to taxable money market yields during
the first ten months of 1999.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Municipal Reserves.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus Municipal Reserves perform over the past year?
For the one-year period ended October 31, 1999, the fund's Investor shares
produced a yield of 2.54% and, after taking into account the effect of
compounding, the effective yield was 2.57% .(1) The fund's Class R shares
provided a 2.74% yield and a 2.77% effective yield.(1) The fund's Investor
shares provided a total return of 2.57%,(2) compared to a total return of 2.60%
for the Lipper Tax-Exempt Money Market Fund category average for the same
period.(3) The fund' s Class R shares provided a total return of 2.77%,(2)
compared to a total return of 2.88% for the Lipper Institutional Tax-Exempt
Money Market Fund category average for the same period.(3)
We attribute the fund's performance to our average-maturity management strategy,
which attempted to anticipate seasonal yield fluctuations in a generally rising
interest-rate environment.
What is the fund's investment approach?
Our goal is to seek as high a level of federally tax-exempt income as is
practical while maintaining a stable $1.00 share price. To achieve this
objective, we employ two primary strategies. First and foremost, we attempt to
add value by selecting the individual tax-exempt money market instruments that
we believe are most likely to provide the highest returns with the least risk.
Second, we actively manage the portfolio's average maturity in anticipation of
supply-and-demand changes in the short-term municipal marketplace.
Using a "bottom-up" approach that focuses on individual securities rather than
economic or market trends, we constantly search for securities that, in our
opinion, represent better values than we currently hold in the portfolio. When
we find securities that we believe will help us enhance the fund's yield without
sacrificing quality, we buy them and sell less attractive securities.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The management of the portfolio's average maturity is a more tactical approach.
If we expect the demand for securities to decrease temporarily we may reduce the
portfolio' s average maturity to make cash available for the purchase of higher
yielding securities.
If we expect demand for short-term municipal securities to surge at a time when
we anticipate little issuance and, therefore, lower yields, we may increase the
portfolio' s average maturity to maintain current yields for as long as
practical. At other times, we generally try to maintain a neutral average
maturity that is consistent with our benchmark index.
What other factors influenced the fund's performance?
When the reporting period began on November 1, 1998, investors were concerned
about the potentially adverse economic effects of the global currency and credit
crisis. In response, the Federal Reserve Board reduced short-term interest rates
last fall in an attempt to stimulate global economic growth. Its strategy
apparently was effective. Overseas economies halted their deterioration early in
1999, and the growth of the U.S. economy was stronger than most analysts
expected.
In the second and third quarters of 1999, however, strong economic growth in
both domestic and overseas markets raised concerns among fixed-income investors
that inflationary pressures might re-emerge. In response, the Federal Reserve
Board increased short-term interest rates twice during the summer of 1999 in an
attempt to forestall inflationary pressures. This change in monetary policy
effectively offset 1998' s interest-rate reductions. As a result, yields of
short-term money market securities, including tax-exempt instruments, generally
rose during the second half of the period.
What is the fund's current strategy?
Technical factors caused by seasonal fluctuations in supply and demand had a
more profound effect on the tax-exempt money markets than changes induced by
economic conditions. In January and June 1999, heightened investor demand caused
short-term municipal yields to decline. In April 1999, when many individuals
used their liq
uid assets to pay income tax liabilities, selling pressure caused tax-exempt
money market yields to rise temporarily. In late summer, when many
municipalities issued short-term debt, yields rose.
We attempted to take advantage of these seasonal fluctuations by actively
managing the fund's average maturity. In April 1999, for example, we increased
our holdings of Variable-Rate Demand Notes (VRDNs) , which are issued by
investment banks through the securitization of longer term municipal bonds. With
conventional tax-exempt notes in short supply, we believe that VRDNs have
offered the most attractive yields among high quality, short-term municipal
securities. Conversely, in July, we reduced the percentage of floating-rate
securities, thereby minimizing the impact of falling yields on the portfolio.
As of October 31, 1999, about 51% of the portfolio was composed of VRDNs, while
commercial paper and municipal notes comprised 26% and 12% of the fund,
respectively. This allocation is expected to give us the flexibility we need to
take advantage of temporary yield fluctuations through year-end. In addition, we
have maintained our focus on very high credit-quality securities, which should
help us maintain liquidity if Y2K-related pressures arise.
November 15, 1999
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE.
INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES, AND SOME INCOME MAY BE SUBJECT
TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. AN
INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
Principal
TAX EXEMPT INVESTMENTS--99.7% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ALASKA--2.2%
Alaska Industrial Development Authority, Revenue, VRDN
(Providence Medical Office Building)
<S> <C> <C>
3.40% (LOC; Kredietbank) 3,380,000 (a) 3,380,000
Anchorage, Higher Education Revenue, Refunding, VRDN
(Alaska Pacific University)
3.50% (LOC; Seattle First National Bank) 3,600,000 (a) 3,600,000
COLORADO--2.3%
Colorado Health Facilities Authority, Revenue, VRDN
(North Colorado Medical Center)
3.45% (BPA; Credit Suisse and Insured; MBIA) 1,200,000 (a) 1,200,000
Dove Valley Metropolitan District of Arapohoe County,
Revenue, Refunding 3.375%, Series B, 11/1/1999
(LOC; Banque Nationale de Paris) 1,000,000 1,000,000
Interstate South Metropolitan District, Refunding
3.375%, Series B, 11/1/1999
(LOC; Banque Nationale de Paris) 975,000 975,000
Larimer County, COP (Courthouse and Jail Facility)
3.80%, 12/15/1999 (Insured; FSA) 2,460,000 2,461,963
SBC Metropolitan District
3.35%, 12/1/1999 (LOC; U.S. Bank of Washington) 1,560,000 1,560,000
FLORIDA--12.5%
Alachua County Health Facilities Authority, Health Facilities
Revenue, VRDN (Shands Teaching Hospital)
3.50%, Series B (Insured; MBIA and LOC; Suntrust Bank) 1,600,000 (a) 1,600,000
Broward County Housing Finance Authority, MFHR, Refunding,
VRDN (Waters Edge Project) 4% 6,740,000 (a) 6,740,000
Capital Projects Finance Authority, Revenue, VRDN
(Florida Hospital Association Capital Project Loan)
3.55% (Insured; FSA and SBPA; Credit Suisse) 3,600,000 (a) 3,600,000
Dade County, Water and Sewer Systems Revenue, VRDN
3.45% (Insured; FGIC and LOC; Commerzbank) 5,700,000 (a) 5,700,000
Florida Multi-Family Housing Finance Agency, Refunding,
VRDN 3.55%, Series E (LOC; Comerica Bank) 1,200,000 (a) 1,200,000
Miami Health Facilities Authority, Health Facilities Revenue,
Refunding, VRDN (Mercy Hospital Project)
3.50% (LOC; Bank of America) 1,900,000 (a) 1,900,000
Sarasota County, HR, CP (Sarasota Memorial Hospital Project):
Health Facilities Authority,
3.45%, 2/18/2000 (LOC; Suntrust Bank) 6,400,000 6,400,000
Public Hospital District,
3.50%, 2/18/2000 (LOC; Suntrust Bank) 3,150,000 3,150,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
Sarasota County School Bond Finance Corporation,
LR, Prerefunded 7.20%, 7/1/2000 (Escrowed in;
U.S. Government Securities and Insured; AMBAC) 2,500,000 2,583,876
Sunshine Governmental Finance Commission, Revenue, CP
3.50%, 2/1/2000 (Insured; AMBAC and LOC:
Toronto-Dominion Bank and United Bank of Switzerland) 6,700,000 6,700,000
GEORGIA--1.4%
Clayton County Housing Authority, MFHR, Refunding, VRDN
(Chateau Forest Apartments)
3.55%, Series E (Insured; FSA and LOC; Societe Generale) 1,000,000 (a) 1,000,000
De Kalb County Development Authority, Revenue, VRDN
(Marist School Inc. Project) 3.60% (LOC; Suntrust Bank) 3,500,000 (a) 3,500,000
ILLINOIS--11.0%
City of Chicago,
VRDN 3.45%, Series B
(LOC; Canadian Imperial Bank of Commerce) 1,700,000 (a) 1,700,000
Illinois Development Finance Authority, VRDN:
IDR:
(Heritage Tool and Manufacturing Inc.)
3.60% (LOC; Harris Trust and Savings Bank) 4,965,000 (a) 4,965,000
(Institute of Gas Technology Project)
3.50% (LOC; Bank of Montreal) 2,800,000 (a) 2,800,000
PCR
(Aces Power Co.)
3.65%, Series D (LOC; Morgan Guaranty Trust Co.) 2,700,000 (a) 2,700,000
Revenue
(Residential Rental-F.C. Harris Pavilion Project)
3.50% (LOC; FNMA) 1,100,000 (a) 1,100,000
State of Illinois, Educational Facilities Revenue, VRDN
(Cultural Pool)
3.45% (LOC; Bank One Corp. ) 1,000,000 (a) 1,000,000
Illinois Health Facilities Authority, Revenue, VRDN:
Refunding (Swedish Covenant)
3.55%, Series A (Insured; AMBAC and
LOC; Bank One Corp.) 2,600,000 (a) 2,600,000
(Rush-Presbyterian St. Lukes)
3.45% (LOC; Northern Trust Co.) 6,800,000 (a) 6,800,000
Illinois Housing Development Authority, Revenue
(Homeowner Mortgage)
3.90%, Sub-Series A, 7/20/2000 7,000,000 7,000,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
City of New Lenox, IDR, VRDN (Panduit Corp. Project)
3.55% (LOC; Commerzbank) 1,300,000 (a) 1,300,000
City of Zion, Revenue, VRDN (H & M Enterprises LLC Project)
3.65%, Series A (LOC; Federal Home Loan Bank) 2,885,000 (a) 2,885,000
INDIANA--4.2%
City of Portage, EDR, VRDN (Pedcor Investments)
3.55%, Series A (LOC; Federal Home Loan Banks) 6,253,000 (a) 6,253,000
Purdue University, University Revenues, VRDN (Student Fee)
3.40%, Series L (Corp. Guaranty; Purdue University) 400,000 (a) 400,000
City of Seymour, EDR, VRDN
(Pedcor Investments-Sycamore Springs Apartments Project)
3.55%, Series A (LOC; FNMA) 4,077,000 (a) 4,077,000
Whiting, Industrial and PCR, (Amoco Project-
Standard Oil Industry)
3.50%, 2/15/2000 (Corp. Guaranty; Amoco Credit Corp) 2,500,000 2,500,000
LOUISIANA--12.4%
Desoto Parish, PCR, Refunding (Central Electric Co.)
3.60%, Series B, 11/30/1999
(LOC; Westdeutsche Landesbank) 3,700,000 3,700,000
Louisiana Public Facilities Authority:
CP (Christus Health)
3.75%, 2/8/20000 (Insured; AMBAC and
LOC; Bank One Corp.) 8,000,000 8,000,000
Refunding, VRDN:
HR (Willis Knighton Medical Project)
3.60% (Insured; AMBAC and SBPA;
Credit Local de France) 10,140,000 (a) 10,140,000
MFMR (Emberwood)
3.45% (LOC; General Electric Co.) 2,100,000 (a) 2,100,000
City of New Orleans and Home Mortgage Authority, SFMR
3.15%, Series C-2, 12/1/1999 (Collateralized; FNMA) 3,000,000 3,000,000
Saint James Parish, PCR, Refunding, CP (Texaco Project)
3.50%, Series B, 1/19/2000 (Corp. Guaranty; Texaco Inc.) 12,500,000 12,500,000
MAINE--1.5%
Eastport, IDR, Refunding, VRDN (Passamaquoddy Tribe)
3.50% (LOC; Wachovia Bank and Trust Co.) 4,660,000 (a) 4,660,000
MASSACHUSETTS--4.5%
Massachusetts Development Finance Agency, Revenue, VRDN
(First Mortgage Lasell Village)
3.35%, Series C (LOC; Fleet Bank) 3,900,000 (a) 3,900,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Health and Education Facility Authority,
Revenue, VRDN:
(Amherst College)
3.15%, Series F (Corp. Guaranty; Amherst College) 3,500,000 (a) 3,500,000
(Newton-Wellesley Hospital)
3.15%, Series F (Insured; MBIA and LOC; Credit Suisse) 3,400,000 (a) 3,400,000
State of Massachusetts, Refunding, VRDN
3.40%, Series A (LOC; Commerzbank) 3,600,000 (a) 3,600,000
MICHIGAN--3.3%
Michigan Municipal Bond Authority, Revenue, BAN
4.25%, Series B-2, 8/25/2000
(LOC; Morgan Guaranty Trust Co.) 3,000,000 3,016,019
Michigan Building Authority, Revenue, CP
3.90%, Series 2, 1/12/2000
(LOC; Canadian Imperial Bank of Commerce) 7,400,000 7,400,000
MINNESOTA--1.3%
Minnesota Housing Finance Agency, Single Family Mortgage
3.80%, Series H, 6/29/2000 4,000,000 4,003,776
MISSISSIPPI--.6%
Noxubee County, IDR, VRDN (Barge Forest Products Project)
3.65% (LOC; Amsouth Bank) 1,825,000 (a) 1,825,000
MISSOURI--.8%
Independence Industrial Development Authority, IDR, Refunding,
VRDN (Groves and Graceland)
3.50%, Series A (LOC; Credit Locale de France) 100,000 (a) 100,000
Missouri Higher Education Loan Authority, Student Loan ,
Revenue, VRDN:
3.55%, Series A (LOC; National Westminster Bank) 1,000,000 (a) 1,000,000
3.55%, Series B (LOC; National Westminster Bank) 1,500,000 (a) 1,500,000
MONTANA--1.5%
Butte-Silver Bow, PCR, Refunding, VRDN
(Rhone-Poulenc Inc. Project)
3.55% (LOC; Banque Nationale de Paris) 1,605,000 (a) 1,605,000
Montana Health Facilities Authority, Health Care Revenue,
VRDN (Pooled Loan Program)
3.40%, Series A (Insured; FGIC and SBPA; Norwest Bank) 3,000,000 (a) 3,000,000
NEVADA--6.6%
Clark County, Airport Improvement Revenue, VRDN (Sub Lien)
3.45%, Series A-1 (LOC; Westdeutsche Landesbank) 2,700,000 (a) 2,700,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
NEVADA (CONTINUED)
Clark County Airport, Revenue (Sub Lien)
3.70%, Series B-2, 2/29/2000
(LOC; Bayerische Landesbank) 3,900,000 3,900,000
Clark County Airport, Special Facility Revenue:
(Signature Flight Project)
3.35%, 12/1/1999 (LOC; Bayerische Landesbank) 7,335,000 7,335,000
(Signature Project)
3.25%, Series A, 12/1/1999
(LOC; Bayerische Landesbank) 7,140,000 7,140,000
NEW HAMPSHIRE--.6%
New Hampshire Higher Educational and Health Facilities
Authority, Revenue (Dartmouth Educational Loan Corp.)
3.30%, 6/1/2000 (Guaranteed by; Dartmouth College) 1,920,000 1,920,000
NEW MEXICO--1.1%
City of Santa Fe, Gross Receipts Tax Revenue, VRDN
(Wastewater Systems) 3.55%, Series B
(LOC; Canadian Imperial Bank of Commerce) 3,500,000 (a) 3,500,000
NEW YORK--4.0%
City of New York, VRDN
3.40%, Sub-Series J-2 (LOC; Commerzbank) 5,650,000 (a) 5,650,000
Metropolitan Transit Authority, Transit Facility Revenue, CP
3.45%, Series 1, 12/9/1999 (LOC; ABN-Amro Bank) 7,000,000 7,000,000
NORTH DAKOTA--1.0%
Grand Forks, Hospital Facilities Revenue, VRDN
(United Hospital Obligation Group Project)
3.65% (LOC; ABN-Amro Bank) 3,200,000 (a) 3,200,000
PENNSYLVANIA--4.9%
Allegheny County Hospital Development Authority, Revenue,
VRDN (Health Center Presbyterian)
3.60%, Series B (Insured; MBIA and SBPA; PNC Bank) 100,000 (a) 100,000
Dauphin County General Authority, Revenue, VRDN
(All Health Pooled Financing)
3.60%, Series B (Insured; FSA and SBPA; Credit Suisse) 900,000 (a) 900,000
Fairview School District, Prerefunded
6%, 2/15/2000 (Escrowed in; U.S. Government Securities
and Insured; FGIC) 890,000 897,191
Lehigh County Industrial Development Authority, PCR, VRDN
(Allegheny Electric Co-Op)
3.90% (LOC; Rabobank Nederland) 820,000 (a) 820,000
Moon Industrial Development Authority, IDR, VRDN
(Executive Office Association Project)
3.60% (LOC; PNC Bank) 1,250,000 (a) 1,250,000
STATEMENT OF INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Pennsylvania Turnpike Commission, Revenue, Refunding
5%, Series O, 12/1/1999 (Insured; FGIC) 1,000,000 1,001,505
Quakertown General Authority, Revenue, VRDN
(Pooled Financing Program)
3.60%, Series A (LOC; PNC Bank) 1,355,000 (a) 1,355,000
Quakertown Hospital Authority, HR, VRDN
(HPS Group Pooled Financing Project)
3.60% (LOC; First National Bank of Chicago) 9,100,000 (a) 9,100,000
SOUTH CAROLINA--.3%
South Carolina Jobs Economic Development Authority, EDR,
VRDN (Wellman Inc. Project)
3.65% (LOC; Wachovia Bank and Trust Co.) 1,100,000 (a) 1,100,000
TEXAS--13.5%
Austin Texas Travis and Williamson Counties, CP
3.55%, 12/6/1999 (LOC; Morgan Guaranty Trust Co.) 6,250,000 6,250,000
Brownsville, Utility Systems Revenue, CP 3.55%, Series A,
11/15/1999 (LOC; Toronto-Dominion Bank) 10,725,000 10,725,000
Comal County Health Facilities Development Corporation,
Health Care Systems Revenue, VRDN
(McKenna) 3.65% (LOC; Chase Manhattan Bank) 3,000,000 (a) 3,000,000
Dallas Area Rapid Transportation, Sales Tax Revenue, CP
3.60%, 11/9/1999 (LOC: Bayerische Landesbank,
United Bank of Switzerland, and Westdeutsche Landesbank) 7,000,000 7,000,000
Dallas Industrial Development Corporation, IDR, VRDN
(Sealed Power Corp.)
3.60% (LOC; National Bank of Detroit) 1,100,000 (a) 1,100,000
North Texas Higher Education Authority Inc.,
Student Loan Revenue, Refunding, VRDN
3.55%, Series A (BPA; Student Loan Marketing Association
and Insured; AMBAC) 2,000,000 (a) 2,000,000
Nueces County Health Facilities Development Corporation,
Revenue, VRDN (Driscoll Childrens Foundation)
3.60% (LOC; Bank One Corp.) 2,395,000 (a) 2,395,000
Rockwall Industrial Development Corporation, IDR, VRDN
(Columbia Extrusion Corp.)
3.70% (LOC; U.S. National Bank of Oregon) 2,285,000 (a) 2,285,000
State of Texas, G.O. Notes 4.50%, Series A, 8/31/2000 8,000,000 8,052,038
VIRGINIA--2.6%
Campbell County Industrial Development Authority,
Exempt Facility Revenue, VRDN
(Hadson Power 12)
3.65%, Series A (LOC; Barclays Bank) 5,200,000 (a) 5,200,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
VIRGINIA (CONTINUED)
Halifax County Industrial Development Authority, IDR, VRDN
(Annin and Co. Project)
3.75% (LOC; Chase Manhattan Bank) 1,875,000 (a) 1,875,000
Virginia Small Business Financing Authority, IDR, VRDN
(Coral Graphic)
3.65% (LOC; Chase Manhattan Bank) 1,400,000 (a) 1,400,000
WASHINGTON--.6%
Port Seattle Industrial Development Corporation, Revenue,
Refunding, VRDN (Sysco Food Service Project) 3.55% 1,000,000 (a) 1,000,000
Washington Public Power Supply System Revenue, Refunding
(Nuclear Project No. 1)
7.25%, Series C, 7/1/2000 (Insured; FGIC) 1,000,000 1,023,574
WISCONSIN--1.5%
Wisconsin Housing and Economic Development Authority,
Revenue (Home Ownership)
3.55%, Series I, 8/15/2000 5,000,000 5,000,000
WYOMING--.7%
Green River, PCR, Revenue, Refunding, VRDN
(Rhone Poulenc Inc. Project)
3.50% (LOC; ABN-Amro Bank) 2,300,000 (a) 2,300,000
U.S. RELATED--1.9%
Commonwealth of Puerto Rico Government Development Bank,
VRDN 3.25% (Insured; MBIA and LOC; Credit Suisse) 6,100,000 (a) 6,100,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $313,854,942) 98.8% 313,854,942
CASH AND RECEIVABLES (NET) 1.2% 3,951,150
NET ASSETS 100.0% 317,806,092
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AMBAC American Municipal Bond IDR Industrial Development Revenue
Assurance Corporation LOC Letter of Credit
BAN Bond Anticipation Notes LR Lease Revenue
BPA Bond Purchase Agreement MBIA Municipal Bond Investors Assurance
COP Certificate of Participation Insurance Corporation
CP Commercial Paper MFHR Multi-Family Housing Revenue
EDR Economic Development Revenue MFMR Multi-Family Mortgage Revenue
FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue
FNMA Federal National Mortgage Association SBPA Standby Bond Purchase Agreement
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
GO General Obligation VRDN Variable Rate Demand Notes
HR Hospital Revenue
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
F1 +, F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 89.2
AAA/AA(b) Aaa/Aa(b) AAA/AA(b) 10.1
Not Rated(c) Not Rated(c) Not Rated(c) .7
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
(B) NOTES WHICH ARE NOT F, MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS.
(C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF
COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 313,854,942 313,854,942
Receivable for investment securities sold 3,000,000
Interest receivable 1,609,153
318,464,095
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 139,923
Due to Distributor 39
Cash overdraft due to Custodian 515,302
Interest payable--Note 3 2,739
658,003
- -------------------------------------------------------------------------------
NET ASSETS ($) 317,806,092
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 317,814,439
Accumulated net realized gain (loss) on investments (8,347)
- -------------------------------------------------------------------------------
NET ASSETS ($) 317,806,092
NET ASSET VALUE PER SHARE
Investor Class R
- -------------------------------------------------------------------------------
Net Assets ($) 30,688,876 287,117,216
Shares Outstanding 30,690,887 287,122,949
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 1.00 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 9,278,822
EXPENSES:
Management fee--Note 2(a) 1,429,824
Distribution fees (Investor Shares)--Note 2(b) 56,980
Interest expense--Note 3 12,004
TOTAL EXPENSES 1,498,808
INVESTMENT INCOME--NET,
REPRESENTING NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 7,780,014
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
--------------------------------
1999 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
INVESTMENT INCOME--NET, REPRESENTING NET INCREASE
IN NET ASSETS RESULTING FROM OPERATIONS 7,780,014 7,399,745
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (724,308) (715,181)
Class R shares (7,055,706) (6,723,392)
Net realized gain on investments:
Investor shares -- (6,024)
Class R shares -- (62,009)
TOTAL DIVIDENDS (7,780,014) (7,506,606)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold:
Investor shares 101,990,468 109,466,877
Class R shares 872,535,246 631,394,198
Dividends reinvested:
Investor shares 669,793 681,448
Class R shares 1,220,288 1,649,472
Cost of shares redeemed:
Investor shares (99,272,622) (102,321,618)
Class R shares (814,277,109) (599,466,760)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 62,866,064 41,403,617
TOTAL INCREASE (DECREASE) IN NET ASSETS 62,866,064 41,296,756
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 254,940,028 213,643,272
END OF PERIOD 317,806,092 254,940,028
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following tables describe the performance for each share class for the
fiscal periods indicated. All information reflects financial results for a
single fund share. Total return shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the fund's
financial statements.
Year Ended October 31,
------------------------------------------------------------------
INVESTOR SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .025 .029 .030 .029 .032
Distributions:
Dividends from investment income--net (.025) (.029) (.029) (.029) (.032)
Dividends from net realized gain on
investments -- (.000)(a) (.001) -- --
Total Distributions (.025) (.029) (.030) (.029) (.032)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 2.57 3.00 3.00 2.96 3.28
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .70 .70 .72 .70 .70
Ratio of net investment income
to average net assets 2.54 2.90 2.92 2.92 3.33
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 30,689 27,301 19,486 14,074 17,764
(A) AMOUNT REPRESENTS LESS THAN $.001 PER SHARE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
------------------------------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .027 .031 .032 .031 .034
Distributions:
Dividends from investment income--net (.027) (.031) (.031) (.031) (.034)
Dividends from net realized gain on
investments -- (.000)(a) (.001) -- --
Total Distributions (.027) (.031) (.032) (.031) (.034)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 2.77 3.21 3.21 3.17 3.48
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 .50 .52 .50 .50
Ratio of net investment income
to average net assets 2.74 3.11 3.10 3.11 3.41
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 287,117 227,639 194,158 221,178 205,373
(A) AMOUNT REPRESENTS LESS THAN $.001 PER SHARE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Municipal Reserves (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, as amended (the "Act" ), as an open-end
management investment company and operates as a series company currently
offering nineteen series including the fund. The fund's investment objective is
to seek income exempt from federal income tax consistent with stability of
principal by investing in tax-exempt municipal obligations. The Dreyfus
Corporation (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary
of Mellon Financial Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 1 billion shares of $.001 par
value Capital Stock in each of the following classes of shares: Investor and
Class R shares. Investor shares are sold primarily to retail investors and bear
a distribution fee. Class R shares are sold primarily to bank trust departments
and other financial service providers (including Mellon Bank, N.A. and its
affiliates) acting on behalf of customers having a qualified trust or investment
account or relationship at such institution, and bear no distribution fee. Each
class of shares has identical rights and privileges, except with respect to the
distribution fee 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 amortized cost
in accordance with Rule 2a-7 of the Act, which has been The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
determined by the fund's Board of Directors to represent the fair value of the
fund's investments.
It is the fund's policy to maintain a continuous net asset value per share of
$1.00 for the fund; the fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the fund will be able to maintain a stable net asset
value per share of $1.00.
(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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
(c) Distributions 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 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 of 1986, as
amended (the "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.
(d) Federal income taxes: It is the policy of the fund to continue to qualify as
a regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the 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 $8,300 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1999. If not applied, the
carryover expires in fiscal 2005.
At October 31, 1999, 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 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 .50% 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, 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 fees). Each director receives $40,000 per year, plus $5,000
for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust (the
" Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee meetings
attended which are not held in conjunction with a regularly scheduled board
meeting and $500 for Board meetings and separate committee meetings attended
that are conducted by telephone and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event that
there is a joint committee meeting of the Dreyfus/Laurel Funds and the Dreyfus
High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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 The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, Investor shares 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. During the period
ended October 31, 1999, the Investor shares were charged $56,980 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--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
fund at rates which are related to the Federal funds rate in effect at the time
of borrowings.
The average amount of borrowings outstanding during the period ended October 31,
1999 was approximately $223,600 with a related weighted average annualized
interest rate of 5.37%.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of Dreyfus
Municipal Reserves of The Dreyfus/Laurel Funds, Inc., including the statement of
investments, as of October 31, 1999, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. 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, 1999, by correspondence with the custodian. 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 Municipal Reserves of The Dreyfus/Laurel Funds, Inc. as of October 31,
1999, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
New York, New York
December 15, 1999
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law. The fund hereby designates all the dividends
paid from investment income-net during the fiscal year ended October 31, 1999 as
" exempt-interest dividends" (not generally subject to regular Federal income
tax).
For More Information
Dreyfus Municipal Reserves
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 324/724AR9910
Dreyfus
U.S. Treasury
Reserves
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
7 Statement of Assets and Liabilities
8 Statement of Operations
9 Statement of Changes in Net Assets
10 Financial Highlights
12 Notes to Financial Statements
17 Independent Auditors' Report
18 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus
U.S. Treasury Reserves
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus U.S. Treasury Reserves,
covering the 12-month period from November 1, 1998 through October 31, 1999.
Inside, you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio manager,
David Hertan.
When the reporting period began, the U.S. financial markets were experiencing
the aftermath of a sharp correction caused primarily by the spread of the global
financial crisis overseas. The Federal Reserve Board responded to the crisis
last fall by reducing short-term interest rates, which also reduced money market
yields.
The Fed' s strategy apparently was effective, and the U.S. economy remained
strong through the remainder of the reporting period. Investors had become
concerned that strong economic growth in the United States might rekindle
dormant inflationary pressures. As a result, after remaining relatively steady
during the first quarter of 1999, yields on money market securities rose during
the second and third quarters in response to expectations that the Federal
Reserve Board might raise short-term interest rates. In fact, the Federal
Reserve Board raised rates twice during the summer of 1999 in an attempt to
forestall a potential resurgence of inflationary pressures. This increase
effectively reversed most of last fall's interest-rate cuts, and led to higher
yields on most money market securities.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus U.S. Treasury Reserves.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
David Hertan, Portfolio Manager
How did Dreyfus U.S. Treasury Reserves perform during the period?
For the 12-month period ended October 31, 1999, Dreyfus U.S. Treasury Reserves'
Investor shares produced a yield of 4.19% while its Class R shares produced a
yield of 4.40% . After taking into account the effect of compounding, the
effective yields for Investor shares and Class R shares were 4.27% and 4.48%,
respectively.(1)
For the 12-month period ended October 31, 1999, the fund's Investor shares
provided a total return of 4.27%(2) compared to the Lipper U.S. Treasury Money
Market Funds category average total return of 4.17% for the same time period.(3)
For the same 12-month period, the fund's Class R shares provided a total return
of 4.48% ,(2) compared to the Lipper Institutional U.S. Treasury Money Market
Funds category average total return of 4.48%(3)
We attribute the fund's performance to the fact that we maintained a relatively
long average maturity in the portfolio during the first half of the period,
which enabled us to lock in higher returns when interest rates were declining.
Conversely, as interest rates were rising during the second half of the period,
we shortened the fund's average maturity and were able to capture higher yields
as they became available. In addition, our emphasis on repurchase agreements
helped boost the fund' s overall returns.
What is the fund's investment approach?
As a U.S. Treasury money market fund, our goal is to provide shareholders with
an investment vehicle that is made up of Treasury bills and notes issued by the
United States government as well as repurchase agreements with securities
dealers which are backed by U.S. Treasuries. A major benefit of these securities
is that they are very liquid in nature; that is, they can be converted to cash
quickly. Because U.S. Treasury bills and notes are backed by the full faith and
credit of The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
the U.S. government, they are generally considered to be among the highest
quality investments available. By investing in these obligations, the fund seeks
to add an incremental degree of safety to the portfolio. The fund is also
required to maintain an average dollar-weighted portfolio maturity of 90 days or
less.
What other factors influenced the fund's performance?
During the past year, the returns offered by U.S. Treasury securities such as
those held in this fund have fluctuated. That's because interest rates, which
generally determine the returns for these types of investments, also fluctuated
during the period.
At the beginning of the fund's 12-month reporting period, the global equity
markets were in the midst of a crisis that created a "flight to quality" in
which many investors flocked to the safety provided by U.S. Treasury securities.
In an effort to stimulate global economic growth, the Federal Reserve Board
lowered short-term interest rates by a total of 75 basis points in three
separate moves in October and November, 1998. However, by the end of the year
and into the first quarter of 1999, many industry analysts were surprised to see
signs that the Asian economies were beginning to recover. As a result, investors
became concerned that the Federal Reserve Board might take back some of last
fall' s interest-rate cuts.
Toward the end of the second quarter, the global economy appeared to be
recovering. Commodity prices, particularly oil prices, began to climb, signaling
the end of the "flight to quality" for U.S. bond market investors as they became
more comfortable holding riskier assets. As a result, prices on U.S. Treasury
bonds began to fall.
By the end of the third quarter, commodity prices had leveled off and the U.S.
Treasury market stabilized. Because of a stronger global economy and potential
inflationary pressures, the Federal Reserve Board raised short-term interest
rates twice during the summer. An additional rate hike was expected in November
1999, which would effectively offset all of last fall's rate cuts.
What is the fund's current strategy?
In an effort to provide a high level of income, we allocated a large portion of
the portfolio' s total assets to repurchase agreements during the period.
Commonly referred to as repos, repurchase agreements are overnight loans to
government dealers that are collateralized, in the case of this fund, with U.S.
Treasuries. The primary purpose of investing in repos is to provide liquidity to
the fund. However, because their rates were higher than T-bills during the
period, they generated a higher return.
In managing the portfolio for year-end, we are taking advantage of repos in
order to maintain overnight liquidity. We are also currently keeping the
portfolio' s average maturity short to enable the fund to seek to take advantage
of any possible further interest-rate moves.
November 15, 1999
(1) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE.
EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED MONTHLY.
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
Annualized
Yield on
Date of Principal
U.S. TREASURY BILLS--22.5% Purchase (%) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
11/4/1999 4.45 135,000,000 134,949,938
(cost $134,949,938)
U.S. TREASURY NOTES--29.2%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5.875%, 11/15/1999 4.56 15,000,000 15,006,423
5.625%, 11/30/1999 4.50 40,000,000 40,027,976
7.75%, 12/31/1999 4.41 10,000,000 10,047,883
5.875%, 2/15/2000 4.72 25,000,000 25,068,160
8.50%, 2/15/2000 4.40 20,000,000 20,211,066
5.50%, 2/29/2000 5.10 10,000,000 10,006,962
6.375%, 5/15/2000 4.57 55,000,000 55,342,981
TOTAL U.S. TREASURY NOTES
(cost $175,711,451) 175,711,451
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--48.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co.
dated 10/29/1999, due 11/1/1999
in the amount of $149,434,603
(fully collateralized by $120,000,000
U.S. Treasury Bills, due 10/1/2002,
and by $29,370,000
U.S. Treasury Bonds, 12.375%, due
5/15/2004, value $152,362,025) 5.19 149,370,000 149,370,000
SBC Warburg Dillon Read, Inc.
dated 10/29/1999, due 11/1/1999
in the amount of $140,060,900
(fully collateralized by $140,000,000
U.S. Treasury Bonds, 9.125%, due
5/15/2009, value $142,800,513) 5.22 140,000,000 140,000,000
TOTAL REPURCHASE AGREEMENTS
(cost $289,370,000) 289,370,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $600,031,389) 99.8% 600,031,389
CASH AND RECEIVABLES (NET) .2% 1,117,756
NET ASSETS 100.0% 601,149,145
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $289,370,000)
--Note 1(c) 600,031,389 600,031,389
Interest receivable 4,032,750
604,064,139
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 270,343
Cash overdraft due to Custodian 2,644,651
2,914,994
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 601,149,145
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 601,179,213
Accumulated net realized gain (loss) on investments (30,068)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 601,149,145
NET ASSET VALUE PER SHARE
</TABLE>
Investor Shares Class R
Shares
- -------------------------------------------------------------------------------
Net Assets 36,375,203 564,773,942
Shares Outstanding 36,386,146 564,793,067
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 1.00 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 33,144,430
EXPENSES:
Management fee--Note 2(a) 3,386,551
Distribution fees (Investor Shares)--Note 2(b) 192,131
TOTAL EXPENSES 3,578,682
INVESTMENT INCOME--NET 29,565,748
- -------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): 8,819
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 29,574,567
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
------------------------------------
1999 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 29,565,748 34,970,313
Net realized gain (loss) on investments 8,819 (38,887)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 29,574,567 34,931,426
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (3,995,726) (7,119,905)
Class R shares (25,570,022) (27,850,408)
Net realized gain on investments:
Investor shares -- (4,910)
Class R shares -- (18,455)
TOTAL DIVIDENDS (29,565,748) (34,993,678)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Investor shares 547,120,345 771,417,738
Class R shares 1,600,623,062 1,786,812,396
Dividends reinvested:
Investor shares 3,916,616 2,712,741
Class R shares 22,586,362 24,906,286
Cost of shares redeemed:
Investor shares (630,281,989) (771,398,333)
Class R shares (1,672,499,479) (1,719,791,151)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (128,535,083) 94,659,677
TOTAL INCREASE (DECREASE) IN NET ASSETS (128,526,264) 94,597,425
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 729,675,409 635,077,984
END OF PERIOD 601,149,145 729,675,409
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information reflects financial results for a
single fund share. Total return shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the fund's
financial statements.
Year Ended October 31,
-------------------------------------------------------------------
INVESTOR SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .042 .048 .048 .046 .049
Distributions:
Dividends from investment income--net (.042) (.048) (.048) (.046) (.049)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.27 4.95 4.89 4.74 5.02
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .70 .70 .70 .70 .70
Ratio of net investment income
to average net assets 4.16 4.85 4.81 4.64 4.92
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 36,375 115,622 112,900 21,826 21,386
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
------------------------------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .044 .050 .050 .048 .051
Distributions:
Dividends from investment income--net (.044) (.050) (.050) (.048) (.051)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.48 5.16 5.10 4.94 5.23
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 .50 .50 .50 .50
Ratio of net investment income
to average net assets 4.40 5.03 4.98 4.79 5.14
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 564,774 614,053 522,178 464,303 399,873
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus U.S. Treasury Reserves (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, as amended (the "Act" ), as an open-end
management investment company and operates as a series company currently
offering nineteen series including the fund. The fund's investment objective is
to seek a high level of current income consistent with stability of principal by
investing in high-grade money market instruments. The Dreyfus Corporation (the
" Manager" ) serves as the fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon
Financial Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 1 billion shares of $.001 par
value Capital Stock in each of the following classes of shares: Investor and
Class R. Investor shares are sold primarily to retail investors and bear a
distribution fee. Class R shares are sold primarily to bank trust departments
and other financial service providers (including Mellon Bank, N.A. and its
affiliates) acting on behalf of customers having a qualified trust or investment
account or relationship at such institution, and bear no distribution fee. Each
class of shares has identical rights and privileges, except with respect to the
distribution fee 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 are valued at amortized cost in accordance
with Rule 2a-7 of the Act, which has been determined by the fund's Board of
Directors to represent the fair value of the fund's investments.
It is the fund's policy to maintain a continuous net asset value per share of
$1.00 for the fund; the fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the fund will be able to maintain a stable net asset
value per share of $1.00.
(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. Interest income,
adjusted for amortization of premiums and discounts on investments, is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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: 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 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 of 1986, as
amended (the "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 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 $30,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1999. If not applied, the
carryover expires in fiscal 2006.
At October 31, 1999, 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 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 .50% 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,
Rule 12b-1 distribution fees, service 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 fees). Each director receives $40,000 per year, plus $5,000
for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust (the
" Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee meetings
attended which are not held in conjunction with a regularly scheduled board
meeting and $500 for Board meetings and separate committee meetings attended
that are conducted by telephone and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event that
there is a joint committee meeting of the Dreyfus/Laurel Funds and the Dreyfus
High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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 fund's Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act, Investor shares 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. During the period October 31, 1999, Investor shares were charged
$192,131 pursuant to the Plan.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 or in any agreement related to
the Plan.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. During the period ended October 31, 1999, the fund did not borrow
under the line of credit.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of Dreyfus
U.S. Treasury Reserves of The Dreyfus/Laurel Funds, Inc., including the
statement of investments, as of October 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. 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, 1999, by correspondence with the custodian. 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 U.S. Treasury Reserves of The Dreyfus/Laurel Funds, Inc. as of October
31, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the Fund hereby designates 31.75% of
the ordinary income dividends paid during its fiscal year ended October 31, 1999
as attributable to interest income from direct obligations of the United States.
Such dividends are currently exempt from taxation for individual income tax
purposes in most states, including New York, California and the District of
Columbia.
NOTES
For More Information
Dreyfus U.S. Treasury Reserves
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 326/726AR9910
Dreyfus Premier
Midcap Stock Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
17 Financial Highlights
21 Notes to Financial Statements
27 Independent Auditors' Report
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
Midcap Stock Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Midcap Stock
Fund, covering the 12-month period from November 1, 1998 through October 31,
1999. Inside, you' ll find valuable information about how the fund was managed
during the reporting period, including a discussion with the fund's portfolio
manager, John O'Toole.
Over the past year, midcap stocks generally performed better than small-cap
stocks but did not fare as well as the large-cap market sector. When the
reporting period began, the entire U.S. stock market had just completed a sharp
correction caused primarily by concerns regarding the spread of the global
financial crisis in overseas markets. Soon after the start of 1999, however,
those fears abated. In fact, the U.S. economy remained strong, and investors
became concerned that inflationary pressures might re-emerge. As a result, the
Federal Reserve Board raised short-term interest rates twice during the summer
in an effort to forestall a reacceleration of inflation in a fast-growing
economy. In this environment, equity investors once again preferred the relative
predictability of earnings from large-cap companies.
Despite a brief rally in April and May, small- and mid-cap stocks generally
failed to keep pace with their large-cap counterparts. However, some midcap
stocks, especially technology companies that were subject to heightened investor
speculation, were exceptions to this trend.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Midcap Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
John O'Toole, Portfolio Manager
How did Dreyfus Premier Midcap Stock Fund perform relative to its benchmark?
For the 12-month period ended October 31, 1999, the fund's Class A, B, C and R
shares produced total returns of 17.21% , 16.32% , 16.30% and 17.44% ,
respectively.(1) In contrast, the Standard & Poor' s MidCap 400 Index ("S&P
MidCap 400" ), which serves as the fund's benchmark, produced a total return of
21.07% for the same period.(2)
During the first half of the reporting period, the fund had to compete with a
benchmark that included such high-flying stocks as Qualcomm and E*Trade Group.
These and several other companies did not fit our investment process, mainly
because of their extreme valuations. This problem was mitigated as 1999
progressed because some of these companies moved into the Standard & Poor's 500
Index or their stock prices returned to more rational levels. In addition, the
fund' s returns were enhanced in the second half of the reporting period,
relative to its benchmark, when investors appeared to be somewhat more attracted
to traditional valuation measures.
What is the fund's investment approach?
The fund invests primarily in a blended portfolio of growth and value stocks of
mid-capitalization companies chosen through a disciplined process that combines
computer analysis with human judgment.
The quantitatively driven valuation process identifies and ranks approximately
2,500 midcap stocks as an attractive, neutral or unattractive investment, based
upon more than a dozen different valuation inputs. Those inputs, which we
believe can have an important influence on stock returns, include earnings
estimates, profit margins and growth in cash flow. We establish weights for each
of these factors based upon our analysis of which factors are being rewarded by
investors, making adjustments along the way for the uniqueness of various
industries and The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
economic sectors. For example, the equity markets may be rewarding companies
with strong growth in cash flow. If this were the case, then we would add more
weight to our growth-in-cash flow factor.
Then our investment management team conducts fundamental research on each stock,
which ultimately results in their buy-and-sell recommendations. The fund seeks
to own the best-performing stocks within each economic sector of the S&P MidCap
400. By maintaining an economic sector-neutral stance, we allow individual stock
selection to drive the portfolio's performance.
What other factors influenced the fund's performance?
During most of the 12-month reporting period, investors were jittery about the
economic environment, causing them to favor large household name stocks. Last
November, the Asian economic crisis was still causing concerns about a worldwide
recession and deflation, which is why the Federal Reserve Board lowered interest
rates three times in rapid succession. It wasn't until April 1999 that midcap
stocks began to perform comparatively well, when it appeared that economic
growth was accelerating and investor concerns over deflation were waning. By
late spring however, the U.S. economy appeared in danger of overheating. Energy
prices soared and investors began to worry about inflation, causing the Fed to
raise interest rates in June and August and the anticipation of an additional
rate hike in November, shortly after the end of the fund's fiscal year. Rising
interest rates and a spike in the Consumer Price Index created new worries for
investors. As a result, investors generally shifted from midcap stocks to
large-cap companies that they perceived offered less risk.
What is the fund's current strategy?
We continue to follow our quantitatively driven valuation model and our
sector-neutral portfolio construction process. In doing so, we have identified a
number of individual stocks in a broad array of industries which have provided
strong investment performance.
In the technology sector, Apple Computer has made an impressive rebound as the
market has indicated strong acceptance of its new products. In healthcare,
Biogen continued to have a positive impact on the fund's returns. Biogen
continued to beat Wall Street expectations based on its very successful drug,
Avonex, used in the treatment of multiple sclerosis. In retailing, Zale
Corporation has benefited from the strong economy as well as its strategy of
offering jewelry at a variety of price points. A recent addition to the
portfolio is Univision Communications, a Spanish-language television broadcaster
based in Los Angeles whose audience is increasing along with the booming
Hispanic population in the U.S.
The fund invests in a broadly diversified portfolio of midcap companies, which
are a blend of growth as well as value names. We believe the midcap sector of
the market includes a number of dynamic and interesting companies that currently
offer attractive valuations relative to their large-cap counterparts.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
TOTAL RETURN DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE
IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES
CHARGE ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT RETURN
FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S MIDCAP 400 INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF MEDIUM-CAP
STOCK MARKET PERFORMANCE.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Midcap
Stock Fund Class R shares and the Standard & Poor's MidCap 400 Index
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN CLASS R SHARES OF DREYFUS
PREMIER MIDCAP STOCK FUND ON 11/12/93 (INCEPTION DATE) TO A $10,000 INVESTMENT
MADE IN THE STANDARD & POOR'S MIDCAP 400 INDEX ON THAT DATE. FOR COMPARATIVE
PURPOSES, THE VALUE OF THE INDEX ON 10/31/93 IS USED AS THE BEGINNING VALUE ON
11/12/93. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
PERFORMANCE FOR CLASS A, CLASS B, CLASS C AND CLASS T SHARES WILL VARY FROM THE
PERFORMANCE OF CLASS R SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND
EXPENSES.
THE DREYFUS PREMIER MIDCAP STOCK FUND SEEKS INVESTMENT RETURNS (INCLUDING
CAPITAL APPRECIATION AND INCOME) CONSISTENTLY SUPERIOR TO THE STANDARD & POOR'S
MIDCAP 400 INDEX. WHILE THE MIDCAP MARKET IS THE FUND'S MAIN FOCUS, THE FUND CAN
ALSO INVEST IN OTHER AREAS, SUCH AS STOCKS OF SMALLER AND LARGER CORPORATIONS.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. THE STANDARD & POOR'S MIDCAP 400 INDEX IS A BROAD-BASED INDEX
OF 400 COMPANIES WITH MARKET CAPITALIZATIONS GENERALLY RANGING FROM $50 MILLION
TO $10 BILLION AND IS A WIDELY ACCEPTED, UNMANAGED INDEX OF OVERALL MIDCAP STOCK
MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares
<S> <C> <C> <C> <C>
WITH SALES CHARGE (5.75%) 4/6/94 10.46% 18.45% 15.97%
WITHOUT SALES CHARGE 4/6/94 17.21% 19.85% 17.21%
Class B Shares
WITH REDEMPTION* 1/16/98 12.32% -- 4.58%
WITHOUT REDEMPTION 1/16/98 16.32% -- 6.72%
Class C Shares
WITH REDEMPTION** 1/16/98 15.30% -- 6.80%
WITHOUT REDEMPTION 1/16/98 16.30% -- 6.80%
Class R Shares 11/12/93 17.44% 20.15% 16.27%
- -----------------------------------------------------------------------------------------------------------------------------------
Actual Aggregate Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------------------
Class T Shares
WITH SALES CHARGE (4.5%) 8/16/99 -- -- (5.39)%
WITHOUT SALES CHARGE 8/16/99 -- -- (0.95)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS
REDUCED TO 0% AFTER SIX YEARS.
** THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 1% FOR
SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
</TABLE>
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
COMMON STOCKS--100.4% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--2.2%
<S> <C> <C>
Cytec Industries 51,500 (a) 1,329,344
Engelhard 59,600 1,050,450
Sherwin-Williams 47,800 1,069,525
Solutia 64,200 1,103,438
4,552,757
CONSUMER CYCLICAL--11.7%
Abercrombie & Fitch, Cl. A 56,800 (a) 1,547,800
Alaska Air Group 27,900 (a) 1,109,025
BJ's Wholesale Club 45,800 (a) 1,411,212
Bob Evans Farms 50,500 694,375
Brinker International 46,000 (a) 1,072,375
Brunswick 37,300 843,912
Dollar Tree Stores 41,500 (a) 1,807,844
Furniture Brands International 66,300 (a) 1,284,562
Harley-Davidson 17,100 1,014,244
Leggett & Platt 47,500 1,053,906
MGM Grand 30,700 (a) 1,565,700
Meritor Automotive 61,700 1,045,044
Miller (Herman) 41,400 897,863
Nautica Enterprises 38,900 (a) 585,931
Navistar International 23,900 (a) 996,331
Ross Stores 112,200 2,314,125
TJX Cos. 90,500 2,454,813
V.F. 28,800 865,800
Zale 47,100 (a) 1,972,313
24,537,175
CONSUMER STAPLES--4.6%
Dial 48,900 1,143,037
Earthgrains 29,800 679,812
Hormel Foods 34,300 1,479,188
Lancaster Colony 37,200 1,299,675
Lauder (Estee), Cl. A 26,000 1,212,250
Supervalu 45,500 955,500
U.S. Foodservice 46,400 (a) 890,300
Universal Foods 99,100 1,895,288
9,555,050
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY--7.0%
Diamond Offshore Drilling 56,400 1,790,700
KeySpan Energy 54,600 1,535,625
LG&E Energy 40,900 899,800
NICOR 29,200 1,131,500
Questar 57,000 1,026,000
Santa Fe International 34,800 732,975
Tidewater 41,500 1,245,000
Tosco 63,700 1,612,406
Transocean Offshore 70,000 1,903,125
Ultramar Diamond Shamrock 64,100 1,570,450
Vastar Resources 21,800 1,287,563
14,735,144
HEALTH CARE--9.9%
Allergan 25,100 2,695,113
BioChem Pharma 58,000 (a) 1,192,625
Biogen 64,800 (a) 4,803,300
Biomet 56,100 1,690,013
Health Management Associates, Cl. A 153,400 (a) 1,361,425
Lincare Holdings 42,100 (a) 1,184,062
MedImmune 27,900 (a) 3,124,800
Patterson Dental 11,300 (a) 509,206
Universal Health Services, Cl. B 37,700 (a) 1,107,437
VISX 20,800 (a) 1,301,300
Watson Pharmaceuticals 52,000 (a) 1,651,000
20,620,281
INTEREST SENSITIVE--14.6%
Associated Banc 36,800 1,415,650
Block (H & R) 27,200 1,157,700
City National 62,200 2,410,250
Cullen/Frost Bankers 54,000 1,559,250
Dime Bancorp 60,500 1,081,438
Edwards (A.G.) 50,000 1,503,125
First Tennessee National 59,800 2,033,200
Golden West Financial 14,300 1,598,025
Mercantile Bankshares 48,800 1,756,800
Mutual Risk Management 41,400 626,175
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Nationwide Financial Services, Cl. A 36,600 1,386,225
North Fork Bancorporation 49,400 1,021,962
Old Kent Financial 52,320 2,132,040
PMI Group 45,100 2,339,563
Pacific Century Financial 62,600 1,428,062
Paine Webber Group 13,400 546,050
Radian Group 25,100 1,325,594
RenaissanceRe Holdings 13,100 477,331
T. Rowe Price Associates 55,100 1,956,050
Travelers Property and Casualty, Cl. A 36,600 1,317,600
Union Planters 33,400 1,486,300
30,558,390
MINING AND METALS--.9%
AK Steel Holding 29,600 512,450
Centex Construction Products 28,900 1,027,756
Cleveland-Cliffs 9,900 295,762
1,835,968
PRODUCER GOODS--6.7%
American Power Conversion 84,700 (a) 1,900,456
Briggs & Stratton 23,700 1,384,969
Caraustar Industries 70,700 1,705,638
Centex 35,000 938,437
Cordant Technologies 28,500 888,844
Crane 51,800 1,058,662
Dexter 17,900 627,619
Georgia-Pacific (Timber Group) 26,500 632,688
Kansas City Southern Industries 33,100 1,570,181
Louisiana-Pacific 81,900 1,039,106
Trinity Industries 41,000 1,222,313
USFreightways 21,400 969,688
13,938,601
SERVICES--11.0%
Belo (A.H.), Cl. A 60,600 1,234,725
Circle.com 6,525 94,612
Computer Task Group 31,800 401,475
Convergys 92,100 (a) 1,801,706
DST Systems 15,700 (a) 999,894
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
SERVICES (CONTINUED)
DeVry 63,300 (a) 1,333,256
Hertz, Cl. A 53,200 2,307,550
King World Productions 26,700a (a) 1,034,625
Knight-Ridder 18,500 1,174,750
McClatchy, Cl. A 27,000 1,059,750
Pulitzer 18,900 810,337
Quintiles Transnational 57,900 (a) 1,074,769
Snyder Communications 26,100 (a) 332,775
SunGard Data Systems 44,900 (a) 1,097,244
United States Cellular 21,000 (a) 1,858,500
Univision Communications, Cl. A 17,700 (a) 1,505,606
VeriSign 15,800 (a) 1,951,300
Washington Post, Cl. B 3,200 1,702,600
Young & Rubicam 29,600 1,354,200
23,129,674
TECHNOLOGY--23.6%
Altera 124,800 (a) 6,068,400
Apple Computer 20,000 (a) 1,602,500
BMC Software 43,500 (a) 2,792,156
Check Point Software Technologies 16,200 (a) 1,874,137
Compuware 57,200 (a) 1,590,875
Comverse Technology 17,500 (a) 1,986,250
Jabil Circuit 32,400 (a) 1,692,900
Johnson Controls 21,700 1,318,275
Legato Systems 52,200 (a) 2,805,750
Lexmark International Group, Cl. A 34,400 (a) 2,685,350
Linear Technology 66,300 4,636,856
Maxim Integrated Products 56,000 (a) 4,420,500
SABRE Group Holdings, Cl. A 61,800 (a) 2,746,237
Sanmina 31,800 (a) 2,863,988
Sterling Software 43,900 (a) 963,056
Teradyne 47,700 (a) 1,836,450
VERITAS Software 34,100 (a) 3,678,538
Vitesse Semiconductor 57,000 (a) 2,614,875
Waters 24,500 (a) 1,301,563
49,478,656
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--8.2%
Allegheny Energy 38,900 1,237,506
Century Telephone Enterprises 23,900 966,456
Energy East 76,300 1,917,037
GPU 47,200 1,601,850
IPALCO Enterprises 96,900 1,980,394
Northern States Power 41,300 887,950
NSTAR 45,200 1,720,425
OGE Energy 86,800 1,969,275
Peoples Energy 14,800 562,400
Pinnacle West Capital 30,000 1,106,250
Sierra Pacific Resources 49,768 1,119,780
TECO Energy 38,600 851,613
Telephone and Data Systems 10,800 1,244,700
17,165,636
TOTAL COMMON STOCKS
(cost $190,636,546) 210,107,332
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--.7% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS;
Goldman Sachs & Co.,
Tri-Party Repurchase Agreement, 5.18%
dated 10/29/1999 to be repurchased
at $1,425,615 on 11/1/99,
collateralized by $1,444,000 U.S.
Treasury Notes, 5.625% due
2/28/2001, value $1,454,006
(cost $1,425,000) 1,425,000 1,425,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $192,061,546) 101.1% 211,532,332
LIABILITIES, LESS CASH AND RECEIVABLES (1.1%) (2,203,793)
NET ASSETS 100.0% 209,328,539
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(c) 192,061,546 211,532,332
Cash 482,671
Dividends and interest receivable 205,898
Receivable for shares of Capital Stock subscribed 134,931
Receivable for investment securities sold 35,547
212,391,379
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 214,583
Due to Distributor 19,226
Payable for shares of Capital Stock redeemed 2,476,697
Payable for investment securities purchased 352,176
Loan commitment fees payable 158
3,062,840
- -------------------------------------------------------------------------------
NET ASSETS ($) 209,328,539
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 186,221,203
Accumulated net realized gain (loss) on investments 3,636,550
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 19,470,786
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSETS ($) 209,328,539
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R Class T
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets ($) 83,674,240 25,723,623 5,472,934 94,455,400 2,342
Shares Outstanding 5,013,024 1,562,665 332,066 5,631,484 140.382
NET ASSET VALUE
PER SHARE ($) 16.69 16.46 16.48 16.77 16.68
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $2,832 foreign taxes withheld at source) 2,096,970
Interest 184,770
TOTAL INCOME 2,281,740
EXPENSES:
Management fee--Note 2(a) 2,121,314
Distribution and service fees--Note 2(b) 501,007
Interest expense--Note 4 665
Loan commitment fees--Note 4 588
TOTAL EXPENSES 2,623,574
INVESTMENT (LOSS) (341,834)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 7,058,703
Net unrealized appreciation (depreciation) on investments 18,185,744
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 25,244,447
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 24,902,613
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------------
1999(a) 1998(b,c)
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss)--net (341,834) (83,422)
Net realized gain (loss) on investments 7,058,703 (3,136,094)
Net unrealized appreciation (depreciation)
on investments 18,185,744 (5,105,472)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 24,902,613 (8,324,988)
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares -- (4,238)
Class R shares -- (64,231)
Net realized gain on investments:
Class A shares -- (1,209,970)
Class R shares -- (4,651,856)
TOTAL DIVIDENDS -- (5,930,295)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 87,568,401 40,740,337
Class B shares 10,111,646 19,859,177
Class C shares 3,098,549 4,197,511
Class R shares 50,612,334 66,281,293
Class T shares 2,330 --
Dividends reinvested:
Class A shares -- 1,166,625
Class R shares -- 4,473,465
Cost of shares redeemed:
Class A shares (53,668,857) (7,916,760)
Class B shares (4,263,709) (863,005)
Class C shares (1,751,689) (189,956)
Class R shares (19,791,175) (39,601,301)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 71,917,830 88,147,386
TOTAL INCREASE (DECREASE) IN NET ASSETS 96,820,443 73,892,103
- ------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 112,508,096 38,615,993
END OF PERIOD 209,328,539 112,508,096
A FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1999
FOR CLASS T SHARES.
BEFFECTIVE JANUARY 16, 1998, INVESTOR SHARES AND RESTRICTED SHARES WERE
REDESIGNATED AS CLASS A AND CLASS R SHARES, RESPECTIVELY.
C FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1998
FOR CLASS B AND CLASS C SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
---------------------------------
1999(a) 1998(b,c)
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(D)
Shares sold 5,612,113 2,705,902
Shares issued for dividends reinvested -- 82,408
Shares redeemed (3,285,647) (504,168)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,326,466 2,284,142
- -------------------------------------------------------------------------------
CLASS B(D)
Shares sold 638,392 1,253,924
Shares redeemed (267,298) (62,353)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 371,094 1,191,571
- -------------------------------------------------------------------------------
CLASS C
Shares sold 195,119 259,755
Shares redeemed (109,042) (13,766)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 86,077 245,989
- -------------------------------------------------------------------------------
CLASS R
Shares sold 3,084,883 4,094,892
Shares issued for dividends reinvested -- 331, 341
Shares redeemed (1,227,426) (2,517,205)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,857,457 1,909,028
- -------------------------------------------------------------------------------
CLASS T
SHARES SOLD 140 --
A FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1999
FOR CLASS T SHARES.
B EFFECTIVE JANUARY 16, 1998, INVESTOR SHARES AND RESTRICTED SHARES WERE
REDESIGNATED AS CLASS A AND CLASS R SHARES, RESPECTIVELY.
C FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1998
FOR CLASS B AND CLASS C SHARES.
D DURING THE PERIOD ENDED, OCTOBER 31, 1999, 3,059 CLASS B SHARES REPRESENTING
$48,938 WERE AUTOMATICALLY CONVERTED TO 3,028 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
--------------------------------------------------------------
CLASS A SHARES 1999 1998(a) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.24 17.02 14.36 11.92 9.75
Investment Operations:
Investment income (loss)--net (.03)(b) (.01) .02 .04 .09
Net realized and unrealized gain (loss)
on investments 2.48 (.29) 4.79 2.98 2.17
Total from Investment Operations 2.45 (.30) 4.81 3.02 2.26
Distributions:
Dividends from investment income--net -- (.01) (.01) (.05) (.09)
Dividends from net realized gain on
investments -- (2.47) (2.14) (.53) --
Total Distributions -- (2.48) (2.15) (.58) (.09)
Net asset value, end of period 16.69 14.24 17.02 14.36 11.92
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 17.21(c) (2.16)(c) 38.40 26.29 23.39
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.35 1.35 1.35 1.35 1.35
Ratio of net investment income (loss)
to average net assets (.17) (.19) .16 .28 .86
Portfolio Turnover Rate 80.15 78.02 81.87 90.93 71.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 83,674 38,267 6,847 3,205 1,417
A EFFECTIVE JANUARY 16, 1998, INVESTOR SHARES WERE REDESIGNATED AS CLASS A SHARES.
B BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
C EXCLUSIVE OF SALES CHARGE.
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Class B Shares Class C Shares
---------------------------------------------------------------------
Year Ended October 31, Year Ended October 31,
---------------------------------------------------------------------
1999 1998(a) 1999 1998(a)
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning
<S> <C> <C> <C> <C>
of period 14.16 14.65 14.17 14.65
Investment Operations:
Investment (loss)--net (.15)(b) (.06) (.15)(b) (.06)
Net realized and unrealized gain
(loss) on investments 2.45 (.43) 2.46 (.42)
Total from Investment Operations 2.30 (.49) 2.31 (.48)
Net asset value, end of period 16.46 14.16 16.48 14.17
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 16.32 (3.41)(d) 16.30 (3.28)(d)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 2.10 1.66(d) 2.10 1.66(d)
Ratio of net investment (loss)
to average net assets (.92) (.77)(d) (.92) (.77)(d)
Portfolio Turnover Rate 80.15 78.02 80.15 78.02
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ X 1,000) 25,724 16,867 5,473 3,485
(A) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
-----------------------------------------------------------
CLASS R SHARES 1999 1998(a) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.28 17.03 14.36 11.92 9.76
Investment Operations:
Investment income--net .01(b) .01 .05 .07 .12
Net realized and unrealized gain (loss)
on investments 2.48 (.26) 4.80 2.98 2.16
Total from Investment Operations 2.49 (.25) 4.85 3.05 2.28
Distributions:
Dividends from investment income--net -- (.03) (.04) (.08) (.12)
Dividends from net realized gain on
investments -- (2.47) (2.14) (.53) --
Total Distributions -- (2.50) (2.18) (.61) (.12)
Net asset value, end of period 16.77 14.28 17.03 14.36 11.92
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 17.44 (1.88) 38.88 26.61 23.57
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.10 1.10 1.10 1.10 1.10
Ratio of net investment income
to average net assets .09 .05 .42 .57 1.11
Portfolio Turnover Rate 80.15 78.02 81.87 90.93 71.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 94,455 53,888 31,769 15,644 12,129
(A) EFFECTIVE JANUARY 16, 1998, RESTRICTED SHARES WERE REDESIGNATED AS CLASS R SHARES.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
----------------------
CLASS T SHARES 1999(a)
- -------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 16.84
Investment Operations:
Investment (loss)--net (.01)(b)
Net realized and unrealized gain (loss) on investments (.15)
Total from Investment Operations (.16)
Net asset value, end of period 16.68
- -------------------------------------------------------------------------------
TOTAL RETURN (%)(C) (.95)(d)
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .34(d)
Ratio of net investment (loss) to average net assets (.06)(d)
Portfolio Turnover Rate 80.15
- --------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 2
(A) FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO
OCTOBER 31, 1999.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Midcap Stock 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, as amended (the "Act" ), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the fund. The fund's investment objective is
to seek total investment returns (including capital appreciation and income)
which consistently outperform the Standard & Poor' s 400 Midcap Index. The
Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank"), which is a
wholly-owned subsidiary of Mellon Financial Corporation.
On July 29, 1999, the Board of Directors approved the addition of Class T
shares, which became effective August 16, 1999.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 488 million shares of $.001 par
value Capital Stock. The fund currently offers five classes of shares: Class A
(22 million shares authorized), Class B (100 million shares authorized), Class C
(100 million shares authorized) , Class R (66 million shares authorized) and
Class T shares (200 million shares authorized). Class A, Class B, Class C and
Class T shares are sold primarily to retail investors through financial
intermediaries and bear a distribution fee and/or service fee. Class A and Class
T shares are sold with a front-end sales charge, while Class B and Class C
shares are subject to a contingent deferred sales charge ("CDSC"). 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 an investment account or relationship at
such institution and bear no distribution or service fees. Class R shares are
offered without a front end sales charge 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is used
when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors.
(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 even
of a counter party default, the fund has the right to use the collateral to
offset losses incurred. There is potential loss to the fund in the event the
fund is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the value of
the underlying securities during the period while the fund seeks to assert its
rights. The Manager, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers with which the fund enters into repurchase agreements to evaluate
potential risks.
(D) FINANCIAL FUTURES: The fund may invest in financial futures contracts in
order to gain exposure to or protect against changes in the market. The fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contracts at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. At October 31, 1999,
there were no financial futures contracts outstanding.
(E) DISTRIBUTIONS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "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.
(F) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as
a regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable pro The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
visions of the Code, and to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and excise taxes.
During the period ended October 31, 1999, the fund increased accumulated
undistributed investment income-net by $341,834 and decreased accumulated net
realized gain (loss) on investments by that amount. Net assets were not affected
by this reclassification.
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 1.10% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
service fees, fees and expenses of non-interested Directors (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to reduce
its fee in an amount equal to the fund's allocable portion of fees and expenses
of the non-interested Directors (including counsel fees). Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel
Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the
exception of reimbursable amounts). In the event that there is a joint committee
meeting of the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund,
the $2,000 fee will be allocated between the Dreyfus/Laurel Funds and the
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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$7,765 during the period ended October 31, 1999 from commissions earned on sales
of fund shares.
(B) DISTRIBUTION AND SERVICE PLAN: Under the fund's Distribution Plan (the
" Plan" ) adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay
annually up to .25% of the value of their average daily net assets to compensate
the Distributor and Dreyfus Service Corporation, an affiliate of the Manager,
for shareholder servicing activities and the Distributor for activities and
expenses primarily intended to result in the sale of Class A shares. Under the
Plan, Class B, Class C and Class T shares may pay the Distributor for
distributing their shares at an aggregate annual rate of .75% of the value of
the average daily net assets of Class B and Class C shares and .25% of the
average daily net assets of Class T shares, respectively. The Distributor may
pay one or more agents in respect of advertising, marketing and other
distribution services for class T shares and determines the amounts, if any, to
be paid to Agents and the basis on which such payments are made. Class B, Class
C and Class T shares are also subject to a service plan adopted pursuant to Rule
12b-1, under which Class B, Class C and Class T shares pay Dreyfus Service
Corporation or the Distributor for providing services to the holders of Class B,
Class C and Class T shares a fee at the annual rate of .25% of the value of the
average daily net assets of Class B, Class C and Class T shares. During the
period ended October 31, 1999, Class A, Class B, Class C and Class T shares were
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
charged $225,666, $170,645, $35,859 and $1, respectively, pursuant to the Plan
and Class B, Class C and Class T shares were charged $56,882, $11,953 and $1,
respectively, pursuant to the service plan.
Under its terms, the Plan and service 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 or in any agreement
related to the Plan or service 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, 1999, amounted to
$224,255,572 and $149,071,412, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments was
$19,470,786, consisting of $36,180,179 gross unrealized appreciation and
$16,709,393 gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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.
The average daily amount of borrowings outstanding under the Facility during the
period ended October 31, 1999 was approximately $12,200, with a related weighted
average annualized interest rate of 5.46%.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of Dreyfus
Premier Midcap Stock Fund of The Dreyfus/Laurel Funds, Inc., including the
statement of investments, as of October 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Midcap Stock Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
The Fund
NOTES
For More Information
Dreyfus Premier Midcap 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 330/730AR9910
Dreyfus Premier
Balanced Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
17 Statement of Financial Futures
18 Statement of Assets and Liabilities
19 Statement of Operations
20 Statement of Changes in Net Assets
23 Financial Highlights
28 Notes to Financial Statements
34 Independent Auditors' Report
35 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
Balanced Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Balanced Fund,
covering the 12-month period from November 1, 1998 through October 31, 1999.
Inside, you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio managers,
Ron Gala and Laurie Carroll.
The past 12 months have been highly volatile for stocks and bonds, which began
the reporting period in the wake of a sharp correction caused primarily by the
spread of the global financial crisis in overseas markets. The Federal Reserve
Board responded to the crisis last fall by reducing short-term interest rates.
Its strategy apparently was effective, and the U.S. economy remained strong
through the remainder of the reporting period.
Because inflation is more likely to rise in a strong economy, the U.S. bond
market generally declined during the first 10 months of 1999. To help forestall
a rise of inflation, the Federal Reserve Board raised short-term interest rates
twice during the summer of 1999, effectively reversing most of last fall's
interest-rate cuts.
Despite weakness in the U.S. stock market toward the end of the reporting
period, these economic conditions generally supported stock prices throughout
the year. Technology stocks and other stocks with high earnings growth rates
provided the highest overall returns, while value-oriented and small-cap stocks
generally lagged the market averages.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Balanced Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Ron Gala and Laurie Carroll, Portfolio Managers
How did Dreyfus Premier Balanced Fund perform relative to its benchmark?
For the 12-month period ended October 31, 1999, Dreyfus Premier Balanced Fund
produced total returns of 14.39%, 13.64%, 13.59% and 14.76% for its Class A,
Class B, Class C and Class R shares, respectively.(1) In contrast, a hybrid
index that is composed of 60% Standard & Poor's 500 Composite Stock Price Index
("S&P 500") and 40% Lehman Brothers Intermediate Government/Corporate Bond Index
(" Intermediate Index" ), provided a total return of 15.79% for the same
period.(2) The S& P 500 and the Intermediate Index provided total returns of
25.66% and 0.99%, respectively, for the same period.
The public offering of the fund's Class T shares commenced on August 16, 1999.
From August 16, 1999 through October 31, 1999, the fund produced a total return
of 1.62% for Class T shares.(1)
We attribute the fund' s relative performance to our defensive position
throughout much of the period. Early in 1999, we shifted a large portion of the
fund' s assets out of stocks, primarily because we believed the stock market was
overvalued. Instead, we chose to deploy those assets into bonds, a move that
served to constrain the fund's returns.
What is the fund's investment approach?
The fund is a balanced fund, with a "neutral" allocation under normal
circumstances of 60% stocks and 40% bonds. However, the fund is permitted to
invest up to 75%, and as little as 40%, of its total assets in stocks, and up to
60% , and as little as 25% , of its total assets in bonds.
When allocating assets between stocks and bonds, we assess the relative return
and risks of each asset class using a model that analyzes several factors,
including interest-rate adjusted price/earnings ratios, the valuation and
volatility levels of stocks relative to bonds, and economic factors such as
interest rates.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
Economic and market forces affected the fund's performance over the past 12
months. Just before the reporting period began, a global economic crisis
resulted in a "flight to quality" in which many investors moved away from
equities and instead flocked to the safety provided by U.S. Treasury securities.
In an effort to stimulate global economic growth, the Federal Reserve Board had
reduced short-term interest rates by a total of 0.75 percentage points in three
separate moves in October and November, 1998. At that time, and following the
trend of the past few years, the equity markets continued to be driven by an
increasingly narrow list of large-cap growth stocks.
Soon after 1999 began many Asian economies began to show signs of recovery.
However, in an environment characterized by global economic uncertainty and
higher stock prices, we believed that stocks were overvalued relative to bonds.
Accordingly, as is consistent with our strategy of assessing the risk/reward
characteristics of the market, we shifted assets away from stocks, choosing
instead to emphasize bonds and position the fund more defensively.
As many global economies continued to recover, commodity prices, particularly
oil prices, began to climb, signaling the end of the "flight to quality" for
U.S. bond market investors. In response, investors became more comfortable
holding riskier assets. In April, market sentiment began to move away from
domestic large-cap growth stocks to include a broader group of companies,
including small- and mid-cap names.
By the end of the third quarter, however, commodity prices began to level off
and the U.S. Treasury market stabilized. A stronger global economy and potential
inflationary pressures prompted the Federal Reserve Board to raise short-term
interest rates twice during the summer. An additional rate hike was expected in
November, which would effectively offset all of 1998's rate cuts. In response,
the equity markets began to narrow again, once again favoring large-cap growth
names.
What is the fund's current strategy?
We have continued to maintain a relatively defensive asset allocation stance
because we believe that the stock market remains overvalued. That said, however,
we have maintained a successful security selection strategy within the equity
portion of the portfolio, which has produced favorable returns. The fund
benefited most during the reporting period from technology holdings such as
Microsoft, America Online, Cisco Systems and Lexmark International Group. In
addition, our holdings within the financial services sector, including Citicorp
and Morgan Stanley Dean Witter, provided solid returns for the fund. Other
positive contributors to performance include Tribune, a major newspaper
publishing company; Tellabs, a telecommunications equipment company; EMC, a
hardware and storage systems company; and Amgen, a biotechnology company whose
blockbuster cancer drug, Epogen, is helping to drive the company's success. On
the other hand, our holdings in Coca-Cola, Philip Morris and Tyco International
have hindered returns.
Within the bond portion of the portfolio, our strategy has emphasized corporate
bonds and asset-backed securities, areas that provided our best fixed-income
returns. However, our U.S. Treasury and government agency holdings produced less
attractive returns. Our underweighted position in these bonds, relative to the
Intermediate Index, has helped limit their effect on the overall portfolio
November 15, 1999
(1) 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 CHARGES
IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT RETURN
FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
(2) SOURCE: (A) LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT
OF INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED,
UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE. SOURCE: (B) BLOOMBERG L.P. --
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX IS AN UNMANAGED
INDEX OF GOVERNMENT AND CORPORATE BOND MARKET PERFORMANCE COMPOSED OF U.S.
GOVERNMENT, TREASURY AND AGENCY SECURITIES, FIXED-INCOME SECURITIES AND
NONCONVERTIBLE INVESTMENT-GRADE CORPORATE DEBT, WITH AN AVERAGE MATURITY OF 1-10
YEARS. REFLECTS REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Balanced
Fund Class R shares with the Standard & Poor's 500 Composite Stock Price Index,
the Lehman Brothers Intermediate Government/Corporate Bond Index and a Hybrid
Index
( (+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
( (+)(+)) SOURCE: BLOOMBERG L.P.
((+)(+)(+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC. AND BLOOMBERG L.P.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN CLASS R SHARES OF DREYFUS
PREMIER BALANCED FUND ON 9/15/93 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE
ON THAT DATE IN EACH OF THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX,
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX AND A HYBRID
INDEX, WHICH ARE DESCRIBED BELOW. FOR COMPARATIVE PURPOSES, THE VALUE OF EACH
INDEX ON 8/31/93 IS USED AS THE BEGINNING VALUE ON 9/15/93. ALL DIVIDENDS AND
CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. THE HYBRID INDEX IS CALCULATED ON A
YEAR-TO-YEAR BASIS. PERFORMANCE FOR CLASS A, CLASS B, CLASS C AND CLASS T SHARES
WILL VARY FROM THE PERFORMANCE OF CLASS R SHARES SHOWN ABOVE DUE TO DIFFERENCES
IN CHARGES AND EXPENSES.
DREYFUS PREMIER BALANCED FUND INVESTS IN COMMON STOCKS AND BONDS. THE FUND'S
PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE FEES AND
EXPENSES. THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE. THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED
INDEX OF GOVERNMENT AND CORPORATE BOND MARKET PERFORMANCE COMPOSED OF U.S.
GOVERNMENT, TREASURY AND AGENCY SECURITIES, FIXED-INCOME SECURITIES AND
NONCONVERTIBLE INVESTMENT GRADE CORPORATE DEBT, WITH AN AVERAGE MATURITY OF 1-10
YEARS. THE INDICES DO NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES.
THE HYBRID INDEX IS COMPOSED OF 60% STANDARD & POOR'S 500 COMPOSITE STOCK PRICE
INDEX AND 40% LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX.
UNDER NORMAL CIRCUMSTANCES, THE FUND'S TOTAL ASSETS ARE ALLOCATED APPROXIMATELY
60% TO COMMON STOCKS AND 40% TO BONDS; HOWEVER, THE FUND IS PERMITTED TO INVEST
UP TO 75%, AND AS LITTLE AS 40%, OF ITS TOTAL ASSETS IN COMMON STOCKS AND UP TO
60%, AND AS LITTLE AS 25%, OF ITS TOTAL ASSETS IN BONDS, AS DEEMED ADVISABLE BY
THE DREYFUS CORPORATION. FURTHER INFORMATION RELATING TO FUND PERFORMANCE,
INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL
HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares
<S> <C> <C> <C> <C>
WITH SALES CHARGE (5.75%) 4/14/94 7.80% 17.66% 16.74%
WITHOUT SALES CHARGE 4/14/94 14.39% 19.05% 17.98%
Class B Shares
WITH REDEMPTION* 12/19/94 9.64% -- 19.07%
WITHOUT REDEMPTION 12/19/94 13.64% -- 19.28%
Class C Shares
WITH REDEMPTION** 12/19/94 12.59% -- 19.34%
WITHOUT REDEMPTION 12/19/94 13.59% -- 19.34%
Class R Shares 9/15/93 14.76% 19.37% 16.00%
- -----------------------------------------------------------------------------------------------------------------------------------
Actual Aggregate Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------------------
Class T Shares
WITH SALES CHARGE (4.5%) 8/16/99 -- -- (2.97)%
WITHOUT SALES CHARGE 8/16/99 -- -- 1.62%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* 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.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
COMMON STOCKS--50.8% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--.2%
<S> <C> <C>
Philip Morris Cos. 58,400 1,470,950
CONSUMER CYCLICAL--5.0%
Delphi Automotive Systems 24,668 405,480
Delta Air Lines 33,900 1,845,431
Federated Department Stores 39,800 (a) 1,698,962
Ford Motor 122,550 6,724,931
Gap 111,975 4,157,072
General Motors 35,050 2,462,262
Home Depot 51,200 3,865,600
K mart 86,350 (a) 868,897
Office Depot 112,000 (a) 1,393,000
Safeway 82,800 (a) 2,923,875
TJX Cos. 142,950 3,877,519
Tommy Hilfiger 51,900 (a) 1,466,175
Wal-Mart Stores 209,600 11,881,700
43,570,904
CONSUMER STAPLES--3.0%
Fortune Brands 58,900 2,087,269
IBP 37,500 897,656
Procter & Gamble 81,050 8,500,119
Quaker Oats 42,100 2,947,000
Ralston-Purina Group 90,200 2,835,662
Sara Lee 199,000 5,385,437
Unilever, N.V. (New York Shares) 57,748 3,851,070
26,504,213
ENERGY--3.3%
Amerada Hess 38,500 2,208,937
Atlantic Richfield 31,700 2,954,044
Chevron 24,350 2,223,459
Coastal 37,900 1,596,537
Diamond Offshore Drilling 35,900 1,139,825
El Paso Energy 45,400 1,861,400
Exxon 79,300 5,873,156
Global Marine 74,400 (a) 1,129,950
Royal Dutch Petroleum (New York Shares) 122,100 7,318,370
Texaco 40,800 2,504,100
28,809,778
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--5.8%
Amgen 105,350 (a) 8,401,662
Bausch & Lomb 17,100 923,400
Biomet 37,000 1,114,625
Bristol-Myers Squibb 121,250 9,313,516
Cardinal Health 31,500 1,358,438
Johnson & Johnson 54,200 5,677,450
Merck & Co. 124,000 9,865,750
Schering-Plough 140,450 6,952,275
Tyco International 81,000 3,234,937
United HealthCare 21,200 1,095,775
Warner-Lambert 39,850 3,180,528
51,118,356
INTEREST SENSITIVE-9.9%
Allstate 120,100 3,452,875
Ambac Financial Group 21,900 1,308,525
Bank of America 84,300 5,426,813
Bank One 38,200 1,434,888
Chase Manhattan 80,600 7,042,425
Citigroup 210,600 11,398,725
Comerica 42,300 2,514,206
Conseco 74,600 1,813,712
Edwards (A.G.) 27,150 816,197
Fannie Mae 73,000 5,164,750
Fleet Boston 141,356 6,166,645
General Electric 85,450 11,583,816
Household International 45,400 2,025,975
MBNA 123,400 3,408,925
MGIC Investment 29,750 1,777,562
Marsh & McLennan Cos. 49,300 3,897,781
Merrill Lynch 34,900 2,739,650
Morgan Stanley Dean Witter & Co. 42,150 4,649,672
SLM Holding 43,200 2,114,100
SunTrust Banks 41,850 3,062,897
UnionBanCal 32,900 1,429,094
XL Capital, Cl. A 53,150 2,853,491
86,082,724
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS--3.6%
American Power Conversion 64,100 (a) 1,438,244
Boeing 60,400 2,782,175
Dow Chemical 26,300 3,109,975
duPont (E.I.) deNemours & Co. 51,900 3,344,306
General Dynamics 46,900 2,600,019
Georgia-Pacific Group 71,700 2,845,594
Ingersoll-Rand 46,600 2,434,850
Kerr-McGee 22,200 1,193,250
Kimberly-Clark 64,300 4,058,938
PPG Industries 22,800 1,382,250
Rohm & Haas 38,800 1,484,100
USG 19,800 981,338
Union Carbide 19,900 1,213,900
United Technologies 39,800 2,407,900
31,276,839
SERVICES--3.6%
America Online 61,300 (a) 7,949,844
Ceridian 70,400 (a) 1,544,400
Comcast, Cl. A 75,400 3,176,225
Fox Entertainment Group, Cl. A 98,900 2,138,713
Gannett 57,700 4,450,113
IMS Health 56,600 1,641,400
Infinity Broadcasting, Cl. A 112,050 3,872,728
Tribune 73,800 4,428,000
Vodafone AirTouch, A.D.R. 50,600 2,425,638
31,627,061
TECHNOLOGY--11.3%
ADC Telecommunications 58,800 (a) 2,804,025
Applied Materials 30,400 (a) 2,730,300
BMC Software 15,000 (a) 962,813
Cisco Systems 126,900 (a) 9,390,600
Compuware 61,800 (a) 1,718,812
Dell Computer 176,600 (a) 7,086,075
EMC 40,800 (a) 2,978,400
Eaton 23,800 1,790,950
General Instrument 36,400 (a) 1,958,775
Hewlett-Packard 32,300 2,392,219
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Intel 142,600 11,042,588
International Business Machines 93,100 9,158,712
Lexmark International Group, Cl. A 38,800 (a) 3,028,825
Lucent Technologies 62,100 3,989,925
Microsoft 231,450 (a) 21,423,591
Motorola 41,500 4,043,656
Nokia, A.D.S. 26,100 3,016,181
Tellabs 91,500 (a) 5,787,375
Texas Instruments 32,600 2,925,850
98,229,672
UTILITIES--5.1%
AT&T 133,600 6,245,800
Ameren 42,750 1,616,484
BellSouth 146,900 6,610,500
Consolidated Edison 52,350 1,999,116
FPL Group 59,400 2,988,562
GTE 32,600 2,445,000
MCI WorldCom 127,350 (a) 10,928,222
SBC Communications 188,320 9,592,530
Sempra Energy 63,400 1,295,737
UtiliCorp United 38,300 828,237
44,550,188
TOTAL COMMON STOCKS
(cost $ 378,563,354) 443,240,685
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
BONDS AND NOTES--46.2% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCE--8.7%
ABN Amro Bank, N.V., Sub. Notes,
7.55%, 6/28/2006 700,000 709,532
American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 2,500,000 2,491,537
Associates, N.A., Sr. Notes,
5.75%, 11/1/2003 2,000,000 1,927,340
Atlantic Richfield, Notes,
5.55%, 4/15/2003 5,000,000 4,853,185
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
Chase Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-3, Cl. A,
6%, 8/15/2005 5,000,000 4,924,800
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 4,500,000 4,459,612
Citigroup, Sr. Notes,
6.60%, 8/1/2000 2,000,000 2,006,250
DaimlerChrysler, Notes,
6.90%, 9/1/2004 6,000,000 6,020,160
General Motors Acceptance, Notes,
6.625%, 10/1/2002 2,000,000 1,995,000
Goldman Sachs Group, Notes,
6.65%, 5/15/2009 2,000,000 1,905,968
International Lease Finance, Notes,
5.625%, 5/1/2002 5,000,000 4,891,550
Lehman Brothers Holdings, Notes,
7.50%, 9/1/2006 7,000,000 6,981,135
Merrill Lynch, Notes,
6%, 2/17/2009 12,000,000 11,011,524
Province of Ontario, Bonds,
7.75%, 6/4/2002 2,651,000 2,728,860
Province of Quebec:
Notes,
7.50%, 7/15/2002 4,000,000 4,082,040
Sr. Unsub.,
5.75%, 2/15/2009 10,000,000 9,115,400
Republic New York, Deb.,
9.75%, 12/1/2000 1,000,000 1,033,607
US Bank, Notes,
5.70%, 12/15/2008 3,000,000 2,700,903
Wells Fargo, Sr. Notes,
6.75%, 10/1/2006 2,200,000 2,138,352
75,976,755
INDUSTRIAL--8.8%
Aesop Funding, Asset Backed Ctfs.,
Ser. 1997-1A, Cl. A2,
6.40%, 10/20/2003 2,000,000 (b) 1,981,230
Albertson's, Sr. Notes,
6.95%, 8/1/2009 3,000,000 2,979,714
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL (CONTINUED)
BP Amoco, Notes,
6.25%, 10/15/2004 1,500,000 1,486,506
Baker Hughes, Notes,
7.875%, 6/15/2004 5,000,000 5,167,055
Comcast Cable Communications, Notes,
6.20%, 11/15/2008 1,500,000 1,383,649
Conoco, Sr. Notes,
5.90%, 4/15/2004 5,000,000 4,829,920
Delphi Automotive Systems, Notes,
6.125%, 5/1/2004 8,820,000 8,430,306
duPont (E.I.) de Nemours & Co., Notes,
6.50%, 9/1/2002 3,000,000 3,013,728
Federated Department Stores, Notes,
6.30%, 4/1/2009 3,500,000 3,238,393
Monsanto, Notes,
5.375%, 12/1/2001 2,900,000 (b) 2,825,685
Newell Rubbermaid, Sr. Notes,
6.60%, 11/15/2006 4,500,000 4,409,019
News America Holdings, Sr. Notes,
8.625%, 2/1/2003 5,000,000 5,210,590
Norfolk Southern, Sr. Notes,
6.20%, 4/15/2009 5,000,000 4,582,605
PPG Industries, Notes,
6.50%, 11/1/2007 5,000,000 4,832,245
Procter & Gamble, Deb.,
8%, 11/15/2003 1,000,000 1,051,740
Raytheon, Notes,
5.70%, 11/1/2003 10,150,000 9,585,660
Safeway Stores, Notes,
7%, 9/15/2002 2,000,000 1,998,250
Wal-Mart Stores:
Notes,
7.50%, 5/15/2004 5,000,000 5,200,335
Sr. Notes,
6.875%, 8/10/2009 5,000,000 5,028,180
77,234,810
UTILITIES--2.5%
AT&T, Notes,
5.625%, 3/15/2004 500,000 478,998
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
MCI WorldCom, Sr. Notes,
6.40%, 8/15/2005 1,250,000 1,215,846
National Rural Utilities, Notes,
5.50%, 1/15/2005 3,000,000 2,835,927
PECO Energy Transition Trust,
Asset Backed Ctfs., Ser. 1999-A, Cl. A2,
5.63%, 3/1/2005 4,000,000 3,905,740
PP&L, Notes,
6.125%, 5/1/2001 2,000,000 1,988,520
TECO Energy, Notes,
5.54%, 9/15/2001 2,000,000 1,968,846
Viacom, Sr. Notes,
7.50%, 1/15/2002 5,500,000 5,586,471
Wisconsin Electric Power, Notes,
7.25%, 8/1/2004 3,500,000 3,575,583
21,555,931
U.S. GOVERNMENT & AGENCIES--26.2%
Federal Farm Credit Bank, Bonds,
6%, 10/1/2001 5,000,000 4,986,300
Federal Home Loan Bank, Bonds:
5.50%, 7/14/2000 4,100,000 4,091,513
4.875%, 1/26/2001 4,100,000 4,044,486
5.625%, 3/19/2001 4,250,000 4,224,925
5.61%, 6/22/2001 7,700,000 7,640,956
5.875%, 8/15/2001 10,000,000 9,954,600
5.875%, 9/17/2001 13,000,000 12,940,603
5.125%, 2/26/2002 4,400,000 4,295,500
5.125%, 9/15/2003 2,100,000 2,010,645
Federal Home Loan Mortgage Corp., Notes:
5%, 1/15/2004 20,000,000 18,970,180
6.25%, 7/15/2004 7,000,000 6,954,073
5.75%, 3/15/2009 3,500,000 3,263,750
Federal National Mortgage Association:
Medium-Term Notes:
5.10%, 9/25/2000 5,000,000 4,965,950
Notes:
5.25%, 1/15/2003 3,000,000 2,908,656
4.75%, 11/14/2003 10,000,000 9,420,770
5.625%, 5/14/2004 19,000,000 18,426,276
5.75%, 6/15/2005 5,000,000 4,834,950
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCIES (CONTINUED)
U.S. Treasury Bonds:
11.625%, 11/15/2002 500,000 578,080
11.125%, 8/15/2003 2,800,000 3,268,972
U.S. Treasury Notes:
5.75%, 10/31/2000 4,550,000 4,555,642
5.625%, 2/28/2001 3,000,000 2,997,630
6.25%, 4/30/2001 3,000,000 3,022,500
5.625%, 5/15/2001 3,000,000 2,994,900
6.625%, 6/30/2001 4,000,000 4,051,800
6.625%, 7/31/2001 5,000,000 5,067,850
7.875%, 8/15/2001 3,000,000 3,103,350
6.25%, 10/31/2001 3,900,000 3,932,643
5.875%, 11/30/2001 5,300,000 5,306,307
6.125%, 12/31/2001 3,000,000 3,017,430
6.25%, 2/28/2002 5,000,000 5,044,600
6.625%, 3/31/2002 300,000 305,073
6.625%, 4/30/2002 4,250,000 4,325,480
7.50%, 5/15/2002 2,300,000 2,386,572
5.875%, 9/30/2002 4,500,000 4,500,315
5.75%, 10/31/2002 4,400,000 4,385,656
5.75%, 11/30/2002 7,000,000 6,970,390
5.625%, 12/31/2002 3,000,000 2,976,210
5.50%, 1/31/2003 2,200,000 2,173,468
6.25%, 2/15/2003 8,200,000 8,273,964
5.50%, 2/28/2003 6,000,000 5,924,280
5.50%, 3/31/2003 3,000,000 2,960,490
5.50%, 5/31/2003 1,000,000 985,310
6.50%, 10/15/2006 11,000,000 11,196,020
228,239,065
TOTAL BONDS AND NOTES
(cost $ 407,159,623) 403,006,561
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--6.3% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-5.8%
Goldman Sachs & Co.,Tri-Party Repurchase
Agreement, 5.18% dated 10/29/1999, due
11/1/1999 in the amount of $ 50,021,583
(fully collateralized by $ 48,629,000
U.S. Treasury Notes, 6.625%, 5/15/2007,
value $ 51,000,906) 50,000,000 50,000,000
U.S. TREASURY BILLS-.5%
4.67%, 12/16/1999 4,554,000 (c) 4,529,090
TOTAL SHORT-TERM INVESTMENTS
(cost $54,527,416) 54,529,090
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $840,250,393) 103.3% 900,776,336
LIABILITIES, LESS CASH AND RECEIVABLES (3.3%) (28,939,708)
NET ASSETS 100.0% 871,836,628
(A) NON-INCOME PRODUCING.
(B) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT OCTOBER 31, 1999,
THESE SECURITIES AMOUNTED TO $4,806,915 OR APPROXIMATELY .6% OF NET ASSETS.
</TABLE>
(C) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR
OPEN FINANCIAL FUTURES POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES
October 31, 1999
Market Value Unrealized
Covered (Depreciation)
Contracts by Contracts ($) Expiration at 10/31/99 ($)
- ------------------------------------------------------------------------------------------------------------------------------
FINANCIAL FUTURES LONG:
<S> <C> <C> <C> <C>
5 Year U.S. Treasury Notes 560 60,453,750 December '99 (78,750)
FINANCIAL FUTURES SHORT:
Standard & Poor's 500 189 (65,025,450) December '99 (751,275)
(830,025)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(c) 840,250,393 900,776,336
Cash 165,522
Dividends and interest receivable 7,391,841
Receivable for shares of Capital Stock subscribed 2,390,731
910,724,430
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 943,268
Due to Distributor 52,832
Payable for shares of Capital Stock redeemed 35,935,141
Payable for investment securities purchased 1,008,061
Payable for futures variation margin--Note 1(d) 948,500
38,887,802
- -------------------------------------------------------------------------------
NET ASSETS ($) 871,836,628
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 785,970,115
Accumulated undistributed investment income--net 5,690,270
Accumulated net realized gain (loss) on investments 20,480,325
Accumulated net unrealized appreciation (depreciation)
on investments [Including ($830,025) net unrealized
(depreciation) on financial futures]--Note 3 59,695,918
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSETS ($) 871,836,628
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R Class T
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets ($) 213,362,146 205,491,433 55,723,363 397,234,141 25,545
Shares Outstanding 13,596,133 13,132,697 3,549,367 25,293,568 1,629
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 15.69 15.65 15.70 15.70 15.68
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 17,854,383
Cash dividends (net of $73,380 foreign taxes withheld at source) 3,456,913
TOTAL INCOME 21,311,296
EXPENSES:
Management fee--Note 2(a) 6,008,517
Distribution and service fees--Note 2(b) 1,874,690
Loan commitment fees--Note 4 1,161
TOTAL EXPENSES 7,884,368
INVESTMENT INCOME--NET 13,426,928
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 15,627,830
Net realized gain (loss) on financial futures 8,670,071
NET REALIZED GAIN (LOSS) 24,297,901
Net unrealized appreciation (depreciation) on investments
[including ($4,459,579) net unrealized (depreciation)
on financial futures] 23,866,853
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 48,164,754
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 61,591,682
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------------
1999(a) 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 13,426,928 6,199,838
Net realized gain (loss) on investments 24,297,901 18,170,821
Net unrealized appreciation (depreciation)
on investments 23,866,853 12,885,989
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 61,591,682 37,256,648
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (1,580,492) (533,044)
Class B shares (1,223,741) (701,190)
Class C shares (248,678) (70,788)
Class R shares (6,441,114) (4,618,084)
Net realized gain on investments:
Class A shares (2,889,067) (2,098,834)
Class B shares (4,479,684) (4,236,067)
Class C shares (646,144) (300,306)
Class R shares (13,660,063) (20,836,393)
TOTAL DIVIDENDS (31,168,983) (33,394,706)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 186,156,663 26,608,304
Class B shares 149,541,513 32,650,743
Class C shares 50,394,929 5,817,624
Class R shares 341,138,366 104,742,971
Class T shares 24,689 --
Year Ended October 31,
---------------------------------
1999(a) 1998
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS (CONTINUED) ($):
Dividends reinvested:
Class A shares 3,904,501 2,423,236
Class B shares 4,568,521 4,051,465
Class C shares 636,923 282,986
Class R shares 19,652,706 25,416,979
Cost of shares redeemed:
Class A shares (22,218,320) (3,869,815)
Class B shares (17,504,497) (4,536,684)
Class C shares (4,762,205) (415,387)
Class R shares (188,359,586) (73,043,662)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 523,174,203 120,128,760
TOTAL INCREASE (DECREASE) IN NET ASSETS 553,596,902 123,990,702
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 318,239,726 194,249,024
END OF PERIOD 871,836,628 318,239,726
Undistributed investment income--net 5,690,270 1,757,367
A FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1999
FOR CLASS T SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
--------------------------------
1999(a) 1998
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(B)
Shares sold 12,037,162 1,865,888
Shares issued for dividends reinvested 262,442 179,977
Shares redeemed (1,444,709) (272,801)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 10,854,895 1,773,064
- -------------------------------------------------------------------------------
CLASS B(B)
Shares sold 9,761,921 2,307,420
Shares issued for dividends reinvested 308,271 302,337
Shares redeemed (1,141,433) (319,296)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 8,928,759 2,290,461
- -------------------------------------------------------------------------------
CLASS C
Shares sold 3,277,930 413,223
Shares issued for dividends reinvested 42,774 20,986
Shares redeemed (309,521) (29,104)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,011,183 405,105
- -------------------------------------------------------------------------------
CLASS R
Shares sold 22,264,108 7,480,245
Shares issued for dividends reinvested 1,321,991 1,891,491
Shares redeemed (12,212,108) (5,243,539)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 11,373,991 4,128,197
- -------------------------------------------------------------------------------
CLASS T
SHARES SOLD 1,629 --
(A) FROM AUGUST 16, 1999, (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31,
1999 FOR CLASS T SHARES.
(B) DURING THE PERIOD ENDED OCTOBER 31, 1999, 256,691 CLASS B SHARES
REPRESENTING $3,945,999 WERE AUTOMATICALLY CONVERTED TO 256,023 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
--------------------------------------------------------------
CLASS A SHARES 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.88 15.17 13.71 11.91 10.08
Investment Operations:
Investment income--net .36(a) .33 .34 .31 .28
Net realized and unrealized gain (loss)
on investments 1.68 1.81 2.77 1.88 1.82
Total from Investment Operations 2.04 2.14 3.11 2.19 2.10
Distributions:
Dividends from investment income--net (.30) (.37) (.28) (.31) (.27)
Dividends from net realized gain on
investments (.93) (2.06) (1.37) (.08) --
Total Distributions (1.23) (2.43) (1.65) (.39) (.27)
Net asset value, end of period 15.69 14.88 15.17 13.71 11.91
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) 14.39 16.06 25.24 18.71 21.17
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.25 1.25 1.25 1.25
Ratio of net investment income
to average net assets 2.31 2.44 2.21 2.39 2.65
Portfolio Turnover Rate 104.42 69.71 98.88 85.21 53.20
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 213,362 40,780 14,687 6,275 1,650
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
---------------------------------------------------------------
CLASS B SHARES 1999 1998 1997 1996 1995(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 14.83 15.12 13.68 11.89 9.76
Investment Operations:
Investment income--net .24(b) .24 .23 .21 .14
Net realized and unrealized gain (loss)
on investments 1.69 1.79 2.77 1.87 2.11
Total from Investment Operations 1.93 2.03 3.00 2.08 2.25
Distributions:
Dividends from investment income--net (.18) (.26) (.19) (.21) (.12)
Dividends from net realized gain on
investments (.93) (2.06) (1.37) (.08) --
Total Distributions (1.11) (2.32) (1.56) (.29) (.12)
Net asset value, end of period 15.65 14.83 15.12 13.68 11.89
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 13.64 15.20 24.27 17.76 23.19(d)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.00 2.00 2.00 2.00 1.73(d)
Ratio of net investment income
to average net assets 1.55 1.70 1.47 1.65 2.16(d)
Portfolio Turnover Rate 104.42 69.71 98.88 85.21 53.20
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 205,491 62,324 28,940 9,141 3,118
(A) FROM DECEMBER 19, 1994 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1995.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
---------------------------------------------------------------
CLASS C SHARES 1999 1998 1997 1996 1995(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 14.87 15.16 13.70 11.90 9.76
Investment Operations:
Investment income--net .24(b) .22 .24 .25 .11
Net realized and unrealized gain (loss)
on investments 1.71 1.81 2.78 1.84 2.15
Total from Investment Operations 1.95 2.03 3.02 2.09 2.26
Distributions:
Dividends from investment income--net (.19) (.26) (.19) (.21) (.12)
Dividends from net realized gain on
investments (.93) (2.06) (1.37) (.08) --
Total Distributions (1.12) (2.32) (1.56) (.29) (.12)
Net asset value, end of period 15.70 14.87 15.16 13.70 11.90
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 13.59 15.24 24.41 17.83 23.29(d)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.00 2.00 2.00 2.00 1.73(d)
Ratio of net investment income
to average net assets 1.57 1.69 1.47 1.62 2.16(d)
Portfolio Turnover Rate 104.42 69.71 98.88 85.21 53.20
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 55,723 8,004 2,017 237 6
(A) FROM DECEMBER 19, 1994 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1995.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
---------------------------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 14.88 15.18 13.72 11.92 10.09
Investment Operations:
Investment income--net .40(a) .38 .36 .34 .31
Net realized and unrealized gain (loss)
on investments 1.69 1.79 2.79 1.88 1.81
Total from Investment Operations 2.09 2.17 3.15 2.22 2.12
Distributions:
Dividends from investment income--net (.34) (.41) (.32) (.34) (.29)
Dividends from net realized gain on
investments (.93) (2.06) (1.37) (.08) --
Total Distributions (1.27) (2.47) (1.69) (.42) (.29)
Net asset value, end of period 15.70 14.88 15.18 13.72 11.92
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 14.76 16.37 25.56 18.99 21.46
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.00 1.00 1.00 1.00 1.00
Ratio of net investment income
to average net assets 2.54 2.71 2.44 2.68 2.89
Portfolio Turnover Rate 104.42 69.71 98.88 85.21 53.20
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 397,234 207,132 148,605 129,744 97,881
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended
CLASS T SHARES October 31, 1999(a)
- --------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.43
Investment Operations:
Investment income--net .08(b)
Net realized and unrealized gain (loss) on investments .17
Total from Investment Operations .25
Net asset value, end of period 15.68
- -------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 1.62(d)
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .32(d)
Ratio of net investment income to average net assets .40(d)
Portfolio Turnover Rate 104.42
- -------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 26
(A) FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO
OCTOBER 31, 1999.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Balanced 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, as amended (the "Act" ), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the fund. The fund's investment objective is
to outperform a hybrid index, 60% of which is the Standard & Poor's 500
Composite Stock Price Index and 40% of which is the Lehman Brothers Intermediate
Government/Corporate Bond Index, by investing in common stocks and bonds in
proportions consistent with their expected returns and risks as determined by
the fund's investment adviser. The Dreyfus Corporation (the "Manager") serves as
the fund' s investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A. (" Mellon Bank" ) which is a wholly-owned subsidiary of Mellon
Financial Corporation.
On July 29, 1999, the Board of Directors approved the addition of Class T shares
which became effective August 16, 1999.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 50 million shares of $.001 par
value Capital Stock in each of the following classes of shares: Class A, Class
B, Class C and Class R shares and 200 million of $.001 par value Capital Stock
of Class T shares. Class A, Class B, Class C and Class T shares are sold
primarily to retail investors through financial intermediaries and bear a
distribution fee and/or service fee. Class A and Class T shares are sold with a
front-end sales charge, while Class B and Class C shares are subject to a
contingent deferred sales charge ("CDSC"). Class R shares are sold primarily to
bank trust departments and other financial service providers (including Mellon
Bank and its affiliates) acting on behalf of customers having a qualified trust
or investment account or relationship at such institution, and bear no
distribution fee or service fee. Class R shares are offered without a front-end
sales charge 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 of a
counter party default, the fund has the right to use the collateral The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
to offset losses incurred. There is potential loss to the fund in the event the
fund is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the value of
the underlying securities during the period while the fund seeks to assert its
rights. The Manager, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers with which the fund enters into repurchase agreements to evaluate
potential risks.
(D) FINANCIAL FUTURES: The fund may invest in financial futures contracts in
order to gain exposure to or protect against changes in the market. The fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. Contracts open at October
31, 1999 are set forth in the Statement of Financial Futures.
(E) DISTRIBUTIONS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. Dividends from net realized capital gain are normally declared and paid
annually, but the fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "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.
(F) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as
a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable provisions
of the Code, and to make distributions of taxable income sufficient to relieve
it from substantially all Federal income and excise taxes.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.00% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
service fees, fees and expenses of non-interested Directors (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to reduce
its fee in an amount equal to the fund's allocable portion of fees and expenses
of the non-interested Directors (including counsel fees). Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel
Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$17,411 during the period ended October 31, 1999, from commissions earned on
sales of the fund's shares.
(B) DISTRIBUTION AND SERVICE PLAN: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of its average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B, Class C and Class T shares may pay the Distributor for distributing
their shares at an aggregate annual rate of .75% of the value of the average
daily net assets of Class B and Class C shares and .25% of the value of the
average daily net assets of Class T shares. The Distributor may pay one or more
agents in respect of advertising, marketing and other distribution services for
Class T shares and determines the amounts, if any, to be paid to agents and the
basis on which such payments are made. Class B, Class C and Class T shares are
also subject to a service plan adopted pursuant to Rule 12b-1, under which Class
B, Class C and Class T shares pay Dreyfus Service Corporation or the Distributor
for providing certain services to the holders of Class B , Class C and Class T
shares a fee at the annual rate of .25% of the value of the average daily net
assets of Class B, Class C and Class T shares. During the period ended October
31, 1999, Class A, Class B, Class C and Class T shares were charged $255,553,
$984,882, $229,462 and $6, respectively, pursuant to the Plan. During the period
ended October 31, 1999, Class B, Class C and Class T shares were charged
$328,294, $76,487 and $6, respectively, pursuant to the service plan.
Under its terms, the Plan and service 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 or in any agreement
related to the Plan and service plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and financial futures, during the period ended October 31,
1999, amounted to $1,072,594,677 and $560,755,149, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments and
financial futures was $59,695,918, consisting of $75,453,754 gross unrealized
appreciation and $15,757,836 gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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
October 31, 1999, the fund did not borrow under the Facility.
The Fund
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments and financial futures, of Dreyfus Premier Balanced
Fund of The Dreyfus Laurel/Funds, Inc. as of October 31, 1999, and the related
statement of operations for the year then ended, the statement 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 in the five-year period
then ended. 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 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, 1999 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier Balanced Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 1999, 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 the
financial highlights for each of the years or periods in the five-year period
then ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $.7065 per share as a
long-term capital gain distribution paid on December 21, 1998.
The fund also designates 13.049% of the ordinary dividends paid during the
fiscal year ended October 31, 1999 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 2000 of
the percentage applicable to the preparation of their 1999 income tax returns.
The Fund
NOTES
For More Information
Dreyfus Premier Balanced Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 342/642AR9910
Dreyfus
BASIC S&P 500
Stock Index Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
22 Statement of Financial Futures
23 Statement of Assets and Liabilities
24 Statement of Operations
25 Statement of Changes in Net Assets
26 Financial Highlights
27 Notes to Financial Statements
32 Independent Auditors' Report
33 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus BASIC
S&P 500 Stock Index Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC S&P 500 Stock
Index Fund, covering the 12-month period from November 1, 1998 through October
31, 1999. Inside, you' ll find valuable information about how the fund was
managed during the reporting period, including a discussion with the fund's
portfolio managers, Steve Falci and Jocelin Reed.
Despite a relatively weak third quarter of 1999 for the U.S. stock market, the
past year has been rewarding for most equity investors overall. When the
reporting period began, most sectors of the U.S. stock market had completed a
sharp correction caused primarily by concerns regarding the spread of the global
financial crisis in overseas markets. Soon after the start of 1999, however,
those fears abated. In fact, the U.S. economy remained strong, characterized by
low inflation and high levels of consumer spending. These conditions supported
continued strength in the stock market through the spring.
In the summer of 1999, however, the Federal Reserve Board raised short-term
interest rates twice in an effort to forestall inflationary pressures in a
fast-growing economy. Because higher interest rates tend to increase the cost of
capital and make fixed-income securities more competitive relative to equities,
most sectors of the stock market declined. By the end of the 12-month reporting
period, major stock indices had fallen from the record highs reached during the
summer, although stock prices generally were still higher than they were one
year earlier.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus BASIC S&P 500 Stock Index Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Steve Falci and Jocelin Reed, Portfolio Managers
How did Dreyfus BASIC S&P 500 Stock Index Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 1999, Dreyfus BASIC S&P 500 Stock
Index Fund produced a total return of 25.34%.(1) The Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index") produced a total return of 25.66%
for the same period.(2) The difference in returns is accounted for by
transaction costs and other fund operating expenses.
What is the fund's investment approach?
The fund seeks to match the total return of the S&P 500 Index. To pursue that
goal, the fund generally invests in all 500 stocks in the S&P 500 Index in
proportion to their weighting in the Index. Often considered a barometer for the
stock market in general, the S&P 500 Index is made up of 500 widely held common
stocks. It is dominated by large-cap blue chip stocks, which, when combined,
cover nearly 75% of total U.S. market capitalization.
However, it is important to note that the S&P 500 Index is not composed of the
500 largest companies; rather, it is designed to capture the returns of many
different sectors of the U.S. economy. The S&P 500 Index contains approximately
375 industrial, 40 utility, 75 financial and 10 transportation stocks. Each
stock is weighted by its market capitalization; that is, larger companies have
greater representation in the S&P 500 Index than smaller ones. The fund may
also use stock index futures as a substitute for the sale or purchase of stocks
As an index fund, the fund uses a passive management approach; all investment
decisions are made based on the fund's objective, which is to seek to match the
performance of the S& P 500 Index. The fund does not attempt to manage market
volatility.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
At the beginning of the fund's 12-month reporting period, and following the
trend of the past few years, the growth of the U.S. equity market was dominated
by large-cap growth stocks. However, in April market sentiment began to shift
away from domestic large-cap growth stocks to include a broader group of
companies, including small- and mid-cap names. By August, however, the equity
market began to narrow, once again favoring large-cap growth names.
During the reporting period, the largest gains within the S&P 500 Index, and
therefore the fund as well, came from its technology group, which includes
communications equipment, electronic equipment and instruments, office
electronics and semiconductor equipment and products companies. In addition, the
S&P 500 Index's holdings within the newspaper publishing area and retail apparel
stores provided strong returns, as did its engineering and construction and
computer software stocks.
On the other hand, the poorest performing returns of the S&P 500 Index, and
therefore of the fund as well during the reporting period, were generated from
its pollution control, office equipment and supplies, toys, cosmetics and
healthcare (specifically HMO) companies. In addition, the stocks of supermarket
chains, textile, specialty printing and tobacco stocks provided disappointing
returns.
What is the fund's current strategy?
The fund is an index fund and its goal is to replicate the return of the S&P 500
Index. Therefore, the fund's strategy is to hold all 500 stocks that make up the
S& P 500 Index in an effort to capture a similar return.
To understand the strategy behind how index investing works, it's important to
recognize the differences associated with a passive index manager and an active
manager. The active manager typically makes decisions about buying and selling
stocks based on economic, financial and market conditions. The passive index
manager, on the other hand,
buys the stocks in the index in an effort to match its returns. An advantage of
the passive management approach is that lower costs are incurred for
professional research.
Another advantage of an index fund is its buy-and-hold strategy. As a result of
low trading volumes, index funds often incur lower transaction costs and realize
fewer taxable capital gains. Fewer realized capital gains may translate into
lower annual taxes for investors.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX
OF U.S. STOCK MARKET PERFORMANCE.
The Fund
FUND PERFORMANCE
<TABLE>
<CAPTION>
Comparison of change in value of $10,000 investment in Dreyfus BASIC S&P 500
Stock Index Fund and the Standard & Poor's 500 Composite Stock Price Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fund 9/30/93 25.34% 25.64% 21.74%
</TABLE>
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS BASIC S&P 500
STOCK INDEX FUND ON 9/30/93 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ON THAT DATE. ALL DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND SEEKS TO REPLICATE THE TOTAL RETURN PERFORMANCE OF THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX. THE FUND'S PERFORMANCE SHOWN IN THE LINE
GRAPH TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THE STANDARD & POOR'S
500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S.
STOCK MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND
OTHER EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
- --------------------------------------------------------------------------------
COMMON STOCKS--96.7% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--1.1%
<S> <C> <C>
Anheuser-Busch Cos. 70,100 5,034,056
Brown-Forman, Cl. B 10,300 695,250
Coors (Adolph), Cl. B 5,515 306,083
Philip Morris Cos. 358,400 9,027,200
Seagram 64,800 3,199,500
UST 26,100 722,644
18,984,733
CONSUMER CYCLICAL--8.9%
AMR 22,600 (a) 1,435,100
Albertson's 62,986 2,287,179
AutoZone 22,300 (a) 592,344
Bed Bath & Beyond 20,500 (a) 682,906
Best Buy 30,600 (a) 1,700,213
Black & Decker 13,100 563,300
Brunswick 13,800 312,225
CVS 58,718 2,550,563
Circuit City Group 30,136 1,286,431
Consolidated Stores 16,500 (a) 302,156
Cooper Tire and Rubber 11,403 191,713
Costco Wholesale 33,100 (a) 2,658,344
Dana 24,899 736,077
Darden Restaurants 19,800 377,438
Dayton Hudson 66,300 4,284,638
Delphi Automotive Systems 84,672 1,391,796
Delta Air Lines 21,000 1,143,188
Dillard's, Cl. A 16,000 302,000
Dollar General 33,637 887,176
Eastman Kodak 47,500 3,274,531
Federated Department Stores 31,300 (a) 1,336,119
Ford Motor 181,400 9,954,325
Gap 128,600 4,774,275
General Motors 96,600 6,786,150
Grainger (W.W.) 14,000 593,250
Great Atlantic & Pacific 5,743 164,034
Harrah's Entertainment 19,194 (a) 555,426
Hasbro 29,175 601,734
Hilton Hotel 38,200 353,350
Home Depot 222,400 16,791,200
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
K mart 74,000 (a) 744,625
Kohl's 24,400 (a) 1,825,425
Kroger 124,400 (a) 2,589,075
Leggett & Platt 29,500 654,531
Limited 32,100 1,320,113
Liz Claiborne 9,200 368,000
Longs Drug Stores 5,938 161,811
Lowes 57,200 3,146,000
Marriott International, Cl. A 37,300 1,256,544
Mattel 63,000 842,625
May Department Stores 50,100 1,737,844
Maytag 13,100 524,819
McDonald's 203,100 8,377,875
Mirage Resorts 29,800 (a) 433,963
Navistar International 9,900 (a) 412,706
NIKE, Cl. B 42,200 2,381,663
Nordstrom 21,000 523,688
Office Depot 56,200 (a) 698,987
PACCAR 11,722 552,399
Penney (J.C.) 39,500 1,002,312
Pep Boys-Manny, Moe & Jack 7,900 98,750
Polaroid 6,700 149,494
Reebok International 8,415 (a) 82,572
Rite Aid 38,800 339,500
Russell 5,014 76,150
Safeway 76,500 (a) 2,701,406
Sears, Roebuck & Co. 57,000 1,606,687
Southwest Airlines 75,562 1,270,386
Springs Industries 2,700 107,494
Staples 69,650 (a) 1,545,359
TJX Cos. 47,600 1,291,150
Tandy 28,952 1,822,167
Toys R Us 37,100 (a) 524,038
Tricon Global Restaurants 23,030 (a) 925,518
US Airways Group 10,700 (a) 299,600
V.F. 17,800 535,113
Wal-Mart Stores 667,200 37,821,900
Walgreen 150,500 3,790,719
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
Wendy's International 18,247 435,647
Whirlpool 11,300 787,469
Winn-Dixie Stores 22,300 603,494
155,238,799
CONSUMER STAPLES--5.9%
Alberto-Culver, Cl. B 8,344 196,605
Archer Daniels Midland 92,550 1,139,522
Avon Products 39,136 1,262,136
Bestfoods 41,800 2,455,750
Campbell Soup 65,100 2,929,500
Clorox 35,400 1,449,188
Coca-Cola 370,200 21,841,800
Coca-Cola Enterprises 63,700 1,628,331
Colgate-Palmolive 87,400 5,287,700
ConAgra 73,232 1,908,609
Fortune Brands 24,971 884,910
General Mills 22,900 1,996,594
Gillette 162,700 5,887,706
Heinz (H.J.) 53,700 2,564,175
Hershey Foods 20,900 1,055,450
International Flavors & Fragrances 15,900 608,175
Kellogg 60,800 2,420,600
Nabisco Group Holdings 48,900 626,531
National Service Industries 6,100 196,725
Newell Rubbermaid 42,278 1,463,876
PepsiCo 219,300 7,606,969
Procter & Gamble 199,200 20,891,100
Quaker Oats 20,100 1,407,000
Ralston-Purina Group 48,500 1,524,719
SUPERVALU 20,800 436,800
Sara Lee 135,500 3,666,969
Sysco 49,604 1,906,654
Tupperware 8,600 170,388
Unilever 85,678 5,713,652
Wrigley, (Wm) Jr 17,400 1,390,913
102,519,047
ENERGY-- 6.3%
Amerada Hess 13,600 780,300
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
Anadarko Petroleum 19,100 588,519
Apache 17,100 666,900
Atlantic Richfield 48,300 4,500,956
Baker Hughes 49,320 1,377,878
Burlington Resources 26,606 927,884
Chevron 98,400 8,985,150
Coastal 32,020 1,348,843
Columbia Energy Group 12,300 799,500
Conoco, Cl. B 94,008 2,549,959
Consolidated Natural Gas 14,431 923,584
Eastern Enterprises 4,018 205,420
El Paso Energy 34,200 1,402,200
Enron 107,000 4,273,313
Exxon 364,000 26,958,750
Halliburton 66,200 2,494,913
Helmerich & Payne 7,410 176,451
McDermott International 8,900 161,313
Mobil 117,400 11,329,100
Nicor 7,100 275,125
Occidental Petroleum 52,300 1,193,094
ONEOK 4,782 139,575
Peoples Energy 5,370 204,060
Phillips Petroleum 38,000 1,767,000
Rowan Cos. 12,510 (a) 194,687
Royal Dutch Petroleum 321,500 19,269,906
Schlumberger 82,100 4,972,181
Sunoco 13,568 327,328
Texaco 82,900 5,087,988
Tosco 22,800 577,125
Union Pacific Resources Group 37,807 548,202
Unocal 36,300 1,252,350
USX-Marathon Group 46,300 1,348,488
Williams Cos. 65,100 2,441,250
110,049,292
HEALTH CARE--11.1%
ALZA 15,200 650,750
Abbott Laboratories 228,100 9,209,538
Allergan 9,900 (a) 1,063,012
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
American Home Products 195,900 10,235,775
Amgen 76,460 (a) 6,097,685
Bard (C.R.) 7,700 415,319
Bausch & Lomb 8,564 462,456
Baxter International 43,700 2,835,038
Becton, Dickinson & Co. 37,500 951,563
Biomet 16,900 509,113
Boston Scientific 62,000 (a) 1,247,750
Bristol-Myers Squibb 297,800 22,874,763
Cardinal Health 40,900 1,763,813
Columbia/HCA Healthcare 84,600 2,040,975
Guidant 45,300 2,236,688
HEALTHSOUTH 62,200 (a) 357,650
Humana 25,100 (a) 172,562
Johnson & Johnson 201,600 21,117,600
Lilly (Eli) 163,900 11,288,613
Mallinckrodt Group 10,600 359,738
Manor Care 16,100 (a) 253,575
Mckesson HBOC 42,154 845,715
Medtronic 176,000 6,094,000
Merck & Co. 351,700 27,982,131
Pfizer 581,000 22,949,500
Pharmacia & Upjohn 76,000 4,099,250
Schering-Plough 220,200 10,899,900
Service Corp. International 40,800 390,150
Sigma-Aldrich 15,100 430,350
St. Jude Medical 12,700 (a) 347,662
Tenet Healthcare 46,600 (a) 905,788
Tyco International 250,886 10,019,760
United Healthcare 26,000 1,343,875
Warner-Lambert 128,200 10,231,963
Watson Pharmaceuticals 14,400 (a) 457,200
Wellpoint Health Networks 9,900 (a) 574,200
193,715,420
INTEREST SENSITIVE--18.9%
AFLAC 39,900 2,039,888
Aetna 21,127 1,061,632
Allstate 119,700 3,441,375
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
American Express 67,400 10,379,600
American General 37,338 2,770,013
American International Group 232,161 23,898,073
Amsouth Bancorp 58,200 1,498,650
Aon 38,450 1,364,975
Associates First Capital, Cl. A 109,122 3,982,953
BB&T 47,900 1,742,362
Bank One 175,798 6,603,412
Bank of America 259,004 16,673,383
Bank of New York 110,228 4,615,798
Bear Stearns Cos. 17,475 744,872
CIGNA 29,900 2,235,025
Capital One Financial 29,600 1,568,800
Cendant 107,986 (a) 1,781,769
Chase Manhattan 124,782 10,902,827
Chubb 26,400 1,448,700
Cincinnati Financial 24,700 884,569
Citigroup 506,387 27,408,196
Comerica 23,450 1,393,809
Conseco 49,071 1,193,039
Countrywide Credit Industries 16,900 573,544
Federal National Mortgage Association 153,700 10,874,275
Fifth Third Bancorp 45,325 3,345,552
First Union 143,434 6,122,839
Firstar 147,674 4,337,924
Fleet Boston 138,224 6,030,032
Franklin Resources 37,800 1,323,000
Federal Home Loan Mortgage 104,200 5,633,313
General Electric 491,800 66,669,638
Golden West Financial 8,200 916,350
H&R Block 14,600 621,413
Hartford Financial Services Group 33,900 1,756,444
Household International 71,741 3,201,442
Huntington Bancshares 34,497 1,021,974
Jefferson-Pilot 15,800 1,185,988
Keycorp 67,300 1,880,194
Lehman Brothers Holdings 18,000 1,326,375
Lincoln National 29,800 1,374,525
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Loews 16,100 1,141,088
MBIA 15,000 855,938
MBNA 120,212 3,320,857
MGIC Investment 16,400 979,900
Marsh & McLennan Cos. 39,550 3,126,922
Mellon Financial 77,100 2,847,881
Merrill Lynch 55,400 4,348,900
Morgan (J.P.) 26,300 3,442,012
Morgan Stanley, Dean Witter & Co. 85,555 9,437,786
National City 92,700 2,734,650
Northern Trust 16,700 1,612,594
Paine Webber Group 21,800 888,350
PNC Bank 45,600 2,718,900
Progressive 10,900 1,008,931
Providian Financial 21,250 2,316,250
Regions Financial 33,600 1,010,100
Republic New York 15,700 992,044
SLM Holding 24,100 1,179,394
Safeco 19,700 541,750
Schwab (Charles) 122,600 4,773,738
SouthTrust 25,100 1,004,000
St. Paul Companies 33,992 1,087,744
State Street 24,200 1,842,225
Summit Bancorp 26,500 917,562
SunTrust Banks 48,200 3,527,638
Synovus Financial 40,700 872,506
T. Rowe Price Associates 18,100 642,550
Torchmark 19,916 621,130
U.S. Bancorp 109,651 4,063,940
Union Planters 21,400 952,300
UnumProvident 35,772 1,178,240
Wachovia 30,300 2,613,375
Washington Mutual 86,857 3,121,423
Wells Fargo 247,280 11,838,530
331,389,690
PRODUCER GOODS--7.0%
Air Products & Chemicals 34,400 946,000
Alcan Aluminium 33,900 1,116,581
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Alcoa 55,000 3,341,250
Allegheny Teledyne 28,567 433,861
AlliedSignal 82,500 4,697,344
Armstrong World Industries 6,000 224,250
Ashland 10,800 356,400
Avery Dennison 16,992 1,062,000
Ball 4,600 185,438
Barrick Gold 58,500 1,071,281
Bemis 7,800 272,513
Bethlehem Steel 19,600 (a) 135,975
Boeing 144,044 6,635,027
Boise Cascade 8,514 303,311
Briggs & Stratton 3,500 204,531
Burlington Northern Santa Fe 69,717 2,222,229
CSX 32,600 1,336,600
Case 11,700 620,100
Caterpillar 53,300 2,944,825
Centex 8,914 239,007
Champion International 14,400 832,500
Cooper Industries 14,200 611,488
Crane 10,150 207,441
Crown Cork & Seal 18,300 438,056
Cummins Engine 6,247 316,645
Deere & Co. 35,000 1,268,750
Dow Chemical 33,025 3,905,206
duPont (E.I.) deNemours & Co. 156,394 10,077,638
Eastman Chemical 11,726 452,184
Ecolab 19,400 655,963
Emerson Electric 65,100 3,910,069
Engelhard 18,900 333,113
FDX 44,592 (a) 1,920,243
FMC 4,800 (a) 195,300
Fleetwood Enterprises 5,000 109,063
Fluor 11,389 454,136
Fort James 33,100 870,944
Foster Wheeler 6,100 68,625
Freeport-McMoRan Copper, Cl. B 24,500 408,844
General Dynamics 29,900 1,657,581
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Genuine Parts 26,800 698,475
Georgia-Pacific 25,700 1,019,969
Goodrich (B.F.) 16,500 390,844
Goodyear Tire & Rubber 23,400 966,712
Grace (W.R.) & Co. 10,700 (a) 159,831
Great Lakes Chemical 8,803 312,506
Hercules 15,900 382,594
Homestake Mining 39,000 326,625
ITT Industries 13,200 451,275
Illinois Tool Works 37,600 2,754,200
Inco 28,800 583,200
Ingersoll-Rand 24,750 1,293,187
International Paper 62,008 3,263,171
Kansas City Southern Industries 16,600 787,463
Kaufman & Broad Home 7,200 144,450
Kerr-McGee 12,939 695,471
Kimberly-Clark 79,900 5,043,688
Laidlaw 49,500 303,188
Lockheed Martin 59,200 1,184,000
Louisiana-Pacific 16,100 204,269
Masco 66,418 2,025,749
Mead 15,354 552,744
Milacron 5,500 90,406
Minnesota Mining & Manufacturing 60,400 5,741,775
Monsanto 95,000 3,657,500
NACCO Industries, Cl. A 1,222 56,670
Newmont Mining 25,074 550,061
Norfolk Southern 57,000 1,392,938
Northrop Grumman 10,400 570,700
Nucor 13,100 679,563
Owens-Corning 8,200 168,100
Owens-Illinois 23,400 (a) 560,138
PPG Industries 26,021 1,577,523
Pall 18,603 408,103
Parker-Hannifin 16,240 743,995
Phelps Dodge 11,625 655,359
Placer Dome 48,800 591,700
Potlach 4,300 181,406
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Praxair 23,900 1,117,325
Pulte 6,498 130,772
Raytheon, Cl. B 50,600 1,473,725
Reynolds Metals 9,400 568,112
Rockwell International 28,700 1,390,156
Rohm & Haas 32,655 1,249,054
Sealed Air 12,531 (a) 693,904
Sherwin-Williams 25,400 568,325
Snap-On 9,800 297,675
Stanley Works 13,327 369,824
TRW 18,200 780,325
Temple-Inland 8,400 488,250
Tenneco 25,600 409,600
Textron 22,500 1,736,719
Thomas & Betts 8,541 383,277
Timken 9,300 166,819
USX-U.S. Steel Group 13,300 339,981
Union Carbide 19,922 1,215,242
Union Pacific 37,200 2,073,900
United Technologies 72,228 4,369,794
Vulcan Materials 15,000 619,688
Westvaco 15,000 445,313
Weyerhaeuser 30,200 1,802,563
Willamette Industries 16,700 694,094
Worthington Industries 13,800 229,425
121,825,722
SERVICES--7.3%
ALLTEL 45,800 3,812,850
Allied Waste Industries 28,300 (a) 297,150
America Online 166,100 (a) 21,541,094
American Greetings, Cl. A 10,100 261,338
Automatic Data Processing 92,800 4,471,800
CBS 105,700 (a) 5,159,481
Carnival 92,000 4,094,000
Ceridian 21,666 (a) 475,298
Clear Channel Communications 50,600 (a) 4,066,975
Comcast, Cl. A 112,400 4,734,850
Computer Sciences 24,000 (a) 1,648,500
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
SERVICES (CONTINUED)
Deluxe 11,400 322,050
Disney (Walt) 309,200 8,155,150
Donnelley (R.R.) & Sons 19,100 463,175
Dow Jones & Co 13,600 836,400
Dun & Bradstreet 24,100 707,938
Electronic Data Systems 73,900 4,323,150
Equifax 21,600 583,200
First Data 64,300 2,937,706
Gannett 41,900 3,231,537
Harcourt General 10,700 411,950
IMS Health 46,900 1,360,100
Interpublic Group Cos. 42,300 1,718,437
Jostens 5,122 108,202
King World Productions 10,724 (a) 415,555
Knight-Ridder 12,100 768,350
McGraw-Hill Cos. 29,500 1,758,938
MediaOne Group 90,900 (a) 6,459,581
Meredith 7,760 276,935
New York Times, Cl. A 26,136 1,051,974
NEXTEL Communications, Cl. A 49,700 (a) 4,283,519
Omnicom Group 26,600 2,340,800
Paychex 36,850 1,450,969
Ryder System 10,500 224,437
Shared Medical Systems 4,000 151,000
Sprint (PCS Group) 130,100 (a) 9,668,056
Time Warner 193,900 13,512,406
Times Mirror, Cl. A 8,939 644,725
Tribune 35,544 2,132,640
Viacom, Cl. B 104,500 (a) 4,676,375
Waste Management 92,842 1,705,972
127,244,563
TECHNOLOGY--21.0%
ADC Telecommunications 23,600 (a) 1,125,425
Adaptec 15,600 (a) 702,000
Adobe Systems 18,200 1,272,862
Advanced Micro Devices 22,100 (a) 437,856
Analog Devices 26,400 (a) 1,402,500
Andrew 12,300 (a) 158,363
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Apple Computer 24,100 (a) 1,931,012
Applied Materials 56,300 (a) 5,056,444
Autodesk 8,800 165,000
BMC Software 35,900 (a) 2,304,330
Cabletron Systems 26,100 (a) 432,281
Cisco Systems 487,500 (a) 36,075,000
Compaq Computer 254,849 4,842,131
Computer Associates International 80,550 4,551,075
Compuware 53,500 (a) 1,487,969
Comverse Technology 10,100 (a) 1,146,350
Corning 36,700 2,885,538
Danaher 21,300 1,029,056
Dell Computer 381,000 (a) 15,287,625
Dover 31,200 1,327,950
EMC 151,900 (a) 11,088,700
Eaton 10,821 814,280
Gateway 47,000 (a) 3,104,938
General Instrument 26,000 (a) 1,399,125
Harris 11,906 267,141
Hewlett-Packard 151,900 11,250,094
Honeywell 19,100 2,013,856
Ikon Office Solutions 22,400 154,000
Intel 496,000 38,409,000
International Business Machines 271,200 26,679,300
Johnson Controls 12,828 779,301
KLA-Tencor 13,200 (a) 1,045,275
LSI Logic 22,091 (a) 1,174,965
Lexmark International Group, Cl. A 19,300 (a) 1,506,606
Lucent Technologies 459,421 29,517,799
Micron Technology 37,500 (a) 2,674,219
Microsoft 765,300 (a) 70,838,081
Millipore 6,700 213,561
Motorola 91,000 8,866,812
National Semiconductor 25,200 (a) 754,425
Network Appliance 11,000 (a) 814,000
Nortel Networks 199,040 12,328,040
Novell 50,200 (a) 1,007,138
Oracle 215,850 (a) 10,266,366
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
PE Biosystems Group 15,300 992,588
Parametric Technology 40,400 (a) 770,125
PeopleSoft 36,500 (a) 547,500
PerkinElmer 6,916 282,259
Pitney Bowes 40,106 1,827,330
QUALCOMM 24,100 (a) 5,368,275
Scientific-Atlanta 11,500 658,375
Seagate Technology 33,400 (a) 983,212
Silicon Graphics 28,300 (a) 219,325
Solectron 40,500 (a) 3,047,625
Sun Microsystems 116,000 (a) 12,274,250
3COM 53,600 (a) 1,554,400
Tektronix 7,059 238,241
Tellabs 58,700 (a) 3,712,775
Texas Instruments 117,800 10,572,550
Thermo Electron 23,700 (a) 319,950
Unisys 45,900 (a) 1,113,075
Xerox 99,448 2,784,544
367,854,188
UTILITIES--9.2%
AT&T 479,134 22,399,514
AES 30,400 (a) 1,715,700
Ameren 20,600 778,937
American Electric Power 29,000 1,000,500
Bell Atlantic 232,772 15,115,632
BellSouth 282,700 12,721,500
CINergy 23,800 672,350
CMS Energy 17,700 652,688
Carolina Power & Light 23,956 826,482
Central & Southwest 31,900 707,781
CenturyTel 20,900 845,144
Consolidated Edison 33,100 1,264,006
Constellation Energy Group 22,400 687,400
DTE Energy 21,700 720,169
Dominion Resources 28,800 1,386,000
Duke Energy 54,661 3,088,347
Edison International 52,100 1,543,463
Entergy 37,000 1,107,688
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
FPL Group 26,900 1,353,406
FirstEnergy 35,100 914,794
Florida Progress 14,700 673,444
GPU 18,800 638,025
GTE 147,100 11,032,500
Global Crossing 115,200 (a) 3,988,800
MCI WorldCom 280,868 (a) 24,101,985
New Century Energies 17,300 563,331
Niagara Mohawk Power 28,100 (b) 446,087
Northern States Power 23,100 496,650
PG&E 57,600 1,321,200
PP&L Resources 23,600 638,675
PECO Energy 28,000 1,069,250
PacifiCorp 44,600 919,875
Pinnacle West Capital 12,600 464,625
Public Service Enterprise Group 32,900 1,301,606
Reliant Energy 44,344 1,208,374
SBC Communications 511,879 26,073,826
Sempra Energy 36,042 736,608
Southern 102,400 2,720,000
Sprint 65,900 5,465,581
Texas Utilities 41,420 1,605,025
U S West 75,654 4,619,622
UniCom 32,600 1,248,988
160,835,578
TOTAL COMMON STOCKS
(cost $1,083,710,044) 1,689,657,032
Principal
SHORT-TERM INVESTMENTS--4.4% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--4.1%
Goldman Sachs & Co., 5.18% dated
10/29/1999, due 11/1/1999 in the amount
of $71,881,015 (fully collateralized by
$14,208,000 U.S. Treasury Notes, 4.625%
12/31/2000, $11,666,000 U.S. Treasury
Bonds, 8.125%, 8/15/2021, $36,152,000
U.S. Treasury Bonds, 8.875%, 8/15/2017,
value $73,287,015) 71,850,000 71,850,000
U.S. TREASURY BILLS--.3%
4.66%, 11/18/1999 535,000 (b) 533,935
4.81%, 11/26/1999 545,000 (b) 543,392
4.60%, 12/9/1999 403,000 (b) 401,118
4.67%, 12/16/1999 3,845,000 (b) 3,823,969
5,302,414
TOTAL SHORT-TERM INVESTMENTS
(cost $77,150,600) 77,152,414
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,160,860,644) 101.1% 1,766,809,446
LIABILITIES, LESS CASH AND RECEIVABLES (1.1%) (19,527,146)
NET ASSETS 100.0% 1,747,282,300
(A) NON-INCOME PRODUCING.
(B) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN FINANCIAL FUTURES POSITIONS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF FINANCIAL FUTURES
October 31, 1999
<TABLE>
<CAPTION>
Market Value Unrealized
Covered Appreciation
FINANCIAL FUTURES LONG Contracts by Contracts ($) Expiration at 10/31/99 ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Standard & Poor's 500 228 78,443,400 December '99 4,048,950
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(c) 1,160,860,644 1,766,809,446
Cash 1,632,050
Receivable for futures variation margin--Note 1(d) 1,515,397
Dividends and interest receivable 1,370,367
Receivable for shares of Capital Stock subscribed 120,923
Receivable for investment securities sold 70,807
1,771,518,990
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation 285,354
Payable for investment securities purchased 339,394
Payable for shares of Capital Stock redeemed 23,611,942
24,236,690
- -------------------------------------------------------------------------------
NET ASSETS ($) 1,747,282,300
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,127,457,350
Accumulated undistributed investment income--net 4,506,755
Accumulated net realized gain (loss) on investments 5,320,443
Accumulated net unrealized appreciation (depreciation)
on investments (including $4,048,950 net unrealized
appreciation on financial futures)--Note 3 609,997,752
- -------------------------------------------------------------------------------
NET ASSETS ($) 1,747,282,300
- -------------------------------------------------------------------------------
SHARES OUTSTANDING
(150 million shares of $.001 par value Capital Stock authorized) 60,743,399
- -------------------------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per share ($) 28.76
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $212,316 foreign taxes withheld at source) 20,048,172
Interest 2,603,609
TOTAL INCOME 22,651,781
EXPENSES:
Management fee--Note 2 3,159,300
Loan commitment fees--Note 4 4,204
TOTAL EXPENSES 3,163,504
INVESTMENT INCOME--NET 19,488,277
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 1,094,058
Net realized gain (loss) on financial futures 5,854,553
NET REALIZED GAIN (LOSS) 6,948,611
Net unrealized appreciation (depreciation) on investments (including
$3,184,825 net unrealized appreciation on financial futures) 303,889,104
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 310,837,715
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 330,325,992
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
Year Ended October 31,
--------------------------------
1999 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 19,488,277 15,357,976
Net realized gain (loss) on investments 6,948,611 3,351,910
Net unrealized appreciation (depreciation)
on investments 303,889,104 80,759,022
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 330,325,992 99,468,908
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (18,808,418) (14,638,843)
Net realized gain on investments (4,281,732) (12,006,581)
TOTAL DIVIDENDS (23,090,150) (26,645,424)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 1,081,926,616 796,141,077
Dividends reinvested 22,563,493 26,303,252
Cost of shares redeemed (797,590,203) (565,263,383)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 306,899,906 257,180,946
TOTAL INCREASE (DECREASE) IN NET ASSETS 614,135,748 330,004,430
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,133,146,552 803,142,122
END OF PERIOD 1,747,282,300 1,133,146,552
Undistributed investment income--net 4,506,755 3,826,896
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 40,268,549 35,271,108
Shares issued for dividends reinvested 870,770 1,249,129
Shares redeemed (28,940,895) (28,686,916)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 12,198,424 7,833,321
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
-------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 23.34 19.73 15.38 12.75 10.42
Investment Operations:
Investment income--net .34(a) .31 .30 .29 .26
Net realized and unrealized
gain (loss) on investments 5.52 3.89 4.52 2.69 2.37
Total from Investment Operations 5.86 4.20 4.82 2.98 2.63
Distributions:
Dividends from investment income--net (.35) (.31) (.28) (.30) (.26)
Dividends from net realized gain on
investments (.09) (.28) (.19) (.05) (.04)
Total Distributions (.44) (.59) (.47) (.35) (.30)
Net asset value, end of period 28.76 23.34 19.73 15.38 12.75
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 25.34 21.68 31.87 23.78 25.75
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .20 .20 .20 .20 .37
Ratio of net investment income
to average net assets 1.23 1.45 1.72 2.16 2.36
Portfolio Turnover Rate 16.58 16.76 3.75 4.75 1.03
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 1,747,282 1,133,147 803,142 449,123 204,278
A BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus BASIC S& P 500 Stock Index 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, as amended (the "Act"), as an open-end
management investment company and operates as a series company currently
offering nineteen series including the fund. The fund's investment objective is
to replicate the total return of the Standard & Poor's 500 Composite Stock Price
Index primarily through investments in equity securities. The Dreyfus
Corporation (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. (" Mellon Bank"), which is a
wholly-owned subsidiary of Mellon Financial Corporation. Premier Mutual Fund
Services, Inc. is the distributor of the fund's shares, which are sold to the
public without a sale charge.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued to 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 the fund in the event the fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the fund seeks to assert its
rights. The Manager, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers with which the fund enters into repurchase agreements to evaluate
potential risks.
(D) FINANCIAL FUTURES: The fund may invest in financial futures contracts in
order to gain exposure to or protect against changes in the market. The fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. Contracts open at October
31, 1999, are set forth in the Statement of Financial Futures.
(E) DISTRIBUTIONS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. Dividends from net realized capital gain are normally declared and paid
annually, but the fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "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.
(F) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as
a regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the 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:
Pursuant to an Investment Management agreement with the Manager, the Manager
provides or arranges for one or more third and/or affiliates parties 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 .20 of 1% 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, 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 fees) . Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust (the
" Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee meetings
attended which are not held in conjunction with a regularly scheduled board
meeting and $500 for Board meetings and separate committee meetings attended
that are conducted by telephone and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event that
there is a joint committee meeting of the Dreyfus/Laurel Funds and the Dreyfus
High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and financial futures, during the period ended October 31,
1999 amounted to $533,571,251 and $249,575,736, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments and
financial futures was $609,997,752, consisting of $652,055,322 gross unrealized
appreciation and $42,057,570 gross unrealized depreciation.
At October 31, 1999, 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 Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility" ) to be utilized fo
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 October 31, 1999, the fund did not borrow under the Facility.
The 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 of Dreyfus
BASIC S&P 500 Stock Index Fund of The Dreyfus/Laurel Funds, Inc., including the
statements of investments and financial futures, as of October 31, 1999, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
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, 1999, by correspondence with the custodian and brokers. 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 BASIC S&P 500 Stock Index Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $.060 per share as a
long-term capital gain distribution of the $.230 paid on December 22, 1998.
The fund also designates 79.55% of the ordinary dividends paid during the fiscal
year ended October 31, 1999 as qualifying for the corporate dividends received
deduction. Shareholders will receive notification in January 2000 of the
percentage applicable to the preparation of their 1999 income tax returns.
The Fund
For More Information
Dreyfus BASIC S&P 500 Stock Index 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 713AR9910
Dreyfus Disciplined
Stock Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
12 Statement of Assets and Liabilities
13 Statement of Operations
14 Statement of Changes in Net Assets
15 Financial Highlights
16 Notes to Financial Statements
22 Independent Auditors' Report
23 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus
Disciplined Stock Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Disciplined Stock Fund,
covering the 12-month period from November 1, 1998 through October 31, 1999.
Inside, you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio manager,
Bert J. Mullins.
Despite a relatively weak third quarter of 1999 for the U.S. stock market, the
past year has been rewarding for most equity investors overall. When the
reporting period began, most sectors of the U.S. stock market had completed a
sharp correction caused primarily by concerns regarding the spread of the global
financial crisis in overseas markets. Soon after the start of 1999, however,
those fears abated. In fact, the U.S. economy remained strong, characterized by
low inflation and high levels of consumer spending. These conditions supported
continued strength in the stock market through the spring.
In the summer of 1999, however, the Federal Reserve Board raised short-term
interest rates twice in an effort to forestall inflationary pressures in a
fast-growing economy. Because higher interest rates tend to increase the cost of
capital and make fixed-income securities more competitive relative to equities,
most sectors of the stock market declined. By the end of the 12-month reporting
period, major stock indices had fallen from the record highs reached during the
summer, although stock prices generally were still higher than they were one
year earlier.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Disciplined Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Bert J. Mullins, Portfolio Manager
How did Dreyfus Disciplined Stock Fund perform relative to its benchmark?
For the 12-month period ended October 31, 1999, the fund's total return was
24.01% .(1) For the same period, the total return of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index"), the fund's benchmark, was 25.66%
..(2)
We attribute the fund's underperformance of the S&P 500 Index to the narrow base
of stocks that supported the rise. Much of the market's advance during the
period was driven by strong performance among a relative handful of very large
growth stocks. Since the S& P 500 Index is heavily weighted toward just such
companies, the Index rose more than most portfolios that did not focus on those
specific stocks.
What is the fund's investment approach?
Dreyfus Disciplined Stock Fund invests primarily in a diversified portfolio of
large companies that meet our strict standards for value and growth. We identify
potential investments through a quantitative analytic process that sifts through
approximately 2,000 stocks in search of those that are not only undervalued
according to our criteria, but that also exhibit improving earnings momentum. A
team of experienced analysts examine the fundamentals of the top-ranked
candidates. Armed with these analytical insights, the portfolio manager decides
which stocks to purchase, and whether any current holdings should be sold.
In addition to identifying attractive investment opportunities, our approach is
designed to limit the risks associated with market timing and sector and
industry exposure. Market timing refers to the practice of attempting to benefit
from gains and declines in the overall market by adjusting the percentage of a
fund's assets that are invested in the market at any one time. We do not believe
that the advantages of attempting to time the market or rotate in and out of
various indus The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
try sectors outweigh the risks of such moves. Instead, our goal is to neutralize
these risks by being fully invested and remaining industry and sector neutral in
relation to the S&P 500 Index.
The result is a broadly diversified portfolio of carefully selected stocks. At
the end of the recent one-year period, the fund held positions in more than 150
stocks across ten economic sectors. Our ten largest holdings accounted for less
than 25% of the portfolio, so that the fund's performance was not overly
dependent on any one stock, but was determined by a large number of securities.
What other factors influenced the fund's performance?
As we mentioned earlier, the strong rise of the benchmark was driven by the
performance of an extremely narrow group of companies. During the first nine
months of 1999, only eleven stocks in the S&P 500 Index accounted for all of the
Index' s return. While the fund benefited from owning significant positions in
several of these stocks -- such as Cisco Systems, Wal-Mart Stores, and EMC --
others failed to meet our investment criteria. Our performance relative to our
benchmark suffered because we did not own these other stocks.
The fund' s relative performance also suffered due to the high volatility of
stock prices during the period. Uncertainties regarding the sustainability of
U.S. economic growth during the first half of the period, and regarding rising
interest rates during the second half of the period, precipitated sudden swings
in investor sentiment. As a result, stock prices rose and fell sharply, often
moving several percentage points up or down over the course of a few days, only
to move just as sharply in the opposite direction the following week. Since our
quantitative model depends on using data from one month to identify stocks that
will outperform during the next, a high level of market volatility from month to
month reduces the effectiveness of our approach.
What is the fund's current strategy?
We continue to adhere to our disciplined investment process, which seeks to
identify stocks that have a favorable combination of undervaluation and
improving earnings momentum. Our philosophy in seeking consistent high returns
is to construct a portfolio of these stocks in a way that also manages
unnecessary investment risks. The fund is always fully invested, industry and
sector neutral versus the S&P 500 Index, and highly diversified.
November 15, 1999
1 TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED,
UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Disciplined Stock
Fund and the Standard & Poor's 500 Composite Stock Price Index
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years 10 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fund 12/31/87 24.01% 24.76% 18.07% 18.44%
</TABLE>
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
ALL PERFORMANCE INFORMATION REFLECTS THE PERFORMANCE OF THE FUND'S PREVIOUSLY
EXISTING RETAIL SHARES (WHICH WERE NOT SUBJECT TO ANY RULE 12B-1 FEE) THROUGH
DECEMBER 15,1997 AND THE FUND'S SINGLE CLASS OF SHARES (WHICH ARE SUBJECT TO A
..10% RULE 12B-1 FEE) FROM DECEMBER 16, 1997 THROUGH OCTOBER 31, 1999.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS DISCIPLINED STOCK
FUND ON 12/31/87 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL
GAIN DISTRIBUTIONS ARE REINVESTED.
THE DREYFUS DISCIPLINED STOCK FUND SEEKS INVESTMENT RETURNS (INCLUDING CAPITAL
APPRECIATION AND INCOME) CONSISTENTLY SUPERIOR TO THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX BY INVESTING PRIMARILY IN EQUITY SECURITIES SELECTED
THROUGH THE COMBINATION OF QUANTITATIVE SECURITY SELECTION, FUNDAMENTAL ANALYSIS
AND RISK MANAGEMENT TECHNIQUES. THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH
TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK
MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
COMMON STOCKS--100.1% Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--1.3%
<S> <C> <C>
Anheuser-Busch Cos. 315,900 22,685,569
Philip Morris Cos. 724,500 18,248,344
40,933,913
CONSUMER CYCLICAL--9.4%
Best Buy 276,600(a) 15,368,587
Dayton Hudson 292,700 18,915,737
Delphi Automotive Systems 465,324 7,648,763
Eastman Kodak 164,000 11,305,750
Federated Department Stores 244,300(a) 10,428,556
Ford Motor 400,600 21,982,925
General Motors 250,500 17,597,625
Kroger 539,900(a) 11,236,669
Limited 447,100 18,386,987
Lowe's Cos. 263,200 14,476,000
McDonald's 395,300 16,306,125
Safeway 279,300(a) 9,862,781
Staples 494,650(a) 10,975,047
TJX Cos. 612,000 16,600,500
Tandy 267,500 16,835,781
US Airways Group 249,700(a) 6,991,600
Wal-Mart Stores 1,507,000 85,428,062
310,347,495
CONSUMER STAPLES--6.3%
Coca-Cola 491,200 28,980,800
ConAgra 425,000 11,076,562
Dial 380,000 8,882,500
Fortune Brands 285,600 10,120,950
General Mills 157,100 13,697,156
Nabisco Holdings, Cl. A 251,900 9,414,762
PepsiCo 738,800 25,627,125
Procter & Gamble 501,200 52,563,350
Quaker Oats 217,200 15,204,000
Ralston-Purina Group 465,000 14,618,437
Unilever, N.V. (New York Shares) 242,539 16,174,320
206,359,962
ENERGY--6.3%
Atlantic Richfield 328,100 30,574,819
Coastal 376,800 15,872,700
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
Columbia Energy Group 245,200 15,938,000
Diamond Offshore Drilling 545,900 17,332,325
Enron 468,400 18,706,725
Occidental Petroleum 365,600 8,340,250
Royal Dutch Petroleum (New York Shares) 1,122,400 67,273,850
Texaco 446,800 27,422,350
Tidewater 177,800 5,334,000
206,795,019
HEALTH CARE--10.3%
American Home Products 403,000 21,056,750
Amgen 365,600(a) 29,156,600
Bausch & Lomb 141,100 7,619,400
Bristol-Myers Squibb 691,800 53,138,887
Cardinal Health 148,500 6,404,062
Elan, A.D.S. 554,600(a) 14,280,950
Immunex 143,400(a) 9,034,200
Lilly (Eli) & Co. 519,400 35,773,675
MedImmune 60,300(a) 6,753,600
Medtronic 565,200 19,570,050
Merck & Co. 352,700 28,061,694
Pharmacia & Upjohn 305,200 16,461,725
Schering-Plough 778,600 38,540,700
United HealthCare 146,600 7,577,388
Warner-Lambert 578,200 46,147,588
339,577,269
INTEREST SENSITIVE--19.3%
Ace 335,800 6,527,112
Allstate 637,860 18,338,475
Ambac Financial Group 145,100 8,669,725
American General 102,600 7,611,637
American International Group 137,448 14,148,553
Bank One 960,218 36,068,189
CIGNA 139,900 10,457,525
Chase Manhattan 486,380 42,497,453
Citigroup 1,280,770 69,321,676
Edwards (A.G.) 341,600 10,269,350
Fannie Mae 379,500 26,849,625
Fleet Boston 791,400 34,524,825
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
General Electric 1,010,100 136,931,681
Hartford Financial Services Group 315,000 16,320,937
Lehman Brothers Holdings 199,000 14,663,813
MBNA 607,000 16,768,375
Merrill Lynch 224,100 17,591,850
Morgan Stanley Dean Witter & Co. 237,600 26,210,250
Old Republic International 207,675 2,842,552
PNC Bank 243,100 14,494,838
SLM Holding 281,500 13,775,906
SouthTrust 432,150 17,286,000
Summit Bancorp 170,550 5,905,294
SunTrust Banks 169,800 12,427,238
Torchmark 184,100 5,741,619
Washington Mutual 227,316 8,169,169
Wells Fargo 832,900 39,875,088
634,288,755
PRODUCER GOODS--8.5%
Alcan Aluminium 145,400 4,789,112
Alcoa 251,600 15,284,700
AlliedSignal 351,700 20,024,919
Boeing 297,100 13,685,169
Burlington Northern Santa Fe 301,300 9,603,938
Canadian National Railway 197,200 6,014,600
Champion International 193,900 11,209,844
Deere & Co. 212,300 7,695,875
duPont (E.I.) deNemours & Co. 285,200 18,377,575
General Dynamics 166,000 9,202,625
Ingersoll-Rand 216,050 11,288,613
International Paper 222,100 11,688,013
Kerr-McGee 141,600 7,611,000
Martin Marietta Materials 126,000 4,906,125
Minnesota Mining & Manufacturing 181,200 17,225,325
Northrop Grumman 100,700 5,525,913
PPG Industries 228,400 13,846,750
Rohm & Haas 209,500 8,013,375
Southdown 211,200 10,203,600
Tyco International 1,238,000 49,442,625
USX-U.S. Steel Group 177,100 4,527,119
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Union Carbide 103,800 6,331,800
United Technologies 222,300 13,449,150
279,947,765
SERVICES--7.6%
America Online 434,600(a) 56,362,187
Carnival 303,400 13,501,300
Clear Channel Communications 151,200(a) 12,152,700
Fox Entertainment Group, Cl. A 376,200 8,135,325
Infinity Broadcasting, Cl. A 358,500 12,390,656
MediaOne Group 106,900(a) 7,596,581
Omnicom Group 204,200 17,969,600
Time Warner 556,600 38,788,063
Tribune 322,600 19,356,000
Valassis Communications 141,500(a) 6,084,500
Viacom, Cl. B 518,700(a) 23,211,825
Vodafone AirTouch, A.D.R. 692,250 33,184,734
248,733,471
TECHNOLOGY--22.0%
Altera 170,400(a) 8,285,700
Applied Materials 198,300(a) 17,809,819
BMC Software 302,900(a) 19,442,394
Cisco Systems 1,156,550(a) 85,584,700
Corning 167,800 13,193,275
Dell Computer 905,600(a) 36,337,200
EMC 455,900(a) 33,280,700
General Instrument 184,300(a) 9,917,644
Intel 715,800 55,429,762
International Business Machines 480,900 47,308,537
Lexmark International Group, Cl. A 248,100(a) 19,367,306
Linear Technology 124,300 8,693,231
Lucent Technologies 973,100 62,521,675
Maxim Integrated Products 170,200(a) 13,435,163
Microsoft 1,554,600(a) 143,897,663
Motorola 254,600 24,807,588
Nokia, A.D.S. 149,400 17,265,038
Oracle 618,550(a) 29,419,784
Qwest Communications International 237,332(a) 8,543,952
Solectron 176,100(a) 13,251,525
COMMON STOCKS (CONTINUED) Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Sun Microsystems 342,300(a) 36,219,619
Tellabs 300,000(a) 18,975,000
722,987,275
UTILITIES--9.1%
AT&T 1,120,500 52,383,375
Bell Atlantic 482,410 31,326,499
Edison International 328,100 9,719,962
Florida Progress 223,300 10,229,931
GPU 296,700 10,069,256
GTE 275,300 20,647,500
MCI WorldCom 756,500(a) 64,917,156
PECO Energy 237,200 9,058,075
Pinnacle West Capital 126,500 4,664,688
Public Service Enterprise Group 231,000 9,138,938
SBC Communications 1,025,432 52,232,922
Telefonos de Mexico, Cl. L, A.D.S. 157,200 13,440,600
Texas Utilities 329,000 12,748,750
300,577,652
TOTAL COMMON STOCKS
(cost $2,365,364,118) 3,290,548,576
- -----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--.1% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Goldman Sachs & Co.,Tri-Party Repurchase
Agreement, 5.18% dated 10/29/1999, due
11/1/1999 in the amount of $4,251,835
(fully collateralized by $4,306,000
U.S. Treasury Notes, 5.625%, 2/28/2001,
value $4,335,838)
(cost $4,250,000) 4,250,000 4,250,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $2,369,614,118) 100.2% 3,294,798,576
LIABILITIES, LESS CASH AND RECEIVABLES (.2%) (5,249,833)
NET ASSETS 100.0% 3,289,548,743
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(c) 2,369,614,118 3,294,798,576
Cash 255,480
Receivable for investment securities sold 98,938,332
Receivable for shares of Capital Stock subscribed 2,786,202
Dividends and interest receivable 2,251,124
3,399,029,714
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 2,590,105
Due to Distributor 82,059
Payable for investment securities purchased 100,646,320
Payable for shares of Capital Stock redeemed 6,158,587
Loan commitment fees payable 3,900
109,480,971
- -------------------------------------------------------------------------------
NET ASSETS ($) 3,289,548,743
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,264,180,044
Accumulated net realized gain (loss) on investments 100,184,241
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 925,184,458
- -------------------------------------------------------------------------------
NET ASSETS ($) 3,289,548,743
- -------------------------------------------------------------------------------
SHARES OUTSTANDING
(245 million shares of $.001 par value Capital Stock authorized) 80,302,474
NET ASSET VALUE, offering and redemption price per share ($) 40.96
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $616,551 foreign taxes withheld at source) 37,584,292
Interest 735,753
TOTAL INCOME 38,320,045
EXPENSES:
Management fee--Note 2(a) 26,998,354
Distribution fees--Note 2(b) 2,999,817
Loan commitment fees--Note 4 11,462
Interest expense--Note 4 5,351
TOTAL EXPENSES 30,014,984
INVESTMENT INCOME--NET 8,305,061
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 111,120,419
Net unrealized appreciation (depreciation) on investments 484,270,158
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 595,390,577
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 603,695,638
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------
1999 1998(a)
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 8,305,061 12,786,219
Net realized gain (loss) on investments 111,120,419 109,282,274
Net unrealized appreciation (depreciation)
on investments 484,270,158 165,127,716
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 603,695,638 287,196,209
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Institutional shares -- (43,036)
Retail shares and New Single Class (11,442,543) (13,529,583)
Net realized gain on investments:
Retail shares and New Single Class (119,405,805) (158,377,032)
TOTAL DIVIDENDS (130,848,348) (171,949,651)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Institutional shares -- 26,000,037
Retail shares and New Single Class 1,255,734,317 1,607,539,829
Dividends reinvested:
Institutional shares -- 40,647
Retail shares and New Single Class 121,358,577 156,406,066
Cost of shares redeemed:
Institutional shares -- (33,343,597)
Retail shares and New Single Class (996,555,018) (961,519,617)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 380,537,876 795,123,365
TOTAL INCREASE (DECREASE) IN NET ASSETS 853,385,166 910,369,923
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 2,436,163,577 1,525,793,654
END OF PERIOD 3,289,548,743 2,436,163,577
Undistributed investment income--net -- 2,672,348
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold:
Institutional shares -- 766,388
Retail shares and New Single Class 32,584,410 47,447,361
Shares issued for dividends reinvested:
Institutional shares -- 1,199
Retail shares and New Single Class 3,330,034 5,125,076
Shares redeemed:
Institutional shares -- (978,523)
Retail shares and New Single Class (25,858,146) (28,659,176)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 10,056,298 23,702,325
(A) EFFECTIVE DECEMBER 15, 1997, THE FUND CONVERTED TO A SINGLE CLASS FUND, WITH
THE EXISTING INSTITUTIONAL SHARES AND RETAIL SHARES CONVERTED INTO A NEW SINGLE
CLASS OF SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
-------------------------------------------------------------------
1999 1998(a) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 34.68 32.78 26.65 22.09 18.54
Investment Operations:
Investment income--net .11(b) .20 .25 .28 .30
Net realized and unrealized gain (loss)
on investments 7.97 5.31 7.92 5.13 4.02
Total from Investment Operations 8.08 5.51 8.17 5.41 4.32
Distributions:
Dividends from investment income--net (.15) (.24) (.26) (.29) (.30)
Dividends from net realized gain on
investments (1.65) (3.37) (1.78) (.56) (.47)
Total Distributions (1.80) (3.61) (2.04) (.85) (.77)
Net asset value, end of period 40.96 34.68 32.78 26.65 22.09
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 24.01 18.37 32.32 25.14 24.33
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 1.00 .99 .90 .90 .90
Ratio of net investment income to
average net assets .28 .61 .87 1.23 1.61
Portfolio Turnover Rate 57.23 54.45 68.87 64.47 60.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 3,289,549 2,436,164 1,482,176 807,680 382,646
(A) EFFECTIVE DECEMBER 15, 1997, THE FUND CONVERTED TO A SINGLE CLASS FUND, WITH
THE EXISTING INSTITUTIONAL SHARES AND RETAIL SHARES CONVERTED INTO A NEW SINGLE
CLASS OF SHARES.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Disciplined Stock 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, as amended (the "Act" ), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the fund. The fund's investment objective is
to seek investment returns (consisting of capital appreciation and income) that
are consistently superior to the Standard & Poor's 500 Composite Stock Price
Index. The Dreyfus Corporation (the "Manager") serves as the fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank")
, a wholly-owned subsidiary of Mellon Financial Corporation. 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.
On December 2, 1997, shareholders approved a reorganization, effective December
15, 1997, where Institutional class and Retail class converted into a single
class of shares. The performance history for the Retail class shares, the most
relevant historical class represents the class outstanding through the year.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles, which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including financial futures)
are valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is used
when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors.
(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 the fund in the event the fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the fund seeks to assert its
rights. The Manager, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers with which the fund enters into repurchase agreements to evaluate
potential risks.
(D) FINANCIAL FUTURES: The fund may invest in financial futures contracts in
order to gain exposure to or protect against changes in the market. The fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the fund recognizes a realized gain or loss. These
investments
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
require initial margin deposits with a custodian, which consist of cash or cash
equivalents, up to approximately 10% of the contract amount. The amount of these
deposits is determined by the exchange or Board of Trade on which the contract
is traded and is subject to change. At October 31, 1999, there were no
financial futures contracts outstanding.
(E) DISTRIBUTIONS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. Dividends from net realized capital gain are normally declared and paid
annually, but the fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "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.
(F) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as
a regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
During the period ended October 31, 1999, the fund increased accumulated
undistributed investment income-net by $465,134 and decreased accumulated net
realized gain (loss) on investments by that amount. Net assets were not affected
by this reclassification.
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
.. 90% 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 fees) . Each director receives $40,000 per year,
plus $5,000 for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust (the
" Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee meetings
attended which are not held in conjunction with a regularly scheduled board
meeting and $500 for Board meetings and separate committee meetings attended
that are conducted by telephone and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event that
there is a joint committee meeting of the Dreyfus/Laurel Funds and the Dreyfus
High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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 .10% of the value
of the fund's average daily net assets to compensate Mellon Bank, the Manager or
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and the Distributor for shareholder servicing activities
and expenses primarily intended to result in the sale of fund shares. During the
period ended October 31, 1999, the fund was charged $2,999,817 pursuant to the
Plan.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Under its terms, the Plan shall remain in effect from year to year, provided
such continuance is approved annually by a vote of a 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 or in any agreement related to
the Plan.
(C) BROKERAGE COMMISSIONS: During the period ended October 31, 1999, the fund
incurred total brokerage commissions of $3,423,345, of which $212,149 was paid
to Dreyfus Brokerage Services Corporation, a wholly-owned subsidiary of Mellon
Financial Corporation.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 1999, amounted to
$1,952,142,665 and $1,699,157,661, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments was
$925,184,458, consisting of $989,332,146 gross unrealized appreciation and
$64,147,688 gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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.
The average daily amount of borrowings outstanding during the period ended
October 31, 1999 was approximately $104,700, with a related weighted average
annualized interest rate of 5.11%.
NOTE 5--Litigation:
The fund, along with certain related parties, are defendants in a class action
lawsuit. Former Retail class shareholders have asserted that the adoption of the
Plan, with respect to the fund's Retail class, was in violation of the Act and
common law. On March 29, 1999, the trial court dismissed the lawsuit with
prejudice, but the plaintiffs filed an appeal. The case was fully briefed and
oral arguments were heard by the appellate court on December 7, 1999. Although
it is difficult to predict the ultimate outcome of this case, management
believes, based on discussions with counsel, that any ultimate liability will
not materially affect the financial position of the fund.
The Fund
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Dreyfus
Disciplined Stock Fund of The Dreyfus/Laurel Funds, Inc., including the
statement of investments, as of October 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Disciplined Stock Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $1.659 per share as
long-term capital gain distribution of the $1.7153 per share paid on December
22, 1998.
The fund also designates 100% of the ordinary dividends paid during the fiscal
year ended October 31, 1999 as qualifying for the corporate dividends received
deduction. Shareholders will receive notification in January 2000 of the
percentage applicable to the preparation of their 1999 income tax returns.
The Fund
NOTES
For More Information
Dreyfus Disciplined 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 728AR9910
Dreyfus Institutional
Government Money
Market Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments Year 2000 Issues (Unaudited)
and its share price.
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
16 Independent Auditors' Report
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Institutional Government Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Institutional
Government Money Market Fund, covering the 12-month period from November 1, 1998
through October 31, 1999. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund' s portfolio manager, Laurie Carroll.
When the reporting period began, the U.S. financial markets were experiencing
the aftermath of a sharp correction caused primarily by the spread of the global
financial crisis overseas. The Federal Reserve Board responded to the crisis
last fall by reducing short-term interest rates, which also reduced money market
yields.
The Fed' s strategy apparently was effective, and the U.S. economy remained
strong through the remainder of the reporting period. Investors had become
concerned that strong economic growth in the United States might rekindle
dormant inflationary pressures. As a result, after remaining relatively steady
during the first quarter of 1999, yields on money market securities rose during
the second and third quarters in response to expectations that the Federal
Reserve Board might raise short-term interest rates. In fact, the Federal
Reserve Board raised rates twice during the summer of 1999 in an attempt to
forestall a potential resurgence of inflationary pressures. This increase
effectively reversed most of last fall's interest-rate cuts, and led to higher
yields on most money market securities.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Institutional Government Money Market Fund
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Laurie Carroll, Portfolio Manager
How did Dreyfus Institutional Government Money Market Fund perform during the
period?
For the 12-month period ended October 31, 1999, Dreyfus Institutional Government
Money Market Fund produced a yield of 4.64% and after taking into account the
effect of compounding, an effective yield of 4.74%.(1) For the same 12-month
period, the fund provided a total return of 4.74%,(2) compared to the Lipper
Institutional U.S. Government Money Market Funds category average total return
of 4.76%.(3)
We attribute the fund's performance to the fact that we maintained a relatively
long average maturity in the portfolio during the first half of the period,
which enabled us to lock in higher returns when interest rates were declining.
Conversely, as interest rates were rising during the second half of the period,
we shortened the fund's average maturity and were able to capture higher yields
as they became available.
What is the fund's investment approach?
As a government money market fund, the fund provides shareholders with an
investment vehicle that is made up of high quality income-producing securities
that are also very liquid in nature; that is, they can be converted to cash
quickly. To pursue its investment goal, the fund invests in a portfolio of high
quality short-term debt securities that are issued or guaranteed by the United
States government and its agencies or instrumentalities, including U.S. Treasury
securities, as well as repurchase agreements. Generally, the fund is required to
invest at least 95% of its assets in the securities of issuers with the highest
credit rating or the unrated equivalent as determined by Dreyfus. It is also
required to maintain an average dollar-weighted portfolio maturity of 90 days or
less.
What other factors influenced the fund's performance?
During the past 12-month period, the returns offered by government money market
securities have fluctuated. That' s because interest rates, The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
which generally determine the returns for these types of investments, also
fluctuated during the period.
At the beginning of the fund's 12-month reporting period, the global equity
markets were in the midst of a crisis that created a "flight to quality" in
which many investors flocked to the safety provided by U.S. Treasury securities.
In an effort to stimulate global economic growth, the Federal Reserve Board
lowered short-term interest rates by a total of 75 basis points in three
separate moves in October and November, 1998. However, by the end of the year
and into the first quarter of 1999, many industry analysts were surprised to see
signs that the Asian economies were beginning to recover. As a result, investors
became concerned that the Federal Reserve Board might take back some or all of
last fall' s interest-rate cuts.
Toward the end of the second quarter, many worldwide economies appeared to be
recovering. Commodity prices, particularly oil prices, began to climb, signaling
the end of the "flight to quality" for U.S. bond market investors as they became
more comfortable holding riskier assets. As a result, prices on U.S. Treasury
bonds began to fall.
By the end of the third quarter, commodity prices had leveled off and the U.S.
Treasury market stabilized. Because of a stronger global economy and potential
inflationary pressures, the Federal Reserve Board raised short-term interest
rates twice during the summer. An additional rate hike was expected in November,
which would effectively offset all of last fall' s rate cuts.
What is the fund's current strategy?
Our strategy has been to retain the flexibility we need to seek high current
income while remaining capable of responding quickly to changing market
conditions. To that end, we emphasized agency securities throughout the period
in an effort to earn the highest possible yield for the fund. In fact, as of the
end of the reporting period, approximately 57% of the fund's assets were
allocated to government agency securities. In addition, we increased our
allocation to floating-
rate notes toward the end of the period. Floating-rate notes are bonds that have
a variable interest rate that is linked to a money market index, such as U.S.
Treasury bill rates. The benefit to owning these bonds is that they provide the
fund with protection against rising interest rates. Most recently, in the rising
interest-rate environment, floating-rate bonds have been particularly beneficial
for the fund. As of October 31, 1999, approximately 19% of the portfolio was
invested in floating-rate notes.
The remaining 24% of the portfolio was allocated to repurchase agreements, which
provided liquidity and helped boost returns. Commonly referred to as repos,
repurchase agreements are overnight loans to government dealers that are
collateralized with U.S. government securities.
November 15, 1999
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELD FLUCTUATES.
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
Annualized
Yield on
Date of Principal
U.S. GOVERNMENT AGENCIES--75.7% Purchase (%) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Federal Farm Credit Banks, Notes
<S> <C> <C> <C>
11/1/1999 4.67 5,000,000 5,000,000
12/1/1999 4.97 10,000,000 10,000,000
1/18/2000 5.31 10,000,000 10,000,000
2/1/2000 5.34 10,000,000 10,000,000
3/1/2000 5.54 5,000,000 5,000,000
4/3/2000 5.47 5,000,000 5,000,000
5/1/2000 5.62 5,000,000 5,000,000
Federal Home Loan Banks, Discount Notes
11/5/1999 5.29 5,000,000 4,997,089
12/31/1999 4.74 5,000,000 4,962,250
1/26/2000 5.60 5,000,000 4,934,067
Federal Home Loan Banks, Floating Rate Notes
11/10/1999 5.41 (a) 5,000,000 4,999,901
9/28/2000 5.30 (a) 10,000,000 9,996,372
Federal Home Loan Mortgage Corp.,
Discount Notes
11/17/1999 5.14 5,000,000 4,988,622
12/16/1999 5.25 5,000,000 4,967,438
1/14/2000 5.60 5,000,000 4,943,164
1/20/2000 5.57 5,000,000 4,939,222
2/3/2000 5.65 5,000,000 4,927,933
3/1/2000 5.67 5,000,000 4,907,233
3/9/2000 5.62 5,000,000 4,901,996
3/16/2000 5.72 5,000,000 4,894,600
Federal Home Loan Mortgage Corp.,
Floating Rate Note
5/18/2000 5.30 (a) 10,000,000 9,995,650
Federal National Mortgage Association,
Discount Notes
11/2/1999 5.29 5,000,000 4,999,272
12/2/1999 5.33 5,000,000 4,977,353
12/7/1999 5.33 5,000,000 4,973,700
1/28/2000 5.61 5,000,000 4,932,411
4/10/2000 5.74 5,000,000 4,875,225
6/5/2000 5.79 5,000,000 4,831,825
Federal National Mortgage Association,
Floating Rate Notes
8/9/2000 5.25 (a) 10,000,000 9,995,377
9/18/2000 5.32 (a) 10,000,000 9,998,245
TOTAL U.S. GOVERNMENT AGENCIES
(cost $178,938,945) 178,938,945
Annualized
Yield on
Date of Principal
REPURCHASE AGREEMENTS--28.2% Purchase (%) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities Inc.,
Tri-Party Repurchase Agreement
dated 10/29/1999, due 11/1/1999
in the amount of $25,010,875
(fully collateralized by $25,689,000
U.S. Treasury Notes 5.625%-6.625%,
due 4/30/2002 to 2/15/2006,
value $25,500,996) 5.22 25,000,000 25,000,000
Goldman, Sachs & Co., Tri-Party
Repurchase Agreement dated
10/29/1999, due 11/1/1999
in the amount of $41,839,588
(fully collateralized by $33,089,000
U.S. Treasury Bonds 9.00%-11.625%,
due 11/15/2004 to 11/15/2018,
value $42,658,766) 5.18 41,821,535 41,821,535
TOTAL REPURCHASE AGREEMENTS
(cost $66,821,535) 66,821,535
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $245,760,480) 103.9% 245,760,480
LIABILITIES, LESS CASH AND RECEIVABLES (3.9%) (9,228,736)
NET ASSETS 100.0% 236,531,744
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $66,821,535)
--Note 1(c) 245,760,480 245,760,480
Interest receivable 856,995
246,617,475
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 64,171
Due to Distributor 2
Cash overdraft due to Custodian 21,558
Payable for investment securities purchased 10,000,000
10,085,731
- -------------------------------------------------------------------------------
NET ASSETS ($) 236,531,744
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 236,645,816
Accumulated net realized gain (loss) on investments (114,072)
- -------------------------------------------------------------------------------
NET ASSETS ($) 236,531,744
- -------------------------------------------------------------------------------
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized) 236,645,816
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 12,595,578
EXPENSES:
Management fee--Note 2(a) 382,231
Shareholder servicing costs--Note 2(b) 382,231
TOTAL EXPENSES 764,462
INVESTMENT INCOME--NET 11,831,116
- -------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): (31,649)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 11,799,467
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
Year Ended October 31,
----------------------------
1999 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 11,831,116 11,522,861
Net realized gain (loss) from investments (31,649) (68,460)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 11,799,467 11,454,401
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (11,831,116) (11,522,861)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 2,626,381,951 2,124,520,629
Dividends reinvested 358,854 618,577
Cost of shares redeemed (2,734,165,524) (1,972,935,967)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (107,424,719) 152,203,239
TOTAL INCREASE (DECREASE) IN NET ASSETS (107,456,368) 152,134,779
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 343,988,112 191,853,333
END OF PERIOD 236,531,744 343,988,112
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .046 .052 .052 .051 .056
Distributions:
Dividends from investment income--net (.046) (.052) (.052) (.051) (.056)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.74 5.36 5.28 5.25 5.71
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .30 .30 .30 .30 .30
Ratio of net investment income
to average net assets 4.64 5.22 5.14 5.14 5.55
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 236,532 343,988 191,853 295,434 515,812
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Institutional Government Money Market 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, as amended (the "Act"), as
an open-end management investment company and operates as a series company
currently offering nineteen series including the fund. The fund's investment
objective is to seek a high level of current income consistent with stability of
principal and conservative investment risk by investing principally in high
grade money market instruments issued or guaranteed by the U.S. Government and
its agencies and instrumentalities. The Dreyfus Corporation (the "Manager")
serves as the fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial
Corporation. Premier Mutual Fund Services, Inc. is the distributor of the fund's
shares.
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 amortized cost
in accordance with Rule 2a-7 of the Act, which has been determined by the fund's
Board of Directors to represent the fair value of the fund's investments.
It is the fund's policy to maintain a continuous net asset value per share of
$1.00 for the fund; the fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the fund will be able to maintain a stable net asset
value per share of $1.00.
(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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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 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) DISTRIBUTIONS 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 of 1986, as
amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The fund has an unused capital loss carryover of approximately $114,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1999. If not
applied, $14,000 of the carryover expires in fiscal 2005, $68,000 expires in
fiscal 2006 and $32,000 expires in fiscal 2007.
At October 31, 1999, 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 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 .15% 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, shareholder servicing 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 fees). Each director receives $40,000 per year, plus $5,000
for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust (the
" Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee meetings
attended which are not held in conjunction with a regularly scheduled board
meeting and $500 for Board meetings and separate committee meetings attended
that are conducted by telephone and is reimbursed for travel and out-of-pocket
expenses.
The Chairman of the Board receives an additional 25% of such compensation (with
the exception of reimbursable amounts) . In the event that there is a joint
committee meeting of the Dreyfus/Laurel Funds and the Dreyfus High Yield
Strategies Fund, the $2,000 fee will be allocated between the Dreyfus/Laurel
Funds and the 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) SHAREHOLDER SERVICING PLAN: Under the Shareholder Servicing Plan (the
" Plan" ), the fund may pay up to .15% of the value of the average daily net
assets annually to compensate certain banks, brokers, dealers or other financial
institutions for shareholder services. During the period ended October 31, 1999,
the fund was charged $382,231 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 a 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 or any agreement related to the
Plan.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. During the period ended October 31, 1999, the fund did not borrow
under the line of credit.
The Fund
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the statement of investments, of Dreyfus Institutional Government Money Market
Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 1999, 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 in the five-year period then ended.
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 includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999 by correspondence with the custodian and
brokers. 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 Institutional Government Money Market Fund of The Dreyfus/Laurel Funds,
Inc. as of October 31, 1999, 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 the financial highlights for each of the years in the five-year
period then ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
For More Information
Dreyfus Institutional Government Money Market 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 919AR9910
Dreyfus Institutional
U.S. Treasury
Money Market Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
16 Independent Auditors' Report
17 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Institutional
U.S. Treasury Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Institutional U.S.
Treasury Money Market Fund, covering the 12-month period from November 1, 1998
through October 31, 1999. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund' s portfolio manager, Laurie Carroll.
When the reporting period began, the U.S. financial markets were experiencing
the aftermath of a sharp correction caused primarily by the spread of the global
financial crisis overseas. The Federal Reserve Board responded to the crisis
last fall by reducing short-term interest rates, which also reduced money market
yields.
The Fed' s strategy apparently was effective, and the U.S. economy remained
strong through the remainder of the reporting period. Investors had become
concerned that strong economic growth in the United States might rekindle
dormant inflationary pressures. As a result, after remaining relatively steady
during the first quarter of 1999, yields on money market securities rose during
the second and third quarters in response to expectations that the Federal
Reserve Board might raise short-term interest rates. In fact, the Federal
Reserve Board raised rates twice during the summer of 1999 in an attempt to
forestall a potential resurgence of inflationary pressures. This increase
effectively reversed most of last fall's interest-rate cuts, and led to higher
yields on most money market securities.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Institutional U.S. Treasury Money Market
Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Laurie Carroll, Portfolio Manager
How did Dreyfus Institutional U.S. Treasury Money Market Fund perform during
the period?
For the 12-month period ended October 31, 1999, Dreyfus Institutional U.S.
Treasury Money Market Fund produced a yield of 4.49% and after taking into
account the effect of compounding, an effective yield of 4.58%.(1) For the same
12-month period, the fund provided a total return of 4.58%,(2) compared to the
Lipper Institutional U.S. Treasury Money Market Funds category average total
return of 4.48%.(3)
We attribute the fund's performance to the fact that we maintained a relatively
long average maturity in the portfolio during the first half of the period,
which enabled us to lock in higher returns when interest rates were declining.
Conversely, as interest rates were rising during the second half of the period,
we shortened the fund's average maturity and were able to capture higher yields
as they became available.
What is the fund's investment approach?
As a U.S. Treasury money market fund, the fund provides shareholders with an
investment vehicle that is primarily made up of U.S. Treasury bills, also known
as T-bills. A major benefit of these securities is that they are very liquid in
nature; that is, they can be converted to cash quickly. To pursue its investment
goal, the fund invests in a portfolio of U.S. Treasury securities as well as
repurchase agreements that are backed by U.S. Treasuries. Because U.S. Treasury
obligations are backed by the full faith and credit of the U.S. government, they
are generally considered to be among the highest quality investments available.
By investing in these obligations, the fund seeks to add an incremental degree
of safety to the portfolio. The fund is required to maintain an average
dollar-weighted maturity of 90 days or less.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
During the 12-month reporting period, the returns offered by U.S. Treasury
securities such as those held in this fund have fluctuated. That's because
interest rates, which generally determine the returns for these types of
investments, also fluctuated during the period.
At the beginning of the fund's 12-month reporting period, the global equity
markets were in the midst of a crisis that created a "flight to quality" in
which many investors flocked to the safety provided by U.S. Treasury securities.
In an effort to stimulate global economic growth, the Federal Reserve Board
lowered short-term interest rates by a total of 75 basis points in three
separate moves in October and November 1998. However, by the end of the year and
into the first quarter of 1999, many industry analysts were surprised to see
signs that the Asian economies were beginning to recover. As a result, investors
became concerned that the Federal Reserve Board might take back some or all of
last fall' s interest-rate cuts.
Toward the end of the second quarter, many worldwide economies appeared to be
recovering. Commodity prices, particularly oil prices, began to climb, signaling
the end of the "flight to quality" for U.S. bond market investors as they became
more comfortable holding riskier assets. As a result, prices on U.S. Treasury
bonds began to fall.
By the end of the third quarter, commodity prices had leveled off and the U.S.
Treasury market stabilized. Because of a stronger global economy and potential
inflationary pressures, the Federal Reserve Board raised short-term interest
rates twice during the summer. An additional rate hike was expected in November,
which would effectively offset all of last fall' s rate cuts.
What is the fund's current strategy?
Our strategy has been to retain the flexibility we need to seek high current
income while remaining capable of responding quickly to changing market
conditions. To that end, we allocated about 50% of the portfolio's total assets
to repurchase agreements in an effort to earn
the highest possible yield for the fund. Commonly referred to as repos,
repurchase agreements are overnight loans to government dealers that are
collateralized, in the case of this fund, by U.S. Treasuries. The primary
purpose of investing in repos is to provide liquidity to the fund. However,
because their rates were higher than comparable maturity T-bills during the
period, they generated a higher return.
In managing the portfolio for year-end, we are taking advantage of repos in
order to maintain overnight liquidity. We are also currently keeping the
portfolio' s average maturity short to enable the fund to take advantage of any
possible further interest-rate increases.
November 15, 1999
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELD FLUCTUATES.
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
Annualized
Yield on
Date of Principal
U.S. TREASURY BILLS--16.7% Purchase (%) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12/9/1999 4.74 30,000,000 29,852,433
1/20/2000 5.04 50,000,000 49,446,667
TOTAL U.S. TREASURY BILLS
(cost $79,299,100) 79,299,100
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--42.4%
- -----------------------------------------------------------------------------------------------------------------------------------
5.875%, 11/15/1999 4.53 25,000,000 25,012,091
5.625%, 11/30/1999 4.52 25,000,000 25,019,465
6.375%, 1/15/2000 5.07 30,000,000 30,063,393
5.375%, 1/31/2000 4.86 30,000,000 30,024,911
7.75%, 1/31/2000 5.04 30,000,000 30,185,259
5.875%, 2/15/2000 4.90 30,000,000 30,068,641
6.875%, 3/31/2000 5.09 30,000,000 30,192,677
TOTAL U.S. TREASURY NOTES
(cost $200,566,437) 200,566,437
Annualized
Yield on
Date of Principal
REPURCHASE AGREEMENTS--36.9% Purchase (%) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Barclays De Zoette Wedd Securities, Inc.
dated 10/29/1999, due 11/1/1999
in the amount of $55,023,925
(fully collateralized by $57,181,000
U.S. Treasury Bills due 3/16/2000,
value $56,100,279) 5.22 55,000,000 55,000,000
Donaldson, Lufkin & Jenrette Securities, Inc.
dated 10/29/1999, due 11/1/1999
in the amount of $50,021,750
(fully collateralized by $22,776,000
U.S. Treasury Notes 7.75% to 5.50%,
due from 11/30/1999 to 3/31/2003,
and $22,092,000 U.S. Treasury Bonds
8.875%, due 8/15/2017,
value $51,000,708) 5.22 50,000,000 50,000,000
Goldman, Sachs & Co.
dated 10/29/1999, due 11/1/1999
in the amount of $69,678,101
(fully collateralized by $54,839,000
U.S. Treasury Bonds, 9.00% due
11/15/2018, value $71,041,259) 5.18 69,648,036 69,648,036
TOTAL REPURCHASE AGREEMENTS
(cost $174,648,036) 174,648,036
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $454,513,573) 96.0% 454,513,573
CASH AND RECEIVABLES (NET) 4.0% 18,827,580
NET ASSETS 100.0% 473,341,153
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $174,648,036)
--Note 1(c) 454,513,573 454,513,573
Cash 48,467
Receivable for investment securities sold 15,000,000
Interest receivable 3,895,027
473,457,067
- -------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 58,094
Due to Distributor 57,820
115,914
- -------------------------------------------------------------------------------
NET ASSETS ($) 473,341,153
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 473,341,531
Accumulated net realized gain (loss) on investments (378)
- -------------------------------------------------------------------------------
NET ASSETS ($) 473,341,153
- -------------------------------------------------------------------------------
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized) 473,341,531
- -------------------------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 27,739,609
EXPENSES:
Management fee--Note 2(a) 876,496
Shareholder servicing costs--Note 2(b) 876,496
TOTAL EXPENSES 1,752,992
INVESTMENT INCOME--NET 25,986,617
- -------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b)($) (378)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 25,986,239
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-----------------------------
1999 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 25,986,617 34,828,869
Net realized gain (loss) on investments (378) 160,744
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 25,986,239 34,989,613
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (25,986,617) (34,828,869)
Net realized gain on investments (160,744) (45,754)
TOTAL DIVIDENDS (26,147,361) (34,874,623)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 4,828,958,916 5,042,928,785
Dividends reinvested 3,272,221 8,151,415
Cost of shares redeemed (5,004,026,360) (5,182,623,861)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (171,795,223) (131,543,661)
TOTAL INCREASE (DECREASE) IN NET ASSETS (171,956,345) (131,428,671)
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 645,297,498 776,726,169
END OF PERIOD 473,341,153 645,297,498
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .047 .051 .050 .051 .054
Distributions:
Dividends from investment income--net (.047) (.051) (.050) (.051) (.054)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.58 5.22 5.16 5.17 5.57
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .30 .30 .30 .30 .30
Ratio of net investment income
to average net assets 4.45 5.10 5.04 5.06 5.44
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 473,341 645,297 776,726 666,360 767,948
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Institutional U.S. Treasury Money Market 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, as amended (the "Act"), as
an open-end management investment company and operates as a series company
currently offering nineteen series including the fund. The fund's investment
objective is to seek a high level of current income consistent with stability of
principal and conservative investment risk by investing in direct obligations of
the U.S. Treasury and repurchase agreements secured by such obligations. The
Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned
subsidiary of Mellon Financial Corporation. Premier Mutual Fund Services, Inc.
is the distributor of the fund's shares.
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 amortized cost
in accordance with Rule 2a-7 of the Act, which has been determined by the fund's
Board of Directors to represent the fair value of the fund's investments.
It is the fund's policy to maintain a continuous net asset value per share of
$1.00 for the fund; the fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the fund will be able to maintain a stable net asset
value per share of $1.00.
(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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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 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: 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 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 of 1986, as
amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At October 31, 1999, 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 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 .15% 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, shareholder servicing 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 fees). Each director receives $40,000 per year, plus $5,000
for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust (the
" Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee meetings
attended which are not held in conjunction with a regularly scheduled board
meeting and $500 for Board meetings and separate committee meetings attended
that are conducted by telephone and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event that
there is a joint committee meeting of the Dreyfus/Laurel Funds and the Dreyfus
High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund. These fees and
expenses are allocated to each
series based on net assets. Amounts required to be paid by the Company directly
to non-interested Directors, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Directors.
(b) Shareholder servicing plan: Under the Shareholder Servicing Plan (the
" Plan" ), the fund may pay up to .15% of the value of the average daily net
assets annually to compensate certain banks, brokers, dealers or other financial
institutions for shareholder services. During the period ended October 31, 1999,
the fund was charged $876,496 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 a 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 or any agreement related to the
Plan.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. During the period ended October 31, 1999, the fund did not borrow
under the line of credit.
The 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 of Dreyfus
Institutional U.S. Treasury Money Market Fund of The Dreyfus/Laurel Funds, Inc.,
including the statement of investments, as of October 31, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Institutional U.S. Treasury Money Market Fund of The Dreyfus/Laurel
Funds, Inc. as of October 31, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
New York, New York
December 15, 1999
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the Fund hereby designates 53.21% of
the ordinary income dividends paid during its fiscal year ended October 31, 1999
as attributable to interest income from direct obligations of the United States.
Such dividends are currently exempt from taxation for individual income tax
purposes in most states, including New York, California and the District of
Columbia.
The Fund
For More Information
Dreyfus Institutional U.S. Treasury Money Market 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 930AR9910
Dreyfus Premier
Small Company
Stock Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
18 Financial Highlights
23 Notes to Financial Statements
29 Independent Auditors' Report
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Premier
Small Company Stock Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Small Company
Stock Fund, covering the 12-month period from November 1, 1998 through October
31, 1999. Inside, you' ll find valuable information about how the fund was
managed during the reporting period, including a discussion with the fund's
portfolio managers, Anthony Galise and James Wadsworth.
While the past year was rewarding for many equity investors, small-cap stocks
did not fare as well as other market sectors. When the reporting period began,
the U.S. stock market had just completed a sharp correction caused primarily by
concerns regarding the spread of the global financial crisis in overseas
markets. Soon after the start of 1999, however, those fears abated. In fact, the
U.S. economy remained strong, and investors became concerned that inflationary
pressures might re-emerge. As a result, the Federal Reserve Board raised
short-term interest rates twice during the summer in an effort to forestall a
reacceleration of inflation in a fast-growing economy. In this environment,
equity investors once again preferred the relative predictability of earnings
from large-cap companies.
Despite a brief rally in April and May, small-cap stocks generally failed to
keep pace with their large-cap counterparts. However, some small-cap technology
stocks that were subject to heightened investor speculation were exceptions to
this trend.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Small Company Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Anthony Galise and James Wadsworth, Portfolio Managers
How did Dreyfus Premier Small Company Stock Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 1999, the fund's Class A, B, C and R
shares produced total returns of 9.81% , 8.88% , 8.88% and 10.08% ,
respectively.(1) In contrast, the Russell 2500 Index, the fund's benchmark,
produced a total return of 18.00% for the same period.(2)
The public offering of the fund's Class T shares commenced on August 16, 1999.
From August 16, 1999 through October 31, 1999 the fund produced a total return
of -.18% for Class T shares.
The primary reason that the fund underperformed its benchmark during the
reporting period is that the Russell 2500's total return was driven by a narrow
slice of the market, primarily technology companies, many of which do not fit
our investment criteria. Indeed, Lipper Analytical Services, Inc. ("Lipper")
recently reclassified the fund as a "small-cap value" fund, versus its prior
classification as a "small-cap growth" fund. To be classified as small-cap
growth, Lipper requires most of the companies in the portfolio to have
above-average expected earnings growth. To be classified as small-cap value,
most of the fund's stocks should be considered "undervalued," using a measure
such as price-to-earnings ratio, when compared to the average small-cap stock
fund. For the 12-month reporting period, the Lipper SmallCap Funds value
category produced a total return of 6.00% .(3)
What is the fund's investment approach?
The fund invests primarily in a broadly diversified portfolio of small-cap
companies that can include growth and value stocks. The stocks are chosen
through a disciplined process that combines computer analysis with human
judgment.
The computer model identifies and ranks stocks within an industry based on three
broad concepts. The first one is relative value, or how The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
a stock is priced relative to its perceived intrinsic worth. The second is
relative growth, or how a company's profit growth compares to other companies in
its industry. The third factor is relative financial strength, which examines
attributes such as the debt level of a company.
Using the insights our analysts gained from their fundamental analysis, we
select what we believe are the most attractive of the top-ranked securities in
the model. Finally, we use portfolio construction techniques to neutralize
sector and industry risks. For example, if the Russell 2500 Index has a 10%
weighting in a particular sector, about 10% of the fund's assets will also be
invested in that sector.
What other factors influenced the fund's performance?
During most of the 12-month reporting period, investors were jittery about the
economic environment, causing them to favor large, household-name stocks. Last
November, the Asian economic crisis was still causing concerns about a worldwide
recession and deflation, which is why the Federal Reserve Board lowered interest
rates three times in rapid succession. It wasn't until April 1999 that small-cap
stocks began to perform relatively well, at a time when investor concerns over
deflation were waning.
By late spring, however, the U.S. economy appeared in danger of overheating.
Energy prices soared and investors began to worry about inflation, causing the
Fed to raise interest rates in June and August. Rising interest rates and a
spike in the Consumer Price Index created new worries for investors. Their
reaction was once again to seek out the perceived safety of large-cap stocks,
and to buy technology shares because they had been the top performers in the
market.
During most of the reporting period, less than 5% of the stocks in the Russell
2500 Index were responsible for most of its return. Many of these select stocks
were technology companies, primarily Internet-related, that had little or no
earnings, and scored poorly in our investment model. For example, Amazon.com was
part of the Russell 2500 Index, and its absence from our fund was a negative
factor in our relative performance.
What is the fund's current strategy?
Our investment strategy and methodology continue to focus on companies with
strong earnings growth that are selling at reasonable valuation levels. For
example, Calpine, an independent power company, was selling at a reasonable
price/earnings ratio when we acquired it. We continue to hold it because its
earnings growth has continued to exceed expectations.
Another strong performer for the fund was Excite(@)Home, an Internet company
that was compellingly ranked in our valuation model due to its profitability.
The company merged with (@) Home, an Internet service provider owned by a
consortium of cable companies that focuses on increasing "bandwidth,"
facilitating faster connections. Another Internet-related holding in the fund is
Legato Systems, a company that focuses on storage software and is benefiting
from an exploding amount of data flowing into corporations on a daily basis.
This data needs to be stored, organized and managed in a way that it can be
retrieved. We saw the drive for greater bandwidth and storage capacity as
moderate-risk ways to play the Internet sector.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
TOTAL RETURN DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE
IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES
CHARGES ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT RETURN
FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
(2) SOURCE: FACTSET RESEARCH SYSTEMS, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE RUSSELL
2500 INDEX IS A WIDELY RECOGNIZED, UNMANAGED INDEX OF SMALL-CAP STOCK
PERFORMANCE.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
FUND PERFORMANCE
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
((+)) SOURCE: FACTSET RESEARCH SYSTEMS, INC.
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, CLASS C AND CLASS T 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.
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
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Class A Shares
<S> <C> <C> <C> <C>
WITH SALES CHARGE (5.75%) 9/2/94 3.47% 12.20% 11.95%
WITHOUT SALES CHARGE 9/2/94 9.81% 13.53% 13.24%
Class B Shares
WITH REDEMPTION((+)) 12/19/94 4.88% -- 14.16%
WITHOUT REDEMPTION 12/19/94 8.88% -- 14.40%
Class C Shares
WITH REDEMPTION((+)(+)) 12/19/94 7.88% -- 14.42%
WITHOUT REDEMPTION 12/19/94 8.88% -- 14.42%
Class R Shares
9/2/94 10.08% 13.78 13.48%
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Actual Aggregate Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
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Class T Shares
WITH SALES CHARGE (4.5%) 8/16/99 -- -- (4.69)%
WITHOUT SALES CHARGE 8/16/99 -- -- (0.18)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
( (+)) 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>
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 1999
COMMON STOCKS--98.6% Shares Value ($)
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ALCOHOL & TOBACCO--.5%
<S> <C> <C>
Canandaigua Brands, Cl. A 28,400 (a) 1,718,200
CONSUMER CYCLICAL-10.8%
Abercrombie & Fitch, Cl. A 49,700 (a) 1,354,325
Action Performance Cos. 48,100 (a) 978,534
Ames Department Stores 59,100 (a) 1,872,731
Applied Power, Cl. A 55,700 1,618,781
Bed Bath & Beyond 68,400 (a) 2,278,575
Borg-Warner Automotive 51,740 2,043,730
Continental Airlines, Cl. B 52,600 (a) 2,130,300
Darden Restaurants 85,000 1,620,313
Dollar Tree Stores 64,100 (a) 2,792,356
Ethan Allen Interiors 79,750 2,836,109
Interface 26,441 107,417
Lear 27,100 (a) 914,625
Polaroid 51,200 1,142,400
Ross Stores 107,300 2,213,062
Ryan's Family Steak House 209,620 (a) 2,194,459
Speedway Motorsports 66,000 (a) 2,879,250
Tommy Hilfiger 83,280 (a) 2,352,660
Tower Automotive 105,300 (a) 1,717,706
Warnaco Group, Cl. A 71,850 1,023,863
Zale 110,290 (a) 4,618,394
38,689,590
CONSUMER STAPLES--2.8%
Dial 107,400 2,510,475
Pepsi Bottling Group 81,100 1,475,006
Ralcorp Holdings 66,100 (a) 1,288,950
SUPERVALU 91,065 1,912,365
Suiza Foods 76,087 (a) 2,743,887
9,930,683
ENERGY--6.0%
BJ Services 111,200 (a) 3,815,550
Devon Energy 60,300 2,344,162
Kinder Morgan 121,460 2,444,382
MCN Energy Group 73,100 1,786,381
Newfield Exploration 68,000 (a) 2,001,750
Noble Affiliates 44,800 1,134,000
COMMON STOCKS (CONTINUED) Shares Value ($)
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ENERGY (CONTINUED)
Noble Drilling 88,800 (a) 1,970,250
Transocean Offshore 69,400 1,886,813
Ultramar Diamond Shamrock 62,400 1,528,800
WICOR 84,780 2,522,205
21,434,293
HEALTH CARE--6.2%
AmeriSource Health, Cl. A 137,470 (a) 2,062,050
Bard (C.R.) 37,200 2,006,475
Forest Laboratories 23,100 (a) 1,059,713
Genzyme 64,400 2,463,300
IDEXX Laboratories 52,400 (a) 792,550
Lincare Holdings 79,780 (a) 2,243,812
MedImmune 18,900 (a) 2,116,800
Mylan Laboratories 78,600 1,409,888
Orthodontic Centers of America 159,500 (a) 2,193,125
Sybron International 67,500 (a) 1,607,344
VISX 29,980 (a) 1,875,624
Watson Pharmaceuticals 78,760 (a) 2,500,630
22,331,311
INTEREST SENSITIVE--15.5%
Allmerica Financial 24,400 1,395,375
Ambac Financial Group 60,400 3,608,900
Bank United, Cl. A 63,510 2,476,890
Block (H & R) 59,400 2,528,212
City National 102,910 3,987,762
Concord EFS 62,950 (a) 1,703,584
Edwards (A.G.) 77,120 2,318,420
Gallagher (Arthur J.) 37,900 1,961,325
GreenPoint Financial 47,800 1,362,300
Hartford Life, Cl. A 31,300 1,635,425
Health Care Property Investors 53,350 1,400,438
Hibernia, Cl. A 158,100 2,243,044
Investment Technology Group 52,397 1,381,971
M&T Bank 6,456 3,198,948
Mercantile Bankshares 90,500 3,258,000
Mutual Risk Management 95,760 1,448,370
Old Kent Financial 101,763 4,146,842
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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INTEREST SENSITIVE (CONTINUED)
People's Bank 65,160 1,649,363
Peoples Heritage Financial Group 145,700 2,768,300
Protective Life 75,400 2,728,537
Radian Group 76,304 4,029,805
TCF Financial 96,200 2,837,900
Waddell & Reed Financial, Cl. A 51,800 1,243,200
55,312,911
PRODUCER GOODS & SERVICES--14.9%
American Power Conversion 141,100 (a) 3,165,931
American Standard 36,800 (a) 1,405,300
Apartment Investment & Management, Cl. A 59,000 2,219,875
AptarGroup 70,620 1,897,913
Boston Properties 105,900 3,157,144
CK Witco 103,900 974,063
CNF Transportation 55,800 1,844,888
Cabot 94,380 1,757,828
Camden Property Trust 69,000 1,867,313
Caraustar Industries 49,270 1,188,639
Clayton Homes 160,657 1,626,652
Cordant Technologies 34,180 1,065,989
Cytec Industries 74,090 (a) 1,912,448
Duke-Weeks Realty 85,500 1,677,938
Equity Office Properties Trust 85,115 1,883,169
Franchise Finance Corp. of America 64,630 1,405,703
Highwoods Properties 56,300 1,361,756
IMCO Recycling 85,680 1,253,070
Jacobs Engineering Group 38,980 (a) 1,383,790
Kerr-McGee 43,050 2,313,937
Litton Industries 28,200 (a) 1,323,638
Louisiana Pacific 88,100 1,117,769
Mack-Cali Realty 65,470 1,685,853
Martin Marietta Materials 34,800 1,355,025
Mead 30,400 1,094,400
Pacific Gulf Properties 93,700 1,897,425
Reynolds Metals 36,100 2,181,794
Southdown 37,739 1,823,265
Temple-Inland 25,900 1,505,438
Timken 53,500 959,656
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER GOODS & SERVICES (CONTINUED)
USG 26,200 1,298,538
USX-U.S. Steel Group 65,600 1,676,900
53,283,047
SERVICES--11.1%
Adelphia Communications, Cl. A 25,700 (a) 1,403,863
American Management Systems 81,400 (a) 2,106,225
Avis Rent A Car 74,800 (a) 1,337,050
CIBER 83,900 (a) 1,368,619
Convergys 82,800 (a) 1,619,775
DST Systems 26,700 (a) 1,700,456
Hispanic Broadcasting 43,200 (a) 3,499,200
Hollinger International, Cl. A 121,200 1,257,450
Mail-Well 171,200 (a) 2,289,800
SFX Entertainment 31,700 (a) 1,107,519
Sinclar Broadcast Group, Cl. A 193,800 (a) 1,938,000
SunGuard Data Systems 99,960 (a) 2,442,772
Telephone & Data Systems 22,600 2,604,650
Transaction Network Services 143,300 (a) 5,705,131
USA Networks 63,800 (a) 2,874,987
Valassis Communications 50,750 (a) 2,182,250
Wallace Computer Services 77,520 1,715,130
Young & Rubicam 52,200 2,388,150
39,541,027
TECHNOLOGY--23.6%
Adaptec 67,100 (a) 3,019,500
American Tower, Cl. A 40,500 (a) 772,031
CheckFree Holdings 22,231 (a) 830,884
Check Point Software Technologies 23,150 (a) 2,678,166
Clarify 54,500 (a) 4,210,125
Cognex 51,940 (a) 1,554,954
Dallas Semiconductor 53,540 3,152,167
Electronics For Imaging 66,100 (a) 2,664,656
Jabil Circuit 85,600 (a) 4,472,600
Lattice Semiconductor 66,100 (a) 2,338,287
Legato Systems 117,700 (a) 6,326,375
NeoMagic 128,000 (a) 1,020,000
Network Appliance 48,500 (a) 3,589,000
PMC-Sierra 33,500 (a) 3,157,375
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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TECHNOLOGY (CONTINUED)
Plantronics 69,120 (a) 4,047,840
RF Micro Devices 28,100 (a) 1,450,663
Rational Software 59,900 (a) 2,560,725
SMART Modular Technologies 119,900 (a) 4,451,287
SPX 36,500 (a) 3,093,375
Sanmina 51,033 (a) 4,596,160
Scientific-Atlanta 47,400 2,713,650
Security First Technologies 29,500 (a) 1,185,531
Sterling Commerce 110,660 (a) 2,593,594
Synopsys 38,500 (a) 2,399,031
Vignette 20,900 (a) 3,302,200
Vitesse Semiconductor 116,400 (a) 5,339,850
Waters 58,600 (a) 3,113,125
Zebra Technologies, Cl. A 71,690 (a) 3,898,144
84,531,295
UTILITIES--7.2%
Calpine 180,400 (a) 10,395,550
Cincinnati Bell 123,600 2,572,425
DQE 77,770 3,105,939
MidAmerican Energy Holding 99,740 3,353,757
Montana Power 93,500 2,658,906
Pacific Gateway Exchange 74,800 (a) 1,701,700
Sempra Energy 103,573 2,116,773
25,905,050
TOTAL COMMON STOCKS
(cost $314,522,564) 352,677,407
Principal
SHORT-TERM INVESTMENTS--1.4% Amount ($) Value ($)
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Repurchase Agreement;
Goldman Sachs & Co., 5.18% dated
10/29/1999, due 11/1/1999 in the amount
of $4,852,094 (fully collateralized by
$4,913,000 U.S. Treasury Notes, 5.625%, due
2/28/2001, value $4,947,044)
(cost $4,850,000) 4,850,000 4,850,000
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TOTAL INVESTMENTS (cost $319,372,564) 100.0% 357,527,407
LIABILITIES, LESS CASH AND RECEIVABLES .0% (9,479)
NET ASSETS 100.0% 357,517,928
(A) NON-INCOME PRODUCING.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- --------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
<S> <C> <C>
Investments--Note 1(c) 319,372,564 357,527,407
Cash 119,929
Receivable for investment securities sold 392,949
Receivable for shares of Capital Stock subscribed 171,372
Dividends and interest receivable 130,329
358,341,986
- --------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 382,979
Due to Distributor 6,443
Payable for shares of Capital Stock redeemed 434,636
824,058
- --------------------------------------------------------------------------------------
NET ASSETS ($) 357,517,928
- --------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 336,744,568
Accumulated net realized gain (loss) on investments (17,381,483)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 38,154,843
- --------------------------------------------------------------------------------------
NET ASSETS ($) 357,517,928
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R Class T
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets ($) 15,688,078 23,917,915 3,905,531 314,005,406 998
Shares Outstanding 940,832 1,489,090 243,002 18,682,749 59.88
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 16.67 16.06 16.07 16.81 16.67
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $4,856 foreign taxes withheld at source) 3,809,348
Interest 335,423
TOTAL INCOME 4,144,771
EXPENSES:
Management fee--Note 2(a) 4,147,934
Distribution and service fees--Note 2(b) 336,920
Loan commitment fees--Note 4 902
TOTAL EXPENSES 4,485,756
INVESTMENT (LOSS) (340,985)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (13,424,852)
Net unrealized appreciation (depreciation) on investments 42,306,665
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 28,881,813
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 28,540,828
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
--------------------------------
1999(a) 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss)--net (340,985) (547,271)
Net realized gain (loss) on investments (13,424,852) (4,033,890)
Net unrealized appreciation (depreciation)
on investments 42,306,665 (49,605,457)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 28,540,828 (54,186,618)
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Net realized gain on investments:
Class A shares -- (462,818)
Class B shares -- (1,024,452)
Class C shares -- (203,973)
Class R shares -- (11,961,021)
TOTAL DIVIDENDS -- (13,652,264)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 58,145,411 9,635,640
Class B shares 5,744,035 16,236,324
Class C shares 1,523,010 3,534,921
Class R shares 115,299,579 99,604,995
Class T shares 1,000 --
Dividends reinvested:
Class A shares -- 420,621
Class B shares -- 860,498
Class C shares -- 102,849
Class R shares -- 9,814,653
Cost of shares redeemed:
Class A shares (57,554,573) (3,002,178)
Class B shares (9,200,611) (4,968,357)
Class C shares (2,306,158) (1,905,628)
Class R shares (64,595,908) (56,959,110)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 47,055,785 73,375,228
TOTAL INCREASE (DECREASE) IN NET ASSETS 75,596,613 5,536,346
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 281,921,315 276,384,969
END OF PERIOD 357,517,928 281,921,315
A FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1999
FOR CLASS T SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
--------------------------------
1999(a) 1998
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A (B)
Shares sold 3,518,240 545,657
Shares issued for dividends reinvested -- 24,015
Shares redeemed (3,463,986) (169,516)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 54,254 400,156
- -------------------------------------------------------------------------------
CLASS B (B)
Shares sold 363,147 922,997
Shares issued for dividends reinvested -- 50,219
Shares redeemed (581,757) (305,600)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (218,610) 667,616
- -------------------------------------------------------------------------------
CLASS C
Shares sold 95,223 202,040
Shares issued for dividends reinvested -- 6,003
Shares redeemed (145,202) (111,940)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (49,979) 96,103
- -------------------------------------------------------------------------------
CLASS R
Shares sold 6,958,746 5,542,571
Shares issued for dividends reinvested -- 558,142
Shares redeemed (3,920,202) (3,342,921)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,038,544 2,757,792
- -------------------------------------------------------------------------------
CLASS T
SHARES SOLD 60 --
(A) FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO
OCTOBER 31, 1999 FOR CLASS T SHARES.
(B) DURING THE PERIOD ENDED OCTOBER 31, 1999, 19,186 CLASS B SHARES
REPRESENTING $303,709 WERE AUTOMATICALLY CONVERTED TO 18,546 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
-------------------------------------------------------------------
CLASS A SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 15.18 18.89 15.13 13.09 10.07
Investment Operations:
Investment income (loss)--net (.04)(a) (.02) (.04) (.02) .02
Net realized and unrealized gain (loss)
on investments 1.53 (2.78) 4.52 2.48 3.03
Total from Investment Operations 1.49 (2.80) 4.48 2.46 3.05
Distributions:
Dividends from investment income--net -- -- -- -- (.03)
Dividends from net realized gain on
investments -- (.91) (.72) (.42) --
Total Distributions -- (.91) (.72) (.42) (.03)
Net asset value, end of period 16.67 15.18 18.89 15.13 13.09
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 9.81 (15.42) 30.73 19.22 30.31
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 1.50 1.50 1.50 1.50
Ratio of net investment income (loss)
to average net assets (.25) (.32) (.35) (.16) .10
Portfolio Turnover Rate 43.32 47.44 39.18 49.03 56.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 15,688 13,462 9,190 3,884 1,359
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
------------------------------------------------------------------
CLASS B SHARES 1999 1998 1997 1996 1995a
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 14.75 18.51 14.95 13.05 9.49
Investment Operations:
Investment (loss)--net (.16)(b) (.11) (.03) (.07) (.03)
Net realized and unrealized gain (loss)
on investments 1.47 (2.74) 4.31 2.39 3.59
Total from Investment Operations 1.31 (2.85) 4.28 2.32 3.56
Distributions:
Dividends from net realized gain on
investments -- (.91) (.72) (.42) --
Net asset value, end of period 16.06 14.75 18.51 14.95 13.05
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 8.88 (16.10) 29.72 18.17 37.51(d)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.25 2.25 2.25 2.24 1.95(d)
Ratio of net investment (loss)
to average net assets (.99) (1.07) (1.02) (.93) (.56)(d)
Portfolio Turnover Rate 43.32 47.44 39.18 49.03 56.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 23,918 25,183 19,257 4,633 1,025
(A) THE FUND COMMENCED SELLING CLASS B SHARES ON DECEMBER 19, 1994.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
------------------------------------------------------------------
CLASS C SHARES 1999 1998 1997 1996 1995a
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 14.75 18.52 14.95 13.04 9.49
Investment Operations:
Investment income (loss)--net (.16)(b) (.14) .01 (.09) (.01)
Net realized and unrealized gain (loss)
on investments 1.48 (2.72) 4.28 2.42 3.56
Total from Investment Operations 1.32 (2.86) 4.29 2.33 3.55
Distributions:
Dividends from net realized gain on
investments -- (.91) (.72) (.44) --
Net asset value, end of period 16.07 14.75 18.52 14.95 13.04
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 8.88 (16.08) 29.79 18.27 37.41(d)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.25 2.25 2.25 2.25 1.14(d)
Ratio of net investment (loss)
to average net assets (.99) (1.08) (1.01) (.93) (.33)(d)
Portfolio Turnover Rate 43.32 47.44 39.18 49.03 56.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 3,906 4,323 3,647 514 147
(A) THE FUND COMMENCED SELLING CLASS C SHARES ON DECEMBER 19, 1994.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
------------------------------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.27 18.96 15.15 13.10 10.07
Investment Operations:
Investment income (loss)--net .00(a,b) (.01) .00(b) .01 .04
Net realized and unrealized gain (loss)
on investments 1.54 (2.77) 4.53 2.48 3.04
Total from Investment Operations 1.54 (2.78) 4.53 2.49 3.08
Distributions:
Dividends from investment income--net -- -- -- (.02) (.05)
Dividends from net realized gain on
investments -- (.91) (.72) (.42) --
Total Distributions -- (.91) (.72) (.44) (.05)
Net asset value, end of period 16.81 15.27 18.96 15.15 13.10
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 10.08 (15.31) 31.04 19.43 30.70
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.25 1.25 1.25 1.25
Ratio of net investment income (loss)
to average net assets -- (.07) .02 .09 .35
Portfolio Turnover Rate 43.32 47.44 39.18 49.03 56.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 314,005 238,953 244,292 112,209 44,091
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
---------------------
<S> <C>
CLASS T SHARES 1999(a)
- -------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 16.70
Investment Operations:
Investment (loss) (.02)(b)
Net realized and unrealized gain (loss) on investments (.01)
Total from Investment Operations (.03)
Distributions:
Net asset value, end of period 16.67
- -------------------------------------------------------------------------------------
TOTAL RETURN (%) (.18)(c,d)
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .35(d)
Ratio of net investment income (loss) to average net assets (.14)(d)
Portfolio Turnover Rate 43.32
- --------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 1
(A) THE FUND COMMENCED SELLING CLASS T SHARES ON AUGUST 16, 1999.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) EXCLUSIVE OF SALES CHARGE.
(D) NOT ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Small Company Stock 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, as amended (the "Act"), an open-end
management investment company and operates as a series company currently
offering nineteen 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
(the "Manager") serves as the fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. (" Mellon Bank" ), which is a wholly-owned
subsidiary of Mellon Financial Corporation.
On July 29, 1999, the Board of Directors approved the addition of class T shares
which became effective August 16, 1999.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 368 million of $.001 par value
Capital Stock. The fund currently offers five classes of shares: Class A (27
million shares authorized), Class B (50 million shares authorized), Class C (50
million shares authorized), Class R (41 million shares authorized) and Class T
(200 million shares authorized). Class A, Class B, Class C and Class T shares
are sold primarily to retail investors through financial intermediaries and bear
a distribution fee and/or service fee. Class A and Class T shares are sold with
a front-end sales charge, while Class B and Class C shares are subject to a
contingent deferred sales charge ("CDSC"). 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
of a counterparty 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) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and 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 of 1986, as amended (the "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 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 $16,349,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1999. If not
applied, $2,362,000 of the carryover expires in fiscal 2006 and $13,987,000
expires in fiscal 2007.
During the period ended October 31, 1999 the fund increased accumulated
undistributed investment income net by $340,985 and decreased paid-in capital by
that amount.
Net assets were not affected by this reclassification.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, service 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 fees). Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel
Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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 por
tion of the management fee payable to the Manager, are in fact paid directly by
the Manager to the non-interested Directors.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$5,787 during the period ended October 31, 1999 from commissions earned on sales
of the fund's shares.
(B) DISTRIBUTION AND SERVICE PLAN: The fund has adopted a Distribution Plan (the
" Plan" ) pursuant to Rule 12b-1 under the Act relating to its Class A, Class B,
Class C, and Class T shares. Under the Plan, 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, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B, Class C and Class T shares may pay the Distributor for distributing
their shares at an aggregate annual rate of .75% of the value of the average
daily net assets of Class B and Class C shares and .25% of the average value of
the daily net assets of Class T shares. The Distributor may pay one or more
agents in respect of advertising, marketing and other distribution services for
Class T shares and determines the amounts, if any, to be paid to agents and the
basis on which such payments are made. Class B, Class C and Class T shares are
also subject to a service plan adopted pursuant to Rule 12b-1, under which Class
B, Class C and Class T pay Dreyfus Service Corporation or the Distributor for
providing certain services to the holders of Class B, Class C and Class T shares
a fee at the annual rate of .25% of the value of the average daily net assets of
Class B, Class C and Class T shares. During the period ended October 31, 1999,
the distribution fee for Class A, Class B and Class C shares was $37,824,
$192,788 and $31,534, respectively. During the period ended October 31, 1999,
the service fee for Class B shares and Class C shares was $64,263 and $10,511
respectively.
Under its terms, the Plan and service 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 Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the Company and who have no direct or indirect financial interest in the
operation of or in any agreement related to the Plan or service plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales of investment securities, excluding
short-term securities, during the period ended October 31, 1999, amounted to
$191,345,375 and $140,683,409, respectively.
At October 31, 1999, accumulated net unrealized appreciation on investments was
$38,154,843, consisting of $69,725,890 gross unrealized appreciation and
$31,571,047 gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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 the borrowings. During the period ended
October 31, 1999, the fund did not borrow under the Facility.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.
We have audited the accompanying statement of assets and liabilities of Dreyfus
Premier Small Company Stock Fund of The Dreyfus/Laurel Funds, Inc., including
the statement of investments, as of October 31, 1999, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
The Fund
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 385/685AR9910
Dreyfus
Bond Market
Index Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
22 Statement of Assets and Liabilities
23 Statement of Operations
24 Statement of Changes in Net Assets
25 Financial Highlights
27 Notes to Financial Statements
32 Independent Auditors' Report
33 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus
Bond Market Index Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Bond Market Index Fund,
covering the 12-month period from November 1, 1998 through October 31, 1999.
Inside, you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio manager,
Laurie Carroll.
The past 12 months have been highly volatile for most bonds. Although U.S.
Treasury securities began the reporting period in the wake of a rally caused
primarily by a "flight to quality" amid the spread of the global financial
crisis in overseas markets, most higher yielding sectors of the bond market had
declined sharply. The Federal Reserve Board responded to the global financial
crisis last fall by reducing short-term interest rates. Its strategy apparently
was effective, and the U.S. economy remained strong through the remainder of the
reporting period.
Because inflation is more likely to rise in a strong economy, the overall bond
market -- including U.S. Treasury securities -- declined during the first 10
months of 1999. To help forestall a rise of inflation, the Federal Reserve Board
raised short-term interest rates twice during the summer of 1999, effectively
reversing most of last fall's interest-rate cuts. Higher interest rates led to
some erosion of bond prices, especially among the higher yielding market
sectors. In this environment, however, the yields of many higher yielding bonds
- -- including corporate bonds and U.S. government agency securities -- have
recently been quite attractive compared to the yields of U.S. Treasury
securities of comparable maturity.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Bond Market Index Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Laurie Carroll, Portfolio Manager
How did Dreyfus Bond Market Index Fund perform relative to its benchmark?
For the 12-month period ended October 31, 1999, Dreyfus Bond Market Index Fund's
Investor shares and BASIC shares produced total returns of .03% and .29%,
respectively.(1) The fund' s investment objective is to seek to replicate the
total return provided by the Lehman Brothers Aggregate Bond Index (the "Index"),
which provided a total return of .53% for the same period.(2) The difference in
returns is accounted for by transaction costs and other fund operating expenses
What is the fund's investment approach?
The fund seeks to match the total return of the Index. To pursue that goal, the
fund invests primarily in securities that are included in the Index.
While the fund seeks to mirror the returns of the Index, it does not hold the
same number of bonds. Instead, the fund holds approximately 350 securities as
compared to 6,500 bonds in the Index. As a matter of policy, the fund's average
duration generally remains neutral to the Index, which as of October 31, 1999
was about five years for the fund and Index.
As of the end of the reporting period, the fund's portfolio was allocated as
follows: 37.4% U.S. Treasury securities, 34.4% mortgage-backed securities, 19.9%
corporate bonds, 7.7% U.S. government agency bonds and .06% cash. These were the
same general proportions represented in the Index as of October 31, 1999
What other factors influenced the fund's performance?
At the beginning of the fund's 12-month reporting period, the global equity
markets were in the midst of a crisis that created a "flight to quality" in
which many investors flocked to the safety provided by The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
U.S. Treasury securities. In an effort to stimulate global economic growth, the
Federal Reserve Board lowered short-term interest rates by a total of 75 basis
points in three separate moves in October and November 1998. However, by the end
of the year and into the first quarter of 1999, many industry analysts were
surprised to see signs that the Asian economies were beginning to recover. As a
result, investors became concerned that the Federal Reserve Board might take
back some or all of last fall' s interest-rate cuts.
Toward the end of the second quarter, many global economies appeared to be
recovering. Commodity prices, particularly oil prices, began to climb,
indicating that many emerging market countries were using raw materials to
revitalize their industrial growth. The rise in commodity prices signaled the
end of the "flight to quality" for U.S. bond market investors, and investors
became more comfortable holding riskier assets. As a result, prices on U.S.
Treasury bonds began to fall.
By the end of the third quarter, commodity prices had leveled off and the U.S.
Treasury market stabilized. Because of a stronger global economy and potential
inflationary pressures, the Federal Reserve Board raised short-term interest
rates twice during the summer. An additional rate hike was expected in November,
which would effectively offset all of last fall' s rate cuts.
What is the fund's current strategy?
As an index fund, our goal is to replicate the returns of the Index. To that
end, the sectors of the bond market that we emphasized in this fund are the same
ones that were emphasized by the Index.
During the past year, the best returns for the Index, and therefore for the fund
as well, were generated from asset-backed securities, followed by government
agency bonds, corporate securities and U.S. Treasuries. In the case of
asset-backed securities and government agency bonds, these types of securities
performed well due in large part to their shorter duration stance. Generally
speaking, in a rising
interest-rate environment, bonds with shorter durations tend to outperform those
with longer durations. Corporate securities didn' t perform as well as
asset-backed and agencies, primarily because they carry a longer duration.
Finally, U.S. Treasuries underperformed in the strong economic climate.
November 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LEHMAN BROTHERS -- THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS AN
UNMANAGED INDEX OF CORPORATE, GOVERNMENT AND GOVERNMENT AGENCY DEBT INSTRUMENTS,
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. THE INDEX INCLUDES REINVESTED
DIVIDENDS.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Bond Market Index
Fund BASIC Shares and the Lehman Brothers Aggregate Bond Index
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTOR SHARES 4/28/94 0.03% 7.31% 6.52%
BASIC SHARES 11/30/93 0.29% 7.59% 5.70%
((+)) SOURCE: BLOOMBERG L.P.
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN BASIC SHARES OF DREYFUS
BOND MARKET INDEX FUND ON 11/30/93 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE
IN THE LEHMAN BROTHERS AGGREGATE BOND INDEX ON THAT DATE. ALL DIVIDENDS AND
CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. PERFORMANCE FOR INVESTOR SHARES WILL
VARY FROM THE PERFORMANCE OF BASIC SHARES SHOWN ABOVE DUE TO DIFFERENCES IN
CHARGES AND EXPENSES.
EFFECTIVE NOVEMBER 14, 1997, THE FUND'S INVESTMENT OBJECTIVE CHANGED TO SEEKING
TO REPLICATE THE TOTAL RETURN OF THE LEHMAN BROTHERS AGGREGATE BOND INDEX. THE
FUND'S INVESTMENT POLICIES ALSO CHANGED AS OF NOVEMBER 14, 1997 TO PERMIT THE
FUND TO INVEST IN MORTGAGE-BACKED AND ASSET-BACKED SECURITIES IN SEEKING TO
REPLICATE THE LEHMAN BROTHERS AGGREGATE BOND INDEX. PRIOR TO NOVEMBER 14, 1997,
THE FUND'S OBJECTIVE WAS TO SEEK TO REPLICATE THE TOTAL RETURN OF THE LEHMAN
BROTHERS GOVERNMENT/CORPORATE BOND INDEX. THE FUND'S PERFORMANCE SHOWN IN THE
LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THE LEHMAN
BROTHERS AGGREGATE BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF
CORPORATE, U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY DEBT INSTRUMENTS,
MORTGAGED-BACKED SECURITIES, AND ASSET-BACKED SECURITIES. THE INDEX DOES NOT
TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION RELATING
TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS
CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN
THIS REPORT.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
October 31, 1999
Principal
BONDS AND NOTES--125.6% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE AND AVIATION--.7%
American Airlines,
Pass-Through Ctfs., 7.024%, 2009 250,000 248,816
Boeing:
Deb., 8.1%, 2006 25,000 26,201
Deb., 8.625%, 2031 10,000 11,292
Lockheed,
Notes, 6.75%, 2003 25,000 24,618
Raytheon:
Notes, 6.45%, 2002 300,000 295,236
Notes, 6.5%, 2005 25,000 23,905
Rockwell International,
Notes, 6.75%, 2002 30,000 30,049
United Technologies,
Deb., 8.75%, 2021 50,000 57,728
717,845
AUTOMOTIVE--1.1%
Daimler-Chrysler:
Medium-Term Notes, 7.375%, 2006 120,000 121,995
Notes, 7.2%, 2009 200,000 200,568
Dana,
Notes, 7%, 2028 100,000 89,536
Delphi Auto Systems,
Deb., 7.125%, 2029 125,000 112,776
General Motors:
Deb., 7.4%, 2025 210,000 206,260
Medium-Term Notes, 8.875%, 2003 25,000 26,623
Notes, 9.125%, 2001 15,000 15,596
Notes, 7%, 2003 40,000 40,130
Sr. Notes, 8.8%, 2021 150,000 171,601
985,085
BANKING--1.6%
Banc One,
Sub. Notes, 9.875%, 2019 5,000 5,793
BankAmerica,
Sub. Notes, 7.75%, 2002 25,000 25,668
BankAmerica Capital II,
Gtd. Capital Securities, 8%, 2026 55,000 53,622
Bankers Trust New York,
Sub. Deb, 7.5%, 2015 75,000 74,412
Capital One Bank,
Sr. Notes, 6.375%, 2003 200,000 193,941
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
BANKING (CONTINUED)
Chase Manhattan,
Sub. Notes, 7.75%, 1999 40,000 40,000
Chemical,
Sub. Notes, 6.125%, 2008 15,000 14,036
Citicorp,
Sub. Notes, 7.125%, 2003 20,000 20,109
FBS Capital I,
Gtd. Capital Securities, 8.09%, 2026 100,000 98,475
First Bank System,
Sub. Notes, 7.625%, 2005 55,000 56,956
First Chicago,
Sub. Notes, 9.875%, 2000 20,000 20,574
First Union,
Sub. Notes, 6.3%, 2008 100,000 93,561
Fleet Financial Group,
Sr. Notes, 7.125%, 2000 40,000 40,229
HSBC Holding,
Sub. Notes, 7.5%, 2009 200,000 201,276
Key Bank,
Sub. Deb, 6.95%, 2028 250,000 227,228
MBNA America Bank,
Sub. Notes, 6.75%, 2008 100,000 93,587
NCNB,
Sub. Notes, 9.375%, 2009 20,000 22,971
NationsBank:
Sub. Notes, 6.875%, 2005 10,000 9,876
Sub. Notes, 7.625%, 2005 190,000 193,803
Republic New York Corp.,
Sub. Notes, 5.875%, 2008 25,000 22,236
Wachovia,
Sub. Notes, 6.375%, 2003 15,000 14,762
Wells Fargo Capital,
Gtd. Capital Securities, 7.96%, 2026 30,000 29,119
1,552,234
CHEMICALS--.2%
duPont (E.I.) de Nemours:
Deb., 6.5%, 2028 100,000 90,323
Notes, 6.75%, 2002 40,000 40,364
Eastman Chemical,
Notes, 6.375%, 2004 30,000 29,018
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS (CONTINUED)
Monsanto,
Deb., 8.2%, 2025 20,000 19,623
Morton International,
Deb., 9.25%, 2020 5,000 5,729
185,057
CONSUMER--.2%
Clorox,
Notes, 8.8%, 2001 10,000 10,398
Maytag,
Deb., 9.75%, 2002 5,000 5,352
Procter & Gamble:
Deb., 8.7%, 2001 30,000 31,254
Notes, 5.25%, 2003 200,000 191,810
Whirlpool,
Notes, 9%, 2003 10,000 10,518
249,332
ENTERTAINMENT/MEDIA--1.7%
Cox Communications,
Notes, 6.375%, 2000 100,000 100,253
Disney (Walt),
Sr. Notes, 6.75%, 2006 20,000 19,946
Marriott International,
Notes, 7.875%, 2009 500,000 503,021
News America Holdings,
Notes, 8.25%, 2018 300,000 302,152
Reed Elsevier Capital,
Medium-Term Notes, 7%, 2005 200,000 200,487
TCI Communications,
Deb., 8.75%, 2015 250,000 283,643
Time Warner,
Deb., 6.95%, 2028 100,000 92,268
Viacom,
Deb., 7.625%, 2016 125,000 123,410
1,625,180
FINANCIAL SERVICES--4.2%
Aetna Services,
Notes, 7.625%, 2026 50,000 46,435
American Express Credit,
Notes, 6.125%, 2001 40,000 39,719
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
American General Finance,
Notes, 8.125%, 2009 10,000 10,535
Associates Corp. of North America:
Ser. A, Deb., 7.95%, 2010 10,000 10,458
Sr. Notes, 6.625%, 2005 10,000 9,874
Bear Stearns:
Sr. Notes, 8.75%, 2004 10,000 10,559
Sr. Notes, 7.25%, 2006 75,000 74,161
Chrysler,
Deb., 7.45%, 2027 50,000 50,075
Citigroup,
Notes, 6.625%, 2028 100,000 88,720
Dean Witter Discovery,
Notes, 6.25%, 2000 30,000 30,009
Duke Capital,
Sr. Notes, 8%, 2019 250,000 258,516
FINOVA Capital,
Notes, 9.125%, 2002 20,000 20,888
Ford Capital B.V.,
Notes, 9.875%, 2002 25,000 26,798
Ford Motor Credit:
Notes, 6.75%, 2008 20,000 19,433
Sr. Notes, 5.75%, 2004 1,000,000 959,603
GMAC,
Deb., 6%, 2011 70,000 63,273
General Electric Capital:
Notes, 8.3%, 2009 15,000 16,265
Notes, 8.125%, 2012 100,000 108,320
General Electric Credit,
Deb., 5.5%, 2001 10,000 9,839
Goldman Sachs Group,
Notes, 6.65%, 2009 200,000 190,597
Heller Financial,
Notes, 6.25%, 2001 200,000 198,974
Household Finance:
Notes, 8%, 2004 15,000 15,562
Notes, 6.5%, 2008 200,000 188,976
Lehman Brothers,
Notes, 6.625%, 2008 200,000 187,538
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
Merrill Lynch:
Notes, 8.3%, 2002 15,000 15,593
Notes, 6.875%, 2018 250,000 233,762
Norwest Financial,
Sr. Notes, 7%, 2003 15,000 15,063
PNC Funding,
Notes, 7%, 2004 225,000 225,021
Paine Webber:
Sr. Notes, 6.55%, 2008 150,000 139,227
Notes, 7.625%, 2008 175,000 173,517
Salomon, Smith Barney,
Notes, 6.25%, 2003 350,000 342,594
Sears, Roebuck Acceptance:
Deb., 6.75%, 2028 100,000 85,091
Notes, 7%, 2007 35,000 33,862
Toyota Motor Credit,
Notes, 5.625%, 2003 200,000 192,194
U.S. Leasing International,
Notes, 6.625%, 2003 30,000 29,621
4,120,672
FOOD & BEVERAGES--1.2%
Anheuser-Busch,
Deb., 9%, 2009 225,000 259,334
Archer-Daniels-Midland:
Deb., 0%, 2002 5,000 4,258
Deb., 8.125%, 2012 40,000 42,730
Coca-Cola,
Notes, 6.625%, 2002 35,000 34,930
Coca-Cola Enterprises:
Deb., 8.5%, 2022 100,000 109,642
Notes, 7.875%, 2002 15,000 15,448
Diageo,
Notes, 6.125%, 2005 200,000 192,639
Dole Food,
Notes, 6.75%, 2000 15,000 15,012
Heinz (H.J),
Deb., 6.375%, 2028 100,000 88,961
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD & BEVERAGES (CONTINUED)
Hershey Foods,
Deb., 8.8%, 2021 30,000 34,214
McDonald's,
Notes, 6.75%, 2003 20,000 19,849
Nabisco,
Deb., 7.55%, 2015 40,000 39,071
Ralston-Purina Group,
Notes, 8.625%, 2022 40,000 43,878
Safeway,
Notes, 7.5%, 2009 200,000 201,034
Seagram,
Deb., 8.35%, 2022 10,000 10,424
Supervalu,
Notes, 7.8%, 2002 15,000 15,297
Sysco,
Notes, 7%, 2006 25,000 24,954
1,151,675
INDUSTRIAL--1.7%
Aluminum Co. of America,
Notes, 5.75%, 2001 50,000 49,713
Bass America,
Notes, 8.125%, 2002 15,000 15,404
Burlington Resources,
Deb., 6.875%, 2026 70,000 63,497
Caterpillar:
Deb., 9.375%, 2011 300,000 347,000
Sr. Notes, 9.375%, 2000 5,000 5,117
Comdisco,
Notes, 6.375%, 2001 155,000 152,282
Crown Cork & Seal,
Deb., 7.375%, 2026 75,000 68,128
Eaton,
Deb., 8.1%, 2022 10,000 10,260
Emerson Electric,
Notes, 6.3%, 2005 35,000 34,033
Lucent Technologies,
Deb., 6.5%, 2028 150,000 137,905
PPG Industries,
Notes, 7.375%, 2016 45,000 45,010
Sony,
Notes, 6.125%, 2003 600,000 592,249
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL (CONTINUED)
TRW,
Notes, 6.25%, 2010 100,000 90,043
Tenneco,
Deb., 10.2%, 2008 15,000 17,385
1,628,026
INSURANCE--.9%
Cincinnati Financial,
Deb., 6.9%, 2028 100,000 89,617
Hartford Life:
Deb., 7.65%, 2027 100,000 99,379
Notes, 6.9%, 2004 400,000 393,713
Progressive,
Sr. Notes, 6.625%, 2029 100,000 85,738
Torchmark,
Deb., 8.25%, 2009 150,000 154,366
Travelers/Aetna Property & Casualty,
Sr. Notes, 6.75%, 2001 60,000 60,350
883,163
OIL AND GAS--.8%
Amoco Canada,
Deb., 6.75%, 2023 250,000 243,070
Atlantic Richfield,
Deb., 9%, 2021 15,000 17,626
Chevron,
Notes, 6.625%, 2004 300,000 300,004
Occidental Petroleum,
Sr. Notes, 10.125%, 2001 15,000 15,922
Texaco Capital,
Deb., 6.875%, 2023 25,000 22,684
Union Oil of California,
Deb., 9.125%, 2006 200,000 215,450
814,756
PAPER PRODUCTS--0%
Bowater,
Deb., 9.375%, 2021 10,000 11,505
Georgia-Pacific,
Deb., 9.625%, 2022 25,000 26,753
International Paper,
Notes, 7.625%, 2007 10,000 10,110
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER PRODUCTS (CONTINUED)
Weyerhaeuser,
Deb., 7.95%, 2025 20,000 20,694
69,062
RETAIL--1.0%
Dayton Hudson,
Deb., 8.5%, 2022 20,000 20,683
Dillard Department Stores,
Notes, 7.85%, 2012 150,000 147,525
Federated Department Stores,
Deb., 7%, 2028 100,000 90,317
Gap,
Notes, 6.9%, 2007 280,000 277,837
Limited,
Deb., 7.5%, 2023 110,000 107,663
May Department Stores,
Notes, 9.875%, 2002 15,000 16,334
Penney (J.C.):
Deb., 8.25%, 2022 15,000 14,809
Deb., 7.125%, 2023 15,000 13,314
Notes, 9.05%, 2001 80,000 82,073
Wal-Mart Stores:
Notes, 5.875%, 2005 25,000 24,060
Sr. Notes, 6.875%, 2009 150,000 150,845
945,460
TECHNOLOGY--.9%
Dell Computer,
Deb., 7.1%, 2028 250,000 232,065
Electronic Data Systems,
Notes, 7.125%, 2009 300,000 300,879
IBM:
Deb., 7.5%, 2013 75,000 77,614
Deb., 7%, 2025 220,000 212,598
Xerox,
Notes, 7.15%, 2004 15,000 15,118
838,274
TELEPHONE AND TELEGRAPH--2.0%
AT&T:
Bonds, 6%, 2009 200,000 185,374
Deb., 5.125%, 2001 50,000 49,196
Deb., 8.35%, 2025 5,000 5,086
Medium-Term Notes, 6.6%, 2005 220,000 214,283
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE AND TELEGRAPH (CONTINUED)
AT&T (continued):
Notes, 7%, 2005 15,000 15,015
Airtouch Communications,
Notes, 7.125%, 2001 100,000 100,735
Ameritech Capital Funding,
Notes, 6.125%, 2001 200,000 199,202
Bell Telephone Pennsylvania,
Deb., 6.75%, 2008 250,000 246,113
Bellsouth Telecommunications,
Deb., 6.375%, 2028 100,000 87,696
GTE,
Deb., 9.1%, 2003 35,000 37,603
MCI Worldcom,
Notes, 6.95%, 2028 120,000 112,943
New Jersey Bell Telephone,
Deb., 8%, 2022 25,000 26,257
New York Telephone,
Deb., 8.625%, 2010 5,000 5,524
Northern Telecom,
Deb., 8.75%, 2001 200,000 207,184
Pacific-Bell Telephone,
Deb., 7.375%, 2025 75,000 70,385
Deb., 7.125%, 2026 10,000 9,556
Southwestern Bell Telephone,
Notes, 6.625%, 2005 150,000 148,057
Sprint,
Notes, 5.7%, 2003 225,000 215,994
U.S. West Communications,
Deb., 6.875%, 2033 25,000 21,476
1,957,679
TOBACCO--0%
Fortune Brands,
Deb., 8.625%, 2021 5,000 5,566
Philip Morris:
Deb., 8.375%, 2017 9,000 9,099
Notes, 9.25%, 2000 40,000 40,272
54,937
TRANSPORTATION--.4%
Canadian National Railway,
Notes, 6.9%, 2028 100,000 89,846
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (CONTINUED)
Delta Airlines,
Deb., 10.125%, 2010 200,000 234,177
Federal Express,
Notes, 9.875%, 2002 15,000 16,017
Norfolk Southern:
Deb., 9%, 2021 10,000 11,006
Deb., 7.8%, 2027 50,000 50,057
Ryder System,
Ser. J, Bond, 8.75%, 2017 9,000 9,340
United Parcel Service,
Deb., 8.375%, 2020 10,000 11,127
421,570
UTILITIES--2.1%
Alabama Power,
First Mortgage Bonds, 6%, 2000 50,000 49,989
Baltimore Gas & Electric:
First Mortgage Bonds, 7.5%, 2007 10,000 10,172
First Mortgage Bonds, 7.5%, 2023 33,000 32,162
Carolina Power & Light,
First Mortgage Bonds, 8.2%, 2022 15,000 14,986
Commonwealth Edison,
Deb., 6.4%, 2005 200,000 192,684
Florida Power & Light:
First Mortgage Bonds, 6.625%, 2003 30,000 29,773
First Mortgage Bonds, 7.75%, 2023 25,000 24,410
Gulf State Utilities,
First Mortgage Bonds, 6.41%, 2001 45,000 44,688
MCN Investment,
Notes, 6.3%, 2001 300,000 (a) 297,437
New York State Electric & Gas,
First Mortgage Bonds, 9.875%, 2020 10,000 10,557
Niagara Mohawk Power,
First Mortgage Bonds, 7.75%, 2006 700,000 706,647
Northern States Power,
First Mortgage Bonds, 7.125%, 2025 100,000 95,585
PP&L Resources,
First Mortgage Bonds, 6.55%, 2006 25,000 24,401
Public Service Electric & Gas:
First Mortgage Bonds, 6.125%, 2002 20,000 19,744
First Mortgage Bonds, 6.5%, 2004 25,000 24,632
First Refunding Mortgage Bonds, 6.75%, 2006 200,000 195,446
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
South Carolina Electric & Gas,
First Mortgage Bonds, 9%, 2006 20,000 21,670
Texas Utilities,
First Mortgage Bonds, 8.75%, 2023 35,000 35,932
Union Electric,
First Mortgage Bonds, 6.75%, 2008 25,000 24,740
Virginia Electric & Power,
First Mortgage Bonds, 7.625%, 2007 25,000 25,711
Wisconsin Electric & Power,
First Mortgage Bonds, 7.7%, 2027 190,000 183,259
2,064,625
OTHER--.0%
Private Export Funding,
Secured Notes, 8.4%, 2001 30,000 31,122
FOREIGN--4.4%
African Development Bank,
Notes, 7.75%, 2001 15,000 15,443
Bayerische Landesbank Girozentrale,
Sub. Notes, 7.375%, 2002 300,000 306,350
Dresdner Bank-New York,
Sub. Notes, 7.25%, 2015 145,000 139,090
European Invesment Bank,
Notes, 10.125%, 2000 20,000 20,737
Hydro-Quebec:
Ser. HH, Deb., 8.5%, 2029 10,000 11,034
Ser. HK, Deb., 9.375%, 2030 20,000 24,050
Ser. HQ, Deb., 9.5%, 2030 10,000 12,182
Inter-American Development Bank,
Deb., 6.125%, 2002 600,000 596,800
Italy Government Bonds,
Deb., 6.875%, 2023 70,000 69,057
KFW International Finance:
Deb., 9.125%, 2001 10,000 10,419
Deb., 8%, 2010 35,000 38,130
Kingdom of Sweden,
Deb., 12%, 2010 175,000 242,659
Korea Development Bank,
Bonds, 7.25%, 2006 300,000 282,335
Malaysia,
Bonds, 8.75%, 2009 400,000 409,032
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
FOREIGN (CONTINUED)
Province of British Columbia:
Bonds, 7%, 2003 20,000 20,239
Bonds, 6.5%, 2026 25,000 22,879
Province of Manitoba,
Deb., 8.8%, 2020 10,000 11,562
Province of New Brunswick,
Deb., 6.75%, 2013 30,000 28,820
Province of Ontario:
Deb., 7%, 2005 40,000 40,408
Notes, 7.625%, 2004 400,000 414,476
Province of Quebec,
Deb., 7.5%, 2023 50,000 50,073
Province of Saskatchewan, C.D.A.,
Deb., 9.125%, 2021 10,000 11,728
Republic of Finland,
Bonds, 6.95%, 2026 25,000 24,726
Republic of Ireland,
Deb., 7.875%, 2001 150,000 155,099
Republic of Korea,
Notes, 8.875%, 2008 600,000 625,376
Republic of Portugal,
Notes, 5.75%, 2003 100,000 97,578
Royal Bank of Scotland,
Sub. Notes, 6.375%, 2011 160,000 146,509
Santander Finance Issuances,
Sub. Notes, 7.25%, 2006 100,000 98,247
Sanwa Finance Aruba,
Notes, 8.35%, 2009 150,000 152,658
Swiss Bank,
Sub. Deb, 7%, 2015 270,000 255,948
4,333,644
U.S. GOVERNMENTS--47.3%
U.S.Treasury Bonds:
11.75%, 2/15/2001 155,000 166,496
15.75%, 11/15/2001 15,000 17,842
10.75%, 2/15/2003 830,000 945,121
10.75%, 5/15/2003 115,000 131,940
11.875%, 11/15/2003 10,000 12,023
11.625%, 11/15/2004 185,000 228,303
10.75%, 8/15/2005 765,000 932,810
9.375%, 2/15/2006 700,000 814,954
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENTS (CONTINUED)
U.S.Treasury Bonds (continued):
7.625%, 2/15/2007 60,000 61,892
8.75%,11/15/ 2008 225,000 245,210
12.75%, 11/15/2010 75,000 98,981
14%, 11/15/2011 30,000 42,841
12%, 8/15/2013 445,000 610,068
12.5%, 8/15/2014 40,000 57,500
11.25%, 2/15/2015 25,000 36,487
7.25%, 5/15/2016 110,000 118,513
8.875%, 8/15/2017 525,000 654,607
8.75%, 15/15/2020 880,000 1,101,514
8.75%, 8/15/2020 290,000 363,390
7.875%, 2/15/2021 1,380,000 1,595,156
8%, 11/15/2021 1,100,000 1,291,796
7.5%, 11/15/2024 350,000 395,808
7.625%, 2/15/2025 2,000,000 2,296,380
5.5%, 8/15/2028 3,800,000 3,375,046
U.S. Treasury Notes:
5.5%, 4/15/2000 20,000 20,009
8.75%, 8/15/2000 80,000 81,961
8.5%, 11/15/2000 1,005,000 1,034,155
6.5%, 5/31/2001 4,500,000 4,549,275
7.875%, 8/15/2001 4,000,000 4,137,800
7.5%, 11/15/2001 1,000,000 1,031,810
6.25%, 1/31/2002 3,535,000 3,564,694
6.375%, 8/15/2002 2,620,000 2,653,274
5.875%, 9/30/2002 600,000 600,042
6.25%, 2/15/2003 530,000 534,781
4.25%, 11/15/2003 3,000,000 2,818,200
6%, 8/15/2004 1,900,000 1,905,263
7.875%, 11/15/2004 2,306,000 2,485,292
6.875%, 5/15/2006 1,000,000 1,038,510
6.625%, 5/15/2007 1,750,000 1,795,238
5.625%, 5/15/2008 2,580,000 (b) 2,489,313
46,334,295
U.S. GOVERNMENT AGENCIES--53.2%
Federal Farm Credit Banks,
5.25%, 2002 500,000 488,696
Federal Home Loan Banks:
5.785%, 2003 500,000 490,796
4.875%, 2022 350,000 340,565
Federal Home Loan Mortgage Corp.:
5%, 2001 1,500,000 1,480,820
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
Federal Home Loan Mortgage Corp. (continued)
6.34%, 2002 500,000 495,988
6%, 12/1/2013-2/1/2029 2,684,429 2,544,894
6.5%, 3/1/2011-9/1/2029 5,285,234 5,093,341
7% 950,000 (c) 933,672
7%, 9/1/2011-11/1/2029 2,492,297 2,459,447
7.5%, 7/1/2010-9/1/2029 1,551,478 1,568,300
8%, 5/1/2026-8/1/2026 427,893 438,590
Federal National Mortgage Association:
5.125%, 2004 1,717,000 1,632,482
5.25%, 2009 3,000,000 2,704,380
5.59%, 2002 100,000 98,299
6.06%, 2003 500,000 491,853
6.25%, 2029 750,000 692,674
5.5%, 3/1/2014 486,480 458,050
6%, 1/1/2005-3/1/2029 3,629,899 3,412,105
6.5%, 1/1/2011-11/1/2029 7,844,321 7,585,353
7%, 8/1/2008-10/1/2029 3,904,447 3,846,374
7.5%, 9/1/2009-10/1/2029 1,958,634 1,975,293
8%, 5/1/2027-6/1/2027 446,579 456,831
8.5%, 2/1/2025 233,801 244,467
Financing Corp.:
9.65%, 2018 10,000 12,763
8.6%, 2019 40,000 46,550
Government National Mortgage Association I:
6%, 2/15/2029 785,837 729,595
6.5%, 9/15/2008-7/15/2029 2,584,833 2,484,907
7%,10/15/2011-9/15/2029 3,813,916 3,755,245
7.5% 950,000 (c) 952,964
7.5%, 12/15/2026-9/15/2029 1,255,891 1,262,419
8%, 8/15/2024-10/15/2028 1,674,487 1,713,941
8.5%, 10/15/2026 209,482 218,580
9%, 2/15/2022-2/15/2023 410,662 435,965
Resolution Funding:
8.875%, 2020 75,000 90,979
8.625%, 2030 15,000 18,198
Tennesee Valley Authority:
Deb., 6%, 2013 450,000 421,914
Deb., 7.85%, 2044 10,000 10,027
52,087,317
TOTAL BONDS AND NOTES
(cost $124,483,751) 123,051,010
Principal
SHORT-TERM INVESTMENTS--.8% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Goldman, Sachs & Co. Tri-Party
Repurchase Agreement, 5.18%, dated 10/29/1999,
due 11/1/1999 in the amount of $778,922 (fully
collateralized by $789,000 U.S. Treasury Notes,
5.625% due 2/28/2001 value $795,327)
(cost $778,586) 778,586 778,586
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $125,262,337) 126.4% 123,829,596
LIABILITIES, LESS CASH AND RECEIVABLES (26.4) (25,899,084)
NET ASSETS 100.00% 97,930,512
(A) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION. THE STATED MATURITY IS 4/2/2011.
(B) SECURITIES HELD IN WHOLE OR IN PART BY THE CUSTODIAN IN A SEGREGATED
ACCOUNT AS COLLATERAL FOR SECURITIES PURCHASED ON A FORWARD COMMITMENT BASIS.
(C) PURCHASED ON A FORWARD COMMITMENT BASIS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1 (c) 125,262,337 123,829,596
Cash 162,456
Receivable for investment securities sold 2,018,836
Interest receivable 1,856,279
Receivable for shares of Capital Stock subscribed 4,659
Paydowns receivable 3,013
127,874,839
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 22,106
Due to Distributor 475
Payable for shares of Capital Stock redeemed 27,614,622
Payable for investment securities purchased 2,307,124
29,944,327
- --------------------------------------------------------------------------------
NET ASSETS ($) 97,930,512
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 99,599,926
Accumulated undistributed investment income-net 5,213
Accumulated net realized gain (loss) on investments (241,886)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (1,432,741)
- --------------------------------------------------------------------------------
NET ASSETS ($) 97,930,512
NET ASSET VALUE PER SHARE
Investor Shares BASIC Shares
- --------------------------------------------------------------------------------
Net Assets ($) 33,698,854 64,231,658
Shares Outstanding 3,499,843 6,662,290
- --------------------------------------------------------------------------------
NET ASSETS VALUE PER SHARE ($) 9.63 9.64
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 4,684,422
EXPENSES:
Management fee--Note 2(a) 114,907
Distribution fees (Investor shares)--Note 2(b) 47,876
Loan commitment fees--Note 4 192
TOTAL EXPENSES 162,975
INVESTMENT INCOME--NET 4,521,447
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (235,135)
Net unrealized appreciation (depreciation)
on investments (3,673,368)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (3,908,503)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 612,944
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 4,521,447 2,809,085
Net realized gain (loss) on investments (235,135) 400,948
Net unrealized appreciation (depreciation)
on investments (3,673,368) 1,107,949
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 612,944 4,317,982
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (1,098,543) (54,337)
BASIC shares (3,417,691) (2,754,748)
Net realized gain on investments:
Investor shares (13,369) (3,054)
BASIC shares (389,542) (179,537)
TOTAL DIVIDENDS (4,919,145) (2,991,676)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor shares 41,663,441 1,651,522
BASIC shares 56,683,374 38,571,656
Dividends reinvested:
Investor shares 1,096,075 56,335
BASIC shares 3,605,034 2,830,224
Cost of shares redeemed:
Investor shares (9,667,040) (305,795)
BASIC shares (48,548,008) (20,080,253)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 44,832,876 22,723,689
TOTAL INCREASE (DECREASE) IN NET ASSETS 40,526,675 24,049,995
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 57,403,837 33,353,842
END OF PERIOD 97,930,512 57,403,837
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
INVESTOR SHARES
Shares sold 4,221,976 164,062
Shares issued for dividends reinvested 112,563 5,580
Shares redeemed (985,975) (30,352)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,348,564 139,290
BASIC SHARES
Shares sold 5,839,805 3,824,182
Shares issued for dividends reinvested 363,500 280,347
Shares redeemed (4,980,266) (1,988,458)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,223,039 2,116,071
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Ended October 31,
------------------------------------------------------------------
INVESTOR SHARES 1999 1998 1997(a) 1996(b) 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.26 9.99 9.78 9.93 9.15
Investment Operations:
Investment income--net .56 .59 .57 .57 .55
Net realized and unrealized gain (loss)
on investments (.56) .32 .21 (.15) .78
Total from Investment Operations -- .91 .78 .42 1.33
Distributions:
Dividends from investment income--net (.56) (.59) (.57) (.57) (.55)
Dividends from net realized gain
on investments (.07) (.05) -- -- --
Total Distributions (.63) (.64) (.57) (.57) (.55)
Net asset value, end of period 9.63 10.26 9.99 9.78 9.93
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) .03 9.43 8.29 4.36 15.01
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .40 .40 .60 .65 .65
Ratio of net investment income
to average net assets 5.72 5.79 5.82 5.80 5.77
Portfolio Turnover Rate 73.14 43.39 48.86 42.65 40.16
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 33,699 1,552 120 80 207
(A) EFFECTIVE AUGUST 15, 1997, INSTITUTIONAL SHARES WERE REDESIGNATED AS INVESTOR SHARES.
(B) EFFECTIVE JULY 15, 1996, INVESTOR SHARES WERE REDESIGNATED AS INSTITUTIONAL SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31,
-------------------------------------------------------------------
BASIC SHARES 1999 1998 1997(a) 1996(b) 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.27 10.00 9.80 9.94 9.15
Investment Operations:
Investment income--net .59 .61 .60 .59 .58
Net realized and unrealized gain (loss)
on investments (.56) .32 .20 (.14) .79
Total from Investment Operations .03 .93 .80 .45 1.37
Distributions:
Dividends from investment income--net (.59) (.61) (.60) (.59) (.58)
Dividends from net realized gain
on investments (.07) (.05) -- -- --
Total Distributions (.66) (.66) (.60) (.59) (.58)
Net asset value, end of period 9.64 10.27 10.00 9.80 9.94
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 0.29 9.69 8.46 4.69 15.41
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .15 .15 .35 .40 .40
Ratio of net investment income
to average net assets 5.96 6.06 6.12 6.02 6.10
Portfolio Turnover Rate 73.14 43.39 48.86 42.65 40.16
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 64,232 55,852 33,234 32,986 6,824
(A) EFFECTIVE AUGUST 15, 1997, RETAIL SHARES WERE REDESIGNATED AS BASIC SHARES.
(B) EFFECTIVE JULY 15, 1996, CLASS R SHARES WERE REDESIGNATED AS RETAIL SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Bond Market Index 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, as amended (the "Act" ), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the fund. The fund's investment objective is
to seek to replicate the total return of the Lehman Brothers Aggregate Bond
Index. The Dreyfus Corporation (the "Manager") serves as the fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank")
, which is a wholly-owned subsidiary of Mellon Financial Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 150 million of $.001 par value
Capital Stock. The fund is currently authorized to issue two classes of shares:
Investor (50 million shares authorized) and BASIC (100 million shares
authorized) . BASIC shares and Investor shares are offered to any investor.
Differences between the two classes include the services offered to and the
expenses borne by each class, as well as their minimum purchase and account
balance requirements.
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 Fund
NOTES TO FINANCIAL STATEMENTS (continued)
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. Interest income,
adjusted for amortization of premiums and discounts on investments, is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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
counterparty 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: 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 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 of 1986, as
amended (the "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 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 caryyover of approximately $112,000
available for Federal income tax purposes to be applied against future net
securities profits, if any realized subsequent to October 31, 1999. If not
applied, the carryover expires in fiscal 2007.
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 .15% of the value of the fund's average daily net
The Fund
NOTES TO FINANCIAL STATEMENTS (continued)
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 fees). Each director receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel
Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between the
Dreyfus/Laurel Funds and the 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 fund's Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act, Investor shares may pay annually up to
.. 25% of the value of the average daily net assets 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 BASIC shares bear no distribution
fee. During the period ended October 31, 1999, the Investor shares were charged
$47,876 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 Investment Company and who have no
direct or indirect financial interest in the operation or in any agreement
related to the Plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales of investment securities, excluding
short-term securities, during the period ended October 31, 1999, amounted to
$124,275,796 and $53,761,310, respectively.
At October 31, 1999, accumulated net unrealized depreciation on investments was
$1,432,741, consisting of $419,832 gross unrealized appreciation and $1,852,573
gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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
October 31, 1999, the fund did not borrow under the Facility.
The 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 of Dreyfus
Bond Market Index Fund of The Dreyfus/Laurel Funds, Inc., including the
statement of investments, as of October 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Bond Market Index Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $.0522 per share as a
long-term capital gain distribution of the $.0700 per share paid on December 1,
1998.
The Fund
For More Information
Dreyfus Bond Market Index 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 310/710AR9910
Dreyfus
Institutional Prime
Money Market Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
18 Independent Auditors' Report
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Institutional Prime Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Institutional Prime
Money Market Fund, covering the 12-month period from November 1, 1998 through
October 31, 1999. Inside, you'll find valuable information about how the fund
was managed during the reporting period, including a discussion with the fund's
portfolio manager, Laurie Carroll.
When the reporting period began, the U.S. financial markets were experiencing
the aftermath of a sharp correction caused primarily by the spread of the global
financial crisis overseas. The Federal Reserve Board responded to the crisis
last fall by reducing short-term interest rates, which also reduced money market
yields.
The Fed' s strategy apparently was effective, and the U.S. economy remained
strong through the remainder of the reporting period. Investors had become
concerned that strong economic growth in the United States might rekindle
dormant inflationary pressures. As a result, after remaining relatively steady
during the first quarter of 1999, yields on money market securities rose during
the second and third quarters in response to expectations that the Federal
Reserve Board might raise short-term interest rates. In fact, the Federal
Reserve Board raised rates twice during the summer of 1999 in an attempt to
forestall a potential resurgence of inflationary pressures. This increase
effectively reversed most of last fall's interest-rate cuts, and led to higher
yields on most money market securities.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Institutional Prime Money Market Fund
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Laurie Carroll, Portfolio Manager
How did Dreyfus Institutional Prime Money Market Fund perform during the period
For the 12-month period ended October 31, 1999, Dreyfus Institutional Prime
Money Market Fund produced a yield of 4.80%, and after taking into account the
effect of compounding, an effective yield of 4.91%.(1) For the same 12-month
period, the fund provided a total return of 4.91%,(2) compared to the Lipper
Institutional Money Market Funds category average total return of 4.85%.(3
We attribute the fund's performance to the fact that we maintained a relatively
long average maturity in the portfolio during the first half of the period,
which enabled us to lock in higher returns when interest rates were declining.
Conversely, as interest rates were rising during the second half of the period,
we shortened the fund's average maturity to be able to capture higher yields as
they became available.
What is the fund's investment approach?
As a money market fund, the fund provides shareholders with an investment
vehicle that is made up of high quality income-producing securities that are
also very liquid in nature; that is, they can be converted to cash quickly. To
pursue its investment goal, the fund invests in a diversified portfolio of high
quality short-term debt securities, such as those issued or guaranteed by the
United States government or its agencies or instrumentalities, certificates of
deposit issued by banks, repurchase agreements and commercial paper issued by
corporations. Generally, the fund is required to invest at least 95% of its
assets in the securities of issuers with the highest credit rating or the
unrated equivalent as determined by Dreyfus. It is also required to maintain an
average dollar-weighted portfolio maturity of 90 days or less.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
During the past 12-month period, the returns offered by money market securities
such as those held in the fund have fluctuated. That's because interest rates,
which generally determine the returns for these types of investments, also
fluctuated during the period.
At the beginning of the fund's 12-month reporting period, the global equity
markets were in the midst of a crisis that created a "flight to quality" in
which many investors flocked to the safety provided by U.S. Treasury securities.
In an effort to stimulate global economic growth, the Federal Reserve Board
lowered short-term interest rates by a total of 75 basis points in three
separate moves in October and November 1998. However, by the end of the year and
into the first quarter of 1999, many industry analysts were surprised to see
signs that the Asian economies were beginning to recover. As a result, investors
became concerned that the Federal Reserve Board might take back some or all of
last fall' s interest-rate cuts.
Toward the end of the second quarter, many worldwide economies appeared to be
recovering. Commodity prices, particularly oil prices, began to climb, signaling
the end of the "flight to quality" for U.S. bond market investors because
investors became more comfortable holding riskier assets. As a result, prices on
U.S. Treasury bonds began to fall.
By the end of the third quarter, commodity prices had leveled off and the U.S.
Treasury market stabilized. Because of a stronger global economy and potential
inflationary pressures, the Federal Reserve Board raised short-term interest
rates twice during the summer. An additional rate hike was expected in November
1999, which would effectively offset all of last fall' s rate cuts.
What is the fund's current strategy?
We continue to maintain a well-diversified portfolio, which helps reduce the
risks associated with declines in any particular segment or security. In
addition, our strategy has been to retain the flexibility we need to seek high
current income while remaining capable of responding quickly to changing market
conditions.
As of the end of the reporting period, the largest portion of the fund's assets
was invested in commercial paper, followed by corporate notes, repurchase
agreements, and time deposits. However, we trimmed our exposure to commercial
paper during the period, choosing instead to deploy those assets to repurchase
agreements. Commonly referred to as repos, repurchase agreements are overnight
loans to government dealers that are collateralized with U.S. Treasuries. The
primary purpose of investing in repos is to provide liquidity to the fund.
In managing the portfolio for year-end, we are taking advantage of repos in
order to maintain overnight liquidity. We are also currently keeping the
portfolio' s average maturity short to enable the fund to take advantage of any
possible further interest-rate increases.
November 15, 1999
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELD FLUCTUATES.
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
October 31, 1999
Principal
COMMERCIAL PAPER--52.2% Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Akzo Nobel Inc.
5.79%, 2/7/2000 5,000,000 4,923,506
Allergan Inc.
5.47%-6.06%, 12/22/1999-1/31/2000 10,000,000 9,886,786
Amsterdam Funding Corp.
5.99%-6.26%, 1/6/2000-1/14/2000 15,000,000 14,826,461
Aon Corp.
5.36%-5.40%, 11/8/1999-11/10/1999 10,000,000 9,988,074
Asset Portfolio Funding Corp.
5.76%-6.07%, 1/19/2000-1/28/2000 13,500,000 13,322,670
Asset Securitization Corp.
5.32%, 11/3/1999 5,000,000 4,998,542
Bass Finance Ltd.
5.34%, 11/30/1999 5,000,000 4,978,613
Baxter International Inc.
5.93%-6.02%, 2/3/2000-2/24/2000 15,000,000 14,756,424
Bear Stearns Cos. Inc.
5.98%-6.11%, 1/21/2000-3/3/2000 10,000,000 9,833,075
Block Financial Corp.
6.29%, 1/27/2000 5,000,000 4,925,325
Ciesco L.P.
5.36%, 12/10/1999 5,000,000 4,971,129
Corporate Receivables Corp.
5.41%, 12/9/1999 5,000,000 4,971,658
Countrywide Home Loans Inc.
5.33%, 11/4/1999 5,000,000 4,997,783
Credit Suisse First Boston International (Guernsey) Ltd.
5.56%, 2/4/2000 10,000,000 10,000,000
Duke Capital Corp.
6.03%, 2/10/2000 5,000,000 4,917,517
Falcon Asset Securitization Corp.
6.24%, 1/13/2000 5,000,000 4,937,646
Ford Motor Credit Co. of Puerto Rico Inc.
6.08%, 1/12/2000 5,000,000 4,940,200
Greenwich Funding Corp.
5.99%, 1/26/2000 5,000,000 4,930,125
Homeside Lending Inc.
5.42%-6.15%, 12/17/1999-1/25/2000 10,000,000 9,894,277
International Securitization Corp.
5.42%-6.23%, 11/19/1999-1/19/2000 20,000,000 19,836,613
Knight Ridder Inc.
6.04%-6.20%, 2/1/2000-2/9/2000 10,000,000 9,840,112
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Monte Rosa Capital Corp.
5.47%-6.02%, 12/14/1999-1/27/2000 10,000,000 9,896,458
Repsol International Finance B.V.
5.05%-6.32%, 11/15/1999-2/8/2000 23,500,000 23,288,716
Safeco Credit Co. Inc.
5.50%-6.03%, 12/9/1999-3/23/2000 20,000,000 19,740,552
Sheffield Receivables Corp.
5.44%, 11/2/1999 5,000,000 4,999,251
Sigma Finance Corp.
5.42%, 11/1/1999 10,000,000 10,000,000
South Carolina Electric & Gas Co.
5.37%, 11/29/1999 5,000,000 4,979,233
Textron Financial Corp.
5.40%-5.42%, 11/19/1999-11/30/1999 15,000,000 14,949,121
Unumprovident Corp.
6.36%, 3/17/2000 6,000,000 5,858,433
Vodafone Airtouch Plc.
5.41%-5.46%, 11/9/1999-12/7/1999 10,000,000 9,967,056
Volkswagen of America Inc.
5.27%-5.55%, 11/12/1999-1/25/2000 10,000,000 9,928,587
Windmill Funding Corp.
5.36%-6.00%, 11/18/1999-1/28/2000 15,000,000 14,856,477
TOTAL COMMERCIAL PAPER
(cost $305,140,420) 305,140,420
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CORPORATE NOTES--22.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Associates Corp.of North America
5.36%, 3/20/2000 10,000,000 (a) 9,997,351
Bank One Corp
5.49%, 11/6/2000 10,000,000 (a) 9,999,910
Bear Stearns Cos. Inc.
6.28%, 10/13/2000 10,000,000 (a) 10,000,000
Branch Bank & Trust Co.
5.51%-5.73%, 2/22/2000-9/29/2000 20,000,000 (a) 19,994,014
Comerica Bank
5.37%, 2/2/2000 10,000,000 (a) 9,999,250
Corporate Receivables Corp.
5.43%, 4/10/2000 5,000,000 (a) 5,000,000
General Motors Acceptance Corp.
5.36%, 2/25/2000 10,000,000 (a) 10,000,640
Household Finance Corp.
5.57%, 9/14/2000 10,000,000 (a) 9,994,786
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
CORPORATE NOTES (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
John Deere Capital
5.42%-5.61%, 12/8/1999-7/7/2000 14,000,000 (a) 13,999,451
Key Bank N.A.
5.58%, 4/14/2000 10,000,000 (a) 10,000,000
Morgan Guaranty Trust Co.
5.32%, 11/29/1999 10,000,000 (a) 10,000,723
Sigma Finance Corp.
5.28%, 8/2/2000 10,000,000 (a) 10,000,000
TOTAL CORPORATE NOTES
(cost $128,986,125) 128,986,125
- ----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--20.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Barclays De Zoette Wedd
5.22% dated 10/29/1999, due 11/1/1999 in the
amount of $30,013,050 (fully collateralized
by $31,140,000 U.S.Treasury Notes 5.625% due 5/5/2008
value $30,600,453) 30,000,000 30,000,000
Donaldson, Lufkin & Jenrette Securities Inc.
5.22% dated 10/29/1999, due 11/1/1999 in the
amount of $25,010,875 (fully collateralized
by $24,755,000 U.S.Treasury Notes 5.75%-6.625% due
11/15/2000 to 4/30/2002 value $25,500,086) 25,000,000 25,000,000
Goldman, Sachs & Co.
5.18% dated 10/29/1999, due 11/1/1999 in the
amount of $64,285,375 (fully collateralized
by $50,595,000 U.S.Treasury Bonds 9.00% due
11/15/2018 value $65,543,636) 64,257,638 64,257,638
TOTAL REPURCHASE AGREEMENTS
(cost $119,257,638) 119,257,638
Principal
TIME DEPOSIT--5.1% Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Marshall & Ilsley Corp.(London)
5.31%, 11/1/1999 25,000,000 25,000,000
National City Bank (Grand Cayman)
5.22%, 11/1/1999 5,000,000 5,000,000
TOTAL TIME DEPOSITS
(cost $30,000,000) 30,000,000
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TOTAL INVESTMENTS
(cost $583,384,183) 99.8% 583,384,183
CASH AND RECEIVABLES (NET) .2% 1,086,530
NET ASSETS 100.0% 584,470,713
(A) VARIABLE INTEREST RATE-SUBJECT TO PERIODIC CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $119,257,638)
--Note 1(c) 583,384,183 583,384,183
Cash 238,985
Interest receivable 995,851
584,619,019
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 72,879
Due to Distributor 75,427
148,306
- --------------------------------------------------------------------------------
NET ASSETS ($) 584,470,713
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 584,481,025
Accumulated net realized gain (loss) on investments (10,312)
- --------------------------------------------------------------------------------
NET ASSETS ($) 584,470,713
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(4 billion shares of $.001 par value shares of Capital Stock authorized)
584,481,025
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($)
INTEREST INCOME 27,079,602
EXPENSES:
Management fee--Note 2(a) 795,421
Shareholder servicing costs--Note 2(b) 795,421
TOTAL EXPENSES 1,590,842
INVESTMENT INCOME--NET, REPRESENTING NET INCREASE IN
NET ASSETS RESULTING FROM OPERATIONS 25,488,760
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-----------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 25,488,760 31,980,219
Net realized gain (loss) from investments -- (773)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 25,488,760 31,979,446
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (25,488,760) (31,980,219)
- -------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 3,392,852,344 3,359,541,323
Dividends reinvested 8,943,144 8,987,063
Cost of shares redeemed (3,297,190,786) (3,421,815,994)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 104,604,702 (53,287,608)
TOTAL INCREASE (DECREASE) IN NET ASSETS 104,604,702 (53,288,381)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of period 479,866,011 533,154,392
END OF PERIOD 584,470,713 479,866,011
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .048 .053 .053 .052 .056
Distributions:
Dividends from investment income--net (.048) (.053) (.053) (.052) (.056)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.91 5.47 5.42 5.33 5.77
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .30 .30 .30 .30 .30
Ratio of net investment income
to average net assets 4.81 5.34 5.27 5.25 5.61
Net Assets, end of period ($ x 1,000) 584,471 479,866 533,154 575,700 773,602
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Institutional Prime Money Market 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, as amended (the "Act"), as
an open-end management investment company and operates as a series company
currently offering nineteen series including the fund. The fund's investment
objective is to seek a high level of current income consistent with stability of
principal by investing in high grade money market instruments. The Dreyfus
Corporation (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. which is a wholly owned subsidiary
of Mellon Financial Corporation. Premier Mutual Fund Services, Inc. is the
distributor of the fund's shares.
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 amortized cost
in accordance with Rule 2a-7 of the Act, which has been determined by the fund's
Board of Directors to represent the fair value of the fund's investments.
It is the fund's policy to maintain a continuous net asset value per share of
$1.00 for the fund; the fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the fund will be able to maintain a stable net asset
value per share of $1.00.
(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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
(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 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: 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 of 1986, as
amended (the "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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The fund has an unused capital loss carryover of approximately $10,313 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 1999. If not applied, $167
of the carryover expires in fiscal 2004, $9,373 expires in fiscal 2005 and $773
expires in fiscal 2006.
At October 31, 1999, 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 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 .15% 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, shareholder servicing 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 $40,000 per year, plus $5,000 for
each joint Board meeting of The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel
Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust (the
" Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee meetings
attended which are not held in conjunction with a regularly scheduled board
meeting and $500 for Board meetings and separate committee meetings attended
that are conducted by telephone and is reimbursed for travel and out-of-pocket
expenses.
The Chairman of the Board receives an additional 25% of such compensation (with
the exception of reimbursable amounts) . In the event that there is a joint
committee meeting of the Dreyfus/Laurel Funds and the Dreyfus High Yield
Strategies Fund, the $2,000 fee will be allocated between the Dreyfus/Laurel
Funds and the Dreyfus High Yield Strategies Fund. These fees and expenses are
allocated to each series based on net assets. Amounts required to be paid by the
Company directly to non-interested Directors, that would be applied to offset a
portion of the management fee payable to the Manager, are in fact paid directly
by the Manager to the non-interested Directors.
(B) SHAREHOLDER SERVICING PLAN: Under the Shareholder Servicing Plan (the
" Plan" ), the fund may pay up to .15% of the value of the average daily net
assets annually to compensate certain banks, brokers, dealers or other financial
institutions for shareholder services. During the period ended October 31, 1999,
the fund was charged $795,421 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 a 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 any agreement
related to the Plan.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. During the period ended October 31, 1999, the fund did not borrow
under the line of credit.
The 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 of Dreyfus
Institutional Prime Money Market Fund of The Dreyfus/Laurel Funds, Inc.,
including the statement of investments, as of October 31, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Institutional Prime Money Market Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 1999, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended, in conformity with generally accepted accounting principles.
New York, New York
December 15, 1999
NOTES
For More Information
Dreyfus Institutional Prime Money Market 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 922AR9910
Dreyfus Premier
Limited Term
Income Fund
ANNUAL REPORT October 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
17 Financial Highlights
21 Notes to Financial Statements
27 Independent Auditors' Report
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
Limited Term Income Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Limited Term
Income Fund, covering the 12-month period from November 1, 1998 through October
31, 1999. Inside, you' ll find valuable information about how the fund was
managed during the reporting period, including a discussion with the fund's
portfolio manager, Laurie Carroll.
The past 12 months have been highly volatile for most bonds. Although U.S.
Treasury securities began the reporting period in the wake of a rally caused
primarily by a "flight to quality" amid the spread of the global financial
crisis in overseas markets, most higher yielding sectors of the bond market had
declined sharply. The Federal Reserve Board responded to the global financial
crisis last fall by reducing short-term interest rates. Its strategy apparently
was effective, and the U.S. economy remained strong through the remainder of the
reporting period.
Because inflation is more likely to rise in a strong economy, the overall bond
market -- including U.S. Treasury securities -- declined during the first ten
months of 1999. To help forestall a rise of inflation, the Federal Reserve Board
raised short-term interest rates twice during the summer of 1999, effectively
reversing most of last fall's interest-rate cuts. Higher interest rates led to
some erosion of bond prices, especially among the higher yielding market
sectors. In this environment, however, the yields of many higher yielding bonds
- -- including corporate bonds and U.S. government agency securities -- have
recently been quite attractive compared to the yields of U.S. Treasury
securities of comparable maturity.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Limited Term Income Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 1999
DISCUSSION OF FUND PERFORMANCE
Laurie Carroll, Portfolio Manager
How did Dreyfus Premier Limited Term Income Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 1999, Dreyfus Premier Limited Term
Income Fund' s Class A shares provided a total return of -1.26%, its Class B
shares provided a total return of -1.73%, its Class C shares provided a total
return of -1.74% and its Class R shares provided a total return of -0.91%.(1)
The Fund's benchmark, the Lehman Brothers Aggregate Bond Index, produced a total
return of 0.53% for the same period.(2)
We attribute our performance to our conservative approach to credit quality. The
fund emphasized investment-grade bonds in an environment in which lower-quality
bonds were in favor.
What is the fund's investment approach?
The fund' s goal is to provide shareholders with as high a level of current
income as is consistent with safety of principal and maintenance of liquidity.
Liquidity is measured by how quickly assets can be converted to cash. To pursue
its goal, the fund invests primarily in various types of U.S. and foreign
investment-grade bonds, including government bonds, mortgage-backed securities
and corporate debt.
When choosing securities for the fund, we conduct extensive research into the
credit history and current financial strength of investment-grade issuers. We
also examine such factors as the long-term outlook for the industry in which the
issuer operates, the economy, the bond market and the maturity of the
securities, which, on average, will not exceed 10 years. Maturity refers to the
length of time between the date on which a bond is issued and the date the
principal amount must be paid. Generally speaking, bonds with longer maturities
tend to offer higher yields, but also fluctuate more in price than their
short-term counterparts. As of October 31, 1999, the fund's average maturity was
8.84 years.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
Various trends in the overall bond market over the past year had a mixed
influence on the fund' s performance. At the beginning of the fund's 12-month
reporting period, the global equity markets were in the midst of a crisis that
created a "flight to quality" in which many investors flocked to the safety
provided by U.S. Treasury securities. This helped the performance of U.S.
Treasury bonds, but hurt most higher yielding sectors of the bond market.
In an effort to stimulate global economic growth, the Federal Reserve Board
reduced short-term interest rates in the fall of 1998. However, by the second
quarter of 1999, many industry analysts were surprised to see signs that the
Asian economies were beginning to recover. Commodity prices, particularly oil
prices, began to climb, signaling the end of the "flight to quality" for U.S.
bond market investors, and investors became more comfortable holding riskier
assets. As a result, investors became concerned that the Federal Reserve Board
might take back some or all of last fall' s interest rates cuts. In this
environment, prices of U.S. Treasury securities began to fall while higher
yielding sectors began to recover from their recent lows.
By the end of the third quarter, commodity prices had leveled off and the U.S.
Treasury market stabilized. Because of a stronger global economy and potential
inflationary pressures, the Federal Reserve Board raised short-term interest
rates twice during the summer. An additional rate hike was expected in November
1999, which would effectively offset all of last fall' s rate cuts.
What is the fund's current strategy?
We continue to maintain a well-diversified portfolio, which can help reduce the
risks associated with declines in any particular sector or security.
As of the end of the reporting period, the largest portion of the fund's assets
were invested in mortgage-backed securities, followed by corporate securities,
government agency bonds, and U.S. Treasuries.
Within the corporate exposure, we trimmed our exposure to industrial securities
during the period, choosing instead to deploy those assets to financials and
utilities, a move that served to boost our returns later in the period. In
addition, since April of this year, we have been increasing our exposure to
lower-rated investment-grade securities in an attempt to earn additional yield
for the portfolio.
November 15, 1999
(1) 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 CHARGES
IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(2) SOURCE: BLOOMBERG, L.P. -- 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 THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Limited
Term Income Fund Class R shares and the Lehman Brothers Aggregate Bond Index
((+)) SOURCE: BLOOMBERG L.P.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN CLASS R SHARES OF DREYFUS
PREMIER LIMITED TERM INCOME FUND ON 7/11/91 (INCEPTION DATE) TO A $10,000
INVESTMENT MADE IN THE LEHMAN BROTHERS AGGREGATE BOND INDEX ON THAT DATE. FOR
COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 6/30/91 IS USED AS THE BEGINNING
VALUE ON 7/11/91. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
PERFORMANCE FOR CLASS A, CLASS B AND CLASS C SHARES WILL VARY FROM THE
PERFORMANCE OF CLASS R SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND
EXPENSES.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. 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. 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Annual Total Returns AS OF 10/31/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares
WITH SALES CHARGE (3.0%) 4/7/94 (4.22)% 5.64% 5.09%
WITHOUT SALES CHARGE 4/7/94 (1.26)% 6.30% 5.66%
Class B Shares
WITH REDEMPTION((+)) 12/19/94 (4.54)% -- 5.82%
WITHOUT REDEMPTION 12/19/94 (1.73)% -- 5.99%
Class C Shares
WITH REDEMPTION((+)(+)) 12/19/94 (2.44)% -- 5.69%
WITHOUT REDEMPTION 12/19/94 (1.74)% -- 5.69%
Class R Shares
7/11/91 (0.91)% 6.59% 6.51%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
( (+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 3%
AND IS REDUCED TO 0% AFTER SIX YEARS.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS
..75% FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
</TABLE>
The Fund
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
October 31, 1999
Principal
BONDS AND NOTES--99.4% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--6.0%
American Express Credit Account Master Trust,
Ser. 1997-1, Cl. A, 6.4%, 2005 1,000,000 996,615
Citibank Credit Card Master Trust,
Ser. 1998-1, Cl. A, 5.75%, 2003 1,500,000 1,486,538
Peco Energy Transition Trust,
Ser. 1999-A, Cl. A-2, 5.63%, 2005 500,000 488,218
WFS Financial Owner Trust,
Ser. 1999-B, Cl. A-3, 6.32%, 2003 250,000 248,835
3,220,206
BANKING--3.0%
Barnett Capital I,
Gtd. Capital Securities, 8.06%, 2026 435,000 417,856
HSBC Holding,
Sub. Notes, 7.5%, 2009 200,000 201,276
Washington Mutual Capital I,
Gtd. Capital Securities, 8.375%, 2027 500,000 487,579
Wells Fargo,
Notes, 6.625%, 2004 500,000 497,033
1,603,744
CHEMICALS--.8%
Monsanto,
Deb., 6.85%, 2028 500,000 (a) 433,459
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--1.0%
Bear Stearns Commercial Mortgage,
Ser. 1999-WF2, Cl. A-1, 6.8%, 2008 276,957 274,534
DLJ Commercial Mortgage,
Ser. 1999-CG3, Cl. A-1A, 7.12%, 2009 280,000 280,175
554,709
DRUGS AND PHARMACEUTICALS--.8%
Eli Lilly,
Notes, 7.125%, 2025 457,000 451,037
FINANCIAL SERVICES--8.1%
Associates Corp. of North America,
Deb., 6.95%, 2018 200,000 190,227
Ford Motor Credit,
Notes, 8%, 2002 500,000 515,928
GMAC,
Deb., 6.125%, 2008 1,000,000 933,690
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
Goldman Sachs,
Notes, 6.65%, 2009 500,000 476,492
Household Finance,
Sr. Notes, 5.875%, 2009 500,000 451,665
International Lease Finance,
Notes, 5.625%, 2002 1,000,000 978,310
Lehman Brothers,
Sr. Sub. Notes, 6.125%, 2001 200,000 198,250
Merrill Lynch,
Notes, 6%, 2009 500,000 458,814
Transamerica Financial,
Notes, 7.25%, 2002 200,000 201,079
4,404,455
FOREIGN--4.1%
AT&T Canada,
Sr. Notes, 7.65%, 2006 500,000 (a) 501,025
Australia & New Zealand Banking Group,
Sub. Notes, 6.25%, 2004 500,000 481,307
Hydro-Quebec,
Deb., 8.4%, 2022 201,000 218,630
Province of Quebec,
Ser. PD, Deb., 7.5%, 2029 500,000 502,490
Province of Saskatchewan, C.D.A.,
Notes, 6.625%, 2003 500,000 500,085
2,203,537
INDUSTRIAL--.4%
USX,
Deb., 9.125%, 2013 200,000 222,889
INSURANCE--.9%
Royal & Sun Alliance Insurance,
Sub. Notes, 8.95%, 2029 500,000 (a) 499,665
OIL AND GAS--1.7%
Atlantic Richfield,
Notes, 5.55%, 2003 500,000 485,319
Enron,
Notes, 6.95%, 2028 500,000 447,936
933,255
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE AND TELEGRAPH--2.2%
Bell Atlantic Pennsylvania,
Deb., 6%, 2028 500,000 413,013
MCI WorldCom,
Sr. Notes, 6.4%, 2005 500,000 486,339
TCI Communications,
Deb., 7.875%, 2026 300,000 313,135
1,212,487
TRANSPORTATION--.9%
Burlington Northern Santa Fe,
Deb., 7.5%, 2023 500,000 481,838
UTILITIES--5.7%
National Rural Utilities,
Collateral Trust, 5.5%, 2005 500,000 472,655
Niagara Mohawk Power,
First Mortgage Bonds, 7.75%, 2006 300,000 302,849
PP&L Resources,
First Mortgage Bonds, 6.125%, 2001 1,000,000 (b) 994,260
Philadelphia Electric,
First Refunding Mortgage Bonds,
6.625%, 2003 1,300,000 1,291,202
3,060,966
OTHER--1.9%
Private Export Funding,
Ser. NN, Secured Notes, 7.3%, 2002 1,000,000 1,022,430
U.S. GOVERNMENTS--15.9%
U.S. Treasury Bonds:
12.375%, 2004 500,000 621,825
11.625%, 2004 500,000 617,035
10.625%, 2015 500,000 702,245
7.25%, 2016 200,000 215,478
8.125%, 2019 1,000,000 1,178,090
8.75%, 2020 500,000 626,535
7.625%, 2022 265,000 301,037
6.25%, 2023 130,000 127,152
U.S. Treasury Notes:
6.625%, 2002 250,000 254,440
7.5%, 2002 325,000 337,233
6.375%, 2002 500,000 506,350
5.25%, 2003 200,000 195,228
7.25%, 2004 150,000 157,493
6%, 2004 2,000,000 2,005,540
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENTS (CONTINUED)
U.S. Treasury Notes (continued)
7.5%, 2005 400,000 425,120
7%, 2006 300,000 313,296
8,584,097
U.S. GOVERNMENT AGENCIES-46.0%
Federal Farm Credit Banks,
5.875%, 2001 300,000 298,895
Federal Home Loan Banks:
5.125%, 2003 500,000 478,725
5.8%, 2008 1,000,000 941,031
Federal Home Loan Mortgage Corp.:
5.5%, 8/1/2013 236,053 222,775
6%, 6/1/2012-2/1/2029 1,400,807 1,328,004
6.5%, 11/1/2004-5/1/2029 2,747,414 2,657,264
7%, 3/1/2012-5/1/2029 1,500,107 1,483,781
7.5%, 12/1/2024-10/1/2028 570,275 574,617
8%, 10/1/2019-1/1/2028 359,391 368,826
Federal National Mortgage Association:
4.75%, 2003 1,850,000 1,742,843
5.25%, 2003 1,000,000 965,360
6%, 2008 800,000 764,496
6.25%,2029 500,000 461,783
6.5%, 2004 200,000 200,695
6.625%, 2009 600,000 598,123
5.5%, 12/1/2013-2/1/2014 236,869 223,027
6%, 9/1/2013-2/1/2029 1,619,051 1,531,650
6.5%, 3/1/2011-6/1/2029 2,778,960 2,676,945
7%, 6/1/2011-2/1/2029 1,602,771 1,581,147
7.5%, 3/1/2012-11/1/2027 815,323 820,799
8%, 5/1/2013-9/1/2027 312,949 320,778
Government National Mortgage Association I:
6%, 1/15/2029 391,135 363,142
6.5%, 9/15/2008-1/15/2029 1,359,349 1,303,607
7%, 8/15/2025-12/15/2028 1,256,095 1,235,966
7.5%, 12/15/2026-4/15/2029 654,193 658,191
8%, 12/15/2026 323,908 332,411
8.5%, 4/15/2025 298,182 311,600
9%, 10/15/2027 188,364 198,371
9.5%, 2/15/2025 202,274 217,873
24,862,725
TOTAL BONDS AND NOTES
(cost $55,094,282) 53,751,499
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--.0% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement;
Goldman, Sachs & Co., Tri-Party
Repurchase Agreement, 5.18%, dated 10/29/1999,
due 11/1/1999 in the amount of $62,413 (fully
collateralized by $64,000 U.S. Treasury Notes,
5.625% due 2/28/2001 value $64,513)
(cost $62,386) 62,386 62,386
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $55,156,668 ) 99.4% 53,813,885
CASH AND RECEIVABLES (NET) .6% 304,118
NET ASSETS 100.0% 54,118,003
(A) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT OCTOBER 31, 1999,
THESE SECURITIES AMOUNTED TO $1,434,149 OR 2.7% OF NET ASSETS.
(B) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED
MATURITY IS 5/1/2006.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
Cost Value
- -------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(c) 55,156,668 53,813,885
Interest receivable 782,679
Receivable for investment securities sold 500,829
Receivable for shares of Capital Stock subscribed 2,209
55,099,602
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 35,417
Due to Distributor 1,684
Cash overdraft due to Custodian 110,757
Payable for investment securities purchased 711,065
Payable for shares of Capital Stock redeemed 122,676
981,599
- -------------------------------------------------------------------------------
NET ASSETS ($) 54,118,003
- -------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 57,208,579
Accumulated distributions in excess of investment income--net (113)
Accumulated net realized gain (loss) on investments (1,747,680)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (1,342,783)
- -------------------------------------------------------------------------------
NET ASSETS ($) 54,118,003
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 5,043,502 10,055,734 1,811,935 37,206,832
Shares Outstanding 475,638 944,822 172,589 3,507,906
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 10.60 10.64 10.50 10.61
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 3,582,596
EXPENSES:
Management fee--Note 2(a) 354,037
Distribution and service fees--Note 2(b) 98,562
Loan commitment fees--Note 4 182
TOTAL EXPENSES 452,781
INVESTMENT INCOME--NET 3,129,815
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (1,085,712)
Net unrealized appreciation (depreciation) on investments (2,865,975)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (3,951,687)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (821,872)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
----------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,129,815 2,808,242
Net realized gain (loss) on investments (1,085,712) 1,033,599
Net unrealized appreciation (depreciation)
on investments (2,865,975) 693,732
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (821,872) 4,535,573
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (351,005) (203,232)
Class B shares (442,015) (79,961)
Class C shares (72,478) (27,190)
Class R shares (2,264,430) (2,497,614)
TOTAL DIVIDENDS (3,129,928) (2,807,997)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 12,059,310 5,830,588
Class B shares 11,986,879 6,356,694
Class C shares 1,929,966 991,778
Class R shares 10,142,313 11,394,506
Dividends reinvested:
Class A shares 243,578 114,018
Class B shares 180,992 48,757
Class C shares 50,085 22,311
Class R shares 1,508,068 1,699,048
Cost of shares redeemed:
Class A shares (12,172,203) (1,905,104)
Class B shares (6,869,077) (1,623,857)
Class C shares (1,144,120) (306,783)
Class R shares (13,649,898) (20,137,744)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 4,265,893 2,484,212
TOTAL INCREASE (DECREASE) IN NET ASSETS 314,093 4,211,788
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 53,803,910 49,592,122
END OF PERIOD 54,118,003 53,803,910
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
----------------------------
1999 1998
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(A)
Shares sold 1,110,255 527,494
Shares issued for dividends reinvested 22,422 10,267
Shares redeemed (1,129,873) (171,553)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,804 366,208
- --------------------------------------------------------------------------------
CLASS B(A)
Shares sold 1,082,346 566,970
Shares issued for dividends reinvested 16,653 4,366
Shares redeemed (629,249) (145,521)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 469,750 425,815
- --------------------------------------------------------------------------------
CLASS C
Shares sold 178,774 89,566
Shares issued for dividends reinvested 4,692 2,032
Shares redeemed (106,959) (27,716)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 76,507 63,882
- --------------------------------------------------------------------------------
CLASS R
Shares sold 914,656 1,035,268
Shares issued for dividends reinvested 138,448 153,444
Shares redeemed (1,256,689) (1,813,570)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (203,585) (624,858)
(A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 13,685 CLASS B SHARES REPRESENTING
$145,726 WERE AUTOMATICALLY CONVERTED TO 13,733 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
-------------------------------------------------------------------
CLASS A SHARES 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.31 10.96 10.78 10.84 10.22
Investment Operations:
Investment income--net .57 .58 .62 .58 .56
Net realized and unrealized gain (loss)
on investments (.71) .35 .19 (.07) .62
Total from Investment Operations (.14) .93 .81 .51 1.18
Distributions:
Dividends from investment income--net (.57) (.58) (.63) (.57) .(.56)
Net asset value, end of period 10.60 11.31 10.96 10.78 10.84
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(A) (1.26) 8.73 7.80 4.85 11.83
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .85 .85 .85 .85 .85
Ratio of net investment income
to average net assets 5.22 5.20 5.80 5.38 5.33
Portfolio Turnover Rate 161.28 149.08 129.94 153.63 73.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 5,044 5,349 1,169 1,001 1,150
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
------------------------------------------------------------------
CLASS B SHARES 1999 1998 1997 1996 1995(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.35 11.00 10.78 10.84 10.15
Investment Operations:
Investment income--net .52 .52 .56 .52 .47
Net realized and unrealized gain (loss)
on investments (.71) .35 .23 (.07) .69
Total from Investment Operations (.19) .87 .79 .45 1.16
Distributions:
Dividends from investment income--net (.52) (.52) (.57) (.51) (.47)
Net asset value, end of period 10.64 11.35 11.00 10.78 10.84
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) (1.73) 8.14 7.56 4.33 11.32
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.35 1.35 1.35 1.35 1.35(c)
Ratio of net investment income
to average net assets 4.72 4.49 5.06 4.86 4.85(c)
Portfolio Turnover Rate 161.28 149.08 129.94 153.63 73.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 10,056 5,391 542 143 78
A FROM DECEMBER 19, 1994 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1995.
B EXCLUSIVE OF SALES CHARGE.
C ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
------------------------------------------------------------------
CLASS C SHARES 1999 1998 1997 1996 1995(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.20 10.84 10.73 10.84 10.15
Investment Operations:
Investment income (loss)--net .51 .52 (1.98) .3.05 .48
Net realized and unrealized gain (loss)
on investments (.70) .35 2.65 (2.65) .69
Total from Investment Operations (.19) .87 .67 .40 1.17
Distributions:
Dividends from investment income--net (.51) (.51) (.56) (.51) (.48)
Net asset value, end of period 10.50 11.20 10.84 10.73 10.84
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) (1.74) 8.25 6.49 3.83 11.32
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.35 1.35 1.35 1.41 --
Ratio of net investment income
to average net assets 4.72 4.61 4.98 5.50 --
Portfolio Turnover Rate 161.28 149.08 129.94 153.63 73.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 1,812 1,076 349 -- --
A FROM DECEMBER 19, 1994 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1995.
B EXCLUSIVE OF SALES CHARGE.
C ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
-------------------------------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.31 10.96 10.78 10.84 10.22
Investment Operations:
Investment income--net .60 .61 .65 .60 .58
Net realized and unrealized gain (loss)
on investments (.70) .35 .19 (.06) .62
Total from Investment Operations (.10) .96 .84 .54 1.20
Distributions:
Dividends from investment income--net (.60) (.61) (.66) (.60) (.58)
Net asset value, end of period 10.61 11.31 10.96 10.78 10.84
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (.91) 9.02 8.09 5.12 12.11
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .60 .60 .60 .60 .60
Ratio of net investment income
to average net assets 5.47 5.51 6.06 5.62 5.58
Portfolio Turnover Rate 161.28 149.08 129.94 153.63 73.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 37,207 41,988 47,532 49,664 69,924
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Limited Term Income 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, as amended (the "Act"), as an open-end
management investment company and operates as a series company currently
offering nineteen series, including the fund. The fund's investment objective
is to obtain as high a level of current income as is consistent with safety of
principal and maintenance of liquidity. Although the fund may invest in
obligations with different remaining maturities, the fund's dollar-weighted
average maturity will be no more than 10 years. The Dreyfus Corporation (the
" Manager" ) serves as the fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. (" Mellon Bank" ), which is a wholly-owned
subsidiary of Mellon Financial Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue 250 million of $.001 par value
Capital Stock. The fund currently offers four classes of shares: Class A (50
million shares authorized), Class B (50 million shares authorized), Class C (50
million shares authorized) and Class R (100 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 charge 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. Interest income,
adjusted for amortization of premiums and discounts 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 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: 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 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 of 1986, as
amended (the "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 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 $1,703,000
available for Federal income tax purposes to be applied
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
against future net securities profits, if any, realized subsequent to October
31, 1999. If not applied, $344,000 of the carryover expires in fiscal 2002,
$274,000 expires in fiscal 2003 and $1,085,000 expires in fiscal 2007.
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 .60% 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 $40,000 per
year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel Funds
Trust (the "Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the
Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund, the $2,000 fee
will be allocated between the Dreyfus/Laurel Funds and the 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 AND SERVICE PLAN: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of its average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B and Class C shares may pay the Distributor for distributing shares at an
aggregate annual rate of .50% 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 Class B and Class C
shares pay Dreyfus Service Corporation or the Distributor for providing certain
services to the holders of Class B and Class C shares a fee at the annual rate
of .25% of the value of the average daily net assets of Class B and Class C
shares. During the period ended October 31, 1999, Class A, Class B and Class C
shares were charged $16,815, $46,834 and $7,664, respectively, pursuant to the
Plan and Class B and Class C shares were charged $23,417 and $3,832,
respectively, pursuant to the service plan.
Under its terms, the Plan and service 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 or in any agreement
related to the Plan or service plan.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--Securities Transactions:
The aggregate amount of purchase and sales (including paydowns) of investment
securities, excluding short-term securities, during the period ended October 31,
1999, amounted to $97,690,757 and $91,390,886, respectively.
At October 31, 1999, accumulated net unrealized depreciation on investments was
$1,342,783, consisting of $53,770 gross unrealized appreciation and $1,396,553
gross unrealized depreciation.
At October 31, 1999, 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 $500 million
redemption credit facility (the "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
October 31, 1999, the fund did not borrow under the Facility.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.
We have audited the accompanying statement of assets and liabilities of Dreyfus
Premier Limited Term Income Fund of The Dreyfus/ Laurel Funds, Inc., including
the statement of investments, as of October 31, 1999, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. 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, 1999, by correspondence with the custodian and brokers. 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 Limited Term Income Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
New York, New York December 15, 1999
The Fund
NOTES
For More Information
Dreyfus Premier Limited Term Income 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 345/645AR99610
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS BASIC S&P 500 STOCK INDEX FUND AND THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
DREYFUS
BASIC STANDARD
S&P 500 & POOR'S 500
PERIOD STOCK COMPOSITE STOCK
INDEX FUND PRICE INDEX *
9/30/93 10,000 10,000
10/31/93 10,230 10,207
10/31/94 10,588 10,601
10/31/95 13,314 13,401
10/31/96 16,480 16,628
10/31/97 21,732 21,964
10/31/98 26,444 26,798
10/31/99 33,144 33,675
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS BOND MARKET INDEX FUND BASIC SHARES AND THE
LEHMAN BROTHERS AGGREGATE BOND INDEX
EXHIBIT A:
DREYFUS BOND
MARKET LEHMAN BROTHERS
PERIOD INDEX FUND AGGREGATE
(BASIC SHARES) BOND INDEX *
11/30/93 10,000 10,000
10/31/94 9,632 9,716
10/31/95 11,116 11,236
10/31/96 11,638 11,893
10/31/97 12,623 12,950
10/31/98 13,846 14,159
10/31/99 13,887 14,235
* Source: Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND INVESTOR
SHARES AND RESTRICTED SHARES AND THE LEHMAN BROTHERS
AGGREGATE BOND INDEX
EXHIBIT A:
DREYFUS DREYFUS
DISCIPLINED DISCIPLINED
INTERMEDIATE INTERMEDIATE LEHMAN
BOND FUND BOND FUND BROTHERS
PERIOD (INVESTOR (RESTRICTED AGGREGATE
SHARES) SHARES) BOND INDEX*
11/1/95 10,000 10,000 10,000
10/31/96 10,418 10,445 10,585
10/31/97 11,273 11,331 11,526
10/31/98 12,265 12,340 12,602
10/31/99 12,180 12,294 12,669
* Source: Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
DISCIPLINED SMALL CAP STOCK FUND AND THE
STANDARD & POOR'S SMALL CAP 600 INDEX
DREYFUS
DISCIPLINED
SMALL CAP STANDARD
PERIOD STOCK & POOR'S
FUND SMALL CAP 600
INDEX *
9/30/98 10,000 10,000
10/31/98 10,448 10,464
1/31/99 11,504 11,612
4/30/99 12,144 11,409
7/31/99 12,568 12,243
10/31/99 13,112 11,725
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS DISCIPLINED STOCK FUND AND THE STANDARD
& POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
STANDARD
DREYFUS & POOR'S 500
PERIOD DISCIPLINED COMPOSITE STOCK
STOCK FUND PRICE INDEX *
12/31/87 10,000 10,000
10/31/88 11,080 11,623
10/31/89 14,084 14,686
10/31/90 13,650 13,587
10/31/91 18,464 18,128
10/31/92 20,321 19,932
10/31/93 23,869 22,904
10/31/94 24,541 23,788
10/31/95 30,512 30,067
10/31/96 38,182 37,308
10/31/97 50,522 49,283
10/31/98 59,807 60,132
10/31/99 74,167 75,563
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS PREMIER BALANCED FUND CLASS R SHARES WITH THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX, THE
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT / CORPORATE
BOND INDEX AND A HYBRID INDEX
EXHIBIT A:
STANDARD
DREYFUS & POOR'S LEHMAN
PREMIER 500 BROTHERS
BALANCED COMPOSITE INTERMEDIATE
FUND STOCK GOVERNMENT /
PERIOD (CLASS R PRICE CORPORATE HYBRID
SHARES) INDEX* BOND INDEX** INDEX***
9/15/93 10,000 10,000 10,000 10,000
10/31/93 10,180 10,128 10,068 10,104
10/31/94 10,249 10,519 9,874 10,260
10/31/95 12,449 13,297 11,112 12,400
10/31/96 14,813 16,499 11,758 14,480
10/31/97 18,599 21,795 12,639 17,703
10/31/98 21,644 26,593 13,791 20,687
10/31/99 24,838 33,417 13,927 23,954
*Source: Lipper Analytical Services, Inc.
**Source: Lehman Brothers
***Source: Lipper Analytical Services, Inc. and Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
PREMIER LARGE COMPANY STOCK FUND CLASS A AND CLASS R SHARES
AND THE STANDARD AND POOR'S 500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
DREYFUS DREYFUS
PREMIER PREMIER STANDARD
LARGE LARGE & POOR'S 500
COMPANY COMPANY COMPOSITE
STOCK FUND STOCK FUND STOCK
PERIOD (CLASS A (CLASS R PRICE
SHARES) SHARES) INDEX*
9/2/94 9,425 10,000 10,000
10/31/94 9,378 9,950 9,975
10/31/95 11,554 12,286 12,609
10/31/96 14,311 15,257 15,645
10/31/97 18,892 20,192 20,667
10/31/98 22,641 24,250 25,216
10/31/99 28,043 30,109 31,687
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS PREMIER LIMITED TERM INCOME FUND CLASS R
SHARES AND THE LEHMAN BROTHERS AGGREGATE
BOND INDEX
EXHIBIT A:
DREYFUS
PREMIER
LIMITED
TERM
INCOME LEHMAN
FUND BROTHERS
PERIOD (CLASS R AGGREGATE
SHARES) BOND INDEX*
7/11/91 10,000 10,000
10/31/91 10,550 10,686
10/31/92 11,511 11,736
10/31/93 12,584 13,130
10/31/94 12,275 12,648
10/31/95 13,761 14,627
10/31/96 14,466 15,482
10/31/97 15,635 16,859
10/31/98 17,045 18,433
10/31/99 16,890 18,531
*Source: Lehman Brothers
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS PREMIER MIDCAP STOCK FUND CLASS R SHARES AND
THE STANDARD & POOR'S MIDCAP 400 INDEX
EXHIBIT A:
DREYFUS
PREMIER STANDARD
MIDCAP & POOR'S
PERIOD STOCK FUND MIDCAP 400
(CLASS R SHARES) INDEX *
11/12/93 10,000 10,000
10/31/94 9,823 10,238
10/31/95 12,139 12,410
10/31/96 15,368 14,563
10/31/97 21,343 19,320
10/31/98 20,942 20,616
10/31/99 24,594 24,960
* Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
PREMIER SMALL CAP VALUE FUND CLASS A SHARES, CLASS B SHARES,
CLASS C SHARES AND CLASS R SHARES AND THE RUSSELL 2000 VALUE
INDEX
EXHIBIT A:
DREYFUS DREYFUS DREYFUS DREYFUS
PREMIER PREMIER PREMIER PREMIER
RUSSELL SMALL CAP SMALL CAP SMALL CAP SMALL CAP
PERIOD 2000 VALUE FUND VALUE FUND VALUE FUND VALUE FUND
VALUE (CLASS A (CLASS B (CLASS C (CLASS R
INDEX* SHARES) SHARES) SHARES) SHARES)
4/1/98 10,000 9,427 10,000 10,000 10,000
4/30/98 10,049 9,457 10,024 10,024 10,032
7/31/98 8,883 8,582 9,080 9,080 9,112
10/31/98 8,151 7,881 8,328 8,328 8,376
1/31/99 8,437 8,327 8,784 8,784 8,855
4/30/99 8,508 8,168 8,608 8,608 8,702
7/31/99 8,871 8,584 9,024 9,024 9,145
10/31/99 8,209 8,039 8,095 8,440 8,566
* Source: Lipper Analytical Services, Inc.
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 FUND STOCK FUND
PERIOD (CLASS A (CLASS R RUSSELL 2500
SHARES) SHARES) INDEX*
9/2/94 9,425 10,000 10,000
10/31/94 9,491 10,070 9,916
10/31/95 12,368 13,162 12,037
10/31/96 14,744 15,719 14,299
10/31/97 19,275 20,597 18,463
10/31/98 16,303 17,444 17,041
10/31/99 17,902 19,204 20,107
*Source: The Frank Russell Company
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
PREMIER TAX MANAGED GROWTH FUND CLASS A SHARES, CLASS B SHARES,
CLASS C SHARES AND CLASS T SHARES AND THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
DREYFUS DREYFUS DREYFUS DREYFUS
PREMIER PREMIER PREMIER PREMIER
TAX TAX TAX TAX
STANDARD MANAGED MANAGED MANAGED MANAGED
& POOR'S 500 GROWTH GROWTH GROWTH GROWTH
PERIOD COMPOSITE FUND FUND FUND FUND
STOCK (CLASS A (CLASS B (CLASS C (CLASS T
PRICE INDEX* SHARES) SHARES) SHARES) SHARES)
11/4/97 10,000 9,427 10,000 10,000 9,549
1/31/98 10,760 9,797 10,376 10,376 9,920
4/30/98 12,250 11,042 11,672 11,664 11,173
7/31/98 12,396 11,344 11,968 11,960 11,471
10/31/98 12,201 11,148 11,736 11,736 11,265
1/31/99 14,257 12,755 13,408 13,400 12,885
4/30/99 14,923 13,171 13,824 13,816 13,298
7/31/99 14,899 12,816 13,424 13,416 12,931
10/31/99 15,332 13,337 13,544 13,936 13,451
* Source: Lipper Analytical Services, Inc.
