Dreyfus
Municipal Reserves
ANNUAL REPORT October 31, 2000
(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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
15 Statement of Assets and Liabilities
16 Statement of Operations
17 Statement of Changes in Net Assets
18 Financial Highlights
20 Notes to Financial Statements
24 Independent Auditors' Report
25 Important Tax Information
FOR MORE INFORMATION
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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, 1999 through October 31, 2000.
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.
Despite some fluctuations due to changing economic conditions, municipal bond
prices generally rose modestly over the 12-month reporting period. Most of those
gains were achieved after January 2000, with a rally in the municipal bond
market. More recently, most sectors of the municipal bond market also benefited
from slowing economic growth. Additionally, the moderating effects of the
Federal Reserve Board's (the "Fed") interest-rate hikes during the first half of
2000 helped the Fed to achieve its goal of slowing the U.S. economy. Other
factors such as higher energy prices and a weak euro also served to slow
economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above their historical averages,
establishing unrealistic expectations for some investors. We believe that as the
risks of the stock market have become more apparent recently, the relative
stability and income potential of municipal bonds can make them an attractive
investment as part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Municipal Reserves.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus Municipal Reserves perform during the period?
For the 12-month period ended October 31, 2000, the fund's Investor shares
produced an annualized yield of 3.32% and, after taking into account the effect
of compounding, an annualized effective yield of 3.37%. The fund's Class R
shares provided a 3.52% annualized yield and a 3.58% annualized effective yield
for the same period.(1)
We attribute our strong performance to our security selection strategy, which
emphasized variable rate securities. Variable rate securities' yields are
adjusted periodically -- usually daily or weekly -- according to changes in
prevailing money market rates. Because interest rates were rising during much of
the reporting period, variable rate securities enabled us to capture relatively
higher yields for the fund, in comparison to yields of fixed-rate securities.
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 what we feel are 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.
What other factors influenced the fund's performance?
During the reporting period, yields on the fund's tax-exempt money market
securities were primarily influenced by two factors: short-term interest rate
movements initiated by the Federal Reserve Board (the "Fed" ), and
supply-and-demand factors.
When the reporting period began, the U.S. economy was growing quickly, fueling
concerns that long-dormant inflationary pressures might reemerge. In fact, the
Fed had already taken steps to relieve inflationary pressures by increasing
short-term interest rates in June and August 1999, each time by 0.25 percentage
points. The Fed again raised interest rates by 0.25 percentage points each in
November 1999, February 2000 and March 2000, and by 0.50 percentage points in
May 2000. As might be expected, the money markets reacted to the Fed's
interest-rate hikes in the form of higher yields.
In addition, seasonal changes in the tax-exempt money market created
supply-and-demand fluctuations during the reporting period, most notably during
the spring and summer months. For example, during March and April, a lack of
demand caused short-term municipal yields to rise. That's because many investors
used their liquid assets to pay income tax liabilities. However, throughout the
summer months, demand increased as investors invested excess cash into money
market funds. Demand further intensified later in the period when stock market
volatility caused many investors to seek the relatively safe haven of
money market funds. We responded to these changes by modifying our investments
in Variable Rate Demand Notes ("VRDNs"), which are issued by investment banks
through the securitization of longer term municipal bonds.
What is the fund's current strategy?
We have continued to position the fund to take advantage of supply-and-demand
influences in the tax-exempt money markets. Because investor demand for these
securities has increased as stock prices have generally declined, we attempted
to maintain the flexibility we need to respond quickly to changes in the
marketplace. Accordingly, as of October 31, 2000, about 72% of the fund's assets
were allocated to VRDNs, compared to 52% when the period began. In addition,
municipal notes comprised 22% of the fund's assets, as they did at this time
last year. The balance of the fund's assets was invested in commercial paper.
November 15, 2000
(1) ANNUALIZED 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 THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE
VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY
BY INVESTING IN THE FUND.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
Principal
TAX EXEMPT INVESTMENTS--100.6% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA--3.3%
Port City Medical Clinical Board, Revenues, VRDN
(Infirmary Health Systems) 4.35%, Series B
(Insured; AMBAC and LOC: Bank of Nova Scotia
<S> <C> <C>
and Kredietbank) 5,000,000 (a) 5,000,000
Tuscaloosa County Industrial Development Authority
SWDR, VRDN (Tuscaloosa Steel Corp. Project)
4.35% (LOC; Bayerische Landesbank) 5,000,000 (a) 5,000,000
ALASKA--1.1%
Alaska Industrial Development Authority, Revenues, VRDN
(Providence Medical Office Building)
4.40% (LOC; Kredietbank) 3,195,000 (a) 3,195,000
ARKANSAS--1.0%
Fayetteville Public Facilities Board, Revenues, Refunding, VRDN
(Butterfield Trail Village Project)
4.60% (LOC; Dresdner Bank) 3,000,000 (a) 3,000,000
COLORADO--5.7%
Colorado Housing Finance Authority, Refunding, VRDN
(Multi-Family Winridge Apartments)
4.30% (LOC; FNMA) 1,550,000 (a) 1,550,000
Dove Valley Metropolitan District of Arapahoe County, Revenue:
Refunding 3.95%, Series B, 11/1/2001
(LOC; Banque Nationale de Paris) 1,000,000 1,000,000
4.40%, 11/1/2001(LOC; Banque Nationale de Paris) 3,000,000 3,000,000
East Smoky Hill Metropolitan District #2
4.25%, 12/1/2000 (LOC; U.S. Bancorp) 2,000,000 2,000,000
Interstate South Metropolitan District, Refunding
4.40%, Series B, 11/1/2000 (LOC; Banque Nationale de Paris) 975,000 975,000
NBC Metropolitan District, GO Notes
4.30%, 12/1/2000 (LOC; U.S. Bancorp) 2,700,000 2,700,000
Panaroma Metropolitan District
4%, Series A, 12/1/2000 (LOC; Banque Nationale de Paris) 2,300,000 2,300,000
SBC Metropolitan District:
4%, 12/1/2000 (LOC; US Bancorp) 1,000,000 1,000,000
4%, Series 99, 12/1/2000 (LOC; U.S. Bancorp) 2,655,000 2,655,000
DISTRICT OF COLUMBIA--.2%
District of Columbia, College and University Revenue, VRDN
(George Washington University)
4.40%, Series C (Insured; MBIA and Liquidity
Facility; Bank of America) 500,000 (a) 500,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA--8.0%
Broward County Housing Finance Authority,
MFHR, Refunding VRDN (Waters Edge Project) 4.35% 6,740,000 (a) 6,740,000
Dade County, Water and Sewage Systems Revenue, VRDN
4.25% (Insured; FGIC and LOC; CommerzBank) 3,700,000 (a) 3,700,000
Dade County Industrial Development Authority, IDR, VRDN
(Dolphins Stadium Project):
4.20%, Series A (LOC; Societe Generale) 1,075,000 (a) 1,075,000
4.20%, Series B (LOC; Societe Generale) 1,175,000 (a) 1,175,000
Florida Housing Finance Agency, MFMR, VRDN
4.35%, Series E (LOC; Credit Suisse) 4,800,000 (a) 4,800,000
Miami Health Facilities Authority, Health Facilities Revenue
Refunding, VRDN (Mercy Hospital Project)
4.30% (LOC; Bank of America) 1,800,000 (a) 1,800,000
Sarasota County Public Hospital District, HR, CP
(Sarasota Memorial Hospital)
4.10%, Series A, 11/9/2000 (LOC; Suntrust Bank) 4,000,000 4,000,000
Sunshine Governmental Finance Commission,
Revenues, VRDN
4.25% (Insured; AMBAC and LOC; Credit Local De France) 1,000,000 (a) 1,000,000
GEORGIA--7.0%
Atlanta, Water and Sewer Revenue, Refunding
4.20%, 1/1/2001 2,000,000 (b) 2,000,000
De Kalb County Development Authority,
Private Schools Revenue
VRDN (Marist School Inc. Project)
4.40% (LOC; Suntrust Bank) 3,500,000 (a) 3,500,000
De Kalb Private Hospital Authority,
Revenue Anticipation Certificates
VRDN (ESR Children's Health)
4.30%, Series A (LOC; First Union National Bank) 6,000,000 (a) 6,000,000
Municipal Electric Authority, VRDN:
(Georgia Project One) 4.30%, Series C
(LOC; ABN-Amro Bank) 8,700,000 (a) 8,700,000
(General Resolution) 4.30%, Series B
(LOC; Landesbank Hessen) 1,000,000 (a) 1,000,000
IDAHO--1.6%
Idaho Health Facilities Authority, Revenues, VRDN
Aces-Pooled Financing Program
4.35% (LOC; U.S. Bancorp) 5,000,000 (a) 5,000,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS--10.9%
City of Chicago:
3.90%, Series A, 12/7/2000 (LOC; Landesbank Hessen) 4,000,000 4,000,000
VRDN 4.30%, Series B
(LOC; Canadian Imperial Bank of Commerce) 1,700,000 (a) 1,700,000
Chicago O'Hare International Airport, Revenues, VRDN
4.40%, Series A (LOC; Societe Generale) 500,000 (a) 500,000
Illinois Development Finance Authority, VRDN:
IDR:
(Heritage Tool and Manufacturing Inc.)
4.50% (LOC; Harris Trust and Savings Bank) 4,710,000 (a) 4,710,000
(Institute of Gas Technology Project)
4.40% (LOC; Bank of Montreal) 2,700,000 (a) 2,700,000
Revenues
(Residential Rental-F.C. Harris Pavilion Project)
4.45% (LOC; FNMA) 1,100,000 (a) 1,100,000
Illinois Health Facilities Authority, Revenues, VRDN:
(Memorial Medical Center-Springfield Hospital)
4.35%, Series C (LOC; Kredietbank) 2,400,000 (a) 2,400,000
(Rush Presbyterian Medical Center)
4.40% (LOC; Northern Trust Co.) 3,800,000 (a) 3,800,000
(The Carle Foundation)
4.35%, Series B (Insured; AMBAC and LOC;
Northern Trust Co.) 6,400,000 (a) 6,400,000
Illinois Housing Development Authority, MFHR, VRDN
(Lakeshore Plaza) 4.30%, Series A (Insured; MBIA and
LOC; Bank One Corp.) 800,000 (a) 800,000
Illinois Student Assistance Commission
Student Loan Revenue, VRDN
4.40%, Series A (LOC; Bank One Corp.) 3,600,000 (a) 3,600,000
City of New Lenox, IDR, VRDN (Panduit Corp. Project)
4.50% (LOC; Commerzbank) 1,300,000 (a) 1,300,000
INDIANA--4.1%
Indiana Development Finance Authority, EIR, Refunding
(USX Corp. Project)
4.35%, 6/7/2001 (LOC; Bank Of Nova Scotia) 4,000,000 4,000,000
Indiana Health Facilities Financing Authority, HR, VRDN
(Aces-Deaconess Hospital Inc.) 4.30% (LOC; Bank One Corp) 2,000,000 (a) 2,000,000
City of Seymour, EDR, VRDN
(Pedcor Investments-Sycamore Springs Apartments Project)
4.45%, Series A (LOC; Federal Home Loan Banks) 4,052,000 (a) 4,052,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INDIANA (CONTINUED)
City of Whiting, PCR (Amoco Project-Standard Oil Industry)
4.40%, 2/15/2001 (Corp. Guaranty; Amoco Credit Corp.) 2,500,000 2,500,000
KENTUCKY--.8%
Kentucky Housing Corporation, Housing Revenue, Refunding
4.40%, Series D, 12/1/2000 2,500,000 2,500,000
LOUISIANA--1.3%
Louisiana Public Facilities Authority, HR, Refunding, VRDN
(Willis Knighton Medical Project)
4.40% (Insured; AMBAC and LOC; Credit Local de France) 4,050,000 (a) 4,050,000
MAINE--1.3%
Eastport, IDR, Refunding, VRDN (Passamaquoddy Tribe)
4.25% (LOC; Wachovia Bank and Trust Co.) 4,060,000 (a) 4,060,000
MASSACHUSETTS--9.8%
Bridgewater and Raynham Regional School District, BAN
5%, 7/6/2001 3,000,000 3,006,781
State of Massachusetts, Refunding, VRDN
4.30%, Series B (LOC; Toronto-Dominion Bank) 2,000,000 (a) 2,000,000
Massachusetts Development Finance Agency, Revenues, VRDN
(First Mortgage Lasell Village)
4.30%, Series C (LOC; Fleet Bank) 6,600,000 (a) 6,600,000
Massachusetts Health and Educational Facility Authority
Revenues, VRDN:
Capital Assets Program 4.55%,
Series D (Insured; MBIA and LOC; State Street Bank) 4,000,000 (a) 4,000,000
(Falmouth Assistant Living)
4.30%, Series A (LOC; Fleet Bank) 900,000 (a) 900,000
Massachusetts Industrial Finance Agency, Revenue, VRDN:
Refunding (New England College)
4.25% (LOC; State Street Bank and Trust) 1,000,000 (a) 1,000,000
(Showa Womens Institute Inc.)
4.70% (LOC; Bank of New York) 3,400,000 (a) 3,400,000
Massachusetts Water Residential Authority, VRDN
4.25%, Series B (Insured; FGIC) 9,000,000 (a) 9,000,000
MICHIGAN--5.2%
Michigan Building Authority, Revenue, CP
4.40%, Series 2, 3/1/2001 (LOC: Bank of New York,
Canadian Imperial Bank and Commerzbank) 4,500,000 4,500,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN (CONTINUED)
Michigan Higher Education Facilities Authority
College and University Revenue, VRDN
(Concordia College Project) 4.65% (LOC; Allied Irish Banks) 3,925,000 (a) 3,925,000
Michigan Hospital Finance Authority, Revenues, VRDN
Hospital Equipment Loan Program
4.35%, Series A (LOC; National City Bank) 2,500,000 (a) 2,500,000
Michigan Housing Development Authority,
SFMR, Refunding, VRDN
4.40%, Series A (Insured; MBIA and LOC; Bank One Corp.) 5,000,000 (a) 5,000,000
MISSISSIPPI--.5%
Noxubee County, IDR, VRDN (Barge Forest Products Project)
4.70% (LOC; Amsouth Bank-Alabama) 1,465,000 (a) 1,465,000
MISSOURI--.3%
Missouri Higher Education Loan Authority, Student Loan Revenue
VRDN 4.40%, Series A (LOC; National Westminster Bank) 1,000,000 (a) 1,000,000
MONTANA--.4%
Butte-Silver Bow, PCR, Refunding, VRDN
(Rhone-Poulenc Inc. Project)
4.40% (LOC; Banque Nationale de Paris) 1,300,000 (a) 1,300,000
NEVADA--1.5%
Clark County, Airport Improvement Revenue, VRDN
4.25%, Series A-1 (LOC; Westdeutsche Landesbank) 2,700,000 (a) 2,700,000
Nevada Housing Division, Refunding, VRDN
(Park Vista) 4.35%, Series A (LOC; Credit Suisse) 2,000,000 (a) 2,000,000
NEW MEXICO--1.1%
City of Santa Fe, Gross Receipts Tax Revenue, VRDN
(Wastewater Systems)
4.40%, Series B (LOC; Canadian Imperial Bank of Commerce) 3,400,000 (a) 3,400,000
NORTH DAKOTA--1.6%
North Dakota Housing Finance Agency, Revenues
Housing Finance Program, 4.45%, Series D, 8/27/2001 4,900,000 4,900,000
OHIO--7.8%
Cuyahoga County, HR, VRDN
(University Hospital of Cleveland) 4.55%
(LOC; Chase Manhattan Bank) 4,980,000 (a) 4,980,000
Ohio Air Quality Development Authority, Revenue, VRDN
(JMG Funding Limited Partnership)
4.55%, Series A (LOC; Societe General) 9,700,000 (a) 9,700,000
Ohio Housing Finance Agency, Mortgage Revenue (Residential)
4.25%, Series A-3, 3/1/2001 9,000,000 9,000,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
OREGON--2.1%
Multnomah County, Higher Education Revenue, VRDN
(Concordia University of Portland Project)
4.65% (LOC; Allied Irish Banks) 3,000,000 (a) 3,000,000
State of Oregon, Veterans Welfare Revenue
4.35%, 10/1/2001 3,250,000 3,250,000
PENNSYLVANIA--1.8%
Lehigh County Industrial Development Authority, PCR, VRDN
(Allegheny Electric Co-Op)
4.45% (LOC; Rabobank Nederland N.V.) 720,000 (a) 720,000
Moon Industrial Development Authority, IDR, VRDN
(Executive Office Association Project)
4.40% (LOC; PNC Bank) 1,250,000 (a) 1,250,000
Pennsylvania Higher Educational Facilities Authority
(Association Independent Colleges)
4.40%, Series E-1, 11/1/2001(LOC; PNC Bank) 3,400,000 3,400,000
Quakertown General Authority, Revenues, VRDN
Pooled Financing Program
4.35%, Series A (LOC; PNC Bank) 135,000 (a) 135,000
SOUTH CAROLINA--4.6%
Piedmont Municipal Power Agency, Electric Power
and Light Revenues Refunding, VRDN
4.30%, Series D (Insured; MBIA and LOC;
Morgan Guaranty Trust Co.) 12,900,000 (a) 12,900,000
South Carolina Jobs Economic Development Authority
EDR, VRDN (Wellman Inc. Project)
4.75% (LOC; Wachovia Bank and Trust Co.) 1,100,000 (a) 1,100,000
TEXAS--6.5%
Comal County Health Facilities Development Corporation
Health Care Systems Revenue, VRDN
(McKenna) 4.45% (LOC; Chase Manhattan Bank) 3,000,000 (a) 3,000,000
Dallas Area Rapid Transit, Sales Tax Revenue, CP
4.15%, 1/17/2001 (LOC: Westdeutsche Landesbank
and Bayerische Landesbank) 5,000,000 5,000,000
Dallas Industrial Development Corporation, IDR, VRDN
(Sealed Power Corp.)
4.40% (LOC; National Bank of Detroit) 1,100,000 (a) 1,100,000
Gulf Coast Waste Disposal Authority, PCR
(Amoco Oil-Amoco Chemicals) 4.50%, 1/15/2001 3,000,000 3,000,890
Harris County, CP 4.30%, Series D, 2/1/2001
(LOC; Bank of Nova Scotia) 4,180,000 4,180,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
Lone Star Airport Improvement Authority, Revenues
VRDN (American Airlines)
4.65%, Series A-5 (LOC; Royal Bank of Canada) 1,000,000 (a) 1,000,000
Nueces County Health Facilities
Development Corporation, Revenues
VRDN (Driscoll Childrens Foundation)
4.45% (LOC; Bank One Corp.) 2,395,000 (a) 2,395,000
UTAH--2.2%
Intermountain Power Agency, Power and
Electric Light Revenues, Refunding
5.25%, Series E, 7/1/2001(Insured; FSA) 3,610,000 3,631,991
Weber County, TRAN 4.75%, 12/29/2000 3,000,000 3,001,869
VIRGINIA--2.5%
Campbell County Industrial Development Authority
Exempt Facility Revenue, VRDN
(Hadson Power 12)
4.75%, Series A (LOC; Barclays Bank) 4,600,000 (a) 4,600,000
Halifax County Industrial Development Authority, IDR, VRDN
(Annin and Co. Project)
4.45% (LOC; Chase Manhattan Bank) 1,875,000 (a) 1,875,000
Virginia Small Business Financing Authority, IDR, VRDN
(Coral Graphic)
4.55% (LOC; Chase Manhattan Bank) 1,200,000 (a) 1,200,000
WASHINGTON--4.6%
City of Seattle
5%, Series B, 12/1/2000 3,195,000 3,197,408
Washington Housing Finance Committee, MFHR, VRDN
(Anchor Village Apartments Project)
4.45% (LOC; FNMA) 10,750,000 (a) 10,750,000
WEST VIRGINIA--.5%
State of West Virginia
4.75%, 11/1/2000 1,505,000 1,505,000
WISCONSIN--.5%
University of Wisconsin Hospital & Clinics Authority, HR, VRDN
4.35% (Insured; MBIA and LOC; Bank of America) 1,400,000 (a) 1,400,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
WYOMING--.8%
Green River, PCR, Refunding, VRDN
(Rhone Poulenc Inc. Project)
4.70% (LOC; ABN-Amro Bank) 2,300,000 (a) 2,300,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $305,705,939) 100.6% 305,705,939
LIABILITIES, LESS CASH AND RECEIVABLES (.6%) (1,796,841)
NET ASSETS 100.0% 303,909,098
The Fund
</TABLE>
STATEMENT OF INVESTMENTS (CONTINUED)
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
BAN Bond Anticipation Notes
CP Commercial Paper
EDR Economic Development Revenue
EIR Economic Improvement Revenue
FGIC Financial Guaranty Insurance
Company
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
GO General Obligation
HR Hospital Revenue
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Municipal Bond Investors
Assurance
Insurance Corporation
MFHR Multi-Family Housing Revenue
MFMR Multi-Family Mortgage Revenue
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
SWDR Solid Waste Disposal Revenue
TRAN Tax and Revenue Anticipation
Notes
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 87.2
AAA/AAA (c) Aaa/Aa (c) AAA/AA (c) 10.4
Not Rated (d) Not Rated (d) Not Rated (d) 2.4
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
(B) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(C) NOTES WHICH ARE NOT F, MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF
THE ISSUERS.
(D) 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.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 305,705,939 305,705,939
Interest receivable 1,762,062
307,468,001
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 153,459
Payable for investment securities purchased 3,400,000
Interest payable--Note 3 5,444
3,558,903
--------------------------------------------------------------------------------
NET ASSETS ($) 303,909,098
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 303,917,442
Accumulated net realized gain (loss) on investments (8,344)
--------------------------------------------------------------------------------
NET ASSETS ($) 303,909,098
NET ASSET VALUE PER SHARE
Investor Class R
--------------------------------------------------------------------------------
Net Assets ($) 39,694,201 264,214,897
Shares Outstanding 39,696,184 264,220,655
--------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 1.00 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 11,736,251
EXPENSES:
Management fee--Note 2(a) 1,455,652
Distribution fees (Investor Shares)--Note 2(b) 64,607
Interest expense--Note 3 32,060
TOTAL EXPENSES 1,552,319
INVESTMENT INCOME--NET 10,183,932
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B)($): 3
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 10,183,935
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
----------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 10,183,932 7,780,014
Net realized gain (loss) on investments 3 --
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 10,183,935 7,780,014
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (1,081,019) (724,308)
Class R shares (9,102,913) (7,055,706)
TOTAL DIVIDENDS (10,183,932) (7,780,014)
--------------------------------------------------------------------------------
CAPITAL STOCK TANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold:
Investor shares 106,629,254 101,990,468
Class R shares 756,230,160 872,535,246
Dividends reinvested:
Investor shares 1,006,013 669,793
Class R shares 1,414,590 1,220,288
Cost of shares redeemed:
Investor shares (98,629,970) (99,272,622)
Class R shares (780,547,044) (814,277,109)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (13,896,997) 62,866,064
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,896,994) 62,866,064
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 317,806,092 254,940,028
END OF PERIOD 303,909,098 317,806,092
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 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .033 .025 .029 .030 .029
Distributions:
Dividends from investment income--net (.033) (.025) (.029) (.029) (.029)
Dividends from net realized gain on
investments -- -- (.000)(a) (.001) --
Total Distributions (.033) (.025) (.029) (.030) (.029)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 3.38 2.57 3.00 3.00 2.96
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .70 .70 .70 .72 .70
Ratio of interest expense to
average net assets .01 -- -- -- --
Ratio of net investment income
to average net assets 3.35 2.54 2.90 2.92 2.92
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 39,694 30,689 27,301 19,486 14,074
(A) AMOUNT REPRESENTS LESS THAN $.001 PER SHARE.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
-------------------------------------------------------------------
CLASS R SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .035 .027 .031 .032 .031
Distributions:
Dividends from investment income--net (.035) (.027) (.031) (.031) (.031)
Dividends from net realized gain on
investments -- -- (.000)(a) (.001) --
Total Distributions: (.035) (.027) (.031) (.032) (.031)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 3.59 2.77 3.21 3.21 3.17
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .50 .50 .50 .52 .50
Ratio of interest expense to
average net assets .01 -- -- -- --
Ratio of net investment income
to average net assets 3.52 2.74 3.11 3.10 3.11
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 264,215 287,117 227,639 194,158 221,178
(A) AMOUNT REPRESENTS LESS THAN $.001 PER SHARE.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
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., ("Mellon Bank"), which is a
wholly-owned subsidiary of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund
is authorized to issue 1 billion shares of $.001 par value Capital Stock in each
of the following classes of shares: Investor Class 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 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 accounting
principles generally accepted in the United States of America, 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) Dividends to shareholders: It is the policy of the fund to declare dividends
daily from investment income-net; such dividends are paid monthly. Dividends
from net realized capital gain, if any, are normally declared and paid annually,
but the fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code 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, 2000. If not applied, the
carryover expires in fiscal 2005.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At October 31, 2000, 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, 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, Investor shares may pay annually up to .25%
(currently limited by the Company's Board of Directors to .20%) of the value of
the average daily net assets attributable to its Investor shares to compensate
the distributor for shareholder servicing activities and activities primarily
intended to result in the sale of Investor shares. Class R shares bear no
distribution fee. During the period ended October 31, 2000, Investor shares were
charged $64,607 pursuant to the Plan, of which $45,078 was paid to DSC.
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.
The average amount of borrowings outstanding during the period ended October 31,
2000 was approximately $466,500 with a related weighted average annualized
interest rate of 6.85%.
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
Municipal Reserves (the "Fund") of The Dreyfus/Laurel Funds, Inc., including the
statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Municipal Reserves of The Dreyfus/Laurel Funds, Inc. as of October 31,
2000, 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 accounting principles generally accepted in the United States of America.
New York, New York
December 8, 2000
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, 2000 as
" exempt-interest dividends" (not generally subject to regular Federal income
tax).
The Fund
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 324AR0010
Dreyfus Institutional
U.S. Treasury
Money Market Fund
ANNUAL REPORT October 31, 2000
(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
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, 1999
through October 31, 2000. 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.
Yields on money market instruments generally rose over the reporting period as
the Federal Reserve Board (the "Fed") continued to raise short-term interest
rates at its February, March and May 2000 meetings. However, amid signs that its
previous interest-rate hikes had begun to slow the economy, the Fed refrained
from raising rates further at its meetings in June and August of 2000. Other
factors such as higher energy prices and a weak euro also served to slow
economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above historical averages, establishing
unrealistic expectations for some investors. In our opinion, as the risks of the
stock market have become more apparent due to recent volatility, the safety and
income potential of money market funds can make them an attractive investment as
part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Institutional U.S. Treasury Money Market
Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus Institutional U.S.
Treasury Money Market Fund produced an annualized yield of 5.49%, and after
taking into account the effects of compounding, an annualized effective yield of
5.63%.(1)
We attribute the fund's good performance to our maturity management strategy,
which led us to maintain a relatively short average maturity for the portfolio.
This position enabled us to capture higher yields more quickly as interest rates
rose during the first half of the reporting period. In addition, our emphasis on
repurchase agreements helped boost the fund's 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 invests in a portfolio of U.S. Treasury securities as
well as repurchase agreements that 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 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.
What other factors influenced the fund's performance?
The fund was primarily influenced by higher short-term interest rates over the
past year. Higher interest rates were primarily the result of a more restrictive
monetary policy on the part of the Federal Reserve Board (the "Fed").
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
When the reporting period began, the U.S. economy was growing quickly, fueling
concerns that long-dormant inflationary pressures might reemerge. The Fed raised
interest rates by 0.25 percentage points each in November 1999, February 2000
and March 2000, and by 0.50 percentage points in May 2000. As might be expected,
the money markets reacted to the Fed's interest-rate hikes in the form of higher
yields.
During the first calendar quarter of 2000, the economy grew at a strong 4.8%,
well above the level most analysts believed may trigger destructive levels of
inflation. In addition, rising energy prices began to add to inflation concerns,
strong domestic demand for goods and services continued, and overseas demand for
raw materials accelerated as well.
In the second calendar quarter, economic growth accelerated to an even more
robust 5.6% . Consumer confidence and consumer spending showed few signs of
abating despite sharp declines in the technology sector of the stock market. The
tightest U.S. labor market in the past 30 years added the threat of wage-driven
inflation.
From July through the end of the reporting period, however, we saw signs that
the Fed' s rate hikes may have begun to have the desired effect of slowing the
economy. Retail sales declined, housing starts slowed dramatically, and
inflation appeared to be relatively benign. As a result, the Fed chose not to
raise rates further at its June, August or October meetings. Indeed,
third-quarter GDP slowed to a more sustainable growth rate of approximately 2.7%
. What' s more, the corrections in the Nasdaq stock market during the reporting
period may have had a "reverse wealth effect," causing consumer spending to
moderate as investors became less confident in the stock market's returns. As a
result of these factors, money market rates began to trend lower toward the end
of the reporting period.
What is the fund's current strategy?
Toward the end of the reporting period, we began to extend the fund's average
maturity from the shorter than average position we had maintained through most
of the reporting period. We chose to maintain a modestly long average maturity
because the economy continued to slow, suggesting that the Fed is unlikely to
raise interest rates again in 2000. In fact, some analysts believe that the
Fed's next move may be to reduce interest rates if the economy slows too much.
In addition, as of October 31, 2000, we allocated about 45% of the fund's total
assets to repurchase agreements in an effort to earn the highest possible yields
for the fund. The balance of the fund's assets was allocated to U.S. Treasury
securities. As of October 31, 2000, we planned to maintain this asset allocation
strategy until we see signs that the investment landscape may be changing.
November 15, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
YIELDS FLUCTUATE. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY
THE FDIC OR THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE
VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY
BY INVESTING IN THE FUND.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
Annualized
Yield on
Date of Principal
U.S. TREASURY BILLS--8.6% Purchase (%) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11/2/2000 6.13 10,000,000 9,998,324
11/9/2000 6.17 10,000,000 9,986,489
12/7/2000 6.16 20,000,000 19,879,200
TOTAL U.S. TREASURY BILLS
(cost $39,864,013) 39,864,013
------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--45.3%
--------------------------------------------------------------------------------
5.75%, 11/15/2000 6.13 20,000,000 19,995,327
8.50%, 11/15/2000 5.97 10,000,000 10,008,352
4.625%, 11/30/2000 6.20 10,000,000 9,985,903
5.625%, 11/30/2000 6.19 10,000,000 9,994,122
4.625%, 12/31/2000 6.22 50,000,000 49,848,178
5.50%, 12/31/2000 6.34 20,000,000 19,966,797
4.50%, 1/31/2001 6.14 40,000,000 39,824,956
5.25%, 1/31/2001 6.17 10,000,000 9,972,501
5.375%, 2/15/2001 6.17 10,000,000 9,972,959
7.75%, 2/15/2001 6.21 20,000,000 20,074,599
4.875%, 3/31/2001 6.20 10,000,000 9,940,265
TOTAL U.S. TREASURY NOTES
(cost $209,583,959) 209,583,959
Annualized
Yield on
Date of Principal
REPURCHASE AGREEMENTS--45.3% Purchase (%) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Barclays De Zoette Wedd Securities, Inc.
dated 10/31/2000, due 11/1/2000
in the amount of $80,014,555
(fully collateralized by $76,242,000
U.S. Treasury Notes 4.25%
due 1/15/2010, value $81,600,175) 6.55 80,000,000 80,000,000
C S First Boston Corp.
dated 10/31/2000, due 11/1/2000
in the amount of $70,012,697
(fully collateralized by $71,368,000
U.S. Treasury Notes 5.75% to 6.50%,
due from 7/31/2001 to 10/31/2002,
value $71,750,997) 6.53 70,000,000 70,000,000
Goldman, Sachs & Co. dated 10/31/2000,
due 11/1/2000 in the amount of $59,389,757
(fully collateralized by $59,041,000
U.S. Treasury Notes 6.375%
due 6/30/2002, value $60,566,545) 6.55 59,378,953 59,378,953
TOTAL REPURCHASE AGREEMENTS
(cost $209,378,953) 209,378,953
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $458,826,925) 99.2% 458,826,925
CASH AND RECEIVABLES (NET) .8% 3,539,476
NET ASSETS 100.0% 462,366,401
SEE NOTES TO FINANCIAL STATEMENT.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
----------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of
$209,378,953)--Note 1(c) 458,826,925 458,826,925
Cash 57,612
Interest receivable 3,613,674
462,498,211
-------------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 131,810
--------------------------------------------------------------------------------
NET ASSETS ($) 462,366,401
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 462,366,779
Accumulated net realized (loss) on investments (378)
--------------------------------------------------------------------------------
NET ASSETS ($) 462,366,401
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized) 462,366,779
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 24,870,987
EXPENSES:
Management fee--Note 2(a) 639,554
Shareholder servicing costs--Note 2(b) 639,554
TOTAL EXPENSES 1,279,108
INVESTMENT INCOME--NET, REPRESENTING NET INCREASE IN
NET ASSETS RESULTING FROM OPERATIONS 23,591,879
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
----------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 23,591,879 25,986,617
Net realized gain (loss) from investments -- (378)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 23,591,879 25,986,239
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (23,591,879) (25,986,617)
Net realized gain on investments -- (160,744)
TOTAL DIVIDENDS (23,591,879) (26,147,361)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 3,462,620,773 4,828,958,916
Dividends reinvested 1,820,483 3,272,221
Cost of shares redeemed (3,475,416,008) (5,004,026,360)
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL STOCK TRANSACTIONS (10,974,752) (171,795,223)
TOTAL INCREASE (DECREASE) IN NET ASSETS (10,974,752) (171,956,345)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 473,341,153 645,297,498
END OF PERIOD 462,366,401 473,341,153
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,
---------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .055 .047 .051 .050 .051
Distributions:
Dividends from investment income--net (.055) (.047) (.051) (.050) (.051)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.64 4.58 5.22 5.16 5.17
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .30 .30 .30 .30 .30
Ratio of net investment income
to average net assets 5.53 4.45 5.10 5.04 5.06
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 462,366 473,341 645,297 776,726 666,360
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. Effective March 22, 2000, Dreyfus
Service Corporation (" DSC"), a wholly-owned subsidiary of the Manager, became
the distributor of the fund's shares, which are sold to the public without a
sales charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was
the distributor.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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) Dividends to shareholders: It is the policy of the fund to declare dividends
daily from investment income-net; such dividends are paid monthly. Dividends
from net realized capital gain, if any, are normally declared and paid annually,
but the fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 $378 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.
At October 31, 2000, 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 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, 2000,
the fund was charged $639,554 pursuant to the Plan, of which $442,290 was paid
to DSC.
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, 2000, 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 (the "Fund") of The Dreyfus/Laurel
Funds, Inc., including the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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 Institutional U.S. Treasury Money Market Fund of The Dreyfus/Laurel
Funds, Inc. as of October 31, 2000, 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 accounting principles generally
accepted in the United States of America.
New York, New York
December 8, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the Fund hereby designates 58.16% of
the ordinary income dividends paid during its fiscal year ended October 31, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 930AR0010
Dreyfus Disciplined Smallcap Stock Fund
ANNUAL REPORT October 31, 2000
(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
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
---------------------------------------------------------------------------
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, 1999 through October
31, 2000. 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.
The Russell 2000 Index, a broad measure of small-cap stock performance, rose
more than 17% over the 12-month reporting period. Investor enthusiasm over
technology stocks drove the market to new highs. Conversely, in the first nine
months of 2000, the small-cap investment environment was marked by dramatic
price fluctuations. Additionally, the moderating effects of the Federal Reserve
Board's (the "Fed") interest-rate hikes during the first half of 2000 helped the
Fed to achieve its goal of slowing the U.S. economy. Other factors such as
higher energy prices and a weak euro also served to slow economic growth.
In our view, the stock market's recent weakness is a reminder that 20% annual
gains are not the norm, historically speaking. Since stocks provided returns
well above their historical averages during the second half of the 1990s, some
investors may have developed unrealistic expectations in equities. Recent
volatility has reminded investors of both the risks of investing and the
importance of fundamental research and investment selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Disciplined Smallcap Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, the fund produced a total return
of 15.25% .(1) In comparison, the fund' s benchmark, the Standard & Poor's
SmallCap 600 Index ("S&P 600") returned 25.26% for the same period.(2)
While small-cap stocks benefited from strong investor interest during the
reporting period, the fund's relative performance lagged primarily due to our
stock selection within the technology sector.
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 modeling techniques,
fundamental analysis and risk management.
The computer model identifies and ranks stocks based on more than a dozen
variables related to financial strength, relative profit growth and the
disparity between stock price and intrinsic worth. After the computer sifts
through thousands of candidates for investment, we select what we believe to be
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.
What other factors influenced the fund's performance?
Because the fund is structured to be similar to the S&P 600 in terms of sector
weightings, a deviation in performance from the S&P 600 most likely is not
attributable to an overemphasis on a particular sector of the market. If our
results lag, it' s most likely because our quantitative model led us to select
stocks that didn' t perform as well as the stocks that are included in the S&P
600. In fact, that is precisely what happened during the reporting period.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
For example, the fund's technology weighting included a number of initial public
offerings (IPOs) , typically very speculative companies with no earnings that
have just issued stock for the first time. When technology shares were booming
during the first four months of the reporting period, many of these IPOs offered
superior results. However, by March, the IPO market began to weaken along with
the technology sector. In this kind of negative market environment, IPOs tend to
perform much worse than more established companies, primarily because investors
are less inclined to take on investment risk.
One of the fund' s best performers, Plexus, is a company that enables other
companies to remain profitable by reducing or even removing their fixed
manufacturing costs. Home-based in Wisconsin, Plexus is a "contract"
manufacturer that designs, manufactures and assembles products for computer,
medical, telecommunications and other industrial companies. A global
manufacturer serving many continents would typically find it more cost effective
to use a contract manufacturer such as Plexus. That's because the more expensive
alternative would entail building manufacturing plants all over the world,
incurring higher transportation costs and longer lead times in getting products
to market.
Another strong performer for the fund was RenaissanceRe Holdings, whose
customers include property and casualty insurance companies. As a "reinsurance"
company, the firm sells insurance to other insurance companies to reduce the
risk of losses from large-scale calamities. The company has benefited this year
from significantly reduced catastrophe losses from hurricane and tornado damage.
In addition, insurance companies, such as RenaissanceRe, have large bond
investment portfolios that tend to perform well when interest rates peak and
then begin to fall in a slowing economic environment. As this was the case
during the reporting period, RenaissanceRe produced very strong returns for the
fund.
Investors also looked for companies whose fortunes did not diminish as the
economy slowed. A good example of this was found in the area of health care
stocks, where the fund benefited from its holdings in
Medicis Pharmaceutical, a company that offers prescription and over-the-counter
treatments for skin conditions. During the reporting period, such "niche"
pharmaceutical companies -- that is, those that offer solutions to a few
specific ailments -- tended to perform better than very large pharmaceutical
companies, whose stock prices experienced more dramatic swings in response to
Congressional hearings on prescription drug prices.
What is the fund's current strategy?
We have remained consistent in our disciplined focus on small-cap stocks, which
generally outperformed large-cap stocks during the reporting period. At the end
of the reporting period, our investment model remained biased toward growth
versus value. However, it appears that this bias may be declining. If it does,
we would expect to increase the proportion of value stocks held in the
portfolio.
November 15, 2000
(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 INC. -- REFLECTS THE REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD & POOR'S SMALLCAP 600 INDEX
IS A WIDELY ACCEPTED, UNMANAGED INDEX OF OVERALL SMALL-CAP STOCK MARKET
PERFORMANCE.
The Fund
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
--------------------------------------------------------------------------------
<TABLE>
Average Annual Total Returns AS OF 10/31/00
Inception From
Date 1 Year Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FUND 9/30/98 15.25% 21.84%
((+)) SOURCE: LIPPER 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 $10,000 INVESTMENT MADE IN
THE STANDARD & POOR'S SMALLCAP 600 INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL
GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. THE STANDARD & POOR'S SMALLCAP 600 INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF SMALL-CAP STOCK MARKET PERFORMANCE. THE INDEX DOES
NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION
RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE,
IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE
IN THIS REPORT.
<TABLE>
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--99.7% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALCOHOL & TOBACCO--.9%
Constellation Brands, Cl. A 22,350 (a) 1,089,562
CONSUMER CYCLICAL--14.2%
AnnTaylor Stores 36,480 (a) 1,094,400
Cheesecake Factory 20,600 (a) 912,837
HON INDUSTRIES 36,700 883,094
Harman International Industries 53,300 2,558,400
Hot Topic 35,300 (a) 1,209,025
Jack in the Box 60,400 (a) 1,479,800
Kenneth Cole Productions, Cl. A 27,520 (a) 1,250,440
Pacific Sunwear of California 84,830 (a) 1,739,015
Pier 1 Imports 113,900 1,509,175
Station Casinos 57,600 (a) 928,800
Too 41,080 (a) 942,273
Visteon 96,200 1,701,537
Zale 41,390 (a) 1,402,086
17,610,882
CONSUMER STAPLES--3.2%
Hain Celestial Group 65,290 (a) 2,591,197
Michael Foods 53,610 1,444,119
4,035,316
ENERGY RELATED--7.3%
Helmerich & Payne 35,100 1,103,456
Louis Dreyfus Natural Gas 38,300 (a) 1,227,994
Newfield Exploration 36,000 (a) 1,359,000
ONEOK 20,800 824,200
Seitel 102,400 (a) 1,536,000
UTI Energy 54,500 (a) 1,093,406
Valero Energy 57,700 1,907,706
9,051,762
HEALTH CARE--14.7%
Alpharma, Cl. A 33,550 1,302,159
Aradigm 43,800 (a) 969,075
Cooper Cos. 27,180 971,685
Dura Pharmaceuticals 50,600 (a) 1,742,537
Enzon 22,400 (a) 1,596,000
IDEXX Laboratories 76,400 (a) 1,833,600
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
Invitrogen 11,100 (a) 844,294
Medicis Pharmaceutical, Cl. A 33,260 (a) 2,448,767
Patterson Dental 75,660 (a) 2,369,104
Priority Healthcare, Cl. B 23,700 (a) 1,273,875
STERIS 79,400 (a) 1,191,000
Sequenom 18,300 592,463
Triad Hospitals 42,740 (a) 1,186,035
18,320,594
INTEREST SENSITIVE--13.7%
Allied Capital 63,970 1,319,381
BlackRock 22,700 (a) 967,587
Commerce Bancorp 35,900 2,174,194
Cullen/Frost Bankers 90,310 3,008,452
Eaton Vance 27,590 1,374,327
Legg Mason 13,630 707,908
MONY Group 42,220 1,736,297
Radian Group 28,600 2,027,025
RenaissanceRe Holdings 31,560 2,290,073
Webster Financial 59,610 1,452,994
17,058,238
INTERNET RELATED--1.1%
DigitalThink 22,000 775,156
Inet Technologies 15,900 (a) 651,900
1,427,056
PRODUCER GOODS--15.6%
Arch Chemicals 40,100 779,444
Astec Industries 50,580 (a) 521,606
C&D Technologies 22,900 1,353,963
Cambrex 31,800 1,270,013
Hercules 30,800 564,025
Insituform Technologies, Cl. A 50,170 (a) 1,790,442
Manitowoc 47,120 1,281,075
MasTec 27,100 (a) 784,206
Milacron 62,990 1,003,903
NCI Building Systems 59,890 (a) 932,038
Reliance Steel & Aluminum 75,300 1,788,375
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Stanley Works 22,100 588,412
Stewart & Stevenson Services 76,700 1,840,800
Teekay Shipping 43,000 1,607,125
Terex 83,810 (a) 1,031,911
Timken 74,310 1,044,984
United Stationers 39,000 (a) 1,172,437
19,354,759
SERVICES--7.1%
Armor Holdings 75,350 (a) 1,172,634
Catalina Marketing 70,130 (a) 2,752,603
Cox Radio, Cl. A 41,770 (a) 950,268
Dollar Thrifty Automotive Group 63,100 (a) 970,163
Entercom Communications 23,620 (a) 925,609
Entravision Communications, Cl. A 22,100 390,894
Stericycle 50,500 (a) 1,634,938
8,797,109
TECHNOLOGY--20.0%
Aclara Biosciences 12,200 218,075
AudioCodes 26,100 (a) 1,032,581
Black Box 20,000 (a) 1,317,500
CheckFree 15,680 (a) 780,080
DDi 36,100 1,441,744
DMC Stratex Networks 62,320 (a) 1,441,150
Dallas Semiconductor 60,880 2,412,370
DuPont Photomasks 11,500 (a) 645,438
Henry (Jack) & Associates 21,100 1,160,500
KEMET 68,700 (a) 1,915,013
Merix 22,000 (a) 1,027,469
National Instruments 31,400 (a) 1,465,987
Photon Dynamics 28,400 (a) 1,022,400
Plexus 27,200 (a) 1,715,300
RSA Security 34,500 (a) 2,001,000
RadiSys 30,200 (a) 800,300
Remedy 30,720 (a) 526,080
Sawtek 13,500 (a) 686,812
TranSwitch 23,740 (a) 1,370,985
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Trimble Navigation 28,400 (a) 674,500
Viasystems Group 87,200 1,237,150
24,892,434
UTILITIES--1.9%
Cleco 17,100 813,319
Public Service Company of New Mexico 55,900 1,540,744
2,354,063
TOTAL COMMON STOCKS
(cost $111,251,922) 123,991,775
------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--.2% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Greenwich Capital Markets, Tri-Party Repurchase
Agreement, 6.55%, dated 10/31/2000,
due 11/1/2000 in the amount of $285,052
(fully collateralized by $295,000 Federal Home
Loan Mortgage Corp., Notes, 6.625%, 9/15/2009,
value $295,362)
(cost $285,000) 285,000 285,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $111,536,922) 99.9% 124,276,775
CASH AND RECEIVABLES (NET) .1% 182,279
NET ASSETS 100.0% 124,459,054
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement
of Investments--Note 1(c) 111,536,922 124,276,775
Cash 4,963
Receivable for investment securities sold 7,532,833
Dividends and interest receivable 42,127
Receivable for shares of Capital Stock subscribed 700
131,857,398
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 153,671
Payable for investment securities purchased 7,189,648
Payable for shares of Capital Stock redeemed 55,025
7,398,344
--------------------------------------------------------------------------------
NET ASSETS ($) 124,459,054
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 118,970,535
Accumulated net realized gain (loss) on investments (7,251,334)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 12,739,853
--------------------------------------------------------------------------------
NET ASSETS ($) 124,459,054
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(100 million shares of $.001 par value Capital Stock authorized) 6,587,579
NET ASSET VALUE, offering and redemption price per share--Note 2(c)($) 18.89
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends 501,821
Interest 245,237
TOTAL INCOME 747,058
EXPENSES:
Management fee--Note 2(a) 1,177,402
Distribution fees--Note 2(b) 235,481
Loan commitment fees--Note 4 329
TOTAL EXPENSES 1,413,212
INVESTMENT (LOSS) (666,154)
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (7,251,334)
Net unrealized appreciation (depreciation) on investments 9,244,240
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,992,906
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,326,752
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-----------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss) (666,154) (87,892)
Net realized gain (loss) on investments (7,251,334) 80,509
Net unrealized appreciation (depreciation)
on investments 9,244,240 3,209,491
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,326,752 3,202,108
CAPITAL STOCK TRANSACTIONS ($):
--------------------------------------------------------------------------------
Net proceeds from shares sold 121,363,499 25,188,670
Cost of shares redeemed (21,813,496) (10,237,144)
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS 99,550,003 14,951,526
TOTAL INCREASE (DECREASE) IN NET ASSETS 100,876,755 18,153,634
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 23,582,299 5,428,665
END OF PERIOD 124,459,054 23,582,299
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 6,327,901 1,691,393
Shares redeemed (1,179,048) (668,393)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 5,148,853 1,023,000
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
Year Ended October 31,
---------------------------------------
2000 1999 1998(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 16.39 13.06 12.50
Investment Operations:
Investment (loss)--net (.14)(b) (.09)(b) --
Net realized and unrealized
gain (loss) on investments 2.64 3.42 .56
Total from Investment Operations 2.50 3.33 .56
Net asset value, end of period 18.89 16.39 13.06
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 15.25 25.50 4.48(c)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 1.50 .13(c)
Ratio of net investment (loss)
to average net assets (.71) (.56) (.02)(c)
Portfolio Turnover Rate 116.36 76.14 2.58(c)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 124,459 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.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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, which is a wholly-owned subsidiary
of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service
Corporation ("DSC" ), a wholly-owned subsidiary of the Manager, became the
distributor of the fund's shares, which are sold to the public without a sales
charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the
distributor.
The fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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, 2000, there were no open financial futures contracts.
(e) 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.
(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.
The fund has an unused capital loss carryover of approximately $5,773,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, the carryover expires in fiscal 2008.
During the period ended October 31, 2000, as a result of permanent book to tax
differences, the fund increased accumulated investment (loss) on investments by
$666,154 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,
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.25% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
fees and expenses of non-interested Directors (including counsel fees) and
extraordinary expenses. In addition, the Manager is required to reduce its fee
in an amount equal to the fund's allocable portion of fees and expenses of the
non-interested Directors (including counsel 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 and
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, 2000, the fund was
charged $235,480 pursuant to the Plan, of which $195,659 was paid to DSC.
(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 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, 2000, amounted to
$203,950,709 and $103,832,412, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$12,739,853, consisting of $20,034,730 gross unrealized appreciation and
$7,294,877 gross unrealized depreciation.
At October 31, 2000, 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, 2000, 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 (the "Fund") of The Dreyfus/Laurel Funds, Inc.,
including the statement of investments, as of October 31, 2000, 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, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Disciplined Smallcap Stock Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 2000, and 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 its financial highlights for each of the two years in the period then ended,
and for the period from September 30, 1998 (commencement of operations) to
October 31, 1998 in conformity with accounting principles generally accepted in
the United States of America.
New York, New York
December 8, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 041AR0010
Dreyfus
Bond Market
Index Fund
ANNUAL REPORT October 31, 2000
(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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
21 Statement of Assets and Liabilities
22 Statement of Operations
23 Statement of Changes in Net Assets
25 Financial Highlights
27 Notes to Financial Statements
32 Independent Auditors' Report
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, 1999 through October 31, 2000.
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.
Bond prices were mixed over the 12-month reporting period, with prices of U.S.
Treasury securities generally ending the period higher while prices of
investment-grade corporate bonds generally ended the period at modestly lower
levels than where they began. More recently, most sectors of the U.S. bond
market have been affected by slowing economic growth. Additionally, the
moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above their long-term averages,
establishing unrealistic expectations for some investors. We believe that as the
risks of the stock market have become more apparent, the relative stability and
income potential of bonds can make them an attractive investment as part of a
well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Bond Market Index Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus Bond Market Index Fund's
Investor shares produced a total return of 6.34% and approximate income
dividends of $0.5956 per share. The fund's BASIC shares produced a total return
of 6.63% and approximate income dividends of $0.6220 per share.(1) In
comparison, the fund's benchmark, the Lehman Brothers Aggregate Bond Index (the
"Index"), produced a total return of 7.30% for the same period.(2)
The fund seeks to replicate the total return provided by the Index. The
difference in returns was primarily due to transaction costs and other fund
operating expenses.
What is the fund's investment approach?
The fund seeks to match the total return of the Lehman Brothers Aggregate Bond
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 -- a measure of sensitivity to changing interest rates -- generally
remains neutral to the Index. As of October 31, 2000, the Index and fund's
average duration was approximately 4.8 years.
What other factors influenced the fund's performance?
As index investors, we do not base our investment decisions on market or
economic trends; our goal is to replicate the return of the Index. However, we
remain fully cognizant of the overall economic environment, and we are aware of
trends that may affect our performance.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
That said, four primary factors influenced the performance of both the Index and
the fund over the reporting period: lower returns from most other fixed-income
securities as compared to U.S. Treasury securities; the recent government
buyback program for U.S. Treasury securities; a series of short-term
interest-rate hikes initiated by the Federal Reserve Board (the "Fed") earlier
in the period; and the consolidation of broker/dealers within the fixed-income
marketplace.
First, the difference in yields between U.S. Treasury securities and most other
fixed-income securities has widened over the last 12 months to levels not seen
in approximately 10 years. One explanation may be an increasing number of
credit-quality downgrades being issued by the major independent rating services,
which cited excessive corporate debt levels and a change in the business cycle
as reasons for these downgrades. As a result, corporate bonds -- especially
those with the lowest credit ratings -- have experienced the steepest declines.
Second, in mid-January the U.S. Government announced that it would use a portion
of the federal budget surplus to buy back some outstanding U.S. Treasury
securities with relatively high yields. This announcement triggered a wave of
investor purchases of long-term Treasury securities, which helped drive yields
of 30-year U.S. Treasury bonds below those of shorter term Treasuries.
Third, in four separate moves during November, February, March and May, the Fed
raised interest rates for a total of 1.25 percentage points in an attempt to
slow economic growth and forestall the buildup of inflationary pressures. While
no changes to monetary policy have been made since May, the rising interest-rate
environment during the first half of the reporting period created increased
volatility for the Index and fund.
Finally, a consolidation within the broker/dealer industry, which began in
1998, has negatively affected the corporate fixed-income market. Several large
brokerage firms have purchased smaller ones, thereby reducing the number of
brokers available to invest capital in the bond market. Some large brokerage
firms have abandoned this line of business altogether, choosing instead to
pursue more profitable products within the brokerage industry. The reduced
number of brokers has, in turn, constrained liquidity in the overall bond market
and has contributed to wider yield differences among individual market sectors.
As a result of these influences, the best returns over the past 12 months for
securities comprising the Index and the fund were provided by commercial
mortgage-backed securities, followed by U.S. Treasuries, asset-backed securities
and corporate securities.
What is the fund's current strategy?
As an index fund, we invested in the various areas of the bond market in the
same proportions as the Index. Accordingly, as of October 31, 2000,
approximately 41% of the fund' s assets were invested in mortgage-backed
securities, 28% in U.S. Treasury securities, 24% in corporate bonds and
asset-backed securities, 4% in repurchase agreements and 3% in U.S. Government
agency bonds. These were the same general proportions represented in the Index
as of October 31, 2000.
November 15, 2000
(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: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS AGGREGATE BOND INDEX
IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN INDEX OF CORPORATE, U.S. GOVERNMENT
AND U.S. GOVERNMENT AGENCY DEBT INSTRUMENTS, MORTGAGE-BACKED SECURITIES AND
ASSET-BACKED SECURITIES WITH AN AVERAGE MATURITY OF 1-10 YEARS.
The Fund
<TABLE>
<CAPTION>
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
--------------------------------------------------------------------------------
Average Annual Total Returns AS OF 10/31/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTOR SHARES 4/28/94 6.34% 5.64% 6.49%
BASIC SHARES 11/30/93 6.63% 5.90% 5.84%
((+)) SOURCE: LIPPER INC.
</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 $10,000 INVESTMENT MADE
IN THE LEHMAN BROTHERS AGGREGATE BOND INDEX ON THAT DATE. ALL DIVIDENDS AND
CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. PERFORMANCE FOR INVESTOR SHARES WILL
VARY FROM THE PERFORMANCE OF BASIC SHARES SHOWN ABOVE DUE TO DIFFERENCES IN
CHARGES AND EXPENSES.
EFFECTIVE NOVEMBER 14, 1997, THE FUND'S INVESTMENT OBJECTIVE CHANGED TO SEEKING
TO REPLICATE THE TOTAL RETURN OF THE LEHMAN BROTHERS AGGREGATE BOND INDEX. THE
FUND'S INVESTMENT POLICIES ALSO CHANGED AS OF NOVEMBER 14, 1997 TO PERMIT THE
FUND TO INVEST IN MORTGAGE-BACKED AND ASSET-BACKED SECURITIES IN SEEKING TO
REPLICATE THE LEHMAN BROTHERS AGGREGATE BOND INDEX. PRIOR TO NOVEMBER 14, 1997,
THE FUND'S OBJECTIVE WAS TO SEEK TO REPLICATE THE TOTAL RETURN OF THE LEHMAN
BROTHERS GOVERNMENT/CREDIT BOND INDEX. THE FUND'S PERFORMANCE SHOWN IN THE LINE
GRAPH TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THE LEHMAN BROTHERS
AGGREGATE BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF CORPORATE, U.S.
GOVERNMENT AND U.S. GOVERNMENT AGENCY DEBT INSTRUMENTS, MORTGAGE-BACKED
SECURITIES, AND ASSET-BACKED SECURITIES. THE INDEX DOES NOT TAKE INTO ACCOUNT
CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION RELATING TO FUND
PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN
THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
Principal
BONDS AND NOTES--96.7% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE AND AVIATION--.7%
American Airlines Pass-Through Trust,
<S> <C> <C>
Ser. 1999-1, Cl. A-2, 7.024%, 2011 250,000 243,664
Boeing:
Deb., 8.1%, 2006 25,000 26,259
Deb., 8.625%, 2031 10,000 11,496
Raytheon:
Notes, 6.45%, 2002 300,000 296,174
Notes, 6.5%, 2005 25,000 24,181
Rockwell International,
Notes, 6.75%, 2002 30,000 29,992
United Technologies,
Deb., 8.75%, 2021 50,000 56,006
687,772
ASSET-BACKED CTFS.--2.0%
Chase Manhattan Credit Card Master Trust,
Ser. 1996-3, Cl. A, 7.04%, 2005 700,000 701,043
MBNA Master Credit Card Trust,
Ser. 1995-C, Cl. A, 6.45%, 2008 400,000 395,060
Premier Auto Trust,
Ser. 1999-2, Cl. A-3, 5.49%, 2003 1,000,000 994,385
2,090,488
AUTOMOTIVE--1.0%
Daimler-Chrysler:
Gtd. Notes, 8%, 2010 200,000 204,841
Medium-Term Notes, 7.375%, 2006 120,000 120,221
Dana,
Notes, 7%, 2028 100,000 73,280
Delphi Auto Systems,
Deb., 7.125%, 2029 125,000 105,564
General Motors:
Notes, 7%, 2003 40,000 40,189
Sr. Notes, 8.8%, 2021 150,000 163,748
Hertz,
Sr. Notes, 8.25%, 2005 300,000 308,737
1,016,580
BANKING--2.2%
Banc One,
Sub. Notes, 9.875%, 2019 5,000 5,841
BankAmerica,
Sub. Notes, 7.75%, 2002 25,000 25,300
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
BANKING (CONTINUED)
BankAmerica Capital II,
Gtd. Capital Securities, 8%, 2026 55,000 51,818
Bankers Trust New York,
Sub. Deb, 7.5%, 2015 75,000 72,534
Capital One Bank,
Sr. Notes, 6.375%, 2003 200,000 195,192
Chemical,
Sub. Notes, 6.125%, 2008 15,000 13,752
Citigroup,
Notes, 6.625%, 2028 100,000 88,479
FBS Capital I,
Gtd. Capital Securities, 8.09%, 2026 100,000 92,062
First Bank System,
Sub. Notes, 7.625%, 2005 55,000 55,886
First Union,
Sub. Notes, 6.3%, 2008 100,000 91,107
Fleet Boston,
Sub. Notes, 7.375%, 2009 175,000 173,455
HSBC Holding,
Sub. Notes, 7.5%, 2009 200,000 200,340
Key Bank,
Sub. Deb, 6.95%, 2028 250,000 219,418
MBNA America Bank,
Sr. Notes, 7.75%, 2005 500,000 496,737
Sub. Notes, 6.75%, 2008 100,000 92,449
NationsBank:
Sub. Notes, 6.875%, 2005 10,000 9,924
Sub. Notes, 7.625%, 2005 190,000 193,857
PNC Funding,
Notes, 7%, 2004 225,000 221,648
Republic New York Corp.,
Sub. Notes, 5.875%, 2008 25,000 22,475
Wachovia,
Sub. Notes, 6.375%, 2003 15,000 14,829
Wells Fargo Capital ,
Gtd. Capital Securities, 7.96%, 2026 30,000 27,905
2,365,008
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--.1%
duPont (E.I.) de Nemours,
Notes, 6.75%, 2002 40,000 40,046
Eastman Chemical,
Notes, 6.375%, 2004 30,000 28,740
Morton International,
Deb., 9.25%, 2020 5,000 5,702
Pharmacia,
Deb., 8.2%, 2025 20,000 20,039
94,527
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--1.1%
Bear Stearns Commercial Mortgage Securities,
Ser. 1999-WF2, Cl. A-2, 7.08%, 2009 250,000 249,905
GMAC Commercial Mortgage Securities,
Ser. 1998-C1, Cl. A-2, 6.7%, 2008 225,000 218,602
Heller Financial Commercial Mortgage Asset,
Ser. 1999-PH-1, Cl. A-2, 6.847%, 2031 150,000 147,432
LB Commercial Conduit Mortgage Trust,
Ser. 1999-C2, Cl. A-2, 7.325%, 2009 200,000 203,344
Morgan Stanley Capital I,
Ser. 1998-WF1, Cl. A-1, 6.25%, 2007 386,549 380,788
1,200,071
CONSUMER--.2%
Maytag,
Deb., 9.75%, 2002 5,000 5,160
Procter & Gamble:
Deb., 8.7%, 2001 30,000 30,439
Notes, 5.25%, 2003 200,000 193,366
Whirlpool,
Notes, 9%, 2003 10,000 10,305
239,270
ENTERTAINMENT/MEDIA--.9%
Disney (Walt),
Sr. Notes, 6.75%, 2006 20,000 19,985
News America Holdings,
Notes, 8.25%, 2018 300,000 291,856
Reed Elsevier Capital,
Medium-Term Notes, 7%, 2005 200,000 197,747
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/MEDIA (CONTINUED)
TCI Communications,
Deb., 8.75%, 2015 250,000 259,910
Time Warner,
Deb., 6.95%, 2028 100,000 89,634
Viacom,
Deb., 7.625%, 2016 125,000 125,054
984,186
FINANCIAL SERVICES--3.0%
Aetna Services,
Notes, 7.625%, 2026 50,000 48,428
American Express Credit,
Notes, 6.125%, 2001 40,000 39,778
American General Finance,
Notes, 8.125%, 2009 10,000 10,278
Associates Corp. of North America,
Sr. Notes, 6.625%, 2005 10,000 9,796
Bear Stearns:
Sr. Notes, 8.75%, 2004 10,000 10,415
Sr. Notes, 7.25%, 2006 75,000 73,207
CIT Group,
Sr. Notes, 7.125%, 2004 600,000 590,690
Chrysler,
Deb., 7.45%, 2027 50,000 47,364
Duke Capital,
Sr. Notes, 8%, 2019 250,000 256,281
Ford Capital B.V.,
Notes, 9.875%, 2002 25,000 26,008
Ford Motor Credit,
Notes, 6.75%, 2008 20,000 18,879
GMAC:
Deb., 6%, 2011 70,000 61,749
Notes, 7.125%, 2003 500,000 500,844
General Electric Capital:
Notes, 8.3%, 2009 15,000 16,158
Notes, 8.125%, 2012 100,000 107,929
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
General Electric Credit,
Deb., 5.5%, 2001 10,000 9,887
Goldman Sachs,
Notes, 7.8%, 2010 200,000 202,269
Household Finance:
Notes, 8%, 2004 15,000 15,358
Notes, 6.5%, 2008 200,000 185,573
Lehman Brothers,
Notes, 6.625%, 2008 200,000 184,566
Merrill Lynch:
Notes, 8.3%, 2002 15,000 15,377
Notes, 6.875%, 2018 250,000 229,794
Norwest Financial,
Sr. Notes, 7%, 2003 15,000 15,016
Paine Webber:
Notes, 7.625%, 2008 175,000 178,308
Sr. Notes, 6.55%, 2008 150,000 143,550
Sears, Roebuck Acceptance:
Deb., 6.75%, 2028 100,000 78,608
Notes, 7%, 2007 35,000 32,858
U.S. Leasing International,
Notes, 6.625%, 2003 30,000 29,600
3,138,568
FOOD & BEVERAGES--.8%
Archer-Daniels-Midland,
Deb., 0%, 2002 5,000 4,506
Coca-Cola,
Notes, 6.625%, 2002 35,000 34,886
Coca-Cola Enterprises:
Deb., 8.5%, 2022 100,000 107,236
Notes, 7.875%, 2002 15,000 15,149
Diageo,
Notes, 6.125%, 2005 200,000 192,517
Heinz (H.J.),
Deb., 6.375%, 2028 100,000 86,791
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FOOD & BEVERAGES (CONTINUED)
Hershey Foods,
Deb., 8.8%, 2021 30,000 33,758
Nabisco,
Deb., 7.55%, 2015 40,000 35,817
Ralston-Purina Group,
Notes, 8.625%, 2022 40,000 42,401
Safeway,
Notes, 7.5%, 2009 200,000 198,398
Seagram,
Deb., 8.35%, 2022 10,000 11,856
Supervalu,
Notes, 7.8%, 2002 15,000 15,122
Sysco,
Notes, 7%, 2006 25,000 25,226
803,663
FOREIGN--4.5%
Amoco Canada,
Deb., 6.75%, 2023 250,000 232,679
AT&T Canada,
Sr. Notes, 7.65%, 2006 250,000 244,837
Bayerische Landesbank Girozentrale,
Sub. Notes, 7.375%, 2002 300,000 302,743
Deutsche Telekom International Finance,
Bonds, 8%, 2010 300,000 306,949
Dresdner Bank-New York,
Sub. Notes, 7.25%, 2015 145,000 135,382
Hydro-Quebec:
Ser. HH, Deb., 8.5%, 2029 10,000 11,104
Ser. HK, Deb., 9.375%, 2030 20,000 24,216
Inter-American Development Bank,
Deb., 6.125%, 2002 600,000 596,732
Italy Government Bonds,
Deb., 6.875%, 2023 70,000 68,955
KFW International Finance,
Deb., 8%, 2010 35,000 37,156
Kingdom of Spain,
Notes, 7%, 2005 200,000 202,466
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FOREIGN (CONTINUED)
Korea Development Bank,
Bonds, 7.25%, 2006 300,000 287,254
Province of British Columbia:
Bonds, 7%, 2003 20,000 20,119
Bonds, 6.5%, 2026 25,000 22,611
Province of Manitoba,
Deb., 8.8%, 2020 10,000 11,613
Province of New Brunswick,
Deb., 6.75%, 2013 30,000 28,926
Province of Ontario:
Deb., 7%, 2005 40,000 40,497
Notes, 7.625%, 2004 400,000 411,886
Province of Quebec,
Deb., 7.5%, 2023 50,000 49,797
Province of Saskatchewan, C.D.A.,
Deb., 9.125%, 2021 10,000 11,812
Republic of Finland,
Bonds, 6.95%, 2026 25,000 24,256
Republic of Ireland,
Deb., 7.875%, 2001 150,000 151,447
Republic of Korea,
Notes, 8.875%, 2008 300,000 313,950
Republic of Portugal,
Notes, 5.75%, 2003 100,000 97,339
Royal Bank of Scotland,
Sub. Notes, 6.375%, 2011 160,000 142,735
Santander Finance Issuances,
Sub. Notes, 7.25%, 2006 100,000 99,202
Sanwa Finance Aruba,
Notes, 8.35%, 2009 150,000 149,513
Telefonica Europe,
Gtd. Notes, 7.75%, 2010 200,000 201,263
Toyota Motor Credit,
Notes, 5.625%, 2003 200,000 194,610
United Mexican States,
Notes, 9.875%, 2010 275,000 286,688
4,708,737
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--.8%
Aluminum Co. of America:
Notes, 5.75%, 2001 50,000 49,805
Notes, 7.375%, 2010 300,000 303,334
Bass America,
Notes, 8.125%, 2002 15,000 15,137
Burlington Resources,
Deb., 6.875%, 2026 70,000 63,285
Caterpillar,
Deb., 9.375%, 2011 150,000 169,605
Eaton,
Deb., 8.1%, 2022 10,000 9,795
Emerson Electric,
Notes, 6.3%, 2005 35,000 34,187
Lucent Technologies,
Deb., 6.5%, 2028 150,000 117,570
PPG Industries,
Notes, 7.375%, 2016 45,000 44,312
TRW,
Notes, 6.25%, 2010 100,000 86,767
893,797
INSURANCE--.7%
Cincinnati Financial,
Deb., 6.9%, 2028 100,000 87,540
Hartford Life,
Notes, 6.9%, 2004 400,000 396,954
Progressive,
Sr. Notes, 6.625%, 2029 100,000 80,155
Torchmark,
Deb., 8.25%, 2009 150,000 152,957
717,606
OIL AND GAS--.4%
Atlantic Richfield,
Deb., 9%, 2021 15,000 17,727
Phillips Petroleum,
Notes, 8.75%, 2010 200,000 218,835
Texaco Capital,
Deb., 6.875%, 2023 25,000 22,839
Union Oil of California,
Deb., 9.125%, 2006 200,000 213,794
473,195
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
OTHER--.0%
Private Export Funding,
Secured Notes, 8.4%, 2001 30,000 30,388
PAPER PRODUCTS--.2%
Bowater,
Deb., 9.375%, 2021 10,000 10,386
Georgia-Pacific:
Deb., 9.625%, 2022 25,000 25,009
Notes, 7.75%, 2029 125,000 111,248
International Paper,
Notes, 7.625%, 2007 10,000 10,064
Weyerhaeuser,
Deb., 7.95%, 2025 20,000 19,804
176,511
RETAIL--.6%
Dayton Hudson,
Deb., 8.5%, 2022 20,000 19,954
Federated Department Stores,
Deb., 7%, 2028 100,000 75,767
Gap,
Notes, 6.9%, 2007 280,000 259,605
Limited,
Deb., 7.5%, 2023 110,000 92,830
May Department Stores,
Notes, 9.875%, 2002 15,000 15,899
Wal-Mart Stores:
Notes, 5.875%, 2005 25,000 24,115
Sr. Notes, 6.875%, 2009 150,000 149,351
637,521
TECHNOLOGY--2.0%
Compaq Computer,
Notes, 7.45%, 2002 1,000,000 1,003,796
Electronic Data Systems,
Notes, 7.125%, 2009 300,000 298,527
Hewlett Packard,
Notes, 7.15%, 2005 300,000 300,775
IBM:
Deb., 7.5%, 2013 75,000 76,374
Deb., 7%, 2025 220,000 207,585
Marconi,
Gtd. Notes, 7.75%, 2010 200,000 193,369
2,080,426
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TELEPHONE AND TELEGRAPH--1.4%
AT&T:
Deb., 5.125%, 2001 50,000 49,607
Deb., 8.35%, 2025 5,000 4,851
Notes, 7%, 2005 15,000 14,639
Alltel
Sr. Notes, 7.6%, 2009 550,000 543,645
Bell Telephone Pennsylvania,
Deb., 6.75%, 2008 250,000 242,971
Bellsouth Telecommunications,
Deb., 6.375%, 2028 100,000 84,939
GTE,
Deb., 9.1%, 2003 35,000 36,614
MCI Worldcom,
Notes, 6.95%, 2028 120,000 105,970
New Jersey Bell Telephone,
Deb., 8%, 2022 25,000 25,522
New York Telephone,
Deb., 8.625%, 2010 5,000 5,380
Pacific-Bell Telephone:
Deb., 7.375%, 2025 75,000 68,877
Deb., 7.125%, 2026 10,000 9,397
Southwestern Bell Telephone,
Notes, 6.625%, 2005 150,000 147,099
U.S. West Communications,
Deb., 6.875%, 2033 25,000 20,878
Vodafone Airtouch,
Unsub. Notes, 7.75%, 2010 150,000 (a) 153,010
1,513,399
TOBACCO--.0%
Fortune Brands,
Deb., 8.625%, 2021 5,000 5,320
Philip Morris,
Deb., 8.375%, 2017 9,000 8,546
13,866
TRANSPORTATION--.2%
Canadian National Railway,
Notes, 6.9%, 2028 100,000 86,948
Federal Express,
Notes, 9.875%, 2002 15,000 15,494
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (CONTINUED)
Norfolk Southern:
Deb., 9%, 2021 10,000 10,893
Deb., 7.8%, 2027 50,000 48,711
United Parcel Service,
Deb., 8.375%, 2020 10,000 11,010
173,056
UTILITIES--1.6%
Baltimore Gas & Electric:
First Mortgage Bonds, 7.5%, 2007 10,000 10,099
First Mortgage Bonds, 7.5%, 2023 33,000 31,118
Carolina Power & Light,
First Mortgage Bonds, 8.2%, 2022 15,000 14,838
Commonwealth Edison,
Deb., 6.4%, 2005 200,000 192,371
Florida Power & Light:
First Mortgage Bonds, 6.625%, 2003 30,000 29,693
First Mortgage Bonds, 7.75%, 2023 25,000 23,856
Gulf States Utilities,
First Mortgage Bonds, 6.41%, 2001 45,000 44,732
MCN Investment,
Notes, 6.3%, 2001 300,000 (b) 298,046
New York State Electric & Gas,
First Mortgage Bonds, 9.875%, 2020 10,000 10,434
Niagara Mohawk Power,
First Mortgage Bonds, 7.75%, 2006 400,000 405,464
Northern States Power,
First Mortgage Bonds, 7.125%, 2025 100,000 94,249
PP&L Resources,
First Mortgage Bonds, 6.55%, 2006 25,000 24,364
Public Service Electric & Gas:
First Mortgage Bonds, 6.125%, 2002 20,000 19,717
First Mortgage Bonds, 6.5%, 2004 25,000 24,449
Sempra Energy,
Notes, 7.95%, 2010 200,000 201,684
South Carolina Electric & Gas,
First Mortgage Bonds, 9%, 2006 20,000 21,468
Texas Utilities,
First Mortgage Bonds, 8.75%, 2023 35,000 36,527
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
Union Electric,
First Mortgage Bonds, 6.75%, 2008 25,000 24,242
Virginia Electric & Power,
First Mortgage Bonds, 7.625%, 2007 25,000 25,567
Wisconsin Electric & Power,
First Mortgage Bonds, 7.7%, 2027 190,000 181,696
1,714,614
U.S. GOVERNMENTS--27.9%
U.S. Treasury Bonds:
5.5%, 8/15/2028 2,300,000 2,165,289
7.25%, 5/15/2016 110,000 123,815
7.625%, 2/15/2007 1,060,000 1,076,727
7.875%, 2/15/2021 1,380,000 1,679,501
8%, 11/15/2021 1,100,000 1,359,875
8.75%, 11/15/2008 225,000 241,569
8.75%, 5/15/2020 1,480,000 1,941,656
8.75%, 8/15/2020 290,000 381,127
8.875%, 8/15/2017 1,525,000 1,982,485
9.375%, 2/15/2006 700,000 810,656
10.75%, 2/15/2003 830,000 913,257
10.75%, 5/15/2003 115,000 127,785
10.75%, 8/15/2005 765,000 918,145
11.25%, 2/15/2015 25,000 37,500
11.625%, 11/15/2004 1,185,000 1,425,697
11.875%, 11/15/2003 10,000 11,625
12%, 8/15/2013 445,000 608,853
12.5%, 8/15/2014 40,000 57,502
12.75%, 11/15/2010 75,000 96,716
14%, 11/15/2011 30,000 42,025
15.75%, 11/15/2001 15,000 16,403
U.S. Treasury Notes:
5.625%, 5/15/2008 825,000 813,541
5.75%, 11/30/2002 1,500,000 1,494,375
5.875%, 2/15/2004 1,700,000 1,700,119
5.875%, 11/15/2004 535,000 535,358
6%, 8/15/2004 1,000,000 1,004,380
6%, 8/15/2009 3,000,000 3,032,070
6.25%, 1/31/2002 2,535,000 2,536,268
6.25%, 2/15/2003 1,530,000 1,540,557
6.5%, 5/15/2005 750,000 770,558
29,445,434
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES/MORTGAGE-BACKEDS--44.4%
Federal Farm Credit Banks,
Bonds, 5.25%, 2002 2,000,000 1,965,970
Federal Home Loan Banks:
Bonds, 5.785%, 2003 500,000 493,136
Notes, 4.875%, 2002 350,000 343,414
Federal Home Loan Mortgage Corp.:
Debs., 6.34%, 2002 500,000 496,411
Notes, 5.75%, 2008 1,650,000 1,568,416
Notes, 6.875%, 2005 700,000 708,974
6%, 12/1/2013-2/1/2029 2,484,862 2,373,784
6.5%, 3/1/2011-9/1/2029 3,680,005 3,563,246
7%, 9/1/2011-9/1/2029 2,269,319 2,236,697
7.5%, 7/1/2010-3/1/2030 2,023,878 2,034,244
8%, 5/1/2026-8/1/2026 863,339 877,032
8.5%, 6/1/2030 481,275 492,854
Federal National Mortgage Association:
Bonds, 6.25%, 2029 1,150,000 1,077,152
Medium-Term Notes, 5.59%, 2002 100,000 98,894
Medium-Term Notes, 6.06%, 2003 500,000 494,699
Notes, 5.125%, 2004 1,717,000 1,654,489
Notes, 5.25%, 2009 1,525,000 1,389,473
5.5%, 3/1/2014 423,206 400,061
6%, 6/1/2011-7/1/2029 2,437,510 2,313,406
6.5% 500,000 (c) 480,780
6.5%, 1/1/2005-11/15/2030 4,923,262 4,767,920
7%, 8/1/2008-10/1/2029 3,874,043 3,819,706
7.5%, 8/1/2015-6/1/2030 2,201,028 2,207,888
8%, 5/1/2027-10/1/2030 1,380,337 1,399,481
8.5%, 2/1/2025 193,037 199,249
9% 350,000 (c) 360,444
Financing Corp:
Bonds, 9.65%, 2018 10,000 12,837
Bonds, 8.6%, 2019 40,000 47,250
Government National Mortgage Association I:
6%, 2/15/2029 730,245 688,797
6.5%, 9/15/2008-7/15/2029 2,320,123 2,253,205
7%, 10/15/2011-9/15/2029 2,244,063 2,225,847
7.5%, 12/15/2026-8/15/2030 1,848,454 1,860,269
8%, 8/15/2024-10/15/2029 926,296 944,789
8.5%, 10/15/2026 178,334 183,740
9%, 2/15/2022-2/15/2023 316,479 331,160
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES/MORTGAGE-BACKEDS (CONTINUED)
Resolution Funding:
Deb. 8.625%, 2030 15,000 19,359
Deb. 8.875%, 2020 75,000 94,356
Tennessee Valley Authority:
Deb., 6%, 2013 450,000 419,647
Deb., 7.85%, 2044 10,000 10,190
46,909,266
TOTAL BONDS AND NOTES
(cost $102,254,543) 102,107,949
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--4.2%
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Goldman Sachs & Co., Tri-Party
Repurchase Agreement, 6.55%, dated 10/31/2000,
due 11/1/2000 in the amount of $4,447,469 (fully
collateralized by $4,275,800 U.S. Treasury Notes,
6.5% due 2/15/2010 value $4,536,292)
(cost $4,446,660) 4,446,660 4,446,660
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $106,701,203) 100.9% 106,554,609
LIABILITIES, LESS CASH AND RECEIVABLES (.9%) (902,246)
NET ASSETS 100.0% 105,652,363
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT OCOTOBER 31, 2000, THIS SECURITY
AMOUNTED TO $153,010 OR .1% OF NET ASSETS.
(B) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION. THE STATED
MATURITY IS 4/2/2011.
(C) PURCHASED ON A FORWARD COMMITMENT BASIS.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABLILITIES
October 31, 2000
Cost Value
---------------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(c) 106,701,203 106,554,609
Cash 81,679
Interest receivable 1,406,060
Receivable for shares of Capital Stock subscribed 9,520
108,051,868
------------------------------------------------------------------------------------------------------------------------------------
LIABLILITES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 20,589
Payable for investment securities purchased 2,374,084
Payable for shares of Capital Stock redeemed 4,832
2,399,505
-------------------------------------------------------------------------------------------------
NET ASSETS ($) 105,652,363
-------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 107,606,949
Accumulated net realized gain (loss) on investments (1,807,992)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (146,594)
-------------------------------------------------------------------------------------------------
NET ASSETS ($) 105,652,363
</TABLE>
NET ASSET VALUE PER SHARE
Investor Shares BASIC Shares
--------------------------------------------------------------------------------
Net Assets ($) 35,612,787 70,039,576
Shares Outstanding 3,700,601 7,269,841
--------------------------------------------------------------------------------
NET ASSETS VALUE PER SHARE ($) 9.62 9.63
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 6,450,934
EXPENSES:
Management fee--Note 2(a) 145,036
Distribution fees (Investor Shares)--Note 2(b) 78,152
Loan commitment fees--Note 4 959
TOTAL EXPENSES 224,147
INVESTMENT INCOME--NET 6,226,787
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (1,566,106)
Net unrealized appreciation (depreciation) on investments 1,286,147
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (279,959)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 5,946,828
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-----------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 6,226,787 4,521,447
Net realized gain (loss) on investments (1,566,106) (235,135)
Net unrealized appreciation (depreciation) on
investments 1,286,147 (3,673,368)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 5,946,828 612,944
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (1,952,848) (1,098,543)
BASIC shares (4,279,152) (3,417,691)
Net realized gain on investments:
Investor shares -- (13,369)
BASIC shares -- (389,542)
TOTAL DIVIDENDS (6,232,000) (4,919,145)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Investor shares 24,069,220 41,663,441
BASIC shares 24,339,942 56,683,374
Dividends reinvested:
Investor shares 1,879,105 1,096,075
BASIC shares 4,279,152 3,605,034
Cost of shares redeemed:
Investor shares (23,814,389) (9,667,040)
BASIC shares (22,746,007) (48,548,008)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 8,007,023 44,832,876
TOTAL INCREASE (DECREASE) IN NET ASSETS 7,721,851 40,526,675
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 97,930,512 57,403,837
END OF PERIOD 105,652,363 97,930,512
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
---------------------------------
2000 1999
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
INVESTOR SHARES
Shares sold 2,520,136 4,221,976
Shares issued for dividends reinvested 197,636 112,563
Shares redeemed (2,517,014) (985,975)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 200,758 3,348,564
--------------------------------------------------------------------------------
BASIC SHARES
Shares sold 2,541,593 5,839,805
Shares issued for dividends reinvested 450,125 363,500
Shares redeemed (2,384,167) (4,980,266)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 607,551 1,223,039
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 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 9.63 10.26 9.99 9.78 9.93
Investment Operations:
Investment income--net .60 .56 .59 .57 .57
Net realized and unrealized
gain (loss) on investments (.01) (.56) .32 .21 (.15)
Total from Investment Operations .59 -- .91 .78 .42
Distributions:
Dividends from investment income--net (.60) (.56) (.59) (.57) (.57)
Dividends from net realized gain
on investments -- (.07) (.05) -- --
Total Distributions (.60) (.63) (.64) (.57) (.57)
Net asset value, end of period 9.62 9.63 10.26 9.99 9.78
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 6.34 .03 9.43 8.29 4.36
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .40 .40 .40 .60 .65
Ratio of net investment income
to average net assets 6.25 5.72 5.79 5.82 5.80
Portfolio Turnover Rate 67.33 73.14 43.39 48.86 42.65
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 35,613 33,699 1,552 120 80
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
--------------------------------------------------------------
BASIC SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 9.64 10.27 10.00 9.80 9.94
Investment Operations:
Investment income--net .62 .59 .61 .60 .59
Net realized and unrealized gain (loss)
on investments (.01) (.56) .32 .20 (.14)
Total from Investment Operations .61 .03 .93 .80 .45
Distributions:
Dividends from investment income--net (.62) (.59) (.61) (.60) (.59)
Dividends from net realized gain
on investments -- (.07) (.05) -- --
Total Distributions (.62) (.66) (.66) (.60) (.59)
Net asset value, end of period 9.63 9.64 10.27 10.00 9.80
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 6.63 .29 9.69 8.46 4.69
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .15 .15 .15 .35 .40
Ratio of net investment income
to average net assets 6.53 5.96 6.06 6.12 6.02
Portfolio Turnover Rate 67.33 73.14 43.39 48.86 42.65
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 70,040 64,232 55,852 33,234 32,986
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 accounting
principles generally accepted in the United States of America, 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
In November 2000 the American Institute of Certified Public Accountants (AICPA)
issued a revised version of the AICPA Audit and Accounting Guide for Investment
Companies (the Guide) . The revised version of the Guide is effective for
financial statements issued for fiscal years beginning after December 15, 2000.
One of the new provisions in the Guide requires investment companies to amortize
premiums on fixed income securities which the fund does not currently do. Upon
adoption, the fund will be required to record a cumulative effect adjustment to
conform with accounting principles generally accepted in the United States of
America. The effect of this adjustment will be to decrease net investment income
with an offsetting increase to unrealized appreciation (depreciation) on
securities. This adjustment will therefore, have no effect on the net assets of
the fund. At this time, the fund has not completed its analysis of the impact of
this accounting change.
(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: 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 has an unused capital loss carryover of approximately $1,684,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, $112,000 of the carryover expires in fiscal 2007 and $1,572,000 expires
in fiscal 2008.
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 .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, 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
for shareholder servicing activities primarily intended to result in the sale of
Investor shares. The BASIC shares bear no distribution fee. During the period
ended October 31, 2000, the Investor shares were charged $78,152 pursuant to the
Plan, of which $50,421 was paid to DSC.
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 purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 2000, amounted to
$64,393,694 and $85,056,796, respectively.
At October 31, 2000, accumulated net unrealized depreciation on investments was
$146,594, consisting of $1,137,396 gross unrealized appreciation and $1,283,990
gross unrealized depreciation.
At October 31, 2000, 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. For the period ended October
31, 2000, 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 (the "Fund") of The Dreyfus/Laurel Funds, Inc., including
the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Bond Market Index Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 2000, 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 accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 310AR0010
Dreyfus
Money Market
Reserves
ANNUAL REPORT October 31, 2000
(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
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 period from November 1, 1999 through October 31, 2000. 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.
Yields on money market instruments generally rose over the reporting period as
the Federal Reserve Board (the "Fed") continued to raise short-term interest
rates at its February, March and May 2000 meetings. However, amid signs that its
previous interest-rate hikes had begun to slow the economy, the Fed refrained
from raising rates further at its meetings in June and August of 2000. Other
factors such as higher energy prices and a weak euro also served to slow
economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above historical averages, establishing
unrealistic expectations for some investors. In our opinion, as the risks of the
stock market have become more apparent due to recent volatility, the safety and
income potential of money market funds can make them an attractive investment as
part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Money Market Reserves.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus Money Market Reserves'
Investor shares produced an annualized yield of 5.54% while its Class R shares
produced an annualized yield of 5.74%. After taking into account the effects of
compounding, the annualized effective yields for the Investor shares and Class R
shares were 5.69% and 5.90%, respectively.(1)
We attribute the fund' s positive performance to our maturity management
strategy, which led us to maintain a relatively short average maturity for the
portfolio. This position enabled us to capture higher yields more quickly as
interest rates rose during much of the period.
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 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?
The fund was primarily influenced by higher short-term interest rates over the
past year. Higher interest rates were primarily the result of a
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
more restrictive monetary policy on the part of the Federal Reserve Board (the
"Fed").
When the reporting period began, the U.S. economy was growing quickly, fueling
concerns that long-dormant inflationary pressures might reemerge. The Fed raised
interest rates by 0.25 percentage points each in November 1999, February 2000
and March 2000, and by 0.50 percentage points in May 2000. As might be expected,
the money markets reacted to the Fed's interest-rate hikes in the form of higher
yields.
During the first calendar quarter of 2000, the economy grew at a strong 4.8%,
well above the level most analysts believed may trigger destructive levels of
inflation. In addition, rising energy prices began to add to inflation concerns,
strong domestic demand for goods and services continued, and overseas demand for
raw materials accelerated as well.
In the second calendar quarter, economic growth accelerated to an even more
robust 5.6% . Consumer confidence and consumer spending showed few signs of
abating despite sharp declines in the technology sector of the stock market. The
tightest U.S. labor market in the past 30 years added the threat of wage-driven
inflation.
From July through the end of the reporting period, however, we saw signs that
the Fed' s rate hikes may have begun to have the desired effect of slowing the
economy. Retail sales declined, housing starts slowed dramatically, and
inflation appeared to be relatively benign. As a result, the Fed chose not to
raise rates further at its June, August or October meetings. Indeed,
third-quarter GDP slowed to a more sustainable growth rate of approximately 2.7%
. What' s more, the corrections in the Nasdaq stock market during the reporting
period may have had a "reverse wealth effect," causing consumer spending to
moderate as investors became less confident in the stock market's returns. As a
result of these factors, money market rates began to trend lower toward the end
of the reporting period.
What is the fund's current strategy?
As of October 31, 2000, the largest portion of the fund's assets was invested in
floating-rate notes, followed by commercial paper, foreign bank obligations,
time deposits and short-term bank notes.
In addition, in October we began to extend the portfolio's average maturity -- a
measure of its sensitivity to interest-rate movements. We have chosen to
maintain a slightly longer average maturity because the economy has continued to
slow, suggesting that the Fed is unlikely to raise interest rates again in 2000.
In fact, some analysts believe that the Fed' s next move may be to reduce
interest rates if the economy slows too much.
November 15, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR
THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--30.3% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Bank Austria AG (Yankee)
<S> <C> <C>
6.62%, 7/16/2001 10,000,000 (a) 9,996,902
Bank of Nova Scotia (Yankee)
6.70%-6.72%, 1/2/2001-2/5/2001 28,000,000 27,999,002
Bayerische Hypo-Und Vereinsbank (Yankee)
6.83%, 4/6/2001 15,000,000 14,999,088
Bayerische Landesbank NY (Yankee)
6.58%, 3/1/2001 10,000,000 (a) 9,998,192
Commerzbank AG (Yankee)
6.80%, 4/17/2001 10,000,000 9,998,699
Credit Agricole-Indosuez S.A. (Yankee)
7.01%, 7/16/2001 15,000,000 14,998,501
Credit Commerciale de Belgique (Yankee)
7.24%, 5/9/2001 5,000,000 5,000,122
Deutsche Bank AG (Yankee)
6.57%, 1/22/2001 15,000,000 14,998,559
Dresdner Bank AG (Yankee)
6.75%, 2/26/2001 7,000,000 6,999,149
Landesbank Baden-Wuerttemberg (Yankee)
6.72%, 1/2/2001 20,000,000 20,000,342
Lloyds Bank PLC (Yankee)
6.88%, 12/7/2000 15,000,000 15,000,290
Rabobank Nederland (Yankee)
6.98%, 7/24/2001 15,000,000 14,998,969
Royal Bank of Canada (Yankee)
6.74%, 2/22/2001 15,000,000 14,990,661
Svenska Handelsbanken (Yankee)
7.00%, 7/12/2001 15,000,000 14,998,031
UBS AG (Yankee)
6.95%, 6/22/2001 10,000,000 10,004,999
Westdeutsche Landesbank Girozentrale (Yankee)
6.59%, 3/23/2001 15,000,000 (a) 14,997,156
TOTAL NEGOTIABLE CERTIFICATES OF DEPOSIT
(cost $219,978,662) 219,978,662
------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--29.1%
--------------------------------------------------------------------------------
Aesop Funding Corp.
6.55%, 12/1/2000 15,000,000 14,918,750
ANC Rental Corp.
6.57%, 11/17/2000 15,000,000 14,956,467
AT&T Corp.
6.82%, 7/13/2001 15,000,000 15,000,000
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Centric Capital Corp.
6.51%-6.55%, 11/2/2000-11/30/2000 27,200,000 27,128,249
Countrywide Home Loans
6.58%, 11/14/2000 30,000,000 29,929,006
FCAR Owner Trust
6.53%, 11/2/2000 20,000,000 19,996,383
Fleet Funding Corp.
6.54%, 11/21/2000 7,111,000 7,085,361
Fountain Square Communication Funding Corp.
6.54%-6.63%, 11/1/2000-11/24/2000 24,417,000 24,388,688
General Electric Capital Corp.
6.64%, 11/1/2000 20,000,000 20,000,000
Homeside Lending Inc.
6.54%, 11/10/2000 8,393,000 8,379,361
Household International Inc.
6.56%, 11/28/2000 30,000,000 29,853,300
TOTAL COMMERCIAL PAPER
(cost $211,635,565) 211,635,565
------------------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--25.2%
--------------------------------------------------------------------------------
AT&T Capital Corp.
6.30%-6.77%, 11/15/2000-4/9/2001 20,625,000 20,634,735
Bank Austria AG
6.57%, 2/16/2001 6,000,000 (a) 5,998,928
Bank One Corp.
6.61%, 11/24/2000 6,000,000 (a) 6,000,833
BankAmerica Corp.
6.74%, 9/11/2001 5,000,000 (a) 5,006,823
Bayerische Landesbank
7.30%, 2/28/2001 580,000 578,188
Caterpillar Financial Services Corp.
6.69%-6.71%, 5/4/2001--7/30/2001 18,250,000 (a) 18,258,341
Chrysler Financial Co. LLC
6.60%-6.61%, 1/29/2001--6/15/2001 7,000,000 (a) 7,001,326
Citicorp
6.63%, 11/10/2000 2,500,000 (a) 2,500,044
First Bank System Inc.
6.60%, 1/17/2001 3,500,000 (a) 3,500,659
Ford Motor Company
6.75%, 9/15/2001 700,000 712,586
Ford Motor Credit Corp.
6.58%--6.67%, 3/5/2001-9/25/2001 1,907,000 (a) 1,910,327
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
CORPORATE NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.
6.64%-6.66%, 8/6/2001-8/23/2001 2,000,000 2,002,545
Hydro-Quebec
6.22%-6.28%, 12/4/2000-12/15/2000 2,250,000 2,255,556
IBM Credit Corp.
6.60%, 5/21/2001 15,000,000 (a) 15,001,365
Merrill Lynch & Co.
6.58%-6.76%, 1/23/2001-10/12/2001 18,500,000 (a) 18,510,399
Morgan (J.P.) & Co.
6.61%, 3/16/2001 15,000,000 (a) 15,000,000
Morgan Stanley Group, Inc.
6.59%, 2/6/2001 1,470,000 (a) 1,470,928
Morgan Stanley, Dean Witter, Discover & Co.
6.60%, 3/16/2001 15,000,000 (a) 15,000,000
National Rural Utilities Corp.
6.74%, 7/20/2001 18,000,000 (a) 17,998,713
New Jersey Bell Telephone Co.
6.36%, 11/1/2000 1,002,000 1,002,000
Sanwa Business Credit
6.66%, 6/19/2001 11,700,000 (a) 11,713,953
TCI Communications Inc.
6.53%, 3/12/2001 1,000,000 (a) 1,002,161
US Bancorp.
6.59%-6.60%, 3/21/2001-5/16/2001 10,000,000 (a) 10,011,746
TOTAL CORPORATE NOTES
(cost $183,072,156) 183,072,156
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BANK NOTES--11.2%
--------------------------------------------------------------------------------
American Express Centurion Bank
6.59%, 3/29/2001 15,000,000 (a) 14,999,392
Bank of America NA
6.71%, 7/19/2001 15,000,000 (a) 15,010,486
Branch Bank & Trust Co.
6.67%, 3/9/2001 10,000,000 (a) 9,998,760
First Union National Bank
6.75%, 5/8/2001 16,000,000 (a) 16,000,000
Fleet National Bank
6.60%, 7/12/2001 10,000,000 (a) 10,011,510
Key Bank N.A.
6.75%, 5/11/2001 15,000,000 15,000,000
Principal
SHORT-TERM BANK NOTES (CONTINUED) Amount ($) Value ($)
--------------------------------------------------------------------------------
National City Bank
6.75%, 2/5/2001 500,000 (a) 497,571
TOTAL SHORT-TERM BANK NOTES
(cost $81,517,719) 81,517,719
------------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSITS--3.2%
--------------------------------------------------------------------------------
Branch Bank & Trust Co. (Grand Cayman)
6.56%, 11/1/2000
(cost $22,901,000) 22,901,000 22,901,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $719,105,102) 99.0% 719,105,102
CASH AND RECEIVABLES (NET) 1.0% 7,389,596
NET ASSETS 100.0% 726,494,698
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 719,105,102 719,105,102
Cash 522,786
Interest receivable 7,974,871
727,602,759
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 387,075
Payable for investment securities purchased 720,986
1,108,061
--------------------------------------------------------------------------------
NET ASSETS ($) 726,494,698
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 726,512,210
Accumulated net realized gain (loss) on investments (17,512)
--------------------------------------------------------------------------------
NET ASSETS ($) 726,494,698
NET ASSET VALUE PER SHARE
Investor Shares Class R
Shares
--------------------------------------------------------------------------------
Net Assets ($) 333,377,233 393,117,465
Shares Outstanding 333,386,470 393,125,740
--------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 1.00 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 43,640,346
EXPENSES:
Management fee--Note 2(a) 3,475,552
Distribution fees (Investor Shares)--Note 2(b) 689,554
TOTAL EXPENSES 4,165,106
INVESTMENT INCOME--NET 39,475,240
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): 3,727
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 39,478,967
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
----------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 39,475,240 29,794,053
Net realized gain (loss) on investments 3,727 1,215
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 39,478,967 29,795,268
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (19,167,911) (15,677,015)
Class R shares (20,307,329) (14,117,038)
TOTAL DIVIDENDS (39,475,240) (29,794,053)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold:
Investor shares 840,509,994 901,165,096
Class R shares 1,002,553,825 887,124,611
Dividends reinvested:
Investor shares 18,538,260 15,260,680
Class R shares 8,957,119 7,024,686
Cost of shares redeemed:
Investor shares (873,269,242) (870,302,688)
Class R shares (918,781,499) (843,178,882)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 78,508,457 97,093,503
TOTAL INCREASE (DECREASE) IN NET ASSETS 78,512,184 97,094,718
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 647,982,514 550,887,796
END OF PERIOD 726,494,698 647,982,514
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 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .056 .045 .050 .049 .048
Distributions:
Dividends from investment income--net (.056) (.045) (.050) (.049) (.048)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.70 4.64 5.13 5.04 4.94
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .70 .70 .70 .70 .70
Ratio of net investment income
to average net assets 5.56 4.54 5.01 4.95 4.84
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 333,377 347,596 301,473 204,851 144,168
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (continued)
Year Ended October 31,
-------------------------------------------------------------
CLASS R SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .058 .047 .052 .051 .050
Distributions:
Dividends from investment income--net (.058) (.047) (.052) (.051) (.050)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.91 4.84 5.34 5.25 5.16
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 .50 .50 .50 .50
Ratio of net investment income
to average net assets 5.80 4.74 5.21 5.13 5.01
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 393,117 300,386 249,415 232,032 170,409
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. (" Mellon Bank" ), which is a wholly-owned
subsidiary of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund
is authorized to issue 2 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 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 accounting
principles generally accepted in the United States of America, 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 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 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, 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 $18,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to October 31, 2000. If not applied, $5,000
of the carryover expires in fiscal 2003 and $13,000 expires in fiscal 2005.
At October 31, 2000, 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
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, 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% (currently limited by the Company's Board of Directors to .20%) of the
value of the average daily net assets attributable to its Investor shares to
compensate the distributor, an affiliate of the Manager, for shareholder
servicing activities and activities primarily intended to result in the sale of
Investor shares. The Class R shares bear no distribution fee. During the period
ended October 31, 2000, the Investor shares were charged $689,554 pursuant to
the Plan, of which $461,482 was paid to DSC.
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, 2000, 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 (the "Fund") of The Dreyfus/Laurel Funds, Inc., including
the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Money Market Reserves of The Dreyfus/Laurel Funds, Inc. as of October
31, 2000, 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 accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 317AR0010
Dreyfus
BASIC S&P 500
Stock Index Fund
ANNUAL REPORT October 31, 2000
(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
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, 1999 through October
31, 2000. 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.
The Standard & Poor' s 500 Composite Stock Price Index, a broad measure of
large-cap stock performance, rose more than 6% over the 12-month reporting
period. Investor enthusiasm over technology stocks drove most major stock market
indices to new highs. Conversely, in the first nine months of 2000, the equity
investment environment was marked by dramatic price fluctuations. Additionally,
the moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
Since stocks provided returns well above their historical averages during the
second half of the 1990s, some investors may have developed unrealistic
expectations in equities. Recent volatility has reminded investors of both the
risks of investing and the importance of fundamental research and investment
selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus BASIC S&P 500 Stock Index Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus BASIC S&P 500 Stock
Index Fund produced a total return of 5.92%.(1) The Standard & Poor's 500
Composite Stock Price Index (the "S& P 500 Index"), the fund's benchmark,
produced a 6.08% total return for the same period.(2) The difference in returns
was primarily due to 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. The S& P 500 Index is dominated by large-cap blue chip stocks that
comprise 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?
From November 1, 1999, through mid-March 2000, technology stocks produced the
lion' s share of gains in the U.S. stock market -- particularly those
high-flying, volatile technology stocks of companies providing Internet-related
products and services. During this period of technology dominance, the growth
style of investing produced higher returns than the value style. In addition,
the large-cap stocks in the S&P 500 Index produced lower returns than their mid-
and small-cap counterparts.
However, beginning in mid-March and continuing through the end of October, a
shift in investor preference caused technology stocks to fall sharply,
effectively reversing earlier gains. From mid-March through the end of the
period, midcap stocks recorded the strongest gains of any capitalization range,
followed by small- and large-cap stocks, respectively. In addition, the value
style of investing returned to favor, benefiting industry groups such as health
care, financial services, utilities and consumer staples across all market
capitalizations.
During the reporting period, the largest gains within the S&P 500 Index, and
therefore the fund as well, came from the technology group, which includes
electrical defense companies. In addition, the S&P 500 Index's holdings within
the health care area -- including hospital management, health maintenance
organizations and medical products manufacturers -- provided strong returns.
Consumer staples stocks also posted attractive returns, benefiting retail drug
stores and food and health products distributors. Finally, financial services
companies produced solid gains, most notably for investment banks, brokerage
services firms and insurance brokers.
On the other hand, the poorest performing area of the S&P 500 Index and the fund
was basic materials stocks, led lower by metal and glass container companies,
office equipment and supply firms and gold and steel producers. In addition, the
stocks of consumer cyclical companies -- which include household furniture and
appliance companies as well as long-distance telecommunications companies --
provided disappointing returns, as did photography and imaging companies in the
technology sector.
What is the fund's current strategy?
The fund is an index fund and its goal is to replicate the returns of the S&P
500 Index. Accordingly, we intend to maintain our strategy of investing in all
500 stocks in the S&P 500 Index, in proportion to their weighting in the index.
As of the end of the reporting period, approximately 26% of the Index and the
fund' s assets were invested in technology stocks, followed by 20% in
interest-sensitive companies, 12% in health care, 8% in utilities, 7% in
consumer cyclicals, 7% in energy, 7% in producer goods, 5% in services and 5% in
consumer staples.
November 15, 2000
(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 INC. -- REFLECTS REINVESTMENT OF 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
<TABLE>
<CAPTION>
FUND PERFORMANCE
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 10/31/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FUND 9/30/93 5.92% 21.40% 19.38%
((+)) SOURCE: LIPPER INC.
</TABLE>
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 $10,000 INVESTMENT MADE IN THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ON THAT DATE. ALL DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND SEEKS TO REPLICATE THE TOTAL RETURN PERFORMANCE OF THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX. THE FUND'S PERFORMANCE SHOWN IN THE LINE
GRAPH TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THE STANDARD & POOR'S
500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S.
STOCK MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND
OTHER EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--99.2% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
BEVERAGES & TOBACCO--1.1%
<S> <C> <C>
Anheuser-Busch Cos. 142,100 6,501,075
Brown-Forman, Cl. B 10,700 651,363
Coors (Adolph), Cl. B 5,815 370,343
Philip Morris Cos. 353,200 12,935,950
UST 25,500 643,875
21,102,606
CONSUMER CYCLICAL--7.3%
AMR 23,500 (a) 769,625
Albertson's 66,386 1,572,518
AutoZone 20,000 (a) 536,250
Bed Bath & Beyond 44,300 (a) 1,143,494
Best Buy 32,400 (a) 1,626,075
Black & Decker 13,100 492,888
Brunswick 13,700 266,294
CVS 61,318 3,246,021
Circuit City Group 32,236 427,127
Consolidated Stores 17,500 (a) 207,813
Cooper Tire and Rubber 11,403 124,720
Costco Wholesale 70,100 (a) 2,567,413
Dana 23,399 519,165
Darden Restaurants 19,200 432,000
Delphi Automotive Systems 87,772 1,376,923
Delta Air Lines 19,200 907,200
Dillard's, Cl. A 14,700 154,350
Dollar General 51,496 798,188
Eastman Kodak 48,300 2,167,463
Federated Department Stores 32,600 (a) 1,061,538
Ford Motor 296,911 7,756,800
Gap 133,300 3,440,806
General Motors 84,100 5,224,713
Grainger (W.W.) 14,700 469,482
Harley-Davidson 47,500 2,288,906
Harrah's Entertainment 18,294 (a) 523,666
Hasbro 26,975 289,981
Hilton Hotel 57,800 549,100
Home Depot 363,200 15,617,600
Johnson Controls 13,428 800,645
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
K mart 75,300 (a) 447,094
Kohl's 51,700 (a) 2,801,494
Kroger 129,500 (a) 2,921,844
Leggett & Platt 30,800 504,350
Limited 67,700 1,709,425
Liz Claiborne 8,400 357,000
Longs Drug Stores 5,938 129,894
Lowe's Cos. 60,000 2,741,250
Marriott International, Cl. A 37,600 1,522,800
Mattel 66,900 865,519
May Department Stores 46,700 1,225,875
Maytag 12,200 349,225
McDonald's 207,100 6,420,100
NIKE, Cl. B 42,300 1,689,356
Navistar International 9,300 (a) 307,481
Nordstrom 20,400 335,325
Office Depot 47,900 (a) 398,169
PACCAR 12,022 505,675
Penney (J.C.) 41,000 479,188
Polaroid 7,100 71,444
RadioShack 29,152 1,738,188
Reebok International 8,915 (a) 192,229
Russell 5,114 81,824
Safeway 78,000 (a) 4,265,625
Sears, Roebuck & Co. 53,800 1,599,474
Southwest Airlines 78,162 2,227,617
Springs Industries 2,800 65,975
Staples 71,250 (a) 1,015,313
Starbucks 29,300 1,309,344
TJX Cos. 45,900 1,250,775
Target 142,700 3,942,088
Tiffany & Co. 22,800 973,275
Toys R Us 32,000 (a) 550,000
Tricon Global Restaurants 22,830 (a) 684,900
US Airways Group 10,500 (a) 396,375
V.F. 18,000 491,625
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
Visteon 20,546 363,407
Wal-Mart Stores 700,500 31,785,188
Walgreen 158,400 7,227,000
Wendy's International 17,847 388,172
Whirlpool 11,200 487,200
Winn-Dixie Stores 22,100 425,425
144,602,290
CONSUMER STAPLES--4.8%
Alberto-Culver, Cl. B 8,744 293,471
Archer Daniels Midland 99,167 1,090,837
Avon Products 37,236 1,805,946
Campbell Soup 66,000 1,930,500
Clorox 36,800 1,642,200
Coca-Cola 388,500 23,455,688
Coca-Cola Enterprises 65,600 1,205,400
Colgate-Palmolive 90,100 5,294,276
ConAgra Foods 83,632 1,787,634
Fortune Brands 24,571 723,309
General Mills 44,800 1,870,400
Gillette 165,100 5,757,863
Heinz (H.J.) 54,500 2,285,594
Hershey Foods 21,400 1,162,288
International Flavors & Fragrances 15,700 262,975
Kellogg 63,600 1,613,850
Nabisco Group Holdings 51,200 1,478,400
National Service Industries 6,400 130,800
Newell Rubbermaid 41,778 801,615
Owens-Illinois 22,900 (a) 135,969
PepsiCo 226,300 10,961,406
Procter & Gamble 205,100 14,651,831
Quaker Oats 20,800 1,696,500
Ralston-Purina Group 48,100 1,166,425
SUPERVALU 20,800 319,800
Sara Lee 136,400 2,941,125
Sysco 52,304 2,729,615
Tupperware 9,100 155,838
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES (CONTINUED)
Unilever, N.V. 89,678 4,556,764
Wrigley, (Wm.) Jr. 17,800 1,409,538
95,317,855
ENERGY--7.0%
Amerada Hess 14,100 874,200
Anadarko Petroleum 38,075 2,438,704
Apache 19,200 1,062,000
Baker Hughes 51,820 1,781,313
Burlington Resources 33,806 1,217,016
Chevron 102,400 8,409,600
Coastal 33,620 2,536,209
Columbia Energy Group 12,500 899,219
Conoco, Cl. B 97,707 2,656,409
Devon Energy 20,000 1,008,000
Duke Energy 57,761 4,992,716
Eastern Enterprises 4,218 271,534
El Paso Energy 36,400 2,281,825
Enron 115,900 9,511,044
Exxon Mobil 546,378 48,730,088
Halliburton 69,900 2,590,669
Kerr-McGee 14,739 962,641
KeySpan 21,100 742,456
McDermott International 9,500 92,032
Nabors Industries 22,900 1,165,610
Nicor 7,200 254,250
ONEOK 4,582 181,562
Occidental Petroleum 57,900 1,150,763
Peoples Energy 5,570 191,469
Phillips Petroleum 40,000 2,470,000
Rowan Cos. 14,810 (a) 373,027
Royal Dutch Petroleum 336,300 19,967,813
Schlumberger 89,400 6,805,575
Sunoco 13,668 409,186
Texaco 86,500 5,108,906
Tosco 22,700 649,788
Transocean Sedco Forex 33,000 1,749,000
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
USX-Marathon Group 48,900 1,329,469
Unocal 38,100 1,300,163
Williams Cos. 69,400 2,901,787
139,066,044
HEALTH CARE--11.8%
ALZA 18,100 (a) 1,464,969
Abbott Laboratories 243,100 12,838,719
Allergan 20,600 1,731,688
American Home Products 204,500 12,985,750
Amgen 161,220 (a) 9,340,684
Bard (C.R.) 8,000 335,000
Bausch & Lomb 8,364 322,537
Baxter International 45,800 3,764,188
Becton, Dickinson & Co. 39,700 1,329,950
Biogen 23,200 (a) 1,396,350
Biomet 27,850 1,007,822
Boston Scientific 63,700 (a) 1,015,219
Bristol-Myers Squibb 308,200 18,780,938
Cardinal Health 43,600 4,131,100
Guidant 48,100 (a) 2,546,294
HCA-Healthcare 87,500 3,494,531
HEALTHSOUTH 60,500 (a) 726,000
Humana 26,000 (a) 315,250
Johnson & Johnson 218,000 20,083,250
King Pharmaceuticals 26,000 1,165,125
Lilly (Eli) & Co. 177,100 15,828,313
Manor Care 16,000 (a) 267,000
McKesson HBOC 44,554 1,250,297
MedImmune 32,900 2,150,838
Medtronic 187,900 10,205,319
Merck & Co. 360,800 32,449,450
PE Biosystems Group 32,700 3,825,900
Pfizer 990,225 42,765,342
Pharmacia 203,547 11,195,085
Schering-Plough 229,700 11,872,619
St. Jude Medical 13,200 (a) 726,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
Tenet Healthcare 49,400 1,942,038
Watson Pharmaceuticals 16,000 (a) 1,001,000
Wellpoint Health Networks 9,800 (a) 1,145,988
235,400,551
INTEREST SENSITIVE--20.3%
AFLAC 41,600 3,039,400
Aetna 22,127 1,279,217
Allstate 115,100 4,632,775
American Express 208,900 12,534,000
American General 39,638 3,190,859
American International Group 362,841 35,558,418
Amsouth Bancorp 59,100 823,706
Aon 39,950 1,655,428
Associates First Capital, Cl. A 114,222 4,240,492
BB&T 62,700 1,998,563
Bank One 181,198 6,613,727
Bank of America 257,604 12,381,092
Bank of New York 115,828 6,667,350
Bear Stearns Cos. 16,848 1,021,410
Block (H&R) 14,400 513,900
CIGNA 24,700 3,012,165
CIT Group, Cl. A 41,200 718,425
Capital One Financial 30,800 (a) 1,944,250
Cendant 113,886 1,366,632
Charter One Financial 32,950 755,791
Chase Manhattan 205,273 9,339,922
Chubb 27,400 2,313,588
Cincinnati Financial 25,200 926,100
Citigroup 705,516 37,127,780
Comerica 24,550 1,480,672
Conseco 50,971 353,611
Countrywide Credit Industries 17,900 670,131
Equifax 22,100 762,450
Fannie Mae 158,000 12,166,000
Fifth Third Bancorp 72,887 3,744,570
First Data 63,600 3,187,950
First Union 154,434 4,681,281
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Firstar 150,274 2,958,520
FleetBoston Financial 141,524 5,377,912
Franklin Resources 38,200 1,636,488
Federal Home Loan Mortgage 109,000 6,540,000
General Electric 1,553,400 85,145,738
Golden West Financial 24,800 1,390,350
Hartford Financial Services Group 35,200 2,620,200
Household International 74,041 3,725,188
Huntington Bancshares 39,376 566,030
Jefferson-Pilot 16,200 1,113,750
Keycorp 67,500 1,666,407
Lehman Brothers Holdings 38,100 2,457,450
Lincoln National 29,900 1,446,413
Loews 15,500 1,409,532
MBIA 15,400 1,119,388
MBNA 133,612 5,018,801
MGIC Investment 16,700 1,137,688
Marsh & McLennan Cos. 42,550 5,563,413
Mellon Financial 76,600 3,695,950
Merrill Lynch 126,000 8,820,000
Morgan (J.P.) 24,900 4,120,950
Morgan Stanley Dean Witter & Co. 176,410 14,167,928
National City 95,300 2,037,038
Northern Trust 34,800 2,971,050
Old Kent Financial 21,425 593,205
PNC Bank 45,300 3,029,438
Paine Webber Group 23,200 1,653,000
Progressive 11,500 1,129,875
Providian Financial 22,450 2,334,800
Regions Financial 34,300 808,194
Safeco 20,000 483,750
Schwab (Charles) 216,500 7,604,563
SouthTrust 26,400 854,700
St. Paul Cos. 34,992 1,793,340
State Street 25,300 3,155,922
Stilwell Financial 35,200 1,577,400
Summit Bancorp 27,300 1,023,750
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
SunTrust Banks 46,800 2,284,425
Synovus Financial 44,600 961,688
T. Rowe Price Associates 19,000 889,437
Torchmark 20,016 666,783
U.S. Bancorp 116,951 2,828,753
USA Education 24,300 1,357,763
Union Planters 21,100 713,444
UnitedHealth Group 25,200 2,756,250
UnumProvident 37,772 1,067,059
Wachovia 31,900 1,722,600
Washington Mutual 84,557 3,720,508
Wells Fargo 258,180 11,956,961
404,375,446
INTERNET--1.2%
America Online 362,100 (a) 18,260,703
Yahoo! 86,200 (a) 5,053,475
23,314,178
PRODUCER GOODS--6.5%
Air Products & Chemicals 36,000 1,343,250
Alcan Aluminium 52,400 1,653,875
Alcoa 135,788 3,895,418
Allegheny Technologies 12,783 258,856
American Power Conversion 30,500 394,594
Armstrong Holdings 6,300 (a) 18,113
Ashland 11,000 360,250
Avery Dennison 17,492 883,346
Ball 4,600 161,575
Barrick Gold 62,100 830,588
Bemis 8,300 214,763
Bethlehem Steel 20,800 (a) 59,800
Boeing 140,744 9,544,202
Boise Cascade 9,014 258,589
Briggs & Stratton 3,400 121,337
Burlington Northern Santa Fe 63,417 1,684,514
CSX 34,300 868,219
Caterpillar 54,200 1,900,388
Centex 9,214 340,918
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Cooper Industries 14,600 558,450
Crane 9,550 250,091
Crown Cork & Seal 19,800 180,675
Cummins Engine 6,547 222,598
Deere & Co. 36,800 1,354,700
Dow Chemical 106,375 3,257,734
duPont (E.I.) deNemours & Co. 163,494 7,418,540
Eastman Chemical 12,026 515,615
Ecolab 20,100 787,669
Emerson Electric 67,000 4,920,312
Engelhard 20,000 417,500
FMC 4,800 (a) 364,800
FedEx 44,692 (a) 2,094,267
Fluor 11,889 416,115
Fort James 32,100 1,057,294
Freeport-McMoRan Copper, Cl. B 24,000 (a) 190,500
General Dynamics 31,100 2,225,594
Genuine Parts 27,400 583,963
Georgia-Pacific 26,700 717,563
Goodrich (B.F.) 15,900 650,906
Goodyear Tire & Rubber 24,500 453,250
Grace (W.R.) & Co. 10,500 (a) 40,031
Great Lakes Chemical 8,203 273,775
Hercules 16,800 307,650
Homestake Mining 41,300 170,363
Honeywell International 125,650 6,761,541
Illinois Tool Works 47,300 2,628,106
Inco 28,500 (a) 439,969
Ingersoll-Rand 25,250 953,188
International Paper 75,788 2,775,736
Kaufman & Broad Home 7,600 226,100
Kimberly-Clark 84,400 5,570,400
Lockheed Martin 66,900 2,398,365
Louisiana-Pacific 16,300 138,550
Masco 71,718 1,340,230
Mead 16,054 464,562
Minnesota Mining & Manufacturing 62,000 5,990,750
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Molex 30,725 1,659,150
Newmont Mining 26,374 357,698
Norfolk Southern 60,100 848,913
Northrop Grumman 11,200 940,800
Nucor 12,700 440,531
PPG Industries 27,321 1,219,200
Pactiv 26,600 (a) 279,300
Pall 19,303 416,221
Parker-Hannifin 17,540 725,718
Phelps Dodge 12,325 576,194
Placer Dome 51,400 417,625
Potlach 4,500 150,750
Praxair 24,800 923,800
Pulte 6,298 209,802
Raytheon, Cl. B 53,300 1,822,194
Rockwell International 29,000 1,140,063
Rohm & Haas 33,955 1,020,772
Sealed Air 13,131 (a) 631,929
Sherwin-Williams 25,500 553,031
Sigma-Aldrich 12,600 450,450
Snap-On 9,200 235,175
Stanley Works 13,527 360,156
TRW 19,500 819,000
Temple-Inland 8,000 358,000
Textron 22,500 1,134,844
Thomas & Betts 9,041 136,745
Timken 9,500 133,594
Tyco International 275,686 15,627,950
USX-U.S. Steel Group 13,900 221,531
Union Carbide 21,122 908,246
Union Pacific 38,900 1,823,438
United Technologies 73,428 5,126,192
Vulcan Materials 15,800 663,600
Westvaco 15,800 450,300
Weyerhaeuser 34,500 1,619,344
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Willamette Industries 17,100 620,944
Worthington Industries 13,400 128,138
129,061,383
SERVICES--5.4%
ALLTEL 49,500 3,189,656
Allied Waste Industries 30,900 285,825
American Greetings, Cl. A 10,100 (a) 183,694
Automatic Data Processing 98,400 6,426,750
Avaya 43,668 586,789
Carnival 92,400 2,292,675
Ceridian 22,766 (a) 569,150
Clear Channel Communications 91,800 (a) 5,513,738
Comcast, Cl. A 141,900 (a) 5,782,425
Computer Sciences 26,400 (a) 1,663,200
Convergys 24,100 1,049,856
Deluxe 11,300 254,956
Disney (Walt) 326,900 11,707,106
Donnelley (R.R.) & Sons 19,100 410,650
Dow Jones & Co 13,700 806,588
Electronic Data Systems 73,200 3,435,825
Gannett 41,300 2,395,400
Harcourt General 11,500 644,575
IMS Health 46,600 1,100,925
Interpublic Group Cos. 48,300 2,073,882
Knight-Ridder 11,900 597,975
McGraw-Hill Cos. 30,500 1,957,719
Meredith 7,960 252,730
Moody's 25,400 668,338
NEXTEL Communications, Cl. A 119,400 (a) 4,589,438
New York Times, Cl. A 26,236 964,173
Omnicom Group 27,900 2,573,775
Paychex 58,325 3,306,298
Quintiles Transnational 18,100 (a) 252,269
Ryder System 9,300 183,675
Seagram 68,500 3,913,063
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
SERVICES (CONTINUED)
Sprint (PCS Group) 145,600 5,551,000
Time Warner 207,600 15,758,916
Tribune 48,341 1,791,639
Viacom, Cl. B 237,850 (a) 13,527,719
Waste Management 97,442 1,948,840
108,211,230
TECHNOLOGY--26.1%
ADC Telecommunications 121,100 (a) 2,588,513
Adaptec 15,600 (a) 246,675
Adobe Systems 37,600 2,859,950
Advanced Micro Devices 48,900 (a) 1,106,363
Agilent Technologies 71,008 3,288,558
Altera 62,600 (a) 2,562,688
Analog Devices 55,700 (a) 3,620,500
Andrew 12,700 (a) 334,169
Apple Computer 51,000 (a) 997,687
Applied Materials 127,200 (a) 6,757,500
Autodesk 9,000 198,563
BMC Software 38,700 (a) 786,094
Broadcom, Cl. A 34,800 (a) 7,738,650
Cabletron Systems 28,900 (a) 783,913
Cisco Systems 1,112,900 (a) 59,957,488
Citrix Systems 29,100 (a) 643,838
Compaq Computer 266,649 8,108,796
Computer Associates International 92,650 2,953,219
Compuware 57,200 (a) 450,450
Comverse Technology 24,500 (a) 2,737,875
Conexant Systems 35,700 (a) 939,356
Corning 138,300 10,579,950
Danaher 22,200 1,401,375
Dell Computer 405,700 (a) 11,968,150
Dover 31,800 1,349,513
EMC 342,000 (a) 30,459,375
Eaton 11,421 777,342
Gateway 50,500 (a) 2,606,305
Hewlett-Packard 312,800 14,525,650
ITT Industries 13,800 449,363
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Intel 1,053,000 47,385,000
International Business Machines 276,100 27,195,850
JDS Uniphase 146,800 (a) 11,945,850
KLA-Tencor 29,200 (a) 987,325
LSI Logic 48,682 (a) 1,600,421
Lexmark International Group, Cl. A 20,000 (a) 820,000
Linear Technology 48,800 3,150,650
Lucent Technologies 523,721 12,209,246
Maxim Integrated Products 44,300 2,937,644
Mercury Interactive 12,500 (a) 1,387,500
Micron Technology 88,600 (a) 3,078,850
Microsoft 825,300 (a) 56,842,498
Millipore 7,300 383,250
Motorola 341,956 8,527,528
NCR 15,100 (a) 651,188
National Semiconductor 27,900 (a) 725,400
Network Appliance 49,000 (a) 5,831,000
Nortel Networks 468,480 21,315,840
Novell 50,900 (a) 458,100
Novellus Systems 20,600 (a) 843,312
Oracle 882,900 (a) 29,135,700
Palm 88,610 4,746,173
Parametric Technology 42,700 (a) 525,744
PeopleSoft 43,900 (a) 1,915,824
PerkinElmer 7,716 922,062
Pitney Bowes 40,006 1,187,678
Power-One 11,500 (a) 815,782
QUALCOMM 116,800 (a) 7,604,775
Sabre Group Holdings 20,276 677,979
Sanmina 23,700 2,709,207
Sapient 18,600 661,463
Scientific-Atlanta 25,000 1,710,938
Seagate Technology 35,900 (a) 2,508,513
Siebel Systems 65,300 (a) 6,852,419
Solectron 94,300 (a) 4,149,200
Sun Microsystems 248,800 (a) 27,585,700
Tektronix 7,559 538,579
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Tellabs 64,300 (a) 3,210,982
Teradyne 27,200 (a) 850,000
Texas Instruments 271,100 13,300,844
Thermo Electron 27,200 (a) 788,800
Unisys 49,100 (a) 626,025
Veritas Software 63,000 (a) 8,883,985
Xerox 104,548 882,124
Xilinx 51,500 (a) 3,730,532
518,575,344
UTILITIES--7.7%
AT&T 589,099 13,659,733
AES 71,600 (a) 4,045,400
Ameren 21,500 854,625
American Electric Power 50,540 2,097,410
BellSouth 293,900 14,199,044
CP&L Energy 25,056 1,010,070
CINergy 24,900 762,563
CMS Energy 19,000 513,000
CenturyTel 22,000 847,000
Consolidated Edison 33,200 1,168,225
Constellation Energy Group 23,500 979,656
DTE Energy 22,400 809,200
Dominion Resources 37,334 2,223,707
Dynegy, Cl. A 48,600 2,250,787
Edison International 51,100 1,220,013
Entergy 35,000 1,340,938
Exelon 50,737 3,050,589
FPL Group 27,900 1,841,400
FirstEnergy 35,900 928,913
Florida Progress 15,500 824,407
GPU 19,000 628,188
Global Crossing 138,100 (a) 3,262,613
Niagara Mohawk Power 25,200 (a) 403,200
PG&E 60,500 1,629,719
PPL 22,700 934,956
Pinnacle West Capital 13,300 577,719
Public Service Enterprise Group 33,600 1,394,400
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
Qwest Communications International 260,474 12,665,548
Reliant Energy 46,144 1,906,324
SBC Communications 531,578 30,665,406
Sempra Energy 32,042 662,869
Southern 101,700 2,987,438
Sprint (FON Group) 138,700 3,536,850
TXU 41,420 1,535,129
Verizon Communications 426,292 24,645,006
WorldCom 450,602 (a) 10,701,799
Xcel Energy 53,230 1,360,692
154,124,534
TOTAL COMMON STOCK
(cost $1,442,096,791) 1,973,151,461
------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--.8% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--.6%
Goldman Sachs & Co., 6.55% dated
10/31/2000, due 11/1/2000 in the amount
of $12,917,350 (fully collateralized by
$12,842,000 of U.S. Treasury Notes
6.375%, 6/30/2002, value $13,173,821) 12,915,000 12,915,000
U.S. TREASURY BILLS--.2%
5.97%, 12/14/2000 3,030,000 (b) 3,008,094
TOTAL SHORT-TERM INVESTMENTS
(cost $15,923,409) 15,923,094
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,458,020,200) 100.0% 1,989,074,555
CASH AND RECEIVABLES (NET) 0.0% 690,419
NET ASSETS 100.0% 1,989,764,974
(A) NON-INCOME PRODUCING.
(B) PARTIALLY HELD BY THE BROKER IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN FINANCIAL FUTURES POSITIONS.
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF FINANCIAL FUTURES
October 31, 2000
Market Value Unrealized
Covered by Appreciation
Contracts Contracts ($) Expiration at 10/31/2000 ($)
----------------------------------------------------------------------------------------------------------------------
FINANCIAL FUTURES LONG
<S> <C> <C> <C> <C>
Standard & Poor's 500 56 20,162,800 December 2000 164,125
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(c) 1,458,020,200 1,989,074,555
Cash 6,036
Receivable for investment securities sold 241,340,727
Receivable for shares of Capital Stock subscribed 2,867,078
Dividends and interest receivable 1,519,988
Receivable for futures variation margin--Note 1(d) 403,884
2,235,212,268
--------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 368,055
Payable for shares of Capital Stock redeemed 244,804,128
Payable for investment securities purchased 275,111
245,447,294
--------------------------------------------------------------------------------------------
NET ASSETS ($) 1,989,764,974
--------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,460,891,743
Accumulated undistributed investment income--net 7,085,585
Accumulated net realized gain (loss) on investments (9,430,834)
Accumulated net unrealized appreciation (depreciation)
on investments (including $164,125 net unrealized
appreciation on financial futures)--Note 3 531,218,480
--------------------------------------------------------------------------------------------
NET ASSETS ($) 1,989,764,974
--------------------------------------------------------------------------------------------
SHARES OUTSTANDING
(150 million shares of $.001 par value Capital Stock authorized) 66,467,962
NET ASSET VALUE, offering and redemption price per share ($) 29.94
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $107,658 foreign taxes
withheld at source) 22,530,502
Interest 2,518,902
TOTAL INCOME 25,049,404
EXPENSES:
Management fee--Note 2 4,042,130
Loan commitment fees--Note 4 17,780
Interest expense--Note 4 746
TOTAL EXPENSES 4,060,656
INVESTMENT INCOME--NET 20,988,748
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (9,019,622)
Net realized gain (loss) on financial futures 8,744,216
NET REALIZED GAIN (LOSS) (275,406)
Net unrealized appreciation (depreciation)
on investments [including
($3,884,825) net unrealized (depreciation)
on financial futures] (78,779,273)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (79,054,679)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (58,065,931)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-------------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 20,988,748 19,488,277
Net realized gain (loss) on investments (275,406) 6,948,611
Net unrealized appreciation (depreciation)
on investments (78,779,273) 303,889,104
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (58,065,931) 330,325,992
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (18,409,918) (18,808,418)
Net realized gain on investments (14,475,871) (4,281,732)
TOTAL DIVIDENDS (32,885,789) (23,090,150)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 1,028,257,891 1,081,926,616
Dividends reinvested 32,035,615 22,563,493
Cost of shares redeemed (726,859,112) (797,590,203)
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS 333,434,394 306,899,906
TOTAL INCREASE (DECREASE) IN NET ASSETS 242,482,674 614,135,748
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,747,282,300 1,133,146,552
END OF PERIOD 1,989,764,974 1,747,282,300
Undistributed investment income--net 7,085,585 4,506,755
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 33,966,492 40,268,549
Shares issued for dividends reinvested 1,078,304 870,770
Shares redeemed (29,320,233) (28,940,895)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 5,724,563 12,198,424
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended October 31,
------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 28.76 23.34 19.73 15.38 12.75
Investment Operations:
Investment income--net .11(a) .34(a) .31 .30 .29
Net realized and unrealized
gain (loss) on investments 1.58 5.52 3.89 4.52 2.69
Total from Investment Operations 1.69 5.86 4.20 4.82 2.98
Distributions:
Dividends from investment income--net (.28) (.35) (.31) (.28) (.30)
Dividends from net realized gain
on investments (.23) (.09) (.28) (.19) (.05)
Total Distributions (.51) (.44) (.59) (.47) (.35)
Net asset value, end of period 29.94 28.76 23.34 19.73 15.38
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.92 25.34 21.68 31.87 23.78
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .20 .20 .20 .20 .20
Ratio of net investment income
to average net assets 1.04 1.23 1.45 1.72 2.16
Portfolio Turnover Rate 4.16 16.58 16.76 3.75 4.75
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 1,989,765 1,747,282 1,133,147 803,142 449,123
(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., which is a wholly-owned subsidiary
of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares, which
are sold to the public without a sales charge. Prior to March 22, 2000, Premier
Mutual Fund Services, Inc. was the distributor.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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, 2000, are set forth in the Statement of Financial
Futures.
(e) Dividends 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 affiliated 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,
2000 amounted to $534,181,968 and $81,469,786, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments and
financial futures was $531,218,480, consisting of $625,746,312 gross unrealized
appreciation and $94,527,832 gross unrealized depreciation.
At October 31, 2000, 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, 2000, was approximately $10,700, with a related weighted average
annualized interest rate of 7.00%.
NOTE 5-Capital Shares Redemption-in-kind:
A siginificant shareholder requested a Redemption-in-kind of its proportionate
share in each of the securities held in the fund as of October 31, 2000. The
remittance was made by the fund on November 1, 2000. The value of securities
liquidated to fulfill the Redemption-in-kind is reflected in the Statement of
Assets and Liabilities as a receivable for investment securities sold.
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 (the "Fund") of The Dreyfus/Laurel Funds, Inc.,
including the statements of investments and financial futures, as of October 31,
2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus BASIC S&P 500 Stock Index Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 2000, 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 accounting principles generally accepted in the United
States of America.
New York, New York
December 8, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $.1490 per share as a
long-term capital gain distribution of the $.3140 per share paid on December 20,
1999.
The fund also designates 88.78% of the ordinary dividends paid during the fiscal
year ended October 31, 2000 as qualifying for the corporate dividends received
deduction. Shareholders will receive notification in January 2001 of the
percentage applicable to the preparation of their 2000 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 713AR0010
Dreyfus
Disciplined Intermediate
Bond Fund
ANNUAL REPORT October 31, 2000
(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
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
16 Financial Highlights
18 Notes to Financial Statements
24 Independent Auditors' Report
FOR MORE INFORMATION
---------------------------------------------------------------------------
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, 1999
through October 31, 2000. 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.
Bond prices were mixed over the 12-month reporting period, with prices of U.S.
Treasury securities generally ending the period higher while prices of
investment-grade corporate bonds generally ended the period at modestly lower
levels than where they began. More recently, most sectors of the U.S. bond
market have been affected by slowing economic growth. Additionally, the
moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above their historical averages,
establishing unrealistic expectations for some investors. We believe that as the
risks of the stock market have become more apparent recently, the relative
stability and income potential of bonds can make them an attractive investment
as part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Disciplined Intermediate Bond Fund.
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, the fund's Investor shares
produced a total return of 5.95% and approximate income dividends of $0.729 per
share. The fund's Restricted shares produced a total return of 6.30% and
approximate income dividends of $0.758 per share.(1) In comparison, the Lehman
Brothers Aggregate Bond Index, the fund's benchmark, returned 7.30% for the same
period.(2)
The fund' s performance lagged that of the Index because the fund invested in a
higher proportion of corporate bonds and a lower proportion of U.S. Treasury
securities than did the Index. During the period, corporate bonds generally
produced more modest returns than U.S. Treasury securities of comparable
maturities.
What is the fund's investment approach?
We invest primarily in a mixture of U.S. Government and agency bonds, corporate
bonds and mortgage-related securities, generally keeping the portfolio's average
maturity between three and 10 years. Compared to U.S. Treasury securities,
high-grade corporate bonds generally offer additional yield in return for some
credit risk, while mortgage-backed securities generally 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?
In late 1999, the beginning of the reporting period, the fund's emphasis on
corporate bonds was actually a positive factor. November and December of 1999
and January 2000 were very strong months for corporate bonds as Y2K, previously
thought likely to cause disruptions in the economy, turned out to be a
non-event. But two developments offset this initial good news -- a shrinking
supply of U.S. Treasury bonds and a slowing economy in 2000.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The supply of U.S. Treasury bonds began shrinking in early 2000 when the federal
government announced plans to retire some of these bonds due to the federal
budget surplus. In addition to purchasing $30 billion of debt, government
officials allowed another $200 billion in bonds to mature without replacing
them, which represented an approximate 15% shrinkage in the total amount of the
outstanding securities that comprise the Index. According to a Lehman Brothers
study, in 1985 U.S. Treasury bonds represented about 50% of all outstanding
investment-grade taxable bonds. By 2000, however, that percentage was down to
28% . By 2009, Lehman Brothers projects that U.S. Treasury bonds could represent
just 12% of the total taxable bonds outstanding. As with most securities, prices
normally rise when supply becomes scarce.
Meanwhile, corporate bonds faced the challenge of a slowing economy in 2000. In
such an environment, the fund's decision to focus on high quality corporate bond
issuers helped boost our returns. During the reporting period, the Federal
Reserve Board (the "Fed" ) raised short-term interest rates a total of 1.25
percentage points, from 5.25% to 6.50%, in an effort to slow the economy and
stave off inflation. The Fed was apparently successful. By the third quarter of
2000, gross domestic product (GDP) had fallen to an annual growth rate of 2.7%,
about half its rate recorded in each of the first two quarters. With companies
reporting lower than expected profits, investors became concerned that some
issuers would have less money available to make their bond payments. The
challenge was to avoid companies whose creditworthiness would be downgraded by
national rating agencies such as Standard & Poor's Rating Services and Moody's
Investors Service, Inc.
Another positive factor in the fund's absolute performance was the
increased emphasis on mortgage-backed securities, which offered significantly
higher yields than U.S. Treasury bonds, as well as AAA credit ratings. While
mortgage-backed securities carry a risk of homeowners refinancing at lower
interest rates to pay off their mortgages without penalty, we minimized that
risk by focusing on what are called "discounted" and "seasoned" mortgage-backed
securities. Discounted mortgage-backed securities are those mortgages that were
originally financed at lower interest rates, thereby decreasing the likelihood
that homeowners would later refinance. In addition, a seasoned security -- one
that has been outstanding for several years -- is also less likely to be paid
off early since borrowers have already had many chances to refinance and did not
do so.
What is the fund's current strategy?
At the end of the reporting period, we believed that yields on high quality
corporate bonds were extremely attractive relative to U.S. Treasury securities.
As of October 31, an A-rated 10-year corporate bond yielded anywhere from 1.50
to 2.00 percentage points more than U.S. Treasury notes. As a result, we began
to shift the fund's allocation toward these securities. In addition, we believed
that mortgage-backed securities were attractive, providing yields of about 1.25
to 1.50 percentage points above U.S. Treasury yields. Because of what we believe
to be a slowing economy, we continue to focus on discounted mortgage-backed
securities that, in our view, provide attractive returns as well as lower risk
levels than other types of mortgages.
November 15, 2000
(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: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS AGGREGATE BOND INDEX
IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN INDEX OF CORPORATE, U.S. GOVERNMENT
AND U.S. GOVERNMENT AGENCY DEBT INSTRUMENTS, MORTGAGE-BACKED SECURITIES AND
ASSET-BACKED SECURITIES WITH AN AVERAGE MATURITY OF 1-10 YEARS.
The Fund
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 10/31/00
<TABLE>
Inception From
Date 1 Year Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTOR SHARES 11/1/95 5.95% 5.23%
RESTRICTED SHARES 11/1/95 6.30% 5.50%
(+) SOURCE: LIPPER INC.
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN EACH OF THE INVESTOR
SHARES AND RESTRICTED SHARES OF DREYFUS DISCIPLINED INTERMEDIATE BOND FUND ON
11/1/95 TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS AGGREGATE BOND INDEX
ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE
FEES AND EXPENSES. THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS A WIDELY
ACCEPTED, UNMANAGED INDEX OF CORPORATE, U.S. GOVERNMENT AND U.S. GOVERNMENT
AGENCY DEBT INSTRUMENTS, MORTGAGED-BACKED SECURITIES, AND ASSET-BACKED
SECURITIES. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
STATEMENT OF INVESTMENTS
October 31, 2000
Principal
BONDS AND NOTES--97.8% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE--2.6%
Ford Motor,
Notes, 7.45%, 2031 3,700,000 3,420,058
Hertz,
Sr. Notes, 8.25%, 2005 4,500,000 4,631,054
8,051,112
BANKING--4.1%
Capital One Financial,
Notes, 7.25%, 2003 2,500,000 2,468,850
First Union National Bank of Florida,
Medium-Term Notes, 6.18%, 2006 2,250,000 (a) 2,132,651
Fleet Financial Group,
Notes, 6.375%, 2008 4,250,000 3,944,217
U. S. Bank, N. A.,
Sub. Notes, 5.7%, 2008 1,500,000 1,330,346
U. S. Bank N. A. of Minneapolis, MN,
Sub. Notes, 6.3%, 2008 3,000,000 2,775,990
12,652,054
BROKERAGE--2.2%
Lehman Brothers,
Notes, 7.36%, 2003 3,000,000 2,995,203
Merrill Lynch & Co., Ser. B,
Notes, 7.18%, 2003 3,675,000 3,689,755
6,684,958
COLLATERALIZED MORTGAGE OBLIGATIONS--3.4%
Countrywide Funding,
Ser. 1994-10, Cl. A5, 6%, 2009 38,187 37,935
Federal Home Loan Mortgage Corp.,
Multiclass Mortgage Participation Ctfs., REMIC:
Ser. 1546, Cl. G, 6.75%, 2021 8,050,000 7,884,405
Ser. 1660, Cl. H, 6.5%, 2009 2,570,000 2,532,637
10,454,977
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--1.9%
Asset Securitization:
Ser. 1995-MD IV, Cl. A1, 7.1%, 2029 3,404,144 3,419,003
Ser. 1997-D4, Cl. A-CS1, 1.538%, 2029
(Interest Only Obligation) 10,038,824 (b,c) 175,679
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE PASS-THROUGH CTFS. (CONTINUED)
GS Mortgage Securities II,
Ser. 1998-GLII, Cl. A2, 6.562%, 2031 2,500,000 2,415,375
6,010,057
ENERGY--.8%
Conoco,
Sr. Notes, 6.95%, 2029 2,800,000 2,610,849
FINANCE--3.1%
Ford Motor Credit:
Notes, 7.375%, 2009 1,500,000 1,465,875
Sr. Notes, 5.75%, 2004 3,000,000 2,862,708
Household Finance,
Notes, 8%, 2005 1,500,000 1,535,843
NYNEX Capital Funding, Ser. B,
Medium-Term Notes, 8.23%, 2009 3,500,000 3,645,446
9,509,872
FINANCE/ASSET-BACKED CTFS.--2.8%
American Airlines Pass-Through Trusts,
Ser. 1991-A1, 9.71%, 2007 887,856 914,918
Chemical Master Credit Card Trust I,
Ser 1995-3, Cl. A, 6.23%, 2005 3,000,000 2,977,650
CitiBank Credit Card Master Trust I:
Ser. 1997-3, Cl. A, 6.839%, 2004 1,500,000 1,500,473
Ser. 1999-1, Cl. A, 5.5%, 2006 3,250,000 3,133,585
8,526,626
FOREIGN/YANKEE--5.2%
Deutsche Telekom International Finance,
Notes, 8.25%, 2030 3,500,000 3,592,467
Hanson Overseas,
Sr. Notes, 6.75%, 2005 1,500,000 1,452,459
Midland Bank,
Sub. Notes, 7.65%, 2007 1,500,000 (d) 1,539,900
National Australia Bank,
Sub. Notes, 6.4%, 2007 4,250,000 (b) 4,185,392
National Westminster Bank,
Sub. Notes, 7.375%, 2009 3,800,000 3,769,144
Province of Quebec,
Medium-Term Notes, 7.295%, 2006 250,000 (e) 252,325
Santander Financial Issuances,
Sub. Notes, 7%, 2006 1,125,000 1,104,347
15,896,034
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--3.3%
Cox Communications,
Notes, 6.5%, 2002 2,750,000 2,719,907
News America Holdings,
Deb., 8.25%, 2018 2,750,000 2,675,346
WMX Technologies,
Sr. Notes, 7.1%, 2003 5,050,000 (f) 4,875,149
10,270,402
INSURANCE--.7%
American General,
Sr. Notes, 6.625%, 2029 2,500,000 2,118,858
REAL ESTATE--.9%
EOP Operating,
Notes, 8.375%, 2006 2,750,000 2,843,453
RETAIL--.6%
Federated Department Stores,
Notes, 6.3%, 2009 2,250,000 1,893,983
TELECOMMUNICATION--1.2%
Lucent Technologies,
Deb., 6.45%, 2029 2,800,000 2,168,278
WorldCom,
Sr. Notes, 6.125%, 2001 1,440,000 1,431,409
3,599,687
U. S. GOVERNMENTS--16.1%
U. S. Treasury Bonds:
5.25%, 2/15/2029 11,785,000 10,743,206
7.875%, 2/15/2021 6,250,000 7,606,438
U. S. Treasury Notes:
5.875%, 11/15/2004 7,150,000 7,154,791
6%, 8/15/2009 9,000,000 9,096,210
6.5%, 10/15/2006 7,130,000 7,355,165
6.5%, 2/15/2010 4,000,000 4,188,440
6.625%, 4/30/2002 3,500,000 3,527,090
49,671,340
U. S. GOVERNMENT AGENCIES--14.1%
Federal Home Loan Banks,
Notes, 6.75%, 5/1/2002 7,000,000 7,028,630
Federal Home Loan Mortgage Corp.,
Notes, 6.875%, 1/15/2005 11,700,000 11,849,994
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT AGENCIES (CONTINUED)
Federal National Mortgage Association:
Bonds, 7.25%, 5/15/2030 3,250,000 3,445,842
Notes, 6.5%, 4/29/2009 9,855,000 9,417,162
Notes, 7.125%, 6/15/2010 5,500,000 5,680,323
Notes, 7.3%, 7/19/2005 6,025,000 6,048,274
43,470,225
U. S. GOVERNMENT AGENCIES/MORTGAGE-BACKED--34.0%
Federal Home Loan Mortgage Corp.:
5.5%, 9/1/2006 6,698,622 6,390,888
6%, 11/15/2022 2,272,308 2,211,194
6.25%, 11/15/2028 2,500,000 2,257,350
6.5%, 3/1/2029-8/1/2029 13,178,140 12,688,392
7%, 10/1/2030 8,000,000 7,850,000
8.5%, 6/1/2018 7,475,767 7,791,095
Federal National Mortgage Association:
6%, 7/1/2030 9,834,660 9,229,141
6.5%, 8/1/2029 13,041,810 12,564,871
7%, 6/1/2009 1,177,167 1,176,061
7.5%, 10/1/2029 6,797,378 6,799,486
8%, 2/1/2013-7/1/2007 6,609,840 6,744,101
Government National Mortgage Association I:
6%, 11/15/2008-5/15/2009 2,150,957 2,095,090
6.5%, 2/15/2024-5/15/2028 9,267,165 8,996,360
7%, 10/15/2023-12/15/2023 7,121,645 7,066,541
7.5%, 3/15/2027 3,061,750 3,077,060
8%, 5/15/2007-2/15/2008 4,776,867 4,898,057
9%, 12/15/2009 2,886,222 2,990,848
104,826,535
UTILITIES-TELEPHONE--.8%
AT&T,
Notes, 6.5%, 2029 3,150,000 2,480,701
TOTAL BONDS AND NOTES
(cost $303,027,160) 301,571,723
Principal
SHORT-TERM INVESTMENTS--1.2% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS;
J P. Morgan Securities, 6.52%
Dated 10/31/2000, due 11/1/2000 in the
amount of $3,683,667 (fully collateralized by
$3,656,000 U.S. Treasury Notes, 5.875%,
11/15/2004, value $3,855,764)
(cost $3,683,000) 3,683,000 3,683,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $306,710,160) 99.0% 305,254,723
CASH AND RECEIVABLES (NET) 1.0% 3,004,354
NET ASSETS 100.0% 308,259,077
(A) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 2/15/2036.
(B) VARIABLE RATE SECURITY--INTEREST RATE SUBJECT TO PERIODIC CHANGE.
(C) NOTIONAL FACE AMOUNT SHOWN.
(D) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 5/1/2025.
(E) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 7/22/2026.
(F) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED MATURITY IS 8/15/2026.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(c) 306,710,160 305,254,723
Interest receivable 3,968,591
Paydowns receivable 94,007
Other assets 5,013
309,322,334
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 145,722
Cash overdraft due to Custodian 776,388
Payable for shares of Capital Stock redeemed 141,147
1,063,257
--------------------------------------------------------------------------------
NET ASSETS ($) 308,259,077
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 318,472,234
Accumulated net realized gain (loss) on investments (8,757,720)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (1,455,437)
-------------------------------------------------------------------------------
NET ASSETS ($) 308,259,077
NET ASSET VALUE PER SHARE
Investor Shares Restricted Shares
--------------------------------------------------------------------------------
Net Assets ($) 6,175,788 302,083,289
Shares Outstanding 520,141 25,442,338
-------------------------------------------------------------------------------
NET ASSETS VALUE PER SHARE ($) 11.87 11.87
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 19,882,663
EXPENSES:
Management fee--Note 2(a) 1,568,603
Distribution fees (Investor Shares)--Note 2(b) 9,921
Loan commitment fees--Note 4 2,212
TOTAL EXPENSES 1,580,736
INVESTMENT INCOME--NET 18,301,927
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (5,392,777)
Net unrealized appreciation (depreciation) on investments 5,371,570
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (21,207)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 18,280,720
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------------
2000 1999
-------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 18,301,927 12,997,362
Net realized gain (loss) on investments (5,392,777) (3,336,362)
Net unrealized appreciation (depreciation)
on investments 5,371,570 (10,412,217)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 18,280,720 (751,217)
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor Shares (245,854) (103,206)
Restricted Shares (18,144,809) (12,833,622)
Net realized gain on investments:
lnvestor Shares -- (19,420)
Restricted Shares -- (2,243,985)
TOTAL DIVIDENDS (18,390,663) (15,200,233)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Investor Shares 4,984,888 2,504,041
Restricted Shares 93,250,972 124,388,414
Dividends reinvested:
Investor Shares 85,639 99,791
Restricted Shares 5,497,962 6,623,316
Cost of shares redeemed:
Investor Shares (1,196,518) (1,665,390)
Restricted Shares (52,975,021) (28,301,206)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 49,647,922 103,648,966
TOTAL INCREASE (DECREASE) IN NET ASSETS 49,537,979 87,697,516
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 258,721,098 171,023,582
END OF PERIOD 308,259,077 258,721,098
Undistributed investent income--net. -- 88,736
Year Ended October 31,
---------------------------------
2000 1999
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
INVESTOR SHARES
Shares sold 426,471 204,113
Shares issued for dividends reinvested 7,299 8,080
Shares redeemed (101,929) (135,617)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 331,841 76,576
--------------------------------------------------------------------------------
RESTRICTED SHARES
Shares sold 7,953,394 10,113,315
Shares issued for dividends reinvested 469,054 535,682
Shares redeemed (4,512,594) (2,309,550)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,909,854 8,339,447
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
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>
Year Ended October 31,
-------------------------------------------------------------------
INVESTOR SHARES 2000 1999 1998 1997 1996(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 11.92 12.87 12.52 12.29 12.50
Investment Operations:
Investment income--net .72 .70 .72 .74 .71
Net realized and unrealized gain
(loss) on investments (.04) (.79) .35 .23 (.21)
Total from Investment Operations .68 (.09) 1.07 .97 .50
Distributions:
Dividends from investment income--net (.73) (.70) (.72) (.74) (.71)
Dividends from net realized
gain on investments -- (.16) -- -- --
Total Distributions (.73) (.86) (.72) (.74) (.71)
Net asset value, end of period 11.87 11.92 12.87 12.52 12.29
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.95 (.69) 8.80 8.21 4.18
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .80 .80 .80 .80 .79
Ratio of net investment income
to average net assets 6.16 5.74 5.68 6.01 5.61
Portfolio Turnover Rate 100.49 114.24 106.93 143.91 198.16
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 6,176 2,244 1,438 317 126
(A) FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
-------------------------------------------------------------------
RESTRICTED SHARES 2000 1999 1998 1997 1996(a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.91 12.85 12.52 12.29 12.50
Investment Operations:
Investment income--net .75 .73 .76 .77 .74
Net realized and unrealized gain (loss)
on investments (.03) (.78) .32 .23 (.21)
Total from Investment Operations .72 (.05) 1.08 1.00 .53
Distributions:
Dividends from investment income--net (.76) (.73) (.75) (.77) (.74)
Dividends from net realized
gain on investments -- (.16) -- -- --
Total Distributions (.76) (.89) (.75) (.77) (.74)
Net asset value, end of period 11.87 11.91 12.85 12.52 12.29
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 6.30 (.37) 8.90 8.49 4.45
-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .55 .55 .55 .55 .55
Ratio of net investment income
to average net assets 6.40 5.99 5.95 6.31 6.29
Portfolio Turnover Rate 100.49 114.24 106.93 143.91 198.16
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 302,083 256,477 169,585 108,688 58,466
(A) FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 accounting
principles generally accepted in the United States of America, which may require
the use of management estimates and assumptions. Actual results could differ
from those estimates.
(a) Portfolio valuation: Investments in securities (excluding short-term
investments, other than U.S. Treasury Bills) are valued each business day by an
independent pricing service (" Service" ) approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Short-term investments, excluding U.S. Treasury Bills, are carried at amortized
cost, which approximates value.
(b) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In November 2000 the American Institute of Certified Public Accountants (AICPA)
issued a revised version of the AICPA Audit and Accounting Guide for Investment
Companies (the Guide) . The revised version of the Guide is effective for
financial statements issued for fiscal years beginning after December 15, 2000.
One of the new provisions in the Guide requires investment companies to amortize
premiums on fixed income securities which the fund does not currently do. Upon
adoption, the fund will be required to record a cumulative effect adjustment to
conform with accounting principles generally accepted in the United States of
America. The effect of this adjustment will be to decrease net investment income
with an offsetting increase to unrealized appreciation (depreciation) on
securities. This adjustment will therefore, have no effect on the net assets of
the fund. At this time, the fund has not completed its analysis of the impact of
this accounting change.
(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, 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 $8,646,000
available for federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, $3,138,000 of the carryover expires in fiscal 2007 and $5,508,000
expires in fiscal 2008.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(a) Investment management fee: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .55% of the value of the fund's average daily net
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 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 for shareholder servicing activities primarily
intended to result in the sale of Investor shares. The Restricted shares bear no
distribution fee. During the period ended October 31, 2000, Investor shares were
charged $9,921 pursuant to the Plan, of which $7,718 was paid to DSC.
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,
2000, amounted to $353,073,468 and $278,283,198, respectively.
At October 31, 2000, accumulated net unrealized depreciation on investments was
$1,455,437, consisting of $2,482,236 gross unrealized appreciation and
$3,937,673 gross unrealized depreciation.
At October 31, 2000, 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, 2000, 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 (the "Fund") of The Dreyfus/Laurel Funds,
Inc., including the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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 Disciplined Intermediate Bond Fund of The Dreyfus/Laurel Funds, Inc. as
of October 31, 2000, 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 accounting principles generally accepted in the United
States of America.
New York, New York
December 8, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 302AR0010
Dreyfus
Institutional Prime
Money Market Fund
ANNUAL REPORT October 31, 2000
(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
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
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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, 1999 through
October 31, 2000. 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.
Yields on money market instruments generally rose over the reporting period as
the Federal Reserve Board (the "Fed") continued to raise short-term interest
rates at its February, March and May 2000 meetings. However, amid signs that its
previous interest-rate hikes had begun to slow the economy, the Fed refrained
from raising rates further at its meetings in June and August of 2000. Other
factors such as higher energy prices and a weak euro also served to slow
economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above historical averages, establishing
unrealistic expectations for some investors. In our opinion, as the risks of the
stock market have become more apparent due to recent volatility, the safety and
income potential of money market funds can make them an attractive investment as
part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Institutional Prime Money Market Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus Institutional Prime
Money Market Fund produced an annualized yield of 5.94%, and after taking into
account the effects of compounding, an annualized effective yield of 6.11%.(1)
We attribute the fund' s positive performance to our maturity management
strategy, which led us to maintain a relatively short average maturity for the
portfolio. This somewhat defensive position enabled us to capture higher yields
more quickly as interest rates rose during the reporting period.
What is the fund's investment approach?
As a money market fund, our goal is to provide 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 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.
What other factors influenced the fund's performance?
The fund was primarily influenced by higher short-term interest rates over the
past year. Higher interest rates were primarily the result of a more restrictive
monetary policy on the part of the Federal Reserve Board (the "Fed").
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
When the reporting period began, the U.S. economy was growing quickly, fueling
concerns that long-dormant inflationary pressures might reemerge. The Fed raised
interest rates by 0.25 percentage points each in November 1999, February 2000
and March 2000, and by 0.50 percentage points in May 2000. As might be expected,
the money markets reacted to the Fed's interest-rate hikes in the form of higher
yields.
During the first calendar quarter of 2000, the economy grew at a strong 4.8%,
well above the level most analysts believe may trigger destructive levels of
inflation. In addition, rising energy prices began to add to inflation concerns,
strong domestic demand for goods and services continued, and overseas demand for
raw materials accelerated as well.
In the second calendar quarter, economic growth accelerated to an even more
robust 5.6% . Consumer confidence and consumer spending showed few signs of
abating despite sharp declines in the technology sector of the stock market. The
tightest U.S. labor market in the past 30 years added the threat of wage-driven
inflation.
From July through the end of the reporting period, however, we saw signs
that the Fed' s rate hikes may have begun to have the desired effect of slowing
the economy. Retail sales declined, housing starts slowed dramatically, and
inflation appeared to be relatively benign. As a result, the Fed chose not to
raise rates further at its June, August or October meetings. Indeed,
third-quarter GDP slowed to a more sustainable growth rate of approximately
2.7%. What's more, the corrections in the Nasdaq stock market during the
reporting period may have had a "reverse wealth effect," causing consumer
spending to moderate as investors became less confident in the stock market's
returns. As a result of these factors, money market rates began to trend lower
toward the end of the reporting period.
What is the fund's current strategy?
Toward the end of the reporting period, we began to extend the fund's
average maturity from the shorter than average position we had maintained
through most of the reporting period. We have chosen to maintain a modestly long
average maturity because the economy has continued to slow, suggesting that the
Fed is unlikely to raise interest rates again in 2000. In fact, some analysts
believe that the Fed' s next move may be to reduce interest rates if the economy
slows too much.
In addition, as of October 31, 2000, the largest portion of the fund's assets
was invested in commercial paper, followed by repurchase agreements, corporate
notes and negotiable bank certificates of deposit. As of that time, we planned
to maintain this asset allocation strategy until we see signs that the
investment landscape may be changing.
November 15, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR
THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
The Fund
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
October 31, 2000
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--5.9% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
American Express Centurion Bank (Yankee)
<S> <C> <C>
6.53%, 11/20/2000 10,000,000 10,000,000
Harris Trust & Savings Bank (Yankee)
6.53%, 11/6/2000 20,000,000 20,000,000
Svenska Handelsbanken (Yankee)
7.00%, 5/2/2001 10,000,000 9,999,056
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $39,999,056) 39,999,056
------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--60.9%
--------------------------------------------------------------------------------
A.I. Credit Corp.
6.50%, 11/2/2000 10,000,000 9,998,203
AIG Funding Inc.
6.61%, 1/22/2001 10,000,000 9,851,944
Allegheny Energy Inc.
6.62%, 11/20/2000 10,000,000 9,965,536
American Honda Finance Corp.
6.55%, 11/15/2000 10,000,000 9,974,800
Amsterdam Funding Corp.
6.56%, 11/3/2000 10,000,000 9,996,383
Archer Daniels Midland Co.
6.69%, 3/6/2001 10,000,000 9,775,347
AT & T Corp.
6.68%, 1/5/2001--1/12/2001 10,000,000 9,875,939
Barton Capital Corp.
6.63%, 1/23/2001 10,000,000 9,849,678
BASF Corp.
6.60%, 4/27/2001 10,000,000 9,685,825
British Gas Capital Inc.
6.63%, 1/8/2001 5,000,000 4,938,800
British Telecommunications PLC
6.62%--6.68%, 11/1/2000--1/23/2001 15,000,000 14,924,493
Brown-Forman Corp.
6.53%--6.54%, 11/8/2000--12/21/2000 20,000,000 19,897,500
Ciesco L.P.
6.56%, 11/9/2000 5,000,000 4,992,800
Coca-Cola Co.
6.61%, 1/19/2001 10,000,000 9,857,800
Coca-Cola Enterprises Inc.
6.62%, 1/18/2001 5,000,000 4,929,583
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CXC Inc.
6.53%, 11/15/2000 10,000,000 9,974,760
DaimlerChrysler North America Holding Corp.
6.61%, 1/19/2001 10,000,000 9,857,800
Delaware Funding Corp.
6.65%, 1/19/2001 10,000,000 9,856,483
France Telecom
6.59%, 12/6/2000 8,000,000 7,949,367
General Electric Capital Corp.
6.62%, 1/8/2001 10,000,000 9,876,844
Georgia Power Co.
6.53%, 11/8/2000 8,100,000 8,089,763
Golden Peanut Company LLC
6.56%, 12/7/2000 5,000,000 4,967,600
Halliburton Co.
6.71%, 2/5/2001 10,000,000 9,826,400
Hershey Foods Corp.
6.51%, 11/7/2000 10,000,000 9,989,217
Illinois Tool Works Inc.
6.57%, 12/5/2000 10,000,000 9,938,894
International Lease Finance Corp.
6.64%, 1/26/2001 10,000,000 9,844,961
Invensys PLC
6.73%, 1/18/2001 10,000,000 9,858,083
KFW International Finance Inc.
6.65%, 1/9/2001 10,000,000 9,874,842
Lone Star Funding LLC
6.59%, 11/14/2000 7,777,000 7,758,689
Lucent Technologies Inc.
6.60%, 1/4/2001 10,000,000 9,884,267
Market Street Funding Corp.
6.56%, 11/21/2000 10,000,000 9,963,778
Motiva Enterprises LLC
6.53%, 11/6/2000 10,000,000 9,991,014
National Rural Utilities Corp.
6.61%, 2/8/2001 10,000,000 9,822,350
Old Line Funding Corp.
6.55%, 11/9/2000 5,000,000 4,992,767
Rio Tinto America Inc.
6.61%, 11/15/2000 8,044,000 8,023,667
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Sheffield Receivables Corp.
6.55%, 11/2/2000 10,000,000 9,998,192
Spintab AB
6.67%, 1/18/2001 10,000,000 9,858,083
Telenor AS
6.66%, 1/17/2001 10,000,000 9,859,903
Telstra Corp. Ltd.
6.62%, 3/16/2001 10,000,000 9,758,125
Textron Financial Corp.
6.67%, 1/4/2001 10,000,000 9,883,200
Unilever Capital Corp.
6.53%, 11/1/2000 10,000,000 10,000,000
Variable Funding Capital Corp.
6.62%--6.67%, 11/21/2000--2/9/2001 15,000,000 14,826,456
Washington Post Co.
6.62%, 1/19/2001 5,000,000 4,928,681
Woolwich PLC
6.57%, 11/29/2000 5,000,000 4,974,839
TOTAL COMMERCIAL PAPER
(cost $412,943,656) 412,943,656
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES--.7%
--------------------------------------------------------------------------------
Federal Farm Credit Banks, Notes
6.74%, 12/1/2000
(cost $5,000,000) 5,000,000 5,000,000
------------------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--8.9%
--------------------------------------------------------------------------------
Bank One Corp
6.67%--6.84%, 11/6/2000--1/3/2001 20,000,000 (a) 20,000,000
Bavaria Universal Funding Corp.
6.60%, 4/10/2001 10,000,000 (a) 10,000,000
Bear Stearns Cos. Inc.
6.79%, 7/18/2001 10,000,000 (a) 10,000,000
Diageo Capital PLC
6.20%, 12/4/2000 10,000,000 9,999,342
GAP Inc.
6.76%, 9/21/2001 10,000,000 (a) 10,000,000
TOTAL CORPORATE NOTES
(cost $59,999,342) 59,999,342
Principal
SHORT TERM BANK NOTES--3.0% Amount ($) Value ($)
--------------------------------------------------------------------------------
Comerica Bank
6.59%, 4/20/2001 10,000,000 (a) 9,998,171
First Union National Bank
6.62%, 5/29/2001 10,000,000 (a) 10,000,000
TOTAL SHORT TERM BANK NOTES
(cost $19,998,171) 19,998,171
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--17.6%
--------------------------------------------------------------------------------
Barclays De Zoette Wedd
6.55% dated 10/31/2000, due 11/1/2000 in the
amount of $30,005,458 (fully collateralized by
$28,757,000 U.S.Treasury Notes 6.625%
due 1/15/2008, value $30,600,992) 30,000,000 30,000,000
C S First Boston Corp.
6.53% dated 10/31/2000, due 11/1/2000 in the amount
of $40,007,256 (fully collateralized by $38,897,000
U.S.Treasury Notes 6.25%-7.50% due from 4/30/2002
to 5/15/2007, value $40,999,458) 40,000,000 40,000,000
Goldman, Sachs & Co.
6.55% dated 10/31/2000, due 11/1/2000 in the
amount of $49,238,391 (fully collateralized by
$48,950,000 U.S. Treasury Notes 6.375% due
6/30/2002, value $50,214,807) 49,229,434 49,229,434
TOTAL REPURCHASE AGREEMENTS
(cost $119,229,434) 119,229,434
------------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSITS--2.8%
--------------------------------------------------------------------------------
National City Bank (Grand Cayman)
6.50%, 11/1/2000 9,273,000 9,273,000
South Trust NA (Grand Cayman)
6.61%, 4/26/2001 10,000,000 10,000,000
TOTAL TIME DEPOSITS
(cost $19,273,000) 19,273,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $676,442,659) 99.8% 676,442,659
CASH AND RECEIVABLES (NET) .2% 1,313,747
NET ASSETS 100% 677,756,406
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of
$119,229,434)--Note 1(c) 676,442,659 676,442,659
Cash 159,501
Interest receivable 1,340,315
677,942,475
--------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 186,069
--------------------------------------------------------------------------------------------
NET ASSETS ($) 677,756,406
--------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 677,766,562
Accumulated net realized gain (loss) on investments (10,156)
--------------------------------------------------------------------------------------------
NET ASSETS ($) 677,756,406
--------------------------------------------------------------------------------------------
SHARES OUTSTANDING
(4 billion shares of $.001 par value Capital Stock authorized) 677,766,562
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 41,556,607
EXPENSES:
Management fee--Note 2(a) 992,716
Shareholder servicing costs--Note 2(b) 992,716
TOTAL EXPENSES 1,985,432
INVESTMENT INCOME--NET 39,571,175
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($) 156
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 39,571,331
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-------------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 39,571,175 25,488,760
Net realized gain (loss) from investments 156 --
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 39,571,331 25,488,760
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (39,571,175) (25,488,760)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 3,677,358,059 3,392,852,344
Dividends reinvested 10,538,921 8,943,144
Cost of shares redeemed (3,594,611,443) (3,297,190,786)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 93,285,537 104,604,702
TOTAL INCREASE (DECREASE) IN NET ASSETS 93,285,693 104,604,702
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 584,470,713 479,866,011
END OF PERIOD 677,756,406 584,470,713
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,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .060 .048 .053 .053 .052
Distributions:
Dividends from investment income--net (.060) (.048) (.053) (.053) (.052)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 6.13 4.91 5.47 5.42 5.33
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .30 .30 .30 .30 .30
Ratio of net investment income
to average net assets 5.98 4.81 5.34 5.27 5.25
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 677,756 584,471 479,866 533,154 575,700
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
</TABLE>
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 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. Effective March 22, 2000, Dreyfus
Service Corporation (" DSC"), a wholly-owned subsidiary of the Manager, became
the distributor of the fund's shares, which are sold to the public without a
sales charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was
the distributor.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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) 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, 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 pro-
The Fund
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.
The fund has an unused capital loss carryover of $10,156 available for Federal
income tax purposes to be applied against future net securities profits, if any,
realized subsequent to October 31, 2000. If not applied, $10 of the carryover
expires in fiscal 2004, $9,373 expires in fiscal 2005 and $773 expires in fiscal
2006.
At October 31, 2000, 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 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, 2000,
the fund was charged $992,716 pursuant to the Plan, of which $677,710 was paid
to DSC.
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, 2000, 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 (the "Fund") of The Dreyfus/Laurel Funds,
Inc., including the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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 Institutional Prime Money Market Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 2000, 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 accounting principles generally accepted in the
United States of America.
New York, New York
December 8, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 922AR0010
Dreyfus Premier
Balanced Fund
ANNUAL REPORT October 31, 2000
(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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
18 Statement of Financial Futures
19 Statement of Assets and Liabilities
20 Statement of Operations
21 Statement of Changes in Net Assets
24 Financial Highlights
29 Notes to Financial Statements
36 Independent Auditors' Report
37 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, 1999 through October 31, 2000.
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.
In the 12-month reporting period, the Standard & Poor's 500 Composite Stock
Price Index rose more than 6% , while the Lehman Brothers Intermediate
Government/Credit Bond Index provided a return of slightly under 7%. Most stock
market gains during the reporting period were realized during the fourth quarter
of 1999, when investors were enthusiastic about technology stocks. Conversely,
in the first nine months of 2000, the equity investment environment was marked
by dramatic price fluctuations. In the bond market, rising interest rates took
their toll on most sectors, with the exception of long-term U.S. Treasury bonds.
Additionally, the moderating effects of the Federal Reserve Board's (the "Fed")
interest-rate hikes during the first half of 2000 helped the Fed to achieve its
goal of slowing the U.S. economy. Other factors such as higher energy prices and
a weak euro also served to slow economic growth.
Since the investment environment in general provided returns well above their
historical averages during the second half of the 1990s, some investors may have
developed unrealistic expectations. Recent market volatility has reminded
investors of both the risks of investing and the importance of fundamental
research and investment selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Premier Balanced Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus Premier Balanced Fund
produced total returns of 1.66%, 0.84%, 0.90%, 1.86% and 1.35% for its Class A,
Class B, Class C, Class R and Class T shares, respectively.(1) In contrast, the
fund' s benchmark, which is a hybrid index that is composed of 60% Standard &
Poor's 500 Composite Stock Price Index ("S&P 500 Index") and 40% Lehman Brothers
Intermediate Government/Credit Bond Index ("Intermediate Index"), provided a
total return of 6.23% for the same period.(2 )Separately, the S&P 500 Index and
the Intermediate Index provided total returns of 6.08% and 6.46%, respectively,
for the same period.
We attribute the fund' s underperformance to our individual stock selection
strategy. In addition, our decision to allocate a large portion of the fund's
assets to bonds rather than stocks was positive. However, our emphasis on bond
market sectors other than U.S. Treasury securities, during a time when
Treasuries produced higher returns, hindered our performance.
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-to-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?
For some time now, we have believed that valuations in the equity market were
excessive. Coupled with a volatile stock market, we believed the fund was not
being adequately compensated for taking on the additional risks the stock market
generally entails. As a result, throughout the period we limited our equity
exposure to approximately 40% , choosing instead to allocate about 60% of the
portfolio' s assets to bonds.
The stock market was particularly volatile during the first half of the
reporting period when technology stocks soared, only to fall sharply beginning
in March, effectively reversing earlier gains. We considered many of these
technology companies speculative because they had little or no earnings. As a
result, we did not own them. Instead, in the technology area, we favored large,
well-established companies that provide products and services for the Internet's
infrastructure. For example, two of the fund's best performing stocks during the
period were Network Appliance and EMC. Both of these technology companies
specialize in network data storage devices that are an increasing part of the
technological infrastructure of global companies.
While the technology sector recorded the lion's share of the stock market's
gains during the first half of the reporting period, health care, financial
services and consumer staples led the way during the second half. We made
beneficial stock selections within these areas, including our investments in
UnitedHealth Group, a company that offers health care employee benefit programs.
On the other hand, the fund's fixed-income portion was negatively influenced by
three key factors: lower returns from most other fixed-income securities
compared to U.S. Treasury securities; a series of short-term interest-rate hikes
initiated by the Federal Reserve Board during the first half of the period; and
the consolidation of broker-dealers within the fixed-income marketplace. While
the recent government buyback program for U.S. Treasuries helped boost their
returns, our limited exposure to these types of securities held back our
performance. Instead, we focused on the higher yielding sectors of the bond
market, including mortgage-backed securities, government agency securities and
corporate bonds.
What is the fund's current strategy?
As the period came to an end, we witnessed a broadening of the stock market to
include gains in sectors other than technology. We believe this represents a
return to more normal conditions. In our view, a broadly diversified fund such
as ours is likely to benefit from this type of environment. In response, we
began to shift some of the fund's assets away from bonds and toward stocks.
As for the fixed-income portion of the fund, we have continued to emphasize
investments in the higher yielding bond market sectors. While U.S. Treasuries
generally recorded higher returns than those sectors recently, we believe that
the sectors on which we are focusing represent better relative values for the
fund.
November 15, 2000
(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. 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 INC. -- REFLECTS THE REINVESTMENT OF 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 LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT 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 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/Credit Bond Index and a Hybrid Index
((+)) SOURCE: LIPPER 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 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/CREDIT 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/CREDIT BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX
OF GOVERNMENT AND CREDIT 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/CREDIT 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 10/31/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
<S> <C> <C> <C> <C> <C>
WITH SALES CHARGE (5.75%) 4/14/94 (4.20%) 13.59% 14.30%
WITHOUT SALES CHARGE 4/14/94 1.66% 14.95% 15.33%
CLASS B SHARES
WITH REDEMPTION((+)) 12/19/94 (3.04%) 13.84% 15.83%
WITHOUT REDEMPTION 12/19/94 0.84% 14.08% 15.92%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 12/19/94 (0.07%) 14.13% 15.98%
WITHOUT REDEMPTION 12/19/94 0.90% 14.13% 15.98%
CLASS R SHARES 9/15/93 1.86% 15.24% 13.90%
CLASS T SHARES
WITH SALES CHARGE (4.5%) 8/16/99 (3.22%) -- (1.38%)
WITHOUT SALES CHARGE 8/16/99 1.35% -- 2.46%
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, AT WHICH TIME CLASS B SHARES WILL CONVERT TO
CLASS A SHARES.
((+)(+)) 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, 2000
COMMON STOCKS--49.1% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--.2%
<S> <C> <C>
Philip Morris Cos. 55,800 2,043,675
CONSUMER CYCLICAL--3.5%
Bed Bath & Beyond 96,600 (a) 2,493,487
Best Buy 45,600 (a) 2,288,550
Delphi Automotive Systems 102,600 1,609,537
Delta Air Lines 38,700 1,828,575
General Motors 74,400 4,622,100
Home Depot 34,200 1,470,600
Limited 82,800 2,090,700
RadioShack 29,100 1,735,087
Safeway 51,000 (a) 2,789,063
Sears, Roebuck & Co. 126,900 3,772,737
Southwest Airlines 66,900 1,906,650
Tiffany & Co. 41,700 1,780,069
Wal-Mart Stores 217,500 9,869,063
38,256,218
CONSUMER STAPLES--2.6%
Avon Products 60,600 2,939,100
Coca-Cola 34,200 2,064,825
Colgate-Palmolive 52,200 3,067,272
ConAgra Foods 61,200 1,308,150
Estee Lauder Cos., Cl. A 35,400 1,643,887
PepsiCo 139,200 6,742,500
Procter & Gamble 31,500 2,250,281
Ralston Purina Group 103,200 2,502,600
SYSCO 60,000 3,131,250
Sara Lee 114,000 2,458,125
28,107,990
ENERGY RELATED--3.5%
Apache 30,000 1,659,375
BJ Services 37,500 (a) 1,966,406
Conoco, Cl. B 66,300 1,802,531
Devon Energy 31,200 1,572,480
ENSCO International 36,900 1,226,925
Exxon Mobil 170,100 15,170,794
Kerr-McGee 27,000 1,763,437
KeySpan 47,700 1,678,444
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ENERGY RELATED (CONTINUED)
Noble Drilling 30,300 (a) 1,259,344
Occidental Petroleum 128,400 2,551,950
Royal Dutch Petroleum (New York Shares) 67,500 4,007,812
Sunoco 50,400 1,508,850
USX-Marathon Group 71,100 1,933,031
38,101,379
HEALTH CARE--6.0%
Abbott Laboratories 114,600 6,052,312
Amgen 23,700 (a) 1,373,119
Andrx Group 22,500 (a) 1,620,000
Bristol-Myers Squibb 63,000 3,839,063
Cardinal Health 39,000 3,695,250
Forest Laboratories 10,500 (a) 1,391,250
Johnson & Johnson 87,300 8,042,512
Lilly (Eli) & Co. 26,400 2,359,500
Merck & Co. 150,300 13,517,606
Pfizer 339,600 14,666,475
Pharmacia 30,600 1,683,000
Schering-Plough 56,400 2,915,175
Waters 20,400 (a) 1,480,275
Wellpoint Health Networks 17,400 (a) 2,034,713
64,670,250
INTEREST SENSITIVE--9.9%
Ambac Financial Group 32,700 2,609,869
American Express 86,100 5,166,000
American International Group 111,000 10,878,000
Bank of America 73,200 3,518,175
CIGNA 21,000 2,560,950
Citigroup 278,400 14,650,800
Fannie Mae 40,800 3,141,600
FleetBoston Financial 135,000 5,130,000
General Electric 392,700 21,524,869
Goldman Sachs Group 14,700 1,467,244
KeyCorp 64,500 1,592,344
MBNA 144,900 5,442,806
MGIC Investment 33,900 2,309,437
Marsh & McLennan Cos. 9,900 1,294,425
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Merrill Lynch 72,000 5,040,000
Morgan (J.P.) 29,100 4,816,050
Morgan Stanley Dean Witter & Co. 47,100 3,782,719
St. Paul Cos. 59,400 3,044,250
UnitedHealth Group 25,800 2,821,875
Wachovia 33,600 1,814,400
Wells Fargo 108,300 5,015,644
107,621,457
INTERNET RELATED--.6%
America Online 54,600 (a) 2,753,478
Ariba 6,600 (a) 834,075
Juniper Networks 10,800 (a) 2,106,000
VeriSign 7,200 (a) 950,400
6,643,953
PRODUCER GOODS--3.3%
Air Products & Chemicals 48,900 1,824,581
Boeing 69,300 4,699,406
Canadian Pacific 57,300 1,672,444
Deere & Co. 59,400 2,186,663
Eastman Chemical 33,300 1,427,737
Emerson Electric 49,500 3,635,156
FedEx 47,700 (a) 2,235,222
Kimberly-Clark 53,700 3,544,200
Minnesota Mining & Manufacturing 36,300 3,507,488
Tyco International 144,600 8,197,013
United Parcel Service, Cl. B 21,900 1,330,425
United Technologies 26,400 1,843,050
36,103,385
SERVICES--2.6%
Automatic Data Processing 66,900 4,369,406
Clear Channel Communications 30,000 (a) 1,801,875
Comcast, Cl. A 69,900 (a) 2,848,425
Disney (Walt) 182,700 6,542,944
Fox Entertainment Group, Cl. A 112,800 (a) 2,425,200
Infinity Broadcasting, Cl. A 46,500 (a) 1,546,125
Paychex 41,100 2,329,856
SunGard Data Systems 56,100 (a) 2,868,113
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
SERVICES (CONTINUED)
US Cellular 22,200 (a) 1,420,800
Viacom, Cl. B 37,200 (a) 2,115,750
28,268,494
TECHNOLOGY--12.9%
Adobe Systems 33,600 2,555,700
Altera 48,300 (a) 1,977,281
Analog Devices 22,500 (a) 1,462,500
Broadcom, Cl. A 17,400 (a) 3,869,325
Brocade Communications Systems 9,000 (a) 2,046,375
CIENA 12,300 (a) 1,293,037
Cisco Systems 333,900 (a) 17,988,862
Comverse Technology 20,700 (a) 2,313,225
Corning 61,500 4,704,750
Cybear Group 3,350 (a) 2,303
EMC 113,100 (a) 10,072,969
Hewlett-Packard 112,800 5,238,150
Intel 196,200 8,829,000
International Business Machines 22,200 2,186,700
JDS Uniphase 18,600 (a) 1,513,575
KEMET 52,800 (a) 1,471,800
KLA-Tencor 50,400 (a) 1,704,150
Micron Technology 51,000 (a) 1,772,250
Microsoft 196,200 (a) 13,513,275
NVIDIA 23,400 (a) 1,454,091
National Semiconductor 69,900 (a) 1,817,400
Network Appliance 30,300 (a) 3,605,700
Nortel Networks 166,500 7,575,750
Oracle 335,400 (a) 11,068,200
PMC-Sierra 7,800 (a) 1,322,100
Palm 60,600 3,245,888
QLogic 18,900 (a) 1,828,575
Rational Software 22,500 (a) 1,342,969
Redback Networks 9,000 (a) 957,937
SDL 3,000 (a) 777,750
Sanmina 20,700 (a) 2,366,269
Siebel Systems 36,900 (a) 3,872,194
Solectron 66,900 (a) 2,943,600
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Sun Microsystems 56,100 (a) 6,220,088
TIBCO Software 12,900 (a) 812,700
VERITAS Software 24,600 (a) 3,468,984
Vishay Intertechnology 44,100 (a) 1,323,000
140,518,422
UTILITIES--4.0%
AT&T 104,400 2,420,775
Ameren 48,900 1,943,775
BellSouth 158,100 7,638,206
Calpine 22,500 (a) 1,776,094
FPL Group 30,600 2,019,600
PG&E 61,200 1,648,575
Pinnacle West Capital 40,200 1,746,188
Qwest Communications International 118,200 (a) 5,747,475
SBC Communications 213,900 12,339,356
Sempra Energy 74,700 1,545,356
TXU 44,400 1,645,575
WorldCom 129,300 (a) 3,070,875
43,541,850
TOTAL COMMON STOCKS
(cost $468,902,672) 533,877,073
--------------------------------------------------------------------------------
Principal
BONDS AND NOTES-47.3% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE--14.1%
ABN Amro Bank, N.V., Sub. Notes,
7.55%, 6/28/2006 700,000 710,520
American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 2,500,000 2,490,187
Atlantic Richfield, Notes,
5.55%, 4/15/2003 5,000,000 4,888,900
BSCH Issuances, Gtd. Notes,
7.625%, 11/3/2009 12,500,000 12,375,337
CIT Group, Sr. Notes,
7.125%, 10/15/2004 9,100,000 8,958,795
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
Chase Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-3, Cl. A,
6%, 8/15/2005 5,000,000 4,926,850
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 4,500,000 4,491,242
Citigroup, Sub. Notes,
7.25%, 10/1/2010 6,000,000 5,962,560
Ford Motor Credit, Notes,
7.375%, 10/28/2009 10,000,000 9,772,500
General Electric Capital, Notes,
7.50%, 6/5/2003 10,000,000 10,201,010
General Motors Acceptance, Notes,
6.625%, 10/1/2002 10,000,000 9,954,670
HSBC Holding, Sub. Notes,
7.50%, 7/15/2009 9,500,000 9,516,150
Household Finance, Notes,
8%, 7/15/2010 8,000,000 8,104,344
International Lease Finance, Notes,
5.625%, 5/1/2002 5,000,000 4,926,795
Lehman Brothers Holdings, Notes,
8.50%, 5/1/2007 7,000,000 7,240,359
Morgan Stanley Dean Witter & Co., Sr. Unsub.,
7.125%, 1/15/2003 3,000,000 3,019,143
National Australia Bank, Sub. Notes,
8.60%, 5/19/2010 10,000,000 10,652,770
National Westminster Bank, Sub. Notes,
7.375%, 10/1/2009 5,000,000 4,959,400
Norwest, Sr. Notes,
6.75%, 10/1/2006 2,200,000 2,153,670
Province of Ontario, Bonds,
7.75%, 6/4/2002 2,651,000 2,698,079
Province of Quebec:
Deb.,
7.50%, 7/15/2002 4,000,000 4,043,836
Sr. Unsub.,
5.75%, 2/15/2009 6,500,000 5,971,595
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
Republic New York, Deb.,
9.75%, 12/1/2000 1,000,000 1,002,117
Skandinaviska Enskilda Banken, Sub. Notes,
6.875%, 2/15/2009 2,500,000 2,328,030
Standard Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1994-2, Cl. A
7.25%, 4/7/2006 2,000,000 2,033,610
Wells Fargo, Notes,
6.625%, 7/15/2004 10,000,000 9,867,940
153,250,409
INDUSTRIAL--5.6%
Aesop Funding, Asset Backed Ctfs.,
Ser. 1997-1A, Cl. A2,
6.40%, 10/20/2003 2,000,000 (b) 1,987,230
Amoco, Gtd. Notes,
6.25%, 10/15/2004 1,500,000 1,486,329
Coca-Cola Enterprises, Notes,
5.75%, 11/1/2008 6,000,000 5,460,276
Conoco, Sr. Notes,
5.90%, 4/15/2004 12,100,000 11,676,089
DaimlerChrysler Holding, Notes,
7.40%, 1/20/2005 12,000,000 12,058,416
duPont (E.I.) de Nemours & Co., Notes,
6.50%, 9/1/2002 3,000,000 2,988,063
Newell Rubbermaid, Sr. Notes,
6.60%, 11/15/2006 4,500,000 4,396,635
PPG Industries, Notes,
6.50%, 11/1/2007 5,000,000 4,803,630
Pharmacia, Notes,
5.375%, 12/1/2001 2,900,000 2,840,605
Procter & Gamble, Deb.,
8%, 11/15/2003 1,000,000 1,035,836
Safeway, Notes,
7.25%, 9/15/2004 5,000,000 4,980,630
Wal-Mart Stores, Sr. Notes,
6.875%, 8/10/2009 2,500,000 2,489,175
Western Atlas, Notes,
7.875%, 6/15/2004 5,000,000 5,154,360
61,357,274
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES--2.6%
Niagara Mohawk Power, Sr. Notes,
7.75%, 10/1/2008 2,500,000 2,518,635
PECO Energy Transition Trust,
Asset Backed Ctfs., Ser. 1999-A, Cl. A2,
5.63%, 3/1/2005 4,000,000 3,898,420
Sprint Capital, Gtd. Notes,
5.875%, 5/1/2004 5,000,000 4,774,495
TECO Energy, Notes,
5.54%, 9/15/2001 2,000,000 1,978,426
Telefonica Europe, Gtd. Notes,
7.35%, 9/15/2005 10,000,000 10,040,140
Wisconsin Electric Power, Notes,
7.25%, 8/1/2004 3,500,000 3,522,960
WorldCom, Notes,
8%, 5/15/2006 1,250,000 1,282,805
28,015,881
U.S. GOVERNMENT & AGENCIES--25.0%
Federal Home Loan Bank, Bonds,
5.125%, 9/15/2003 12,600,000 12,175,632
Federal Home Loan Mortgage Corp.:
6.50%, 5/1/2014 1,286,832 1,260,492
6.50%, 3/1/2029 649,309 . 626,175
6%, 7/1/2029 1,287,406 1,208,952
7%, 9/1/2030 1,295,814 1,271,919
7.50%, 9/1/2030 799,533 799,534
Federal Home Loan Mortgage Corp., Notes:
5%, 1/15/2004 20,000,000 19,168,520
6.25%, 7/15/2004 19,500,000 19,339,944
6.875%, 1/15/2005 7,000,000 7,089,740
5.75%, 4/15/2008 1,000,000 950,555
Federal National Mortgage Association:
6%, 4/1/2014 1,274,359 1,229,349
6.50%, 2/1/2029 2,234,716 2,154,401
7%, 1/1/2030 699,264 686,587
7.50%, 6/1/2030 99,903 99,841
7.50%, 8/1/2030 999,207 998,578
7%, 9/1/2030 999,198 980,143
Federal National Mortgage Association, Bonds,
7.125%, 2/15/2005 3,000,000 3,066,864
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCIES (CONTINUED)
Federal National Mortgage Association, Notes:
6.75%, 8/15/2002 7,000,000 7,035,721
4.75%, 11/14/2003 10,000,000 9,540,960
5.125%, 2/13/2004 27,500,000 26,498,807
5.625%, 5/14/2004 14,000,000 13,624,240
6.50%, 8/15/2004 18,500,000 18,495,116
5.75%, 2/15/2008 5,000,000 4,763,435
7.25%, 1/15/2010 7,000,000 7,265,692
Government National Mortgage Association I:
6.50%, 5/15/2029 986,113 953,444
7%, 6/15/2029 1,085,682 1,071,093
7.50%, 8/15/2030 649,449 652,088
8%, 9/15/2030 1,998,191 2,031,904
U.S. Treasury Bonds,
11.625%, 11/15/2002 500,000 553,280
U.S. Treasury Notes:
6.125%, 12/31/2001 7,000,000 6,992,020
6.25%, 2/28/2002 5,000,000 5,005,950
6.625%, 3/31/2002 5,300,000 5,334,768
6.375%, 4/30/2002 15,000,000 15,063,900
6.625%, 4/30/2002 4,250,000 4,282,895
7.50%, 5/15/2002 13,300,000 13,577,704
5.875%, 9/30/2002 4,500,000 4,495,140
5.50%, 1/31/2003 2,200,000 2,180,288
7.50%, 2/15/2005 10,000,000 10,614,500
5.625%, 2/15/2006 4,000,000 3,965,600
7%, 7/15/2006 5,000,000 5,272,350
5.625%, 5/15/2008 18,200,000 17,947,202
6%, 8/15/2009 12,000,000 12,128,280
272,453,603
TOTAL BONDS AND NOTES
(cost $512,429,329) 515,077,167
Principal
SHORT-TERM INVESTMENTS--2.9% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--2.5%
Goldman Sachs & Co.,Tri-Party Repurchase
Agreement, 6.55% dated 10/31/2000, due
11/1/2000 in the amount of $26,974,907
(fully collateralized by $ 26,817,000
U.S. Treasury Notes, 6.375%, 6/30/2002
value $27,509,918) 26,970,000 26,970,000
U.S. TREASURY BILLS--.4%
5.96%, 12/7/2000 1,000,000 (c) 993,930
5.94%, 12/14/2000 3,350,000 (c) 3,325,780
4,319,710
TOTAL SHORT-TERM INVESTMENTS
(cost $31,290,269) 31,289,710
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,012,622,270) 99.3% 1,080,243,950
CASH AND RECEIVABLES (NET) .7% 7,996,068
NET ASSETS 100.0% 1,088,240,018
(A) NON-INCOME PRODUCING.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT OCTOBER 31, 2000, THIS SECURITY
AMOUNTED TO $1,987,230 OR APPROXIMATELY .2% OF NET ASSETS.
(C) HELD BY THE BROKER IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN FINANCIAL
FUTURES POSITIONS.
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF FINANCIAL FUTURES
October 31, 2000
Market Value Unrealized
Covered by Appreciation
Contracts Contracts ($) Expiration at 10/31/2000 ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL FUTURES LONG
<S> <C> <C> <C> <C>
5 Year U.S. Treasury Notes 785 79,039,688 December 2000 524,836
FINANCIAL FUTURES SHORT
Standard & Poor's 500 151 (54,367,550) December 2000 2,457,837
2,982,673
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
------------------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(c) 1,012,622,270 1,080,243,950
Cash 2,773,223
Dividends and interest receivable 8,876,611
Receivable for investment securities sold 6,764,479
Receivable for shares of Capital Stock subscribed 471,583
1,099,129,846
----------------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 1,229,513
Payable for investment securities purchased 8,028,711
Payable for futures variation margin--Note 1(d) 1,143,812
Payable for shares of Capital Stock redeemed 487,792
10,889,828
---------------------------------------------------------------------------------------------------
NET ASSETS ($) 1,088,240,018
---------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,031,754,540
Accumulated undistributed investment income--net 9,791,521
Accumulated net realized gain (loss) on investments (23,910,396)
Accumulated net unrealized appreciation (depreciation)
on investments (including $2,982,673 net unrealized
appreciation on financial futures)--Note 3 70,604,353
---------------------------------------------------------------------------------------------------
NET ASSETS ($) 1,088,240,018
</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 ($) 379,670,203 223,096,469 60,236,925 424,082,748 1,153,673
Shares Outstanding 24,928,438 14,695,187 3,954,035 27,828,778 75,840
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE ($) 15.23 15.18 15.23 15.24 15.21
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 36,889,015
Cash dividends (net of $35,051 foreign taxes withheld at source) 5,110,982
TOTAL INCOME 41,999,997
EXPENSES:
Management fee--Note 2(a) 10,313,670
Distribution and service fees--Note 2(b) 3,633,823
Loan commitment fees--Note 4 8,904
TOTAL EXPENSES 13,956,397
INVESTMENT INCOME--NET 28,043,600
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (20,903,884)
Net realized gain (loss) on financial futures (2,934,862)
NET REALIZED GAIN (LOSS) (23,838,746)
Net unrealized appreciation (depreciation)
on investments (including $3,812,698 net
unrealized appreciation on financial futures) 10,908,435
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (12,930,311)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 15,113,289
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
----------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 28,043,600 13,426,928
Net realized gain (loss) on investments (23,838,746) 24,297,901
Net unrealized appreciation (depreciation)
on investments 10,908,435 23,866,853
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 15,113,289 61,591,682
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (7,870,994) (1,580,492)
Class B shares (3,776,794) (1,223,741)
Class C shares (1,025,106) (248,678)
Class R shares (11,264,182) (6,441,114)
Class T shares (5,273) --
Net realized gain on investments:
Class A shares (6,179,160) (2,889,067)
Class B shares (4,523,086) (4,479,684)
Class C shares (1,225,367) (646,144)
Class R shares (8,622,107) (13,660,063)
Class T shares (2,255) --
TOTAL DIVIDENDS (44,494,324) (31,168,983)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 384,764,264 186,156,663
Class B shares 66,869,428 149,541,513
Class C shares 25,243,733 50,394,929
Class R shares 141,760,638 341,138,366
Class T shares 1,181,085 24,689
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
----------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS (CONTINUED) ($):
Dividends reinvested:
Class A shares 7,945,749 3,904,501
Class B shares 6,198,704 4,568,521
Class C shares 1,255,485 636,923
Class R shares 16,322,980 19,652,706
Class T shares 7,528 --
Cost of shares redeemed:
Class A shares (217,349,861) (22,218,320)
Class B shares (48,954,605) (17,504,497)
Class C shares (20,215,613) (4,762,205)
Class R shares (119,189,075) (188,359,586)
Class T shares (56,015) --
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS 245,784,425 523,174,203
TOTAL INCREASE (DECREASE) IN NET ASSETS 216,403,390 553,596,902
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 871,836,628 318,239,726
END OF PERIOD 1,088,240,018 871,836,628
Undistributed investment income--net 9,791,521 5,690,270
(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,
----------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(B)
Shares sold 25,020,734 12,037,162
Shares issued for dividends reinvested 519,415 262,442
Shares redeemed (14,207,844) (1,444,709)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 11,332,305 10,854,895
--------------------------------------------------------------------------------
CLASS B(B)
Shares sold 4,379,183 9,761,921
Shares issued for dividends reinvested 405,035 308,271
Shares redeemed (3,221,728) (1,141,433)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,562,490 8,928,759
--------------------------------------------------------------------------------
CLASS C
Shares sold 1,650,703 3,277,930
Shares issued for dividends reinvested 81,762 42,774
Shares redeemed (1,327,797) (309,521)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 404,668 3,011,183
--------------------------------------------------------------------------------
CLASS R
Shares sold 9,257,129 22,264,108
Shares issued for dividends reinvested 1,066,118 1,321,991
Shares redeemed (7,788,037) (12,212,108)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,535,210 11,373,991
--------------------------------------------------------------------------------
CLASS T
Shares sold 77,449 1,629
Shares issued for dividends reinvested 494 --
Shares redeemed (3,732) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 74,211 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, 2000, 93,536 CLASS B SHARES
REPRESENTING $1,425,868 WERE AUTOMATICALLY CONVERTED TO 93,334 CLASS A SHARES
AND DURING THE PERIOD ENDED OCTOBER 31,1999, 256,691 CLASS B SHARES REPRESENTING
$3,945,999 WERE AUTOMATICALLY CONVERTED TO 256,023 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
--------------------------------------------
CLASS A SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 15.69 14.88 15.17 13.71 11.91
Investment Operations:
Investment income--net .44(a) .36(a) .33 .34 .31
Net realized and unrealized gain (loss)
on investments (.19) 1.68 1.81 2.77 1.88
Total from Investment Operations .25 2.04 2.14 3.11 2.19
Distributions:
Dividends from investment income--net (.38) (.30) (.37) (.28) (.31)
Dividends from net realized
gain on investments (.33) (.93) (2.06) (1.37) (.08)
Total Distributions (.71) (1.23) (2.43) (1.65) (.39)
Net asset value, end of period 15.23 15.69 14.88 15.17 13.71
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 1.66 14.39 16.06 25.24 18.71
------------------------------------------------------------------------------------------------------------------------------------
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 2.83 2.31 2.44 2.21 2.39
Portfolio Turnover Rate 100.47 104.42 69.71 98.88 85.21
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 379,670 213,362 40,780 14,687 6,275
(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 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.65 14.83 15.12 13.68 11.89
Investment Operations:
Investment income--net .32(a) .24(a) .24 .23 .21
Net realized and unrealized gain (loss)
on investments (.19) 1.69 1.79 2.77 1.87
Total from Investment Operations .13 1.93 2.03 3.00 2.08
Distributions:
Dividends from investment income--net (.27) (.18) (.26) (.19) (.21)
Dividends from net realized
gain on investments (.33) (.93) (2.06) (1.37) (.08)
Total Distributions (.60) (1.11) (2.32) (1.56) (.29)
Net asset value, end of period 15.18 15.65 14.83 15.12 13.68
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) .84 13.64 15.20 24.27 17.76
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.00 2.00 2.00 2.00 2.00
Ratio of net investment income
to average net assets 2.07 1.55 1.70 1.47 1.65
Portfolio Turnover Rate 100.47 104.42 69.71 98.88 85.21
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 223,096 205,491 62,324 28,940 9,141
(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 C SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.70 14.87 15.16 13.70 11.90
Investment Operations:
Investment income--net .32(a) .24(a) .22 .24 .25
Net realized and unrealized gain (loss)
on investments (.19) 1.71 1.81 2.78 1.84
Total from Investment Operations .13 1.95 2.03 3.02 2.09
Distributions:
Dividends from investment income--net (.27) (.19) (.26) (.19) (.21)
Dividends from net realized
gain on investments (.33) (.93) (2.06) (1.37) (.08)
Total Distributions (.60) (1.12) (2.32) (1.56) (.29)
Net asset value, end of period 15.23 15.70 14.87 15.16 13.70
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) .90 13.59 15.24 24.41 17.83
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.00 2.00 2.00 2.00 2.00
Ratio of net investment income
to average net assets 2.07 1.57 1.69 1.47 1.62
Portfolio Turnover Rate 100.47 104.42 69.71 98.88 85.21
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 60,237 55,723 8,004 2,017 237
(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 R SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.70 14.88 15.18 13.72 11.92
Investment Operations:
Investment income--net .47(a) .40(a) .38 .36 .34
Net realized and unrealized gain (loss)
on investments (.18) 1.69 1.79 2.79 1.88
Total from Investment Operations .29 2.09 2.17 3.15 2.22
Distributions:
Dividends from investment income--net (.42) (.34) (.41) (.32) (.34)
Dividends from net realized
gain on investments (.33) (.93) (2.06) (1.37) (.08)
Total Distributions (.75) (1.27) (2.47) (1.69) (.42)
Net asset value, end of period 15.24 15.70 14.88 15.18 13.72
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 1.86 14.76 16.37 25.56 18.99
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.00 1.00 1.00 1.00 1.00
Ratio of net investment income
to average net assets 3.07 2.54 2.71 2.44 2.68
Portfolio Turnover Rate 100.47 104.42 69.71 98.88 85.21
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 424,083 397,234 207,132 148,605 129,744
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
----------------------
CLASS T SHARES 2000 1999(a)
--------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.68 15.43
Investment Operations:
Investment income--net . 36(b) .08(b)
Net realized and unrealized gain (loss)
on investments (.15) .17
Total from Investment Operations .21 .25
Distributions:
Dividends from investment income--net (.35) --
Dividends from net realized gain on investments (.33) --
Total Distributions (.68) --
Net asset value, end of period 15.21 15.68
--------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 1.35 1.62(d)
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 .32(d)
Ratio of net investment income
to average net assets 2.52 .40(d)
Portfolio Turnover Rate 100.47 104.42
--------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,154 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.
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 shares 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 B shares automatically convert to Class A shares
after six years. 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 fee or service fee.
Class R
The Fund
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 and privileges 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 accounting
principles generally accepted in the United States of America, which may require
the use of management estimates and assumptions. Actual results could differ
from those estimates.
(a) Portfolio valuation: Most debt securities are valued each business day by an
independent pricing service (the Service) approved by the Board of Directors.
Debt securities 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 debt
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. Other 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. 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 2000, are set
forth in the Statement of Financial Futures.
(e) Dividends 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, 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.
The fund has an unused capital loss carryover of approximately $19,144,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, the carryover expires in fiscal 2008.
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 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% 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.
DSC retained $1,847 during the period ended October 31, 2000 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 ("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 for shareholder
servicing 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,
respectively, 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 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, 2000, Class A, Class B, Class C and Class T shares were
charged $842,256, $1,643,704, $448,618 and $902, respectively, pursuant to the
Plan, of which $598,469, $1,107,877, $302,059 and $817 for Class A, Class B,
Class C and Class T shares, respectively, were paid to DSC. Class B, Class C and
Class T shares were charged $547,901, $149,540 and $902, respectively, pursuant
to the service plan, of which $369,292, $100,686 and $817 for Class B, Class C
and Class T shares, respectively, were paid to DSC.
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.
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,
2000, amounted to $1,201,071,810 and $984,302,764, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$70,604,353, consisting of $98,699,412 gross unrealized appreciation and
$28,095,059 gross unrealized depreciation.
At October 31, 2000, 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, 2000, 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, including
the statements of investments and financial futures, of Dreyfus Premier Balanced
Fund (the "Fund") of the The Dreyfus/Laurel Funds, Inc., as of October 31, 2000,
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 periods indicated herein. These
financial statements and financial highlights are the responsibility of the
Fund' s management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier Balanced Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 2000, the results of its operations for the year then ended, the changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated herein, in conformity with
accounting principles generally accepted in the United States of America.
New York, New York
December 8, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $.1260 per share as a
long-term capital gain distribution paid on December 6, 1999.
The fund also designates 14.54% of the ordinary dividends paid during the fiscal
year ended October 31, 2000 as qualifying for the corporate dividends received
deduction. Shareholders will receive notification in January 2001 of the
percentage applicable to the preparation of their 2000 income tax returns.
The Fund
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 342AR0010
Dreyfus Premier
Large Company
Stock Fund
ANNUAL REPORT October 31, 2000
(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
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
23 Notes to Financial Statements
29 Independent Auditors' Report
30 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, 1999 through October
31, 2000. 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.
The Standard & Poor' s 500 Composite Stock Price Index, a broad measure of
large-cap stock performance, rose more than 6% over the 12-month reporting
period. Investor enthusiasm over technology stocks drove most major stock market
indices to new highs. Conversely, in the first nine months of 2000, the equity
investment environment was marked by dramatic price fluctuations. Additionally,
the moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
Since stocks provided returns well above their historical averages during the
second half of the 1990s, some investors may have developed unrealistic
expectations in equities. Recent volatility has reminded investors of both the
risks of investing and the importance of fundamental research and investment
selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Premier Large Company Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, the fund produced total returns
of 6.80% for Class A shares; 5.98% for Class B shares; 6.02% for Class C shares;
7.10% for Class R shares; and 6.55% for Class T shares.(1) For the same period,
the Standard & Poor' s 500 Composite Stock Price Index ("S&P 500 Index"), the
fund's benchmark, produced a total return of 6.08%.(2)
We attribute the fund' s good relative performance to our stock selection
process, which worked reasonably well despite unusually volatile market
conditions. Such conditions do not generally favor the fund's disciplined,
quantitative investment approach.
What is the fund's investment approach?
The fund invests in a diversified portfolio of large companies that we feel meet
our strict standards for value and growth. We identify potential investments
through a quantitative analytic process that sifts through a universe of
approximately 2,000 stocks in search of those that are not only undervalued
according to our criteria, but that also exhibit what we believe to be higher
than expected earnings momentum. A team of experienced analysts examines the
fundamentals of the top-ranked candidates for investment. Armed with these
analytical insights, the portfolio manager decides which stocks he wishes to
purchase, and whether he feels any current holdings should be sold.
In addition to identifying attractive investment opportunities, our approach has
been 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
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
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 approximately
134 stocks across 11 economic sectors. Our 10 largest holdings accounted for
approximately 26% 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?
U.S. stock market volatility during the period was largely due to a sharp rise
in technology stocks during the first half and a sharp decline in the second
half. Consistent with our investment approach, the fund held approximately the
same percentage of technology stocks as the S& P 500 Index. As a result,
technology-related holdings drove the fund's positive returns during the first
half of the period, and were the primary reason the fund gave up some ground in
the second half. We benefited from holding relatively large positions of some of
the sector' s best performers, such as Corning, and from avoiding some of the
sector' s poorest performers. However, we failed to hold, or held smaller
positions than the S& P 500 Index, in some technology stocks that performed
relatively well.
We also experienced similarly mixed results in a variety of other industry
groups. For example, performance was enhanced by relatively large holdings of
pharmaceutical company Warner-Lambert, The Hartford Financial Services Group,
and diversified manufacturing and services company Tyco International.
Conversely, performance suffered from the fund's exposure to telephone companies
Sprint and AT&T, which faced rising competition in the long-distance market.
Although we succeeded in assembling a portfolio that generally equaled or
bettered the benchmark's results, we were disappointed with the performance of
the quantitative model that helps us choose securities. High levels of market
volatility undermined the effectiveness of our model, which depends on using
data from one month to identify stocks that will outperform during the next.
What is the fund's current strategy?
As of October 31, 2000, we have continued to adhere to our long-standing asset
allocation, security selection and risk management strategies in our efforts to
outperform the S& P 500 Index. Our sector neutral asset allocation strategy is
designed to reduce certain risks by allocating assets among various industry
groups in proportions consistent with our benchmark. At the same time, our stock
selection strategy is driven by our quantitative model, which has historically
been an effective instrument for distinguishing between what we believe to be
attractive and unattractive stocks. However, we are currently looking for ways
to increase our model' s effectiveness in volatile market environments.
November 15, 2000
(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 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 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 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>
<S> <C> <C> <C> <C>
Average Annual Total Returns AS OF 10/31/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
WITH SALES CHARGE (5.75%) 9/2/94 0.67% 19.57% 19.46%
WITHOUT SALES CHARGE 9/2/94 6.80% 20.99% 20.61%
CLASS B SHARES
WITH REDEMPTION((+)) 1/16/98 1.98% -- 14.30%
WITHOUT REDEMPTION 1/16/98 5.98% -- 15.14%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 1/16/98 5.02% -- 15.15%
WITHOUT REDEMPTION 1/16/98 6.02% -- 15.15%
CLASS R SHARES 9/2/94 7.10% 21.28% 20.89%
CLASS T SHARES
WITH SALES CHARGE (4.5%) 8/16/99 1.76% -- 2.84%
WITHOUT SALES CHARGE 8/16/99 6.55% -- 6.83%
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, AT WHICH TIME CLASS B SHARES WILL CONVERT TO
CLASS A SHARES.
((+)(+)) 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>
<S> <C> <C>
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--99.1% Shares Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--.8%
Anheuser-Busch Cos. 40,480 1,851,960
CONSUMER CYCLICAL--7.1%
Best Buy 17,580 (a) 882,296
Costco Wholesale 27,800 (a) 1,018,175
Ford Motor 31,909 833,623
Harley-Davidson 20,300 978,206
Home Depot 49,700 2,137,100
Limited 48,800 1,232,200
Lowe's Cos. 25,640 1,171,427
RadioShack 18,040 1,075,635
Safeway 23,200 (a) 1,268,750
Target 43,480 1,201,135
US Airways Group 15,990 (a) 603,623
Visteon 1 18
Wal-Mart Stores 84,880 3,851,430
16,253,618
CONSUMER STAPLES--5.5%
Avon Products 20,100 974,850
Coca-Cola 45,700 2,759,137
General Mills 21,960 916,830
Heinz (H.J.) 30,200 1,266,513
Keebler Foods 9,100 368,550
PepsiCo 47,390 2,295,453
Procter & Gamble 32,170 2,298,144
Quaker Oats 13,950 1,137,797
Ralston Purina Group 29,860 724,105
12,741,379
ELECTRONIC EQUIPMENT--5.7%
CIENA 5,200 (a) 546,650
Comverse Technology 7,000 (a) 782,250
Corning 28,670 2,193,255
Danaher 8,400 530,250
Harris 17,300 548,194
Motorola 38,851 968,847
Nokia, ADS 26,280 1,123,470
Nortel Networks 70,200 3,194,100
SCI Systems 18,120 (a) 779,160
COMMON STOCKS (CONTINUED) Shares Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT (CONTINUED)
Sanmina 10,800 (a) 1,234,575
Solectron 19,100 (a) 840,400
Tellabs 9,590 (a) 478,901
13,220,052
ENERGY RELATED--7.2%
Baker Hughes 20,800 715,000
Coastal 12,550 946,741
Enron 23,510 1,929,289
Exxon Mobil 74,800 6,671,225
Kerr-McGee 15,920 1,039,775
Noble Drilling 16,200 (a) 673,312
Royal Dutch Petroleum (New York Shares) 40,460 2,402,312
Schlumberger 19,100 1,453,987
USX-Marathon Group 30,000 815,625
16,647,266
HEALTH CARE--11.1%
Abbott Laboratories 41,800 2,207,562
American Home Products 38,800 2,463,800
Amgen 32,120 (a) 1,860,952
Cardinal Health 12,100 1,146,475
Elan, ADS 16,250 (a) 843,984
Genentech 11,800 (a) 973,500
Guidant 13,700 (a) 725,244
Lilly (Eli) & Co. 22,361 1,998,514
MedImmune 11,500 (a) 751,813
Medtronic 34,120 1,853,143
Pfizer 138,485 5,980,821
Pharmacia 40,500 2,227,500
Schering-Plough 48,530 2,508,394
25,541,702
INTEREST SENSITIVE--20.1%
ACE 18,090 710,032
Allstate 27,982 1,126,276
Ambac Financial Group 9,310 743,054
American General 18,090 1,456,245
Bank of America 50,800 2,441,575
CIGNA 8,970 1,093,892
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Chase Manhattan 63,905 2,907,677
Citigroup 58,513 3,079,247
Fannie Mae 24,370 1,876,490
FleetBoston Financial 74,400 2,827,200
General Electric 203,750 11,168,047
Hartford Financial Services Group 35,100 2,612,756
Lehman Brothers Holdings 38,360 2,474,220
MBNA 60,120 2,258,257
Merrill Lynch 29,960 2,097,200
Morgan Stanley Dean Witter & Co. 12,440 999,088
PNC Financial Services Group 15,580 1,041,913
Providian Financial 11,300 1,175,200
SunTrust Banks 10,890 531,568
UnitedHealth Group 12,380 1,354,063
Wells Fargo 48,590 2,250,324
46,224,324
INTERNET RELATED--.9%
America Online 28,780 (a) 1,451,375
Yahoo! 8,900 (a) 521,763
1,973,138
PRODUCER GOODS--6.0%
Alcoa 29,160 836,528
Boeing 20,600 1,396,938
Canadian National Railway 12,580 396,270
International Paper 19,900 728,838
Martin Marietta Materials 8,100 311,040
Minnesota Mining & Manufacturing 17,430 1,684,174
Praxair 11,300 420,925
Southdown 13,560 961,065
Temple-Inland 8,500 380,375
Tyco International 74,160 4,203,945
Union Carbide 26,100 1,122,300
United Technologies 18,690 1,304,796
13,747,194
SERVICES--6.4%
AT&T--Liberty Media, Cl. A 38,900 (a) 700,200
Automatic Data Processing 21,000 1,371,563
COMMON STOCKS (CONTINUED) Shares Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
SERVICES (CONTINUED)
Clear Channel Communications 18,558 (a) 1,114,640
Disney (Walt) 38,800 1,389,525
Fox Entertainment Group, Cl. A 24,120 (a) 518,580
Hispanic Broadcasting 13,400 (a) 418,750
Infinity Broadcasting, Cl. A 22,980 (a) 764,085
Omnicom Group 13,130 1,211,243
Seagram 10,700 611,237
Time Warner 35,710 2,710,746
Viacom, Cl. B 33,310 (a) 1,894,506
Vodafone Group, ADR 34,900 1,485,431
VoiceStream Wireless 4,100 (a) 539,150
14,729,656
TECHNOLOGY--21.1%
Altera 21,800 (a) 892,438
Amdocs 6,000 (a) 388,875
Analog Devices 17,000 (a) 1,105,000
Applied Materials 11,600 (a) 616,250
Cisco Systems 139,000 (a) 7,488,625
Compaq Computer 37,200 1,131,252
Dell Computer 52,560 (a) 1,550,520
EMC 45,640 (a) 4,064,813
Gateway 17,000 (a) 877,370
Intel 134,700 6,061,500
International Business Machines 37,890 3,732,165
Linear Technology 20,200 1,304,163
Maxim Integrated Products 16,920 (a) 1,122,007
Micron Technology 20,100 (a) 698,475
Microsoft 74,750 (a) 5,148,406
Network Appliance 15,000 (a) 1,785,000
Oracle 132,560 (a) 4,374,480
Siebel Systems 12,700 (a) 1,332,706
Sun Microsystems 39,560 (a) 4,386,215
Symantec 14,000 (a) 546,875
48,607,135
UTILITIES--7.2%
AT&T 82,240 1,906,940
Calpine 12,900 (a) 1,018,294
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
Exelon 19,100 1,148,387
GPU 19,030 629,179
Public Service Enterprise Group 14,830 615,445
Qwest Communications International 48,581 (a) 2,362,251
Reliant Energy 23,000 950,187
SBC Communications 85,145 4,911,802
Sprint (FON Group) 45,700 1,165,350
WorldCom 73,855 (a) 1,754,056
16,461,891
TOTAL COMMON STOCKS
(cost $184,539,265) 227,999,315
------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--.6% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Goldman Sachs & Co., Tri-Party Repurchase
Agreement, 6.55% dated 10/31/2000,
due 11/1/2000 in the amount of
$1,350,246 (fully collateralized
by $1,298,000 U.S. Treasury Notes,
6.50%, 2/15/2010, value $1,377,309)
(cost $1,350,000) 1,350,000 1,350,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $185,889,265) 99.7% 229,349,315
CASH AND RECEIVABLES (NET) .3% 682,611
NET ASSETS 100.0% 230,031,926
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
12
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1 (c) 185,889,265 229,349,315
Cash 284,293
Receivable for investment securities sold 754,474
Receivable for shares of Capital Stock subscribed 736,385
Dividends and interest receivable 97,518
231,221,985
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 291,382
Payable for investment securities purchased 822,245
Payable for shares of Capital Stock redeemed 76,432
1,190,059
--------------------------------------------------------------------------------
NET ASSETS ($) 230,031,926
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 189,257,954
Accumulated net realized gain (loss) on investments (2,686,078)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 43,460,050
--------------------------------------------------------------------------------
NET ASSETS ($) 230,031,926
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R Class T
------------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 71,133,008 98,883,640 30,212,769 28,492,176 1,310,333
Shares Outstanding 2,779,901 3,929,867 1,200,426 1,110,418 51,357
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE ($) 25.59 25.16 25.17 25.66 25.51
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $13,554 foreign taxes withheld at source) 1,991,083
Interest 128,293
TOTAL INCOME 2,119,376
EXPENSES:
Management fee--Note 2(a) 1,837,376
Distribution and service fees--Note 2(b) 1,246,121
Loan commitment fees--Note 4 1,626
TOTAL EXPENSES 3,085,123
INVESTMENT (LOSS) (965,747)
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (2,122,199)
Net unrealized appreciation (depreciation) on investments 13,391,931
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 11,269,732
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 10,303,985
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss) (965,747) (121,597)
Net realized gain (loss) on investments (2,122,199) (282,289)
Net unrealized appreciation (depreciation)
on investments 13,391,931 21,415,606
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 10,303,985 21,011,720
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares -- (52,833)
Class R shares -- (109,997)
Net realized gain on investments:
Class A shares (22,246) (1,520,037)
Class B shares (24,471) (912,663)
Class C shares (9,708) (291,767)
Class R shares (12,878) (1,678,760)
Class T shares (25) --
TOTAL DIVIDENDS (69,328) (4,566,057)
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
---------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 37,610,957 31,597,928
Class B shares 51,546,867 40,780,563
Class C shares 11,835,114 20,617,520
Class R shares 583,594 1,231,238
Class T shares 1,294,736 38,917
Dividends reinvested:
Class A shares 19,447 1,351,183
Class B shares 19,815 795,685
Class C shares 7,072 187,918
Class R shares 10,968 1,549,773
Class T shares 25 --
Cost of shares redeemed:
Class A shares (22,026,449) (12,114,117)
Class B shares (11,046,332) (4,710,006)
Class C shares (6,252,326) (2,299,576)
Class R shares (5,802,407) (6,383,006)
Class T shares (10,910) (412)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 57,790,171 72,643,608
TOTAL INCREASE (DECREASE) IN NET ASSETS 68,024,828 89,089,271
--------------------------------------------------------------------------------
NET ASSETS ($)
Beginning of Period 162,007,098 72,917,827
END OF PERIOD 230,031,926 162,007,098
(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,
---------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A (B)
Shares sold 1,474,815 1,393,914
Shares issued for dividends reinvested 771 64,384
Shares redeemed (862,235) (535,102)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 613,351 923,196
--------------------------------------------------------------------------------
CLASS B (B)
Shares sold 2,039,092 1,791,184
Shares issued for dividends reinvested 793 37,850
Shares redeemed (438,085) (207,883)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,601,800 1,621,151
--------------------------------------------------------------------------------
CLASS C
Shares sold 466,874 917,025
Shares issued for dividends reinvested 283 8,996
Shares redeemed (245,642) (101,830)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 221,515 824,191
--------------------------------------------------------------------------------
CLASS R
Shares sold 22,675 55,010
Shares issued for dividends reinvested 434 73,922
Shares redeemed (226,925) (279,459)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (203,816) (150,527)
--------------------------------------------------------------------------------
CLASS T
Shares sold 50,040 1,705
Shares issued for dividends reinvested 1 --
Shares redeemed (372) (17)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 49,669 1,688
(A) FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 1999
FOR CLASS T SHARES.
(B) DURING THE PERIOD ENDED OCTOBER 31, 2000, 24,775 CLASS B SHARES
REPRESENTING $616,115 WERE AUTOMATICALLY CONVERTED TO 24,460 CLASS A SHARES AND
DURING THE PERIOD ENDED OCTOBER 31, 1999, 8,795 CLASS B SHARES REPRESENTING
$198,413 WERE AUTOMATICALLY CONVERTED TO 8,746 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
-------------------------------------------------------------------
CLASS A SHARES 2000 1999 1998 (a) 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 23.97 20.45 18.23 14.49 12.00
Investment Operations:
Investment income (loss)--net (.03)(b) .03(b) .07 .20 .27
Net realized and unrealized gain (loss)
on investments 1.66 4.68 3.39 4.26 2.54
Total from Investment Operations 1.63 4.71 3.46 4.46 2.81
Distributions:
Dividends from investment income--net -- (.04) (.15) (.20) (.20)
Dividends from net realized gain
on investments (.01) (1.15) (1.09) (.52) (.12)
Total Distributions (.01) (1.19) (1.24) (.72) (.32)
Net asset value, end of period 25.59 23.97 20.45 18.23 14.49
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 6.80(c) 23.86(c) 19.85(c) 32.01 23.87
------------------------------------------------------------------------------------------------------------------------------------
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
(loss) to average net assets (.11) .13 .52 1.23 1.81
Portfolio Turnover Rate 43.98 49.42 81.27 37.17 44.33
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 71,133 51,926 25,421 6,456 4,599
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year Ended October 31,
--------------------------------------
CLASS B SHARES 2000 1999 1998 (a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 23.75 20.38 17.93
Investment Operations:
Investment (loss) (.22)(b) (.14)(b) (.02)
Net realized and unrealized gain (loss)
on investments 1.64 4.66 2.48
Total from Investment Operations 1.42 4.52 2.46
Distributions:
Dividends from investment income--net -- -- (.01)
Dividends from net realized gain on investments (.01) (1.15) --
Total Distributions (.01) (1.15) (.01)
Net asset value, end of period 25.16 23.75 20.38
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 5.98 22.91 13.76(d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.90 1.90 1.51(d)
Ratio of net investment (loss)
to average net assets (.87) (.63) (.24)(d)
Portfolio Turnover Rate 43.98 49.42 81.27
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 98,884 55,289 14,410
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
-------------------------------------
CLASS C SHARES 2000 1999 1998 (a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 23.75 20.38 17.93
Investment Operations:
Investment (loss) (.22)(b) (.15)(b) (.02)
Net realized and unrealized gain (loss)
on investments 1.65 4.67 2.48
Total from Investment Operations 1.43 4.52 2.46
Distributions:
Dividends from investment income--net -- -- (.01)
Dividends from net realized gain on investments (.01) (1.15) --
Total Distributions (.01) (1.15) (.01)
Net asset value, end of period 25.17 23.75 20.38
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 6.02 22.97 13.70(d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.90 1.90 1.51(d)
Ratio of net investment (loss)
to average net assets (.86) (.64) (.24)(d)
Portfolio Turnover Rate 43.98 49.42 81.27
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 30,213 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.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Ended October 31,
-------------------------------------------------------------------
CLASS R SHARES 2000 1999 1998 (a) 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 23.97 20.44 18.23 14.49 12.00
Investment Operations:
Investment income--net .04(b) .09(b) .17 .23 .21
Net realized and unrealized gain (loss)
on investments 1.66 4.67 3.33 4.27 2.63
Total from Investment Operations 1.70 4.76 3.50 4.50 2.84
Distributions:
Dividends from investment income--net -- (.08) (.20) (.24) (.23)
Dividends from net realized gain
on investments (.01) (1.15) (1.09) (.52) (.12)
Total Distributions (.01) (1.23) (1.29) (.76) (.35)
Net asset value, end of period 25.66 23.97 20.44 18.23 14.49
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 7.10 24.16 20.10 32.25 24.18
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .90 .90 .90 .90 .90
Ratio of net investment income
to average net assets .16 .40 .85 1.46 2.06
Portfolio Turnover Rate 43.98 49.42 81.27 37.17 44.33
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 28,492 31,503 29,933 28,224 13,387
(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>
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
-------------------------
CLASS T SHARES 2000 1999 (a)
-------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 23.96 23.57
Investment Operations:
Investment (loss) (.13)(b) (.01)(b)
Net realized and unrealized gain (loss)
on investments 1.69 .40
Total from Investment Operations 1.56 .39
Distributions:
Dividends from net realized gain on investments (.01) --
Net asset value, end of period 25.51 23.96
--------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 6.55 1.66(d)
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.40 .30(d)
Ratio of net investment (loss)
to average net assets (.49) (.11)(d)
Portfolio Turnover Rate 43.98 49.42
--------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,310 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.
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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
B shares automatically convert to Class A shares after six years. 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 accounting
principles generally accepted in the United States of America, 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 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 are declared and paid on a quarterly basis.
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 $2,016,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, the carryover expires in fiscal 2008.
During the period ended October 31, 2000, as a result of permanent book to tax
differences, the fund increased accumulated investment loss by $965,747 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 .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 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.
DSC retained $2,290 during the period ended October 31, 2000 from commissions
earned on sales of the fund shares.
(b) Distribution and service plan: Under the distribution plan ("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 for shareholder
servicing 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, 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 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, 2000, Class
A, Class B, Class C and Class T shares were charged $162,098, $601,583, $209,031
and $1,602, respectively, pursuant to the plan, of which $114,575, $443,523,
$147,668 and $1,489 for Class A, Class B, Class C and Class T shares,
respectively, were paid to DSC. Class B, Class C and Class T shares were charged
$200,528, $69,677 and $1,602, respectively, pursuant to the service plan, of
which $147,841, $49,223 and $1,489 for Class B, Class C and Class T shares,
respectively, were paid to DSC.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 2000, amounted to
$145,796,231 and $88,516,595, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$43,460,050, consisting of $54,403,268 gross unrealized appreciation and
$10,943,218 gross unrealized depreciation.
At October 31, 2000, 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, 2000, the fund did not borrow under the Facility.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds.:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Premier Large Company Stock Fund (the
" Fund" ) of the The Dreyfus/Laurel Funds, Inc., as of October 31, 2000, 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 periods indicated herein. These
financial statements and financial highlights are the responsibility of the
Fund' s management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 2000, by
correspondence with the custodian and brokers and other appropriate procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier Large Company Stock Fund of The Dreyfus/Laurel Funds, Inc., as
of October 31, 2000, and 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 its financial highlights for each of the periods indicated herein, in
conformity with accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $.0100 per share as a
long-term capital gain distribution paid on December 3, 1999.
NOTES
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 318AR0010
Dreyfus Premier
Tax Managed
Growth Fund
ANNUAL REPORT October 31, 2000
(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
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
19 Notes to Financial Statements
25 Independent 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, 1999 through October
31, 2000. 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.
The Standard & Poor' s 500 Composite Stock Price Index, a broad measure of
large-cap stock performance, rose more than 6% over the 12-month reporting
period. Investor enthusiasm over technology stocks drove most major stock market
indices to new highs. Conversely, in the first nine months of 2000, the equity
investment environment was marked by dramatic price fluctuations. Additionally,
the moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
Since stocks provided returns well above their historical averages during the
second half of the 1990s, some investors may have developed unrealistic
expectations in equities. Recent volatility has reminded investors of both the
risks of investing and the importance of fundamental research and investment
selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Premier Tax Managed Growth Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, the fund produced total returns
of 6.85% for Class A shares, 6.02% for Class B shares, 6.03% for Class C shares
and 6.53% for Class T shares.(1) For the same period, the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index"), the fund's benchmark, produced a
total return of 6.08%.(2)
We attribute the fund' s performance to relatively strong results during the
second half of the period, which offset weaker performance during the first
half. From November 1, 1999 through March 2000, technology-related stocks drove
much of the market's rise. Since the S&P 500 Index is more heavily exposed to
such companies than the fund, the S&P 500 Index rose more rapidly. Conversely,
the fund outperformed the S&P 500 Index from April 2000 through the end of the
period, resulting in a performance closely comparable to the S&P 500 Index for
the 12-month period as a whole.
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 what we consider to
be 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 cognizant of the concerns
of tax-conscious investors. Our tax-managed approach is based on targeting
long-term growth rather than short-term profit. We typically buy and sell
relatively few stocks during the course of the
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
year, which helps minimize investors' tax liabilities and reduces the fund's
trading costs. During the 12-month reporting period, the fund's turnover rate
was 4.21% , well within our goal of an annual turnover rate below 15% during
normal market conditions.
What other factors influenced the fund's performance?
Despite high levels of stock market volatility, especially in the technology
sector, underlying economic conditions remained relatively steady. The U.S.
economy continued to grow, though the rate of growth showed signs of slowing
during the second half of the period. Inflation remained in check, and interest
rates leveled after rising through much of 1999 and early 2000. Our disciplined
investment approach proved well suited to these conditions. After a mild rise
during the first half of the period, the fund continued to deliver a positive
return from mid-March 2000 through the end of the period. At the same time, the
S&P 500 Index was generally declining in value.
A variety of industry groups contributed to the fund's relatively strong
second-half performance. Our financial services stocks performed better than
average because we concentrated on fee-based brokerage and merchant banking
firms, such as Merrill Lynch and Citigroup, that are relatively insulated from
the impact of rising interest rates by their business models. Our pharmaceutical
holdings also performed well, as did many of our investments in multinational
consumer products companies.
What is the fund's current strategy?
Much of the fund's strategy is based on our sector selection process, which is
an analysis designed to identify industries that we consider likely to enjoy
long-term growth. For example, developments in biotechnology and demographic
shifts toward an aging population in developed countries have created long-term
trends favorable to the health care industry, in our opinion. We also believe
that trends toward growing global wealth have created opportunities for
financial organizations with a well-established global presence and consumer
products companies with globally recognized brand names. These trends have
currently led us to maintain the fund's emphasis on the health care, consumer
staples and financial industries, and to de-emphasize commodities and basic
industries. In addition, our investment discipline continues to lead us away
from technology companies with stock prices higher than we judge to be warranted
by their financial strength and growth rates.
As of October 31, 2000, the long-term economic trends that have led us to
emphasize health care, financials and consumer staples appear to remain in
place. U.S. economic growth remains strong, but shows signs of subsiding to more
moderate, sustainable levels. The global economy demonstrated continuing signs
of improvement. As a result, we have seen little reason to alter our asset
allocation model, nor have we observed changes in company fundamentals that
might lead us to make significant changes among our individual holdings.
November 15, 2000
(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 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 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>
<S> <C> <C> <C>
Average Annual Total Returns AS OF 10/31/00
Inception From
Date 1 Year Inception
-----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
WITH SALES CHARGE (5.75%) 11/4/97 0.69% 12.58%
WITHOUT SALES CHARGE 11/4/97 6.85% 14.82%
CLASS B SHARES
WITH REDEMPTION ((+)) 11/4/97 2.02% 13.19%
WITHOUT REDEMPTION 11/4/97 6.02% 13.97%
CLASS C SHARES
WITH REDEMPTION ((+)(+)) 11/4/97 5.03% 13.95%
WITHOUT REDEMPTION 11/4/97 6.03% 13.95%
CLASS T SHARES
WITH SALES CHARGE (4.5%) 11/4/97 1.74% 12.79%
WITHOUT SALES CHARGE 11/4/97 6.53% 14.54%
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, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS
A SHARES.
((+)(+)) 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>
<S> <C> <C>
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--97.2% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--2.1%
Ford Motor 314,671 8,220,779
BANKING--4.3%
Bank of America 78,948 3,794,438
Chase Manhattan 187,500 8,531,250
SunTrust Banks 95,000 4,637,188
16,962,876
CAPITAL GOODS--7.9%
Emerson Electric 70,000 5,140,625
General Electric 315,000 17,265,937
Honeywell International 100,000 5,381,250
Rockwell International 90,000 3,538,125
31,325,937
COMMUNICATIONS--5.3%
BellSouth 160,000 7,730,000
SBC Communications 161,320 9,306,148
Verizon Communications 70,000 4,046,875
21,083,023
COMPUTERS--12.6%
Cisco Systems 240,000 12,930,000
EMC Corp 100,000 (a) 8,906,250
Hewlett-Packard 200,000 9,287,500
International Business Machines 100,000 9,850,000
Microsoft 125,000 (a) 8,609,375
49,583,125
ELECTRONICS--6.4%
Agilent Technologies 38,140 (a) 1,766,358
Conexant Systems 55,000 (a) 1,447,188
Intel 490,000 22,050,000
25,263,546
ENERGY--7.3%
BP Amoco, ADS 130,000 6,621,875
Chevron 80,000 6,570,000
Exxon Mobil 168,806 15,055,385
Royal Dutch Petroleum, ADR 12,000 712,500
28,959,760
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE-MISC.--9.5%
American Express 120,000 7,200,000
Citigroup 253,333 13,331,649
Federal National Mortgage Association 130,000 10,010,000
Goldman Sachs Group 30,000 2,994,375
Merrill Lynch 60,000 4,200,000
37,736,024
FOOD & DRUGS--2.8%
Walgreen 240,000 10,950,000
FOOD, BEVERAGE & TOBACCO--7.4%
Coca-Cola 175,000 10,565,625
PepsiCo 185,000 8,960,938
Philip Morris 265,000 9,705,625
29,232,188
HEALTH CARE--14.7%
Abbott Laboratories 140,000 7,393,750
Bristol-Myers Squibb 100,000 6,093,750
Johnson & Johnson 130,000 11,976,250
Merck & Co. 145,000 13,040,938
Pfizer 450,000 19,434,375
57,939,063
HOUSEHOLD & PERSONAL PRODUCTS--3.9%
Colgate-Palmolive 90,000 5,288,400
Gillette 125,000 4,359,375
Procter & Gamble 80,000 5,715,000
15,362,775
INSURANCE--4.1%
Berkshire Hathaway, Cl. A 79 (a) 5,032,300
Berkshire Hathaway, Cl. B 15 (a) 31,545
Marsh & McLennan 85,000 11,113,750
16,177,595
MEDIA/ENTERTAINMENT--4.6%
Fox Entertainment Group, Cl. A 120,000 (a) 2,580,000
McDonald's 130,000 4,030,000
Time Warner 75,000 5,693,250
Tricon Global Restaurants 12,500 (a) 375,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT (CONTINUED)
Viacom, Cl. B 100,000 (a) 5,687,500
18,365,750
PUBLISHING--1.6%
McGraw-Hill 100,000 6,418,750
RETAIL--1.5%
Wal-Mart Stores 130,000 5,898,750
TRANSPORTATION--1.2%
Norfolk Southern 130,000 1,836,250
United Parcel Service, Cl. B 50,000 3,037,500
4,873,750
TOTAL COMMON STOCKS
(cost $315,524,086) 384,353,691
------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--.5%
------------------------------------------------------------------------------------------------------------------------------------
PUBLISHING;
News Corp, ADR, Cum., $.4228
(cost $1,391,500) 55,000 1,990,312
------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--2.1% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
6.03%, 11/2/2000 15,000 14,998
6.06%, 11/16/2000 13,000 12,968
6%, 11/24/2000 6,000 5,977
6.12%, 11/30/2000 272,000 270,705
5.97%, 12/7/2000 1,943,000 1,931,206
5.98%, 12/14/2000 199,000 197,561
5.98%, 12/21/2000 4,688,000 4,646,699
6.04%, 1/11/2001 990,000 978,031
6.21%, 1/18/2001 124,000 122,347
TOTAL SHORT-TERM INVESTMENTS
(cost $8,183,208) 8,180,492
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $325,098,794) 99.8% 394,524,495
CASH AND RECEIVABLES (NET) .2% 724,818
NET ASSETS 100.0% 395,249,313
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 325,098,794 394,524,495
Cash 148,735
Receivable for shares of Capital Stock subscribed 946,226
Dividends receivable 398,370
396,017,826
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 615,178
Payable for shares of Capital Stock redeemed 153,335
768,513
--------------------------------------------------------------------------------
NET ASSETS ($) 395,249,313
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 329,123,983
Accumulated net realized gain (loss) on investments (3,300,371)
Accumulated net unrealized appreciation
(depreciation) on investments--Note 3 69,425,701
--------------------------------------------------------------------------------
NET ASSETS ($) 395,249,313
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class T
------------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 89,166,087 227,554,503 70,238,566 8,290,157
Shares Outstanding 4,722,357 12,311,079 3,801,935 442,035
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 18.88 18.48 18.47 18.75
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $33,457 foreign taxes withheld at source) 4,938,500
Interest 517,812
TOTAL INCOME 5,456,312
EXPENSES:
Management fee--Note 2(a) 4,124,681
Distribution and service plan fees--Note 2(b) 3,054,832
Loan commitment fees--Note 4 3,366
TOTAL EXPENSES 7,182,879
INVESTMENT (LOSS) (1,726,567)
-------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (3,064,821)
Net unrealized appreciation (depreciation) on investments 27,049,024
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 23,984,203
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 22,257,636
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
----------------------------------
2000 1999
-------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss) (1,726,567) (1,012,047)
Net realized gain (loss) on investments (3,064,821) (235,550)
Net unrealized appreciation
(depreciation) on investments 27,049,024 35,117,606
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 22,257,636 33,870,009
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 24,317,106 55,621,236
Class B shares 56,946,569 115,526,681
Class C shares 21,187,174 42,487,916
Class T shares 1,560,928 3,980,373
Cost of shares redeemed:
Class A shares (23,788,803) (11,628,031)
Class B shares (33,910,333) (14,203,323)
Class C shares (17,237,264) (6,908,718)
Class T shares (2,212,605) (1,137,798)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 26,862,772 183,738,336
TOTAL INCREASE (DECREASE) IN NET ASSETS 49,120,408 217,608,345
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 346,128,905 128,520,560
END OF PERIOD 395,249,313 346,128,905
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
-----------------------------------
2000 1999
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(A)
Shares sold 1,343,470 3,316,225
Shares redeemed (1,314,478) (682,806)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 28,992 2,633,419
--------------------------------------------------------------------------------
CLASS B(A)
Shares sold 3,204,019 6,940,466
Shares redeemed (1,919,479) (844,926)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,284,540 6,095,540
--------------------------------------------------------------------------------
CLASS C
Shares sold 1,187,082 2,553,452
Shares redeemed (974,565) (412,700)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 212,517 2,140,752
--------------------------------------------------------------------------------
CLASS T
Shares sold 84,457 243,702
Shares redeemed (122,975) (68,513)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (38,518) 175,189
(A) DURING THE PERIOD ENDED OCTOBER 31, 2000, 20,995 CLASS B SHARES
REPRESENTING $375,528 WERE AUTOMATICALLY CONVERTED TO 20,621 CLASS A SHARES AND
DURING THE PERIOD ENDED OCTOBER 31, 1999, 23,432 CLASS B SHARES REPRESENTING
$393,822 WERE AUTOMATICALLY CONVERTED TO 23,192 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
------------------------------------------
CLASS A SHARES 2000 1999 1998(a)
-----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 17.67 14.77 12.50
Investment Operations:
Investment income--net .02(b) .09(b) .05
Net realized and unrealized gain (loss)
on investments 1.19 2.81 2.23
Total from Investment Operations 1.21 2.90 2.28
Dividends from investment income--net -- -- (.01)
Net asset value, end of period 18.88 17.67 14.77
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 6.85 19.64 18.26(d)
-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.35 1.35 1.34(d)
Ratio of net investment income
to average net assets .10 .15 .52(d)
Portfolio Turnover Rate 4.21 1.26 .05(d)
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 89,166 82,943 30,428
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
---------------------------------------
CLASS B SHARES 2000 1999 1998(a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 17.43 14.67 12.50
Investment Operations:
Investment (loss) (.12)(b) (.15)(b) (.02)
Net realized and unrealized gain (loss)
on investments 1.17 2.91 2.19
Total from Investment Operations 1.05 2.76 2.17
Net asset value, end of period 18.48 17.43 14.67
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 6.02 18.81 17.36(d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.10 2.10 2.09(d)
Ratio of investment (loss)
to average net assets (.65) (.60) (.27)(d)
Portfolio Turnover Rate 4.21 1.26 .05(d)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 227,555 192,196 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.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
-----------------------------------------
CLASS C SHARES 2000 1999 1998(a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 17.42 14.66 12.50
Investment Operations:
Investment (loss) (.12)(b) (.14)(b) (.02)
Net realized and unrealized gain (loss)
on investments 1.17 2.90 2.18
Total from Investment Operations 1.05 2.76 2.16
Net asset value, end of period 18.47 17.42 14.66
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 6.03 18.74 17.36(d)
-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.10 2.10 2.09(d)
Ratio of investment (loss)
to average net assets (.64) (.60) (.26)(d)
Portfolio Turnover Rate 4.21 1.26 .05(d
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 70,239 62,533 21,244
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
------------------------------------------
CLASS T SHARES 2000 1999 1998(a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 17.60 14.74 12.50
Investment Operations:
Investment income (loss)-net (.03)(b) .12(b) .03
Net realized and unrealized gain (loss)
on investments 1.18 2.74 2.22
Total from Investment Operations 1.15 2.86 2.25
Dividends from investment income-net -- -- (.01)
Net asset value, end of period 18.75 17.60 14.74
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 6.53 19.40 17.97(d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.60 1.60 1.59(d)
Ratio of net investment income (loss)
to average net assets (.14) (.10) .25(d)
Portfolio Turnover Rate 4.21 1.26 .05(d)
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 8,290 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.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 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 B shares automatically convert to Class A shares after
six years. 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
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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. 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, 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 $3,301,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, $236,000 of the carryover expires in fiscal 2007 and $3,065,000 expires
in fiscal 2008.
During the period ended October 31, 2000, as a result of permanent book to tax
differences, the fund increased accumulated undistributed investment income-net
by $1,726,567 and decreased paid-in capital by that amount. Net assets were not
effected 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 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 pays Sarofim an annual fee of .30 of 1% of the value of the fund's
average daily net assets, payable monthly.
DSC retained $8,776 during the period ended October 31, 2000 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
for shareholder servicing activities and 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% of the value of the average daily net assets of
Class B and Class C shares, respectively, 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 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, 2000, Class A, Class B, Class C
and Class T shares were charged $218,483, $1,598,576, $499,115 and $19,714,
respectively, pursuant to the Plan, of which $147,071, $1,092,611, $336,106 and
$12,965 for Class A, Class B, Class C and Class T shares, respectively, were
paid to DSC. During the period ended October 31, 2000, Class B, Class C and
Class T shares were charged $532,859, $166,371 and $19,714, respectively,
pursuant to the service plan, of which $364,204, $112,035 and $12,965 for Class
B, Class C and Class T shares, respectively, were paid to DSC.
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.
(c) Brokerage commissions: During the period ended October 31, 2000, the fund
incurred total brokerage commissions of $51,275, of
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
which $9,740 was paid to Dreyfus Brokerage Services, 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, 2000, amounted to
$42,688,495 and $15,357,320, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$69,425,701, consisting of $84,931,690 gross unrealized appreciation and
$15,505,989 gross unrealized depreciation.
At October 31, 2000, 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, 2000, 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 (the "Fund") of The Dreyfus/Laurel Funds, Inc.,
including the statement of investments, as of October 31, 2000, 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 financial
highlights for each of the two years in the period then ended and for the period
from November 4, 1997 (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 auditing standards generally accepted
in the United States of America. 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, 2000, 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, 2000, 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
and for the period from November 4, 1997 (commencement of operations) to October
31, 1998, in conformity with accounting principles generally accepted in the
United States of America.
New York, New York
December 8, 2000
The Fund
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 149AR0010
Dreyfus Premier
Small Company
Stock Fund
ANNUAL REPORT October 31, 2000
(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
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
---------------------------------------------------------------------------
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, 1999 through October
31, 2000. 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, Anthony Galise.
The Russell 2000 Index, a broad measure of small-cap stock performance, rose
more than 17% over the 12-month reporting period. Investor enthusiasm over
technology stocks drove the market to new highs. Conversely, in the first nine
months of 2000, the small-cap investment environment was marked by dramatic
price fluctuations. Additionally, the moderating effects of the Federal Reserve
Board's (the "Fed") interest-rate hikes during the first half of 2000 helped the
Fed to achieve its goal of slowing the U.S. economy. Other factors such as
higher energy prices and a weak euro also served to slow economic growth.
In our view, the stock market's recent weakness is a reminder that 20% annual
gains are not the norm, historically speaking. Since stocks provided returns
well above their historical averages during the second half of the 1990s, some
investors may have developed unrealistic expectations in equities. Recent
volatility has reminded investors of both the risks of investing and the
importance of fundamental research and investment selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Premier Small Company Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
DISCUSSION OF FUND PERFORMANCE
Anthony Galise, Portfolio Manager
How did Dreyfus Premier Small Company Stock Fund perform relative to its
benchmark?
For the 12-month period ended October 31, 2000, the fund's Class A, B, C, R and
T shares produced total returns of 20.50%, 19.68%, 19.66%, 20.82% and 20.28%,
respectively.(1) In comparison, the Russell 2500 Index, the fund's benchmark,
produced a total return of 23.27% for the same period.(2)
We attribute the fund's slight underperformance to the first four months of the
reporting period, when technology and biotechnology companies with little or no
earnings dominated the benchmark' s total return. This fund generally avoids
investing in unprofitable companies and during the reporting period our lack of
emphasis there held back our performance. However, later in the period, the fund
was able to benefit when investors began to prefer more reasonably valued
companies with rising profits.
What is the fund's investment approach?
The fund invests primarily in a broadly diversified portfolio of small- and
mid-cap companies that can include growth and value stocks. The stocks are
chosen through a disciplined process that combines computer modeling techniques,
fundamental analysis and risk management.
The computer model identifies and ranks stocks within an industry or sector
based on three broad concepts. The first one is relative value, or how 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
financial attributes such as the debt level of a company.
Using insights our analysts gain 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
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
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 normally be invested in that sector.
What other factors influenced the fund's performance?
From November 1999 through March 2000, the gains achieved by the U.S. stock
market were predominantly generated from technology stocks. However, many of
these companies, which were plentiful in the Russell 2500 Index, were reporting
losses and were unlikely participants in the fund's portfolio because our
investment process places a strong emphasis on a company's profitability. This
limited exposure to technology stocks hurt the fund's relative performance in
the early months of the period.
By mid-March, investors had become concerned about a return of inflation and
rising interest rates. The high-flying technology stocks sold off, and "old
economy" stocks -- those companies that are not related to the Internet --
bounced back. By carefully selecting what we believed were the best stocks
within the old economy, the fund was able to produce higher returns than the
benchmark during the second half of the reporting period. In this comeback, the
strongest areas included three sectors: electric utilities, health care and
financial services.
Two of the fund' s largest holdings, Calpine and Dynegy, illustrate our
commitment to the electric utilities area. Both companies have been profitable
and leaders in their market niche. In addition, they are benefiting from the
shrinking supply and rapid growth in demand for electric power.
Within the health care sector, Medicare hospital reimbursement levels have
improved, resulting in increased stock prices for many hospital-related
companies. For example, one of the fund' s stocks, AmeriSource Health, a
wholesale distributor of pharmaceutical products, benefited from the improved
fiscal health of its hospital customers.
Finally, many financial services companies reported improved profits, including
the fund's holdings in Radian Group, a company that provides private residential
mortgage insurance. During the fiscal year, the booming economy created a
vibrant housing market throughout the United States, causing Radian's business
volume to increase. Another big winner for the fund was Ambac Financial Group, a
company that insures municipal bonds against default. Ambac has been able to
benefit from the strong economy, which in turn decreases the probability that a
municipality will be unable to pay bondholders.
What is the fund's current strategy?
We plan to continue our investment strategy and methodology by seeking companies
that we believe have superior earnings growth and are selling at reasonable
valuation levels. In addition, we intend to invest in companies in the same
proportion as the Russell 2500 Index -- including certain technology stocks that
meet the fund's criteria, despite the sector's recent difficulties. By carefully
selecting those technology stocks that, in our view, offer the best relative
value, we believe that we can offer investors the potential to benefit from this
exciting industry.
November 15, 2000
(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 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: FACTSET RESEARCH SYSTEMS, INC. -- REFLECTS THE REINVESTMENT OF
DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE RUSSELL 2500
INDEX IS A WIDELY RECOGNIZED, UNMANAGED INDEX OF SMALL- TO MID-CAP STOCK
PERFORMANCE AND IS COMPOSED OF THE 2,500 SMALLEST COMPANIES IN THE RUSSELL 3000
INDEX. THE RUSSELL 3000 INDEX IS COMPOSED OF THE 3,000 LARGEST U.S. COMPANIES BY
MARKET CAPITALIZATION.
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: THE FRANK RUSSELL COMPANY.
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 10/31/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
<S> <C> <C> <C> <C>
WITH SALES CHARGE (5.75%) 9/2/94 13.56% 10.45% 13.27%
WITHOUT SALES CHARGE 9/2/94 20.50% 11.77% 14.36%
CLASS B SHARES
WITH REDEMPTION((+)) 12/19/94 15.68% 10.62% 15.20%
WITHOUT REDEMPTION 12/19/94 19.68% 10.88% 15.29%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 12/19/94 18.66% 10.91% 15.30%
WITHOUT REDEMPTION 12/19/94 19.66% 10.91% 15.30%
CLASS R SHARES 9/2/94 20.82% 12.01% 14.61%
CLASS T SHARES
WITH SALES CHARGE (4.5%) 8/16/99 14.83% -- 11.95%
WITHOUT SALES CHARGE 8/16/99 20.28% -- 16.31%
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, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS
A SHARES.
((+)(+)) 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
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--96.6% Shares Value ($)
--------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--.9%
Constellation Brands, Cl. A 29,110 (a) 1,419,112
R.J. Reynolds Tobacco Holdings 75,500 2,699,125
4,118,237
CONSUMER CYCLICAL--8.0%
BJ's Wholesale Club 71,230 (a) 2,346,138
Bed Bath & Beyond 137,160 (a) 3,540,442
Brinker International 60,700 (a) 2,382,475
CDW Computer Centers 42,400 (a) 2,732,150
Chico's FAS 80,500 (a) 2,606,187
Continental Airlines, Cl. B 52,780 (a) 2,770,950
Darden Restaurants 85,320 1,919,700
Dollar Tree Stores 67,165 (a) 2,627,831
Ethan Allen Interiors 80,050 2,341,463
Family Dollar Stores 120,000 2,332,500
International Game Technology 33,400 (a) 1,223,275
Liz Claiborne 49,400 2,099,500
Michaels Stores 50,500 (a) 1,227,781
Miller (Herman) 73,300 1,914,963
Ryan's Family Steak House 210,420 (a) 1,762,268
Zale 52,290 (a) 1,771,324
35,598,947
CONSUMER STAPLES--2.0%
Energizer Holdings 96,100 (a) 1,897,975
Pepsi Bottling Group 86,910 3,009,259
SUPERVALU 120,075 1,846,153
Suiza Foods 49,647 (a) 2,299,277
9,052,664
ELECTRONIC EQUIPMENT--7.3%
APW 55,890 (a) 2,581,419
American Tower, Cl. A 78,720 (a) 3,222,600
Cabot Microelectronics 26,538 (a) 1,172,648
Cognex 38,720 (a) 1,297,120
Flextronics International 46,600 (a) 1,770,800
GlobeSpan 22,470 (a) 1,728,786
Plantronics 79,380 (a) 3,621,712
Polycom 58,000 (a) 3,770,000
Powerwave Technologies 74,080 (a) 3,565,100
COMMON STOCKS (CONTINUED) Shares Value ($)
---------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT (CONTINUED)
SCI Systems 95,100 (a) 4,089,300
SPX 15,400 (a) 1,903,825
Scientific-Atlanta 22,080 1,511,100
Vishay Intertechnology 71,750 (a) 2,152,500
32,386,910
ENERGY--8.7%
BJ Services 111,600 5,852,025
Devon Energy 60,520 3,050,208
Kerr-McGee 43,270 2,826,072
KeySpan 77,500 2,727,031
Kinder Morgan 124,810 4,812,986
MCN Energy Group 108,640 2,675,260
Nabors Industries 85,700 (a) 4,362,130
Newfield Exploration 68,350 (a) 2,580,213
Noble Drilling 89,100 (a) 3,703,219
Smith International 54,570 (a) 3,847,185
Ultramar Diamond Shamrock 86,290 2,265,113
38,701,442
HEALTH CARE--15.0%
AmeriSource Health, Cl. A 138,060 (a) 5,996,981
Bard (C.R.) 51,660 2,163,263
Biovail 129,594 (a) 2,776,125
Chiron 31,220 (a) 1,352,216
Edwards Lifesciences 117,300 (a) 1,576,219
Forest Laboratories 37,710 (a) 4,996,575
Genzyme 64,670 (a) 4,591,570
Health Management Associates, Cl. A 174,500 (a) 3,457,281
IDEXX Laboratories 90,140 (a) 2,163,360
IVAX 93,500 (a) 4,067,250
Laboratory Corporation of America Holdings 20,000 (a) 2,697,500
Lincare Holdings 80,090 (a) 3,368,786
Millennium Pharmaceuticals 90,200 (a) 6,545,137
MiniMed 67,640 (a) 4,933,493
Orthodontic Centers of America 160,140 (a) 5,344,672
Regeneron Pharmaceuticals 44,710 (a) 1,195,993
St. Jude Medical 58,200 (a) 3,201,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
---------------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
Waters 82,820 (a) 6,009,626
66,437,047
INTEREST SENSITIVE--12.9%
Allmerica Financial 24,430 1,540,617
Ambac Financial Group 60,560 4,833,445
Bank United, Cl. A 63,720 3,612,127
Banknorth Group 147,170 2,667,456
Charter One Financial 124,425 2,853,998
City National 103,200 3,547,500
Edwards (A.G.) 52,160 2,647,120
Gallagher (Arthur J.) 52,240 3,297,650
GreenPoint Financial 85,870 2,554,633
Investment Technology Group 52,627 (a) 1,894,572
M&T Bank 64,860 3,255,972
Mercantile Bankshares 90,800 3,416,350
Metris 88,050 2,850,619
Mutual Risk Management 96,090 1,741,631
Old Kent Financial 62,233 1,723,076
Pacific Gulf Properties 1 27
People's Bank 65,400 1,324,350
Protective Life 75,750 1,751,719
Radian Group 76,744 5,439,231
TCF Financial 96,500 3,902,219
Waddell & Reed Financial, Cl. A 77,995 2,486,091
57,340,403
INTERNET--1.1%
Art Technology Group 14,700 (a) 922,425
Macromedia 29,700 (a) 2,288,756
Safeguard Scientifics 54,750 (a) 841,781
SonicWALL 44,460 (a) 664,121
4,717,083
PRODUCER GOODS & SERVICES--7.5%
American Standard 59,580 (a) 2,733,233
AptarGroup 70,840 1,465,503
Bowater 44,600 2,413,975
CNF Transportation 74,430 1,986,351
CSX 107,300 2,716,031
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------------
PRODUCER GOODS & SERVICES (CONTINUED)
Cabot 94,620 2,081,640
Cytec Industries 74,290 (a) 2,572,291
FMC 33,600 (a) 2,553,600
Goodrich (B.F.) 58,200 2,382,563
Pentair 56,100 1,672,481
Quanta Services 52,525 (a) 1,631,558
Southdown 37,789 2,678,295
Sybron International 110,730 (a) 2,740,567
Teekay Shipping 30,500 1,139,938
Temple-Inland 26,080 1,167,080
Terex 94,500 (a) 1,163,531
33,098,637
SERVICES--9.6%
Avis Group Holdings 75,090 (a) 2,243,314
Convergys 83,160 (a) 3,622,657
DST Systems 72,780 (a) 4,485,067
E.W. Scripps 59,342 1,326,531
Fiserv 60,400 (a) 3,167,225
Hispanic Broadcasting 86,700 (a) 2,709,375
Reader's Digest Association, Cl. A 72,300 2,652,506
Republic Services 157,500 (a) 2,116,406
Robert Half International 117,740 (a) 3,591,070
SunGard Data Systems 100,430 (a) 5,134,484
Telephone and Data Systems 27,500 2,901,250
Univision Communications, Cl. A 98,700 (a) 3,775,275
Viad 80,600 1,722,825
Western Wireless, Cl. A 44,300 (a) 2,104,250
Westwood One 65,560 (a) 1,241,543
42,793,778
TECHNOLOGY--14.4%
Brocade Communications Systems 16,100 (a) 3,660,737
Henry (Jack) & Associates 43,000 2,365,000
Intergrated Device Technology 48,400 (a) 2,725,525
Intuit 98,700 (a) 6,063,881
JNI 43,300 (a) 3,856,406
Lattice Semiconductor 80,440 (a) 2,347,843
Manugistics Group 12,500 (a) 1,424,219
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
---------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Micrel 63,300 (a) 2,864,325
Microchip Technology 102,750 (a) 3,249,469
Micromuse 9,300 (a) 1,578,094
NVIDIA 37,100 (a) 2,305,417
QLogic 48,800 (a) 4,721,400
RadiSys 26,500 (a) 702,250
Rational Software 93,880 (a) 5,603,462
Semtech 43,760 (a) 1,411,260
TranSwitch 71,780 (a) 4,145,295
TriQuint Semiconductor 71,140 (a) 2,725,551
Vignette 125,890 (a) 3,753,096
Vitesse Semiconductor 89,900 (a) 6,287,381
Zebra Technologies, Cl. A 53,210 (a) 2,331,263
64,121,874
UTILITIES--9.2%
Allegheny Energy 102,300 4,187,906
Ameren 86,000 3,418,500
Broadwing 124,150 (a) 3,507,237
Calpine 167,180 (a) 13,196,771
DQE 77,990 2,724,776
Dynegy, Cl. A 153,400 7,104,337
Montana Power 93,770 2,649,003
TECO Energy 150,800 4,203,550
40,992,080
TOTAL COMMON STOCKS
(cost $337,217,800) 429,359,102
Principal
SHORT-TERM INVESTMENTS--3.4% Amount ($) Value ($)
--------------------------------------------------------------------------------
</TABLE>
REPURCHASE AGREEMENT;
Goldman, Sachs & Co., 6.55% dated
10/31/2000, due 11/1/2000 in the amount
of $15,282,780 (fully collateralized by
$15,297,000 U.S. Treasury Notes
6.375%, 6/30/2002, value $15,586,465)
(cost $15,280,000) 15,280,000 15,280,000
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $352,497,800) 100.0% 444,639,102
CASH AND RECEIVABLES (NET) .0% 164,366
NET ASSETS 100.0% 444,803,468
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(c) 352,497,800 444,639,102
Cash 386,004
Receivable for investment securities sold 365,004
Dividends and interest receivable 176,511
Receivable for shares of Capital Stock subscribed 30,377
445,596,998
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 488,262
Payable for investment securities purchased 272,734
Payable for shares of Capital Stock redeemed 32,534
793,530
--------------------------------------------------------------------------------
NET ASSETS ($) 444,803,468
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 348,398,125
Accumulated net realized gain (loss) on investments 4,264,041
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 92,141,302
--------------------------------------------------------------------------------
NET ASSETS ($) 444,803,468
NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
Class A Class B Class C Class R Class T
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets ($) 17,089,772 24,766,748 4,063,701 398,875,630 7,617
Shares Outstanding 850,278 1,288,642 211,304 19,636,255 379.986
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE ($) 20.10 19.22 19.23 20.31 20.05
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $1,204 foreign taxes withheld at source) 3,639,173
Interest 410,469
TOTAL INCOME 4,049,642
EXPENSES:
Management fee--Note 2(a) 5,168,773
Distribution and service fees--Note 2(b) 336,765
Loan commitment fees--Note 4 3,701
TOTAL EXPENSES 5,509,239
INVESTMENT (LOSS) (1,459,597)
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 21,482,069
Net unrealized appreciation (depreciation) on investments 53,986,459
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 75,468,528
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 74,008,931
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment (loss) (1,459,597) (340,985)
Net realized gain (loss) on investments 21,482,069 (13,424,852)
Net unrealized appreciation (depreciation)
on investments 53,986,459 42,306,665
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 74,008,931 28,540,828
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 38,991,112 58,145,411
Class B shares 4,726,701 5,744,035
Class C shares 1,020,623 1,523,010
Class R shares 99,351,267 115,299,579
Class T shares 7,240 1,000
Cost of shares redeemed:
Class A shares (41,099,899) (57,554,573)
Class B shares (8,461,616) (9,200,611)
Class C shares (1,606,075) (2,306,158)
Class R shares (79,651,662) (64,595,908)
Class T shares (1,082) --
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 13,276,609 47,055,785
TOTAL INCREASE (DECREASE) IN NET ASSETS 87,285,540 75,596,613
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 357,517,928 281,921,315
END OF PERIOD 444,803,468 357,517,928
(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,
---------------------------------
2000 1999(a)
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A (B)
Shares sold 2,055,425 3,518,240
Shares redeemed (2,145,979) (3,463,986)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (90,554) 54,254
--------------------------------------------------------------------------------
CLASS B (B)
Shares sold 257,844 363,147
Shares redeemed (458,292) (581,757)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (200,448) (218,610)
--------------------------------------------------------------------------------
CLASS C
Shares sold 56,080 95,223
Shares redeemed (87,778) (145,202)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (31,698) (49,979)
--------------------------------------------------------------------------------
CLASS R
Shares sold 5,067,310 6,958,746
Shares redeemed (4,113,804) (3,920,202)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 953,506 3,038,544
--------------------------------------------------------------------------------
CLASS T
Shares sold 380 60
Shares redeemed (60) --
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 320 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, 2000, 34,996 CLASS B SHARES
REPRESENTING $632,584 WERE AUTOMATICALLY CONVERTED TO 33,617 CLASS A SHARES AND
DURING THE PERIOD ENDED OCTOBER 31, 1999, 19,186 CLASS B SHARES REPRESENTING
$303,709 WERE AUTOMATICALLY CONVERTED TO 18,546 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
---------------------------------------------------------------
CLASS A SHARES 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 16.67 15.18 18.89 15.13 13.09
Investment Operations:
Investment (loss) (.12)(a) (.04)(a) (.02) (.04) (.02)
Net realized and unrealized gain (loss)
on investments 3.55 1.53 (2.78) 4.52 2.48
Total from Investment Operations 3.43 1.49 (2.80) 4.48 2.46
Distributions:
Dividends from net realized gain
on investments -- -- (.91) (.72) (.42)
Net asset value, end of period 20.10 16.67 15.18 18.89 15.13
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 20.50 9.81 (15.42) 30.73 19.22
-----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 1.50 1.50 1.50 1.50
Ratio of investment (loss)
to average net assets (.53) (.25) (.32) (.35) (.16)
Portfolio Turnover Rate 80.12 43.32 47.44 39.18 49.03
-----------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 17,090 15,688 13,462 9,190 3,884
(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 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 16.06 14.75 18.51 14.95 13.05
Investment Operations:
Investment (loss) (.32)(a) (.16)(a) (.11) (.03) (.07)
Net realized and unrealized gain (loss)
on investments 3.48 1.47 (2.74) 4.31 2.39
Total from Investment Operations 3.16 1.31 (2.85) 4.28 2.32
Distributions:
Dividends from net realized gain
on investments -- -- (.91) (.72) (.42)
Net asset value, end of period 19.22 16.06 14.75 18.51 14.95
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 19.68 8.88 (16.10) 29.72 18.17
-----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.25 2.25 2.25 2.25 2.24
Ratio of investment (loss)
to average net assets (1.26) (.99) (1.07) (1.02) (.93)
Portfolio Turnover Rate 80.12 43.32 47.44 39.18 49.03
-----------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 24,767 23,918 25,183 19,257 4,633
(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 C SHARES 2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 16.07 14.75 18.52 14.95 13.04
Investment Operations:
Investment income (loss)--net (.32)(a) (.16)(a) (.14) .01 (.09)
Net realized and unrealized gain (loss)
on investments 3.48 1.48 (2.72) 4.28 2.42
Total from Investment Operations 3.16 1.32 (2.86) 4.29 2.33
Distributions:
Dividends from net realized gain
on investments -- -- (.91) (.72) (.42)
Net asset value, end of period 19.23 16.07 14.75 18.52 14.95
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 19.66 8.88 (16.08) 29.79 18.27
-----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.25 2.25 2.25 2.25 2.25
Ratio of investment (loss)
to average net assets (1.26) (.99) (1.08) (1.01) (.93)
Portfolio Turnover Rate 80.12 43.32 47.44 39.18 49.03
-----------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 4,064 3,906 4,323 3,647 514
(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 R SHARES 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 16.81 15.27 18.96 15.15 13.10
Investment Operations:
Investment income (loss)--net (.05)(a) .00(a,b) (.01) .00(b) .01
Net realized and unrealized gain (loss)
on investments 3.55 1.54 (2.77) 4.53 2.48
Total from Investment Operations 3.50 1.54 (2.78) 4.53 2.49
Distributions:
Dividends from investment income--net -- -- -- -- (.02)
Dividends from net realized gain on investments -- -- (.91) (.72) (.42)
Total Distributions -- -- (.91) (.72) (.44)
Net asset value, end of period 20.31 16.81 15.27 18.96 15.15
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 20.82 10.08 (15.31) 31.04 19.43
-----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.25 1.25 1.25 1.25
Ratio of net investment income (loss)
to average net assets (.27) -- (.07) .02 .09
Portfolio Turnover Rate 80.12 43.32 47.44 39.18 49.03
-----------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 398,876 314,005 238,953 244,292 112,209
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
--------------------
CLASS T SHARES 2000 1999(a)
--------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 16.67 16.70
Investment Operations:
Investment (loss) (.14)(b) (.02)(b)
Net realized and unrealized gain (loss)
on investments 3.52 (.01)
Total from Investment Operations 3.38 (.03)
Net asset value, end of period 20.05 16.67
-------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 20.28 (.18)(d)
--------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.75 .35(d)
Ratio of investment (loss)
to average net assets (.82) (.14)(d)
Portfolio Turnover Rate 80.12 43.32
--------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 8 1
(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.
</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"), 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 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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 B shares automatically convert to Class A shares
after six years. 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 accounting
principles generally accepted in the United States of America, 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 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 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, 2000, as a result of permanent book to tax
differences, the fund increased accumulated undistributed investment income-net
by $1,459,597 and increased accumulated net realized gain (loss) on investments
by $163,455 and decreased paid-in capital by $1,623,052. Net assets were not
effected 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 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.
DSC retained $1,358 during the period ended October 31, 2000 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 the average daily net assets attributable to its Class A shares
to compensate the distributor for shareholder servicing activities and 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 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, 2000,
Class A, Class B, Class C and Class T shares were charged $42,465, $189,314,
$31,388 and $15, respectively, pursuant to the Plan, of which $28,594, $126,373,
$21,201 and $13 for Class A, Class B, Class C and Class T shares, respectively,
were paid to DSC. During the period ended October 31, 2000, Class B, Class C and
Class T shares were charged $63,105, $10,463 and $15, respectively, pursuant to
the service plan, of which $42,125, $7,067 and $13 for Class B, Class C and
Class T shares, respectively, were paid to DSC.
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 purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 2000, amounted to
$325,993,338 and $324,776,936, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$92,141,302, consisting of $115,488,621 gross unrealized appreciation and
$23,347,319 gross unrealized depreciation.
At October 31, 2000, 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, 2000, 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 (the "Fund") of the The Dreyfus/Laurel Funds,
Inc., including the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier Small Company Stock Fund of The Dreyfus/Laurel Funds, Inc., as
of October 31, 2000, 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 accounting principles generally accepted in the United
States of America.
New York, New York
December 8, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 385AR0010
Dreyfus Disciplined
Stock Fund
ANNUAL REPORT October 31, 2000
(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
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, 1999 through October 31, 2000.
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.
The Standard & Poor' s 500 Composite Stock Price Index, a broad measure of
large-cap stock performance, rose more than 6% over the 12-month reporting
period. Investor enthusiasm over technology stocks drove most major stock market
indices to new highs. Conversely, in the first nine months of 2000, the equity
investment environment was marked by dramatic price fluctuations. Additionally,
the moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
Since stocks provided returns well above their historical averages during the
second half of the 1990s, some investors may have developed unrealistic
expectations in equities. Recent volatility has reminded investors of both the
risks of investing and the importance of fundamental research and investment
selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Disciplined Stock Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, the fund produced a total return
of 6.88% .(1) For the same period, the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500 Index"), the fund's benchmark, produced a total return of
6.08%.(2)
We attribute the fund's good relative performance to the success of our stock
selection process in a wide variety of industry sectors. We achieved these
results despite unusually volatile market conditions, which do not generally
favor the fund's disciplined, quantitative investment approach.
What is the fund's investment approach?
The fund invests in a diversified portfolio of large companies that we feel meet
our strict standards for value and growth. We identify potential investments
through a quantitative analytic process that sifts through a universe of
approximately 2,000 stocks in search of those that are not only undervalued
according to our criteria, but that also exhibit higher than expected earnings
momentum. A team of experienced analysts examines the fundamentals of the
top-ranked candidates for investment. Armed with these analytical insights, the
portfolio manager decides which stocks he wishes to purchase, and whether he
feels any current holdings should be sold.
In addition to identifying attractive investment opportunities, our approach has
been 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
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
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 approximately
134 stocks across 11 economic sectors. Our 10 largest holdings accounted for
approximately 26% 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?
The U.S. stock market experienced high levels of volatility throughout the
period, largely due to a sharp rise in technology stocks during the first half
and a sharp decline in the second half. Consistent with our investment approach,
the fund held approximately the same percentage of technology stocks as the S&P
500 Index. As a result, technology-related holdings drove the fund's positive
returns during the first half of the period, and were the primary reason the
fund gave up some ground in the second half. We benefited from holding
relatively large positions of some of the sector's best performers, such as
Corning, and from avoiding some of the sector's poorest performers.
We experienced similar success in a variety of other sectors, as well. For
example, performance was enhanced by relatively large holdings of pharmaceutical
company Warner-Lambert, The Hartford Financial Services Group, and diversified
manufacturing and services company Tyco International. Conversely, performance
suffered from the fund's exposure to telephone companies Sprint and AT&T, which
faced rising competition in the long-distance market.
Although we succeeded in assembling a portfolio that outperformed the S&P 500
Index, we were disappointed with the performance of the quantitative model that
helps us choose securities. High levels of market volatility undermined the
effectiveness of our model, which depends on using data from one month to
identify stocks that may outperform during the next.
What is the fund's current strategy?
As of October 31, 2000, we continue to employ our sector neutral asset
allocation strategy, which is designed to reduce certain risks by apportioning
assets among various industry groups in a way that is consistent with our
benchmark, the S& P 500 Index. Our stock selection strategy continues to be
driven by our quantitative model, which has historically been an effective tool
for distinguishing between attractive and unattractive stocks. However, we are
looking for ways to increase our model' s effectiveness in volatile market
environments. We continue to adhere to our long-standing asset allocation,
security selection and risk management strategies in our efforts to outperform
the S&P 500 Index.
November 15, 2000
(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 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 10/31/00
Inception From
Date 1 Year 5 Years 10 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FUND 12/31/87 6.88% 21.04% 19.23% 17.50%
((+)) SOURCE: LIPPER INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</TABLE>
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, 2000.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS DISCIPLINED STOCK
FUND ON 12/31/87 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL
GAIN DISTRIBUTIONS ARE REINVESTED.
THE DREYFUS DISCIPLINED STOCK FUND SEEKS INVESTMENT RETURNS (INCLUDING CAPITAL
APPRECIATION AND INCOME) CONSISTENTLY SUPERIOR TO THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX BY INVESTING PRIMARILY IN EQUITY SECURITIES SELECTED
THROUGH THE COMBINATION OF QUANTITATIVE SECURITY SELECTION, FUNDAMENTAL ANALYSIS
AND RISK MANAGEMENT TECHNIQUES. THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH
TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK
MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--99.3% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--.8%
<S> <C> <C>
Anheuser-Busch Cos. 620,300 28,378,725
CONSUMER CYCLICAL--7.1%
Best Buy 270,700 (a) 13,585,756
Costco Wholesale 426,100 (a) 15,605,913
Ford Motor 482,576 12,607,298
Harley-Davidson 310,200 14,947,763
Home Depot 763,900 32,847,700
Limited 747,200 18,866,800
Lowe's Cos. 392,600 17,936,912
RadioShack 276,100 16,462,463
Safeway 354,500 (a) 19,386,719
Target 665,600 18,387,200
US Airways Group 245,300 (a) 9,260,075
Wal-Mart Stores 1,298,300 58,910,362
248,804,961
CONSUMER STAPLES--5.5%
Avon Products 307,100 14,894,350
Coca-Cola 698,700 42,184,012
General Mills 335,600 14,011,300
Heinz (H.J.) 462,600 19,400,288
Keebler Foods 139,900 5,665,950
PepsiCo 725,400 35,136,563
Procter & Gamble 492,200 35,161,537
Quaker Oats 213,600 17,421,750
Ralston Purina Group 456,600 11,072,550
194,948,300
ELECTRONIC EQUIPMENT--5.8%
CIENA 80,300 (a) 8,441,538
Comverse Technology 106,400 (a) 11,890,200
Corning 438,800 33,568,200
Danaher 128,200 8,092,625
Harris 264,400 8,378,175
Motorola 595,180 14,842,301
Nokia, ADS 402,200 17,194,050
Nortel Networks 1,074,200 48,876,100
SCI Systems 277,440 (a) 11,929,920
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT (CONTINUED)
Sanmina 165,800 (a) 18,953,012
Solectron 292,900 (a) 12,887,600
Tellabs 147,500 (a) 7,365,781
202,419,502
ENERGY RELATED--7.2%
Baker Hughes 318,100 10,934,687
Coastal 192,500 14,521,719
Enron 359,100 29,468,644
Exxon Mobil 1,144,700 102,092,931
Kerr-McGee 243,480 15,902,288
Noble Drilling 247,400 (a) 10,282,563
Royal Dutch Petroleum (New York Shares) 619,400 36,776,875
Schlumberger 291,900 22,220,887
USX-Marathon Group 459,500 12,492,656
254,693,250
HEALTH CARE--11.1%
Abbott Laboratories 639,700 33,784,156
American Home Products 594,100 37,725,350
Amgen 492,100 (a) 28,511,044
Cardinal Health 185,900 17,614,025
Elan, ADS 249,100 (a) 12,937,631
Genentech 180,600 (a) 14,899,500
Guidant 209,200 (a) 11,074,525
Lilly (Eli) & Co. 341,733 30,542,387
MedImmune 175,700 (a) 11,486,387
Medtronic 521,700 28,334,831
Pfizer 2,118,500 91,492,719
Pharmacia 620,500 34,127,500
Schering-Plough 742,100 38,357,294
390,887,349
INTEREST SENSITIVE--20.1%
ACE 276,300 10,844,775
Allstate 428,060 17,229,415
Ambac Financial Group 142,600 11,381,263
American General 277,200 22,314,600
Bank of America 777,800 37,383,012
CIGNA 137,400 16,755,930
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Chase Manhattan 977,670 44,483,985
Citigroup 896,060 47,155,157
Fannie Mae 372,600 28,690,200
FleetBoston Financial 1,139,000 43,282,000
General Electric 3,118,000 170,905,375
Hartford Financial Services Group 536,400 39,928,275
Lehman Brothers Holdings 586,800 37,848,600
MBNA 919,700 34,546,231
Merrill Lynch 457,700 32,039,000
Morgan Stanley Dean Witter & Co. 190,000 15,259,375
PNC Financial Services Group 238,900 15,976,438
Providian Financial 173,600 18,054,400
SunTrust Banks 166,800 8,141,925
UnitedHealth Group 189,500 20,726,563
Wells Fargo 743,300 34,424,081
707,370,600
INTERNET RELATED--.9%
America Online 440,200 (a) 22,199,286
Yahoo! 136,300 (a) 7,990,587
30,189,873
PRODUCER GOODS--6.0%
Alcoa 445,600 12,783,150
Boeing 315,000 21,360,937
Canadian National Railway 193,300 6,088,950
International Paper 303,900 11,130,338
Martin Marietta Materials 123,600 4,746,240
Minnesota Mining & Manufacturing 266,900 25,789,212
Praxair 173,600 6,466,600
Southdown 207,300 14,692,388
Temple-Inland 130,800 5,853,300
Tyco International 1,134,700 64,323,306
Union Carbide 399,500 17,178,500
United Technologies 285,900 19,959,394
210,372,315
SERVICES--6.4%
AT&T-Liberty Media, Cl. A 594,800 (a) 10,706,400
Automatic Data Processing 322,100 21,037,156
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
SERVICES (CONTINUED)
Clear Channel Communications 284,024 (a) 17,059,192
Disney (Walt) 594,000 21,272,625
Fox Entertainment Group, Cl. A 369,500 (a) 7,944,250
Hispanic Broadcasting 205,300 (a) 6,415,625
Infinity Broadcasting, Cl. A 352,200 (a) 11,710,650
Omnicom Group 200,700 18,514,575
Seagram 163,800 9,357,075
Time Warner 546,500 41,484,815
Viacom, Cl. B 509,700 (a) 28,989,187
Vodafone Group, ADR 534,650 22,756,041
VoiceStream Wireless 62,400 (a) 8,205,600
225,453,191
TECHNOLOGY--21.2%
Altera 334,400 (a) 13,689,500
Amdocs 91,500 (a) 5,930,344
Analog Devices 260,800 (a) 16,952,000
Applied Materials 177,500 (a) 9,429,688
Cisco Systems 2,127,800 (a) 114,635,225
Compaq Computer 569,700 17,324,577
Dell Computer 805,000 (a) 23,747,500
EMC 697,700 (a) 62,138,906
Gateway 260,200 (a) 13,428,922
Intel 2,060,900 92,740,500
International Business Machines 579,900 57,120,150
Linear Technology 308,400 19,911,075
Maxim Integrated Products 259,300 (a) 17,194,831
Micron Technology 308,300 (a) 10,713,425
Microsoft 1,143,300 (a) 78,744,787
Network Appliance 230,100 (a) 27,381,900
Oracle 2,028,200 (a) 66,930,600
Siebel Systems 194,600 (a) 20,420,838
Sun Microsystems 605,300 (a) 67,112,637
Symantec 214,200 (a) 8,367,188
743,914,593
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES--7.2%
AT&T 1,258,635 29,184,599
Calpine 198,800 (a) 15,692,775
Exelon 291,600 17,532,450
GPU 291,400 9,634,412
Public Service Enterprise Group 227,000 9,420,500
Qwest Communications International 743,654 (a) 36,160,176
Reliant Energy 351,100 14,504,819
SBC Communications 1,302,331 75,128,220
Sprint (FON Group) 699,800 17,844,900
WorldCom 1,130,500 (a) 26,849,375
251,952,226
TOTAL COMMON STOCKS
(cost $2,501,642,833) 3,489,384,885
------------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--.8% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Goldman Sachs & Co., Tri-Party Repurchase
Agreement, 6.55% dated 10/31/2000,
due 11/1/2000 in the amount of
$27,374,980 (fully collateralized
by $27,215,000 U.S. Treasury Notes,
6.375%, 6/30/2002, value $27,918,201)
(cost $27,370,000) 27,370,000 27,370,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $2,529,012,833) 100.1% 3,516,754,885
LIABILITIES, LESS CASH AND RECEIVABLES (.1%) (1,829,989)
NET ASSETS 100.0% 3,514,924,896
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(c) 2,529,012,833 3,516,754,885
Cash 280,589
Receivable for investment securities sold 11,522,300
Dividends and interest receivable 1,504,258
Receivable for shares of Capital Stock subscribed 897,765
3,530,959,797
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 2,919,204
Payable for investment securities purchased 12,627,189
Payable for shares of Capital Stock redeemed 488,508
16,034,901
--------------------------------------------------------------------------------
NET ASSETS ($) 3,514,924,896
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,377,340,297
Accumulated net realized gain (loss) on investments 149,842,547
Accumulated net unrealized appreciation
(depreciation) on investments--Note 3 987,742,052
--------------------------------------------------------------------------------
NET ASSETS ($) 3,514,924,896
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(245 million shares of $.001 par value Capital Stock authorized) 83,009,217
NET ASSET VALUE, offering and redemption price per share ($) 42.34
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $229,013 foreign taxes withheld at source) 34,512,055
Interest 1,171,696
TOTAL INCOME 35,683,751
EXPENSES:
Management fee--Note 2(a) 31,336,532
Distribution fees--Note 2(b) 3,481,837
Loan commitment fees--Note 4 29,222
Interest expense--Note 4 9,774
TOTAL EXPENSES 34,857,365
INVESTMENT INCOME--NET 826,386
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 161,712,943
Net unrealized appreciation (depreciation) on investments 62,557,594
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 224,270,537
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 225,096,923
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-----------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 826,386 8,305,061
Net realized gain (loss) on investments 161,712,943 111,120,419
Net unrealized appreciation (depreciation)
on investments 62,557,594 484,270,158
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 225,096,923 603,695,638
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (1,601,307) (11,442,543)
Net realized gain on investments (111,279,716) (119,405,805)
TOTAL DIVIDENDS (112,881,023) (130,848,348)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 943,646,506 1,255,734,317
Dividends reinvested 106,211,213 121,358,577
Cost of shares redeemed (936,697,466) (996,555,018)
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS 113,160,253 380,537,876
TOTAL INCREASE (DECREASE) IN NET ASSETS 225,376,153 853,385,166
------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 3,289,548,743 2,436,163,577
END OF PERIOD 3,514,924,896 3,289,548,743
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 22,170,769 32,584,410
Shares issued for dividends reinvested 2,575,267 3,330,034
Shares redeemed (22,039,293) (25,858,146)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,706,743 10,056,298
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,
--------------------------------------------
2000 1999 1998(a) 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 40.96 34.68 32.78 26.65 22.09
Investment Operations:
Investment income--net .01(b) .11(b) .20 .25 .28
Net realized and unrealized
gain (loss) on investments 2.78 7.97 5.31 7.92 5.13
Total from Investment Operations 2.79 8.08 5.51 8.17 5.41
Distributions:
Dividends from investment income--net (.02) (.15) (.24) (.26) (.29)
Dividends from net realized
gain on investments (1.39) (1.65) (3.37) (1.78) (.56)
Total Distributions (1.41) (1.80) (3.61) (2.04) (.85)
Net asset value, end of period 42.34 40.96 34.68 32.78 26.65
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 6.88 24.01 18.37 32.32 25.14
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.00 1.00 .99 .90 .90
Ratio of net investment income
to average net assets .02 .28 .61 .87 1.23
Portfolio Turnover Rate 50.32 57.23 54.45 68.87 64.47
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 3,514,925 3,289,549 2,436,164 1,482,176 807,680
(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")
, which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective
March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly owned subsidiary
of the Manager, became the distributor of the fund's shares, which are sold to
the public without a sales charge. Prior to March 22, 2000, Premier Mutual Fund
Services, Inc. was the distributor.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
deposits is determined by the exchange or Board of Trade on which the contract
is traded and is subject to change. At October 31, 2000, there were no financial
futures contracts outstanding.
(e) Dividends 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, 2000, as a result of permanent book to tax
differences, the fund increased accumulated undistributed investment income-net
by $774,921 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 and 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, 2000, the fund was charged
$3,481,837 pursuant to the Plan, of which $2,360,782 was paid to DSC.
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.
NOTE 3 - Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 2000, amounted to
$1,738,387,032 and $1,763,800,400, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$987,742,052, consisting of $1,147,212,179 gross unrealized appreciation and
$159,470,127 gross unrealized depreciation.
At October 31, 2000, 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, 2000 was approximately $149,000 with a related weighted average
annualized interest rate of 6.56%.
NOTE 5--Litigation:
The fund, along with certain related parties, were defendants in a class action
lawsuit. Former Retail class shareholders 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. On December 23, 1999, the appeals
court affirmed the dismissal and the time period for the plaintiffs to petition
for further review has expired.
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 Stock Fund (the "Fund") of The Dreyfus/Laurel Funds, Inc., including
the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Disciplined Stock Fund of The Dreyfus/Laurel Funds, Inc. as of October
31, 2000, 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 accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes, the fund hereby designates $1.3930 per share as a
long-term capital gain distribution of the $1.4080 per share paid on December
17, 1999.
The fund also designates 100% of the ordinary dividends paid during the fiscal
year ended October 31, 2000 as qualifying for the corporate dividends received
deduction. Shareholders will receive notification in January 2001 of the
percentage applicable to the preparation of their 2000 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 728AR0010
Dreyfus Institutional
Government Money
Market Fund
ANNUAL REPORT October 31, 2000
(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
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
17 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, 1999
through October 31, 2000. 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.
Yields on money market instruments generally rose over the reporting period as
the Federal Reserve Board (the "Fed") continued to raise short-term interest
rates at its February, March and May 2000 meetings. However, amid signs that its
previous interest-rate hikes had begun to slow the economy, the Fed refrained
from raising rates further at its meetings in June and August of 2000. Other
factors such as higher energy prices and a weak euro also served to slow
economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above historical averages, establishing
unrealistic expectations for some investors. In our opinion, as the risks of the
stock market have become more apparent due to recent volatility, the safety and
income potential of money market funds can make them an attractive investment as
part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Institutional Government Money Market Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus Institutional Government
Money Market Fund produced an annualized yield of 5.77%, and after taking into
account the effects of compounding, an annualized effective yield of 5.92%.(1)
We attribute the fund' s positive performance to our maturity management
strategy, which led us to maintain a relatively short average maturity during
much of the reporting period. This somewhat defensive position enabled us to
capture higher yields more quickly when interest rates rose during the first
half of the period.
What is the fund's investment approach?
As a government money market fund, our goal is to provide 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 by the United States
Government or 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?
The fund was primarily influenced by higher short-term interest rates over the
past year. Higher interest rates were primarily the result of a more restrictive
monetary policy on the part of the Federal Reserve Board (the "Fed").
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
When the reporting period began, the U.S. economy was growing quickly, fueling
concerns that long-dormant inflationary pressures might reemerge. The Fed raised
interest rates by 0.25 percentage points each in November 1999, February 2000
and March 2000, and by 0.50 percentage points in May 2000. As might be expected,
the money markets reacted to the Fed's interest-rate hikes in the form of higher
yields.
During the first calendar quarter of 2000, the economy grew at a strong 4.8%,
well above the level most analysts believed may trigger destructive levels of
inflation. In addition, rising energy prices began to add to inflation concerns,
strong domestic demand for goods and services continued, and overseas demand for
raw materials accelerated as well.
In the second calendar quarter, economic growth accelerated to an even more
robust 5.6% . Consumer confidence and consumer spending showed few signs of
abating despite sharp declines in the technology sector of the stock market. The
tightest U.S. labor market in the past 30 years added the threat of wage-driven
inflation.
From July through the end of the reporting period, however, we saw signs that
the Fed' s rate hikes may have begun to have the desired effect of slowing the
economy. Retail sales declined, housing starts slowed dramatically, and
inflation appeared to be relatively benign. As a result, the Fed chose not to
raise rates further at its June, August or October meetings. Indeed,
third-quarter GDP slowed to a more sustainable growth rate of approximately 2.7%
. What' s more, the corrections in the Nasdaq stock market during the reporting
period may have had a "reverse wealth effect," causing consumer spending to
moderate as investors became less confident in the stock market's returns. As a
result of these factors, money market rates began to trend lower toward the end
of the reporting period.
What is the fund's current strategy?
Toward the end of the reporting period, we began to extend the fund's average
maturity from the shorter than average position we had maintained through most
of the reporting period. We chose to maintain a modestly long average maturity
because the economy continued to slow, suggesting that the Fed is unlikely to
raise interest rates again in 2000. In fact, some analysts believe that the
Fed's next move may be to reduce interest rates if the economy slows too much.
In addition, we have continued to emphasize U.S Government agency securities in
an effort to earn the highest possible yield for the fund. In fact, as of the
end of the reporting period, approximately 82% of the fund's assets were
allocated to U.S. Government agency securities, with 17% of that allocation
specifically to floating-rate notes. The portfolio' s remaining assets were
invested in repurchase agreements, which provided liquidity and helped boost
returns.
November 15, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR
THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
The Fund
STATEMENT OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
Annualized
Yield on
Date of Principal
U.S. GOVERNMENT AGENCIES--81.7% Purchase (%) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Federal Farm Credit Banks, Notes
<S> <C> <C> <C>
11/1/2000 6.31 10,000,000 10,000,000
12/1/2000 6.40 5,000,000 5,000,000
1/2/2001 6.48 10,000,000 10,000,000
2/1/2001 6.45 10,000,000 10,000,000
3/1/2001 6.48 5,000,000 5,000,000
4/2/2001 6.42 5,000,000 5,000,000
5/1/2001 6.36 5,000,000 5,000,000
Federal Home Loan Banks, Discount Notes
11/1/2000 6.43 20,000,000 20,000,000
11/17/2000 6.42 10,000,000 9,971,644
12/27/2000 6.46 10,000,000 9,900,989
Federal Home Loan Banks, Floating Rate Notes
3/20/2001 6.44 (a) 10,000,000 9,998,096
9/26/2001 6.49 (a) 15,000,000 14,992,065
Federal Home Loan Mortgage Corp., Discount Notes
11/7/2000 6.44 20,000,000 19,978,733
1/18/2001 6.53 10,000,000 9,860,900
Federal Home Loan Mortgage Corp.,
Floating Rate Note
4/11/2001 6.44 (a) 15,000,000 14,999,351
Federal National Mortgage Association,
Discount Notes
12/7/2000 6.45 30,000,000 29,808,800
12/28/2000 6.45 10,000,000 9,899,142
1/11/2001 6.53 10,000,000 9,873,185
1/22/2001 6.52 15,000,000 14,781,675
2/16/2001 6.41 5,000,000 4,999,825
Federal National Mortgage Association,
Floating Rate Note
4/26/2001 6.55 (a) 10,000,000 9,999,518
TOTAL U.S. GOVERNMENT AGENCIES
(cost $239,063,923) 239,063,923
Annualized
Yield on
Date of Principal
REPURCHASE AGREEMENTS--21.5% Purchase (%) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Barclays De Zoette Wedd
dated 10/31/2000,
due 11/1/2000 in the amount of
$10,001,819 (fully collateralized by
$9,586,000 U.S. Treasury Notes, 6.625%
due 1/15/2008, value $10,200,685) 6.55 10,000,000 10,000,000
C S First Boston
dated 10/31/2000,
due 11/1/2000 in the amount of $10,001,814
(fully collateralized by $10,027,000
U.S. Treasury Notes 5.875%--7.875%
due from 8/15/2001 to 2/15/2004,
value $10,258,359) 6.53 10,000,000 10,000,000
Goldman, Sachs & Co.
dated 10/31/2000,
due 11/1/2000 in the amount of
$42,879,152 (fully collateralized by
$42,628,000 U.S. Treasury Notes 6.375%
due 6/30/2002, value $43,729,454) 6.55 42,871,352 42,871,352
TOTAL REPURCHASE AGREEMENTS
(cost $62,871,352) 62,871,352
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $301,935,275) 103.2% 301,935,275
LIABILITIES, LESS CASH AND RECEIVABLES (3.2%) (9,263,597)
NET ASSETS 100.0% 292,671,678
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
------------------------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $62,871,352)--Note 1(c) 301,935,275 301,935,275
Cash 53,696
Interest receivable 781,316
302,770,287
--------------------------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 98,609
Payable for investment securities purchased 10,000,000
10,098,609
--------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 292,671,678
--------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 292,785,750
Accumulated net realized gain (loss) on investments (114,072)
-------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 292,671,678
-------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
(2 billion shares of $.001 par value Capital Stock authorized) 292,785,750
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 17,632,035
EXPENSES:
Management fee--Note 2(a) 432,979
Shareholder servicing costs--Note 2(b) 432,979
TOTAL EXPENSES 865,958
INVESTMENT INCOME--NET, REPRESENTING NET INCREASE
IN NET ASSETS RESULTING FROM OPERATIONS 16,766,077
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
--------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 16,766,077 11,831,116
Net realized gain (loss) from investments -- (31,649)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 16,766,077 11,799,467
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (16,766,077) (11,831,116)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 3,010,691,825 2,626,381,951
Dividends reinvested 309,551 358,854
Cost of shares redeemed (2,954,861,442) (2,734,165,524)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 56,139,934 (107,424,719)
TOTAL INCREASE (DECREASE) IN NET ASSETS 56,139,934 (107,456,368)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 236,531,744 343,988,112
END OF PERIOD 292,671,678 236,531,744
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,
---------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .058 .046 .052 .052 .051
Distributions:
Dividends from investment income--net (.058) (.046) (.052) (.052) (.051)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.94 4.74 5.36 5.28 5.25
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .30 .30 .30 .30 .30
Ratio of net investment income
to average net assets 5.81 4.64 5.22 5.14 5.14
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 292,672 236,532 343,988 191,853 295,434
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. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a
wholly-owned subsidiary of the Manager, became the distributor of the fund's
shares, which are sold to the public without a sales charge. Prior to March 22,
2000, Premier Mutual Fund Services, Inc. was the distributor.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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) Dividends to shareholders: It is the policy of the fund to declare dividends
daily from investment income-net; such dividends are paid monthly. Dividends
from net realized capital gain, if any, are normally declared and paid annually,
but the fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 $114,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. 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, 2000, 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 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, 2000,
the fund was charged $432,979 pursuant to the Plan, of which $302,728 was paid
to DSC.
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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 2000, 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, including
the statement of investments, of Dreyfus Institutional Government Money Market
Fund (the "Fund") of The Dreyfus/Laurel Funds, Inc., as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Institutional Government Money Market Fund of The Dreyfus/Laurel Funds,
Inc. as of October 31, 2000, 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 accounting principles generally accepted
in the United States of America.
New York, New York
December 8, 2000
The Fund
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 919AR0010
Dreyfus Premier
Midcap Stock Fund
ANNUAL REPORT
October 31, 2000
[Runcat BW logo]
[dreyfus.tiff logo]
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.
o Not FDIC-Insured o Not Bank-Guaranteed o May Lose Value
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
19 Financial Highlights
24 Notes to Financial Statements
30 Independent Auditors' Report
31 Important Tax Information
For More Information
--------------------------------------------------------------------------------
Back Cover
[hand holding pen logo]
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, 1999 through October 31,
2000. 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.
The Standard & Poor's MidCap 400 Index, a broad measure of midcap stock
performance, rose more than 30% for the 12-month reporting period, notably
outperforming most large- and small-cap stock indices. Additionally, the
moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth. In our view, the stock market's recent
weakness is a reminder that 20% annual gains are not the norm, historically
speaking. Since stocks provided returns well above their historical averages
during the second half of the 1990s, some investors may have developed
unrealistic expectations. Recent volatility has reminded investors of both the
risks of investing in equities and the importance of fundamental research and
investment selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Premier Midcap Stock Fund.
Stephen E. Canter
[Canter signature logo]
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
[man with glasses logo]
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, 2000, the fund's Class A, B, C, R and
T shares produced total returns of 22.14%, 21.22%, 21.19%, 22.40% and 21.84%,
respectively.1 In comparison, the Standard & Poor's MidCap 400 Index ("S&P
400"), which serves as the fund's benchmark, produced a total return of 30.17%
for the same period.2
The fund's absolute performance was positively affected by strong investor
interest in midcap stocks as an investment category. However, the stock market's
abrupt preference shifts between growth and value stocks several times during
the period posed a difficult challenge and caused the fund's performance to lag
relative to that of the S&P 400.
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 modeling techniques, fundamental analysis and risk management.
The quantitatively driven valuation process identifies and ranks approximately
2,500 midcap stocks based upon more than a dozen different valuation inputs.
Those inputs, which we believe can have an important influence on stock returns,
include, among other things, earnings estimates, profit margins and growth in
cash flow. Based upon our analysis of which factors are being rewarded by
investors, we establish weightings for each factor and make continuous
adjustments for the uniqueness of various industries and economic sectors. For
example, if the equity markets were rewarding companies with strong growth in
cash flow, then we would add more weight to our growth-in-cash-flow factor.
After considering the different valuation inputs, our investment management team
conducts fundamental research on each stock, which
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
ultimately results in the buy-and-sell recommendations. The fund seeks to
own the best-performing stocks within each economic sector of the midcap market.
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?
The most positive factor influencing the fund's performance during the past 12
months was the fact that midcap stocks were among the best-performing stock
groups in the investment universe, producing gains of more than double those of
the major large-cap stock indexes.
However, while midcap stocks outperformed large-cap stocks as an investment
category during the reporting period, the growth and value investment styles
took turns leading performance. For example, during the period from late 1999
and into early 2000, midcap growth stocks overwhelmingly outperformed midcap
value stocks. Beginning in March, however, value stocks staged a dramatic
comeback. This trend continued for a couple of months, but by June the growth
style was back in favor. This type of seesaw market was seen throughout the
reporting period. It's important to note that the fund's quantitative model
examines a mixture of both growth and value characteristics, without
overwhelmingly favoring either. However, the model is less effective in
polarized markets where one investment style dominates another, even if it's
just for short periods, as in the environment described above.
The fund's focus on individual stock selection was rewarded in many instances.
Several of our top performers were electric utility companies, such as Dynegy,
Calpine and Constellation Energy Group, three companies that performed well in a
newly deregulated environment. In addition, health care stocks, such as IVAX, a
generic drug manufacturer, and Universal Health Services, which operates
hospitals, posted strong gains.
What is the fund's current strategy?
We continue to follow our quantitatively driven valuation model and our sector
neutral portfolio construction process. However, to adapt to changing market
conditions, our model is dynamic by design. For example, after our usual
rigorous research and evaluation, we recently added factors that take into
consideration stock price momentum as well as the buying and selling behavior of
a company's management team and directors. For instance, there are periods when
the market rewards positive price momentum, and this factor attempts to capture
this type of trend. Conversely, there may be equity markets where such positive
trends are not meaningful and investors instead focus on negative price
movements. Our model strives to be effective in all market environments. Another
new factor tracks the investment actions of company management and directors.
For example, if such individuals were selling their shares in the company, we
may view this as a negative development, and may possibly avoid initiating a
position in such a company.
In the mid to late 1990s, midcap stocks trailed the performance of their
large-cap counterparts, as the latter group posted very strong earnings growth.
However, over the past year, the gap in performance between midcap and large-cap
stocks has generally narrowed. We continue to believe that the midcap sector of
the market represents a collection of very dynamic and interesting companies
that still provide attractive values relative to their large-cap counterparts.
November 15, 2000
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 and Class T shares, or the applicable contingent deferred
sales charge 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 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 measuring the performance of the
midsize company segment of the U.S. market.
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 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 $10 BILLION AND IS A WIDELY ACCEPTED, UNMANAGED INDEX OF OVERALL MIDCAP STOCK
MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
Average Annual Total Returns AS OF 10/31/00
<TABLE>
<CAPTION>
Inception From
Date 1 Year 5 Years Inception
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES
WITH SALES CHARGE (5.75%) 4/6/94 15.10% 18.19% 16.89%
WITHOUT SALES CHARGE 4/6/94 22.14% 19.61% 17.95%
CLASS B SHARES
WITH REDEMPTION((+)) 1/16/98 17.22% -- 10.82%
WITHOUT REDEMPTION 1/16/98 21.22% -- 11.71%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 1/16/98 20.19% -- 11.75%
WITHOUT REDEMPTION 1/16/98 21.19% -- 11.75%
CLASS R SHARES 11/12/93 22.40% 19.92% 17.13%
CLASS T SHARES
WITH SALES CHARGE (4.5%) 8/16/99 16.34% -- 12.47%
WITHOUT SALES CHARGE 8/16/99 21.84% -- 16.81%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND
IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS
A SHARES.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 1%
FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
October 31, 2000
<S> <C> <C>
Common Stocks--96.9% Shares Value ($)
Consumer Cyclical--9.1%
American Eagle Outfitters 36,400 a 1,253,525
Avnet 40,900 1,099,187
BJ's Wholesale Club 61,200 a 2,015,775
Blyth 39,700 1,032,200
Brinker International 41,300 a 1,621,025
Brunswick 33,600 653,100
Cybear Group 2,724 a 1,873
Darden Restaurants 60,100 1,352,250
Dollar Tree Stores 25,600 a 1,001,600
Harman International Industries 25,800 1,238,400
Johnson Controls 18,700 1,114,987
Lennar 18,500 594,313
Liz Claiborne 24,600 1,045,500
MGM Mirage 53,400 1,845,638
Miller (Herman) 36,100 943,112
Park Place Entertainment 64,900 a 827,475
Payless ShoeSource 18,500 a 1,071,844
Silicon Valley Bancshares 31,000 a 1,433,750
Zale 40,000 a 1,355,000
21,500,554
Consumer Staples--2.2%
Alberto-Culver 14,000 469,875
Interstate Bakeries 51,700 723,800
McCormick & Co. 30,900 979,144
Pepsi Bottling Group 28,500 986,812
SUPERVALU 41,000 630,375
Wrigley (Wm.) Jr. 16,200 1,282,837
Zomax 14,500 a 87,906
5,160,749
Energy--7.6%
BJ Services 39,200 a 2,055,550
ENSCO International 68,800 2,287,600
Energen 26,500 758,562
Equitable Resources 18,000 1,044,000
KeySpan 49,100 1,727,706
Louis Dreyfus Natural Gas 29,500 a 945,844
Murphy Oil 26,900 1,558,519
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
ENERGY (CONTINUED)
Nabors Industries 27,700 a 1,409,930
Nobel Affiliates 15,100 553,981
Nobel Drilling 32,800 a 1,363,250
Questar 51,300 1,388,306
Rowan Cos. 46,100 a 1,161,144
Santa Fe International 3,000 109,500
Ultramar Diamond Shamrock 57,500 1,509,375
17,873,267
Health Care--14.7%
Andrx Group 13,600 a 979,200
Biomet 50,400 1,823,850
Chiron 21,000 a 909,562
Cytyc 20,900 a 1,240,937
Forest Laboratories 26,000 a 3,445,000
Foundation Health Systems, Cl. A 63,300 a 1,277,869
Genzyme 28,900 a 2,051,900
Gilead Sciences 14,000 a 1,204,000
IDEC Pharmaceuticals 11,000 a 2,157,375
IVAX 56,600 a 2,462,100
King Pharmaceuticals 16,200 a 725,962
Millennium Pharmaceuticals 49,200 a 3,570,075
Noven Pharmaceuticals 12,300 a 548,119
Protein Design Labs 5,300 a 715,914
Quest Diagnostics 28,100 a 2,704,625
Stryker 57,900 2,728,537
Trigon Healthcare 20,200 a 1,448,088
Universal Health Services, Cl. B 15,500 a 1,300,062
Vertex Pharmaceuticals 7,200 a 670,387
Waters 34,300 a 2,488,894
34,452,456
Interest Sensitive--12.1%
Associated Banc 35,100 844,594
City National 52,800 1,815,000
Cullen/Frost Bankers 53,600 1,785,550
Dime Bancorp 85,000 2,077,187
Edwards (A.G.) 44,800 2,273,600
Gallagher (Arthur J.) & Co. 23,600 1,489,750
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
Golden West Financial 37,100 2,079,919
M&T Bank 21,000 1,054,200
Mercantile Bankshares 58,100 2,186,013
Metris Cos. 52,700 1,706,163
Nationwide Financial Services, Cl. A 32,900 1,599,763
North Fork Bancorporation 86,500 1,746,219
PMI Group 40,700 3,006,713
Radian Group 30,400 2,154,600
St. Paul Cos. 18,300 937,875
Union Planters 47,200 1,595,950
28,353,096
Internet Related--1.0%
Art Technology Group 12,500 a 784,375
Black Box 6,900 a 454,538
Efficient Networks 13,900 a 583,148
Portal Software 11,900 a 418,731
Proxicom 800 a 10,800
2,251,592
Producer Goods--8.0%
Bowater 24,600 1,331,475
C&D Technologies 25,400 1,501,775
Cymer 26,700 a 667,500
Cytec Industries 44,800 a 1,551,200
Eagle Supply Group 25,700 a 732,450
Eastman Chemical 23,200 994,700
Englehard 53,600 1,118,900
Helix Technology 22,700 632,763
IMC Global 71,200 921,150
Lyondell Chemical 62,700 901,313
Parker-Hannifin 33,400 1,381,925
Precision Castparts 34,100 1,287,275
Quanta Services 40,300 a 1,251,819
Southdown 21,800 1,545,075
United Parcel Service, Cl. B 21,000 1,275,750
Westvaco 58,200 1,658,700
18,753,770
The Fund
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
Services--12.6%
Apollo Group 29,700 a 1,162,013
Belo (A.H.), Cl. A 54,600 1,047,637
Convergys 29,300 a 1,276,381
Cox Radio, Cl. A 39,500 a 898,625
DST Systems 55,200 a 3,401,700
Entercom Communications 29,300 a 1,148,194
Fox Entertainment Group, Cl. A 47,100 a 1,012,650
Hall, Kinion & Associates 20,600 a 544,613
Heidrick & Struggles International 17,400 a 1,075,537
Hertz, Cl. A 18,600 611,475
Knight-Ridder 16,500 829,125
McClatchy, Cl. A 20,700 786,600
Penton Media 21,300 650,981
Robert Half International 64,500 a 1,967,250
SEI Investments 16,200 1,470,150
Scholastic 14,400 a 1,152,000
SunGard Data Systems 60,000 a 3,067,500
TMP Worldwide 9,900 a 689,133
Telephone and Data Systems 9,400 991,700
True North Communications 24,400 919,575
United Rentals 17,900 a 384,850
United States Cellular 11,200 a 716,800
Univision Communiations, Cl. A 25,100 a 960,075
Viad 63,000 1,346,625
Westwood One 73,500 a 1,391,906
29,503,095
Technology--21.5%
Actuate 19,600 a 552,475
Anixter International 49,100 a 1,190,675
Atmel 82,000 a 1,224,875
CIENA 8,900 a 935,612
Cadence Design Systems 48,900 a 1,256,119
Credence Systems 31,900 a 598,125
Cypress Semiconductor 38,700 a 1,448,831
Digital Lightwave 11,400 a 577,838
Electro Scientific Industries 21,000 a 733,688
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Intergrated Device Technology 25,200 a 1,419,075
International Rectifier 25,700 a 1,146,862
Intuit 59,300 a 3,643,244
Jabil Circuit 39,700 a 2,265,381
Lattice Semiconductor 44,600 a 1,301,762
M-Systems Flash Disk Pioneer 25,400 a 631,825
Macrovision 15,900 a 1,158,713
Mentor Graphics 18,700 a 438,281
Mercury Interactive 7,500 a 832,500
Metasolv Software 23,200 288,550
Microchip Technology 60,600 a 1,916,475
NVIDIA 19,000 a 1,180,672
NetIQ 11,200 a 964,600
Novellus Systems 34,200 a 1,400,062
Peregrine Systems 1,600 a 38,400
PerkinElmer 7,800 932,100
Polycom 17,500 a 1,137,500
Power-One 14,400 a 1,021,500
Powerwave Technologies 34,000 a 1,636,250
QLogic 18,200 a 1,760,850
Rational Software 17,500 a 1,044,531
SERENA Software 27,000 a 1,373,625
SanDisk 13,200 a 709,294
Sawtek 23,900 a 1,215,913
Semtech 38,200 a 1,231,950
Silicon Storage Technology 27,200 a 618,800
Sybase 80,500 a 1,685,469
Symantec 35,600 a 1,390,625
3Com 107,800 a 1,913,450
Tech Data 28,200 a 1,173,825
Varian Semicoductor Euipment 30,100 a 692,300
Vishay Intertechnology 63,800 a 1,914,000
Vitesse Semiconductor 29,200 a 2,042,175
50,638,797
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
Utilities--8.1%
Allegheny Energy 44,700 1,829,906
Calpine 43,300 a 3,417,994
Constellation Energy Group 8,900 371,019
DTE Energy 47,800 1,726,775
Dynegy, Cl. A 32,100 1,486,631
Entergy 31,700 1,214,506
IDACORP 47,300 2,332,481
Illuminet Holdings 16,100 387,658
NRG Energy 29,000 754,000
PPL 46,700 1,923,456
Pinnacle West Capital 27,000 1,172,813
Sempra Energy 30,000 620,625
TECO Energy 34,600 a 964,475
Time Warner Telecom, Cl. A 16,200 a 965,925
19,168,264
Total Common Stocks
(cost $210,218,874) 227,655,640
---------------------------------------------------------------------------------------------------------------------------------
Principal
Short-Term Investments--2.6% Amount ($) Value ($)
---------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement;
Goldman Sachs & Co.,
Tri-Party Repurchase Agreement, 6.55% dated 10/31/2000 to be repurchased at
$6,201,128 on 11/1/2000, collateralized by $5,960,000 U.S. Treasury Notes,
6.50% due 2/15/2010, value $6,243,100
(cost $6,200,000) 6,200,000 6,200,000
---------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $216,418,874) 99.5% 233,855,640
Cash and Receivables (Net) .5% 1,133,185
Net Assets 100.0% 234,988,825
a Non-income producing.
See notes to financial statements.
</TABLE>
The Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
Cost Value
<S> <C> <C>
Assets ($):
Investments in securities--
See Statement of Investments--Note 1(c) 216,418,874 233,855,640
Cash 936,783
Receivable for investment securities sold 11,950,592
Receivable for shares of Capital Stock subscribed 877,614
Dividends and interest receivable 111,519
247,732,148
---------------------------------------------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates--Note 2 258,729
Payable for investment securities purchased 12,279,573
Payable for shares of Capital Stock redeemed 204,618
Loan commitment fees payable 403
12,743,323
---------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 234,988,825
Composition of Net Assets ($):
Paid-in capital 175,544,901
Accumulated net realized gain (loss) on investments 42,007,158
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 17,436,766
---------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 234,988,825
---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class C Class R Class T
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets ($) 78,424,719 35,959,390 7,177,967 113,318,027 108,723
Shares Outstanding 3,922,284 1,837,740 366,387 5,625,395 5,454
---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share ($) 19.99 19.57 19.59 20.14 19.93
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income ($):
Income:
Cash dividends 2,285,542
Interest 236,658
Total Income 2,522,200
Expenses:
Management fee--Note 2(a) 2,313,939
Distribution and service fees--Note 2(b) 532,643
Interest expense--Note 4 14,569
Loan commitment fees--Note 4 2,357
Total Expenses 2,863,508
Investment (Loss) (341,308)
---------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments-Note 3 ($):
Net realized gain (loss) on investments 42,788,497
Net unrealized appreciation (depreciation) on investments (2,034,020)
Net Realized and Unrealized Gain (Loss) on Investments 40,754,477
Net Increase in Net Assets Resulting from Operations 40,413,169
</TABLE>
See notes to financial statements.
The Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
-----------------------------------
2000 1999a
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment (loss)-net (341,308) (341,834)
Net realized gain (loss) on investments 42,788,497 7,058,703
Net unrealized appreciation (depreciation)
on investments (2,034,020) 18,185,744
Net Increase (Decrease) in Net Assets
Resulting from Operations 40,413,169 24,902,613
Dividends to Shareholders from ($):
Net realized gain on investments:
Class A shares (1,598,532) --
Class B shares (519,276) --
Class C shares (107,432) --
Class R shares (1,850,641) --
Class T shares (700) --
Total Dividends (4,076,581) --
---------------------------------------------------------------------------------------------------------------------------------
Capital Stock Transactions ($):
Net proceeds from shares sold:
Class A shares 104,916,243 87,568,401
Class B shares 10,679,826 10,111,646
Class C shares 3,115,224 3,098,549
Class R shares 21,691,421 50,612,334
Class T shares 101,488 2,330
Dividends reinvested:
Class A shares 1,527,643 --
Class B shares 423,230 --
Class C shares 61,915 --
Class R shares 1,514,740 --
Class T shares 700 --
Year Ended October 31,
-----------------------------------
2000 1999a
---------------------------------------------------------------------------------------------------------------------------------
Capital Stock Transactions ($) (continued):
Cost of shares redeemed:
Class A shares (122,967,002) (53,668,857)
Class B shares (5,771,725) (4,263,709)
Class C shares (2,491,383) (1,751,689)
Class R shares (23,477,518) (19,791,175)
Class T shares (1,104) --
Increase (Decrease) in Net Assets
from Capital Stock Transactions (10,676,302) 71,917,830
Total Increase (Decrease) in Net Assets 25,660,286 96,820,443
---------------------------------------------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 209,328,539 112,508,096
End of Period 234,988,825 209,328,539
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,
-----------------------------------
2000 1999a
---------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Class Ab
Shares sold 5,440,489 5,612,113
Shares issued for dividends reinvested 89,075 --
Shares redeemed (6,620,304) (3,285,647)
Net Increase (Decrease) in Shares Outstanding (1,090,740) 2,326,466
---------------------------------------------------------------------------------------------------------------------------------
Class Bb
Shares sold 568,541 638,392
Shares issued for dividends reinvested 25,043 --
Shares redeemed (318,509) (267,298)
Net Increase (Decrease) in Shares Outstanding 275,075 371,094
---------------------------------------------------------------------------------------------------------------------------------
Class C
Shares sold 166,511 195,119
Shares issued for dividends reinvested 3,659 --
Shares redeemed (135,849) (109,042)
Net Increase (Decrease) in Shares Outstanding 34,321 86,077
---------------------------------------------------------------------------------------------------------------------------------
Class R
Shares sold 1,133,012 3,084,883
Shares issued for dividends reinvested 87,862 --
Shares redeemed (1,226,963) (1,227,426)
Net Increase (Decrease) in Shares Outstanding (6,089) 1,857,457
---------------------------------------------------------------------------------------------------------------------------------
Class T
Shares sold 5,333 140
Shares issued for dividends reinvested 42 --
Shares redeemed (61) --
Net Increase (Decrease) in Shares Outstanding 5,314 140
a From August 16, 1999 (commencement of initial offering) to October 31, 1999
for Class T shares.
b During the period ended October 31, 2000,4,599 Class B shares representing
$90,097 were automatically converted to 4,510 Class A shares, and during
the period ended October 31, 1999, 3,059 Class B shares representing
$48,938 were automatically converted to 3,028 Class A shares.
</TABLE>
See notes to financial statements.
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portlolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------
Class A Shares 2000 1999 1998a 1997 1996
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value, beginning of period 16.69 14.24 17.02 14.36 11.92
Investment Operations:
Investment income (loss)-net (.03)b (.03)b (.01) .02 .04
Net realized and unrealized gain (loss)
on investments 3.66 2.48 (.29) 4.79 2.98
Total from Investment Operations 3.63 2.45 (.30) 4.81 3.02
Distributions:
Dividends from investment income-net -- -- (.01) (.01) (.05)
Dividends from net realized
gain on investments (.33) -- (2.47) (2.14) (.53)
Total Distributions (.33) -- (2.48) (2.15) (.58)
Net asset value, end of period 19.99 16.69 14.24 17.02 14.36
---------------------------------------------------------------------------------------------------------------------------------
Total Return (%) 22.14c 17.21c (2.16)c 38.40 26.29
Ratios/Supplemental Data (%):
Ratio of operating expenses to
average net assets 1.35 1.35 1.35 1.35 1.35
Ratio of interest expense and commitment
fees to average net assets .01 -- -- -- --
Ratio of net investment income (loss)
to average net assets (.17) (.17) (.19) .16 .28
Portfolio Turnover Rate 122.19 80.15 78.02 81.87 90.93
---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 78,425 83,674 38,267 6,847 3,205
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>
See notes to financial statements.
The Fund
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------
Class B Shares 2000 1999 1998a
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Data ($):
Net assets value, beginning of period 16.46 14.16 14.65
Investment Operations:
Investment (loss) (.17)b (.15)b (.06)
Net realized and unrealized gain (loss)
on investments 3.61 2.45 (.43)
Total from Investment Operations 3.44 2.30 (.49)
Distributions:
Dividends from net realized gain on investments (.33) -- --
Net asset value, end of period 19.57 16.46 14.16
---------------------------------------------------------------------------------------------------------------------------------
Total Return (%) c 21.22 16.32 (3.41)d
Ratios/Supplemental Data (%):
Ratio of operating expenses to average net assets 2.10 2.10 1.66d
Ratio of interest expense and commitment fees to
average net assets .01 -- --
Ratio of investment (loss)
to average net assets (.91) (.92) (.77)d
Portfolio Turnover Rate 122.19 80.15 78.02
---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 35,959 25,724 16,867
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>
Year Ended October 31,
--------------------------------
Class C Shares 2000 1999 1998a
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Data ($):
Net assets value, beginning of period 16.48 14.17 14.65
Investment Operations:
Investment (loss) (.17)b (.15)b (.06)
Net realized and unrealized gain (loss)
on investments 3.61 2.46 (.42)
Total from Investment Operations 3.44 2.31 (.48)
Distributions:
Dividends from net realized gain on investments (.33) -- --
Net asset value, end of period 19.59 16.48 14.17
---------------------------------------------------------------------------------------------------------------------------------
Total Return (%) c 21.19 16.30 (3.28)d
Ratios/Supplemental Data (%):
Ratio of operating expenses to average net assets 2.10 2.10 1.66d
Ratio of interest expense and commitment fees to
average net assets .01 -- --
Ratio of investment (loss)
to average net assets (.91) (.92) (.77)d
Portfolio Turnover Rate 122.19 80.15 78.02
---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 7,178 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>
See notes to financial statements.
The Fund
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------
Class R Shares 2000 1999 1998a 1997 1996
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data ($):
Net assets value, beginning of period 16.77 14.28 17.03 14.36 11.92
Investment Operations:
Investment income-net .02b .01b .01 .05 .07
Net realized and unrealized gain (loss)
on investments 3.68 2.48 (.26) 4.80 2.98
Total from Investment Operations 3.70 2.49 (.25) 4.85 3.05
Distributions:
Dividends from investment income-net -- -- (.03) (.04) (.08)
Dividends from net realized
gain on investments (.33) -- (2.47) (2.14) (.53)
Total Distributions (.33) -- (2.50) (2.18) (.61)
Net asset value, end of period 20.14 16.77 14.28 17.03 14.36
---------------------------------------------------------------------------------------------------------------------------------
Total Return (%) 22.40 17.44 (1.88) 38.88 26.61
Ratios/Supplemental Data (%):
Ratio of operating expenses to
average net assets 1.10 1.10 1.10 1.10 1.10
Ratio of interest expense and commitment
fees to average net assets .01 -- -- -- --
Ratio of net investment income
to average net assets .10 .09 .05 .42 .57
Portfolio Turnover Rate 122.19 80.15 78.02 81.87 90.93
---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 113,318 94,455 53,888 31,769 15,644 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.
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------
Class T Shares 2000 1999a
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per Share Data ($):
Net assets value, beginning of period 16.68 16.84
Investment Operations:
Investment (loss) (.08)b (.01)b
Net realized and unrealized gain (loss)
on investments 3.66 (.15)
Total from Investment Operations 3.58 (.16)
Distributions:
Dividends from net realized gain on investments (.33) --
Net asset value, end of period 19.93 16.68
---------------------------------------------------------------------------------------------------------------------------------
Total Return (%) c 21.84 .95d
Ratios/Supplemental Data (%):
Ratio of operating expenses to average net assets 1.60 .34d
Ratio of interest expense and commitment fees to
average net assets .01 --
Ratio of investment (loss)
to average net assets (.41) (.06)d
Portfolio Turnover Rate 122.19 80.15
---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 109 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.
</TABLE>
See notes to financial statements.
The Fund
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 B shares automatically convert
to Class A shares after six years. 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 accounting
principles generally accepted in the United States of America, 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 event of a
NOTES TO FINANCIAL STATEMENTS (continued)
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 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.
(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, 2000, as a result of permanent book to tax
differences, the fund increased accumulated undistributed investment income net
by $341,308, 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.
DSC retained $1,641 during the period ended October 31, 2000 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
The Fund
NOTES TO FINANCIAL STATEMENTS (continued)
A shares may pay annually up to .25% of the value of their average daily
net assets to compensate the distributor, for shareholder servicing activities
and 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 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, 2000,
Class A, Class B, Class C and Class T shares were charged $163,621, $229,995,
$46,528 and $163, respectively, pursuant to the Plan, of which $104,188,
$162,158, $32,424 and $138 for Class A, Class B, Class C and Class T shares,
respectively, were paid to DSC. Class B, Class C and Class T shares were charged
$76,665, $15,509 and $163, respectively, pursuant to the service plan, of which
$54,053, $10,808 and $138 for Class B, Class C and Class T shares, respectively,
were paid to DSC.
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, 2000, amounted to
$254,402,599 and $277,608,482, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$17,436,766, consisting of $34,025,166 gross unrealized appreciation and
$16,588,400 gross unrealized depreciation.
At October 31, 2000, 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, 2000 was approximately $192,000, with a related
weighted average annualized interest rate of 7.61%.
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 Midcap Stock Fund (the "Fund") of The Dreyfus/Laurel Funds, Inc.,
including the statement of investments, as of October 31, 2000, 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 periods indicated herein. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier Midcap Stock Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 2000, 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 periods indicated herein, in
conformity with accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
Important Tax Information (Unaudited)
For Federal tax purposes, the fund hereby designates $.1250 per share as a
long-term capital gain distribution of the $.3300 paid on December 7, 1999.
The fund also designates 82.305% of the ordinary dividends paid during the
fiscal year ended October 31, 2000 as qualifying for the corporate dividends
received. Shareholders will receive notification in January 2001 of the
percentage applicable to the preparation of their 2000 income tax returns.
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 330AR0010
Dreyfus Premier
Small Cap
Value Fund
ANNUAL REPORT October 31, 2000
(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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
15 Statement of Assets and Liabilities
16 Statement of Operations
17 Statement of Changes in Net Assets
19 Financial Highlights
24 Notes to Financial Statements
30 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, 1999 through October 31,
2000. 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.
The Russell 2000 Index, a broad measure of small-cap stock performance, rose
more than 17% over the 12-month reporting period. Investor enthusiasm over
technology stocks drove the market to new highs. Conversely, in the first nine
months of 2000, the small-cap investment environment was marked by dramatic
price fluctuations. Additionally, the moderating effects of the Federal Reserve
Board's (the "Fed") interest-rate hikes during the first half of 2000 helped the
Fed to achieve its goal of slowing the U.S. economy. Other factors such as
higher energy prices and a weak euro also served to slow economic growth.
In our view, the stock market's recent weakness is a reminder that 20% annual
gains are not the norm, historically speaking. Since stocks provided returns
well above their historical averages during the second half of the 1990s, some
investors may have developed unrealistic expectations in equities. Recent
volatility has reminded investors of both the risks of investing and the
importance of fundamental research and investment selection.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus Premier Small Cap Value Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, the fund's Class A, B, C, and R
shares produced total returns of 10.54% , 9.68% , 9.67% and 10.80% ,
respectively.(1) In contrast, the Russell 2000 Value Index, which serves as the
fund's benchmark, produced a total return of 17.30% for the same period.(2)
The fund' s Class T shares, which had an inception date of March 1, 2000,
produced a total return of 13.35% for the eight-month period ended October 31,
2000.(1)
We attribute the fund's positive performance to a period of investor preference
toward small-cap value stocks. However, the fund's relative performance was
negatively impacted early in 2000 by certain high-priced biotechnology stocks
that were included in the Russell 2000 Value Index. The fund did not hold these
stocks at a time when their prices soared. However, relative performance
improved as biotech stock prices eventually decreased to more reasonable levels.
What is the fund's investment approach?
The fund uses a disciplined investment process that combines fundamental
analysis and risk management with a computer model that searches for undervalued
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 several different criteria -- including changes in
earnings estimates and changes in price-to-earnings ratios -- in an attempt 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 in
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
similar proportions to the Russell 2000 Value Index. We generally stay industry
neutral in an attempt to capture opportunities that may be realized quickly
during periods of above-average market volatility. By maintaining such a neutral
stance, stock selection generally drives the fund's performance.
What other factors influenced the fund's performance?
While the fund reported a positive return for the reporting period overall, its
relative performance was weakened due to two very difficult months -- January
and February 2000. During those two months, the stock prices of biotechnology
companies soared, causing the Russell 2000 Value Index to rise faster than the
fund's net asset value. These biotechnology companies generally are the types of
companies that the fund avoids -- that is, stocks with extremely high
price-earnings ratios. Of the 1,600 stocks in the Russell 2000 Value Index,
biotechnology stocks were among the 50 most expensive on the basis of
price-earnings ratios. The Russell 2000 Value Index is adjusted every June,
deleting companies that no longer fit its criteria. At that time, many of these
high-flying biotechnology companies were removed from the Index, which helped
boost the fund' s relative performance.
On the positive side, the fund' s energy stocks were strong contributors to
performance throughout the year, as higher fuel prices drove earnings
expectations. Electric utilities also performed well late in the year as a
deregulated business environment began to benefit earnings growth prospects. In
addition, the fund's stock selection among health care companies was very strong
during the period. For example, Bindley Western Industries, a distributor of
pharmaceuticals and health care products, performed well as its sales and
earnings growth prospects increased. In addition, Albany Molecular Research
benefited from the trend of large pharmaceutical companies toward outsourcing
their research and development activities. We are pleased to report that both
stocks, which the fund held throughout the period, more than doubled in price
during the 12-month reporting period.
Another trend was declining interest rates late in the fiscal year, which helped
many of the fund' s financial services companies. For example, real estate
investment trusts, which pay relatively high dividends, performed especially
well after a few years of flat returns. In addition, the fund was able to
benefit from some merger and acquisition activity among banks and asset
management firms.
The fund benefited from the general strength of value stocks as an investment
category during the reporting period, particularly after March 2000 when
technology stocks sold off sharply. Investors began to place greater emphasis on
more conservative companies that have demonstrated solid profitability levels --
precisely the types of companies in which we generally invest.
What is the fund's current strategy?
The focus of our investment model continues to include companies that offer
strong fundamentals because, in our view, those are the companies that are
likely to produce solid profits as well as positive earnings surprises. We also
remain committed to investing in companies across the entire economy -- some 55
industries -- so that our investors have the potential to benefit from a broad
diversification strategy. We believe this is particularly important during
periods of increased volatility.
November 15, 2000
(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 AND CLASS T SHARES, OR THE APPLICABLE CONTINGENT DEFERRED
SALES CHARGE 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 INC. -- REFLECTS THE REINVESTMENT OF INCOME DIVIDENDS AND,
WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE RUSSELL 2000 VALUE INDEX IS AN
UNMANAGED INDEX WHICH MEASURES THE PERFORMANCE OF THOSE RUSSELL 2000 COMPANIES
WITH LOWER PRICE-TO-BOOK RATIOS AND LOWER FORECASTED GROWTH VALUES.
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 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.
PERFORMANCE FOR CLASS T SHARES WILL VARY FROM THE PERFORMANCE OF CLASS A, CLASS
B, CLASS C 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, 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>
<S> <C> <C> <C>
Average Annual Total Returns AS OF 10/31/00
Inception From
Date 1 Year Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
WITH SALES CHARGE (5.75%) 4/1/98 4.17% (4.46%)
WITHOUT SALES CHARGE 4/1/98 10.54% (2.25%)
CLASS B SHARES
WITH REDEMPTION((+)) 4/1/98 5.68% (4.11%)
WITHOUT REDEMPTION 4/1/98 9.68% (2.97%)
CLASS C SHARES
WITH REDEMPTION((+)(+)) 4/1/98 8.67% (2.94%)
WITHOUT REDEMPTION 4/1/98 9.67% (2.94%)
CLASS R SHARES 4/1/98 10.80% (2.00%)
------------------------------------------------------------------------------------------------------------------------------------
Actual Aggregate Total Returns AS OF 10/31/00
Inception From
Date 1 Year Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS T SHARES
WITH SALES CHARGE (4.5%) 3/1/00 -- 8.22%
WITHOUT SALES CHARGE 3/1/00 -- 13.35%
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, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS
A SHARES.
((+)(+)) 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>
<S> <C> <C>
STATEMENT OF INVESTMENTS
October 31, 2000
COMMON STOCKS--99.1% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ALCOHOL & TOBACCO--.3%
Coors (Adolph), Cl. B 400 25,475
CONSUMER CYCLICAL--11.2%
Anchor Gaming 400 (a) 33,975
ArvinMeritor 1,700 28,475
BJ's Wholesale Club 1,100 (a) 36,231
Borders Group 2,000 (a) 27,750
BorgWarner 800 30,200
CBRL Group 1,800 32,175
Coldwater Creek 600 (a) 17,812
Dress Barn 1,000 (a) 25,063
Factory 2-U Stores 600 (a) 19,163
HON INDUSTRIES 1,700 40,906
Harman International Industries 1,200 57,600
K-Swiss, Cl. A 700 19,250
Lear 1,700 (a) 46,325
Neiman Marcus Group, Cl. A 1,600 (a) 59,400
Payless ShoeSource 800 (a) 46,350
Pier 1 Imports 4,900 64,925
Polo Ralph Lauren 2,200 (a) 43,175
Ruby Tuesday 2,000 27,125
SkyWest 700 35,350
Superior Industries 800 27,250
Toro 1,200 42,000
Venator Group 3,800 (a) 53,675
Zale 1,400 (a) 47,425
861,600
CONSUMER STAPLES--3.5%
Alberto-Culver, Cl. B 1,200 40,275
Dean Foods 1,000 32,000
Libbey 600 16,350
Michael Foods 1,500 40,406
Performance Food Group 800 (a) 32,400
Riviana Foods 2,400 40,800
Smithfield Foods 1,400 (a) 40,163
Suiza Foods 600 (a) 27,787
270,181
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ENERGY--6.9%
Berry Petroleum, Cl. A 1,600 27,500
California Water Service Group 1,100 29,631
Energen 1,800 51,525
Equitable Resources 400 23,200
Helmerich & Payne 800 25,150
Mitchell Energy & Development, Cl. A 700 32,200
ONEOK 1,900 75,288
Patterson Energy 700 (a) 19,687
Pioneer Natural Resources 1,300 (a) 16,981
Seitel 1,700 (a) 25,500
Southern Union 1,700 (a) 31,981
St. Mary Land & Exploration 1,000 23,438
Ultramar Diamond Shamrock 900 23,625
Valero Energy 1,500 49,594
Vintage Petroleum 1,200 25,350
Washington Gas Light 2,000 51,000
531,650
FINANCIAL SERVICES--2.7%
Allied Capital 1,600 33,000
Doral Financial 2,700 48,263
Gallagher (Arthur J.) & Co. 1,000 63,125
Health Care REIT 1,500 26,531
IndyMac Bancorp 1,700 (a) 35,487
206,406
HEALTH CARE--7.3%
Albany Molecular Research 600 (a) 34,875
Bergen Brunswig, Cl. A 3,400 30,812
Bindley Western Industries 1,000 35,937
Cell Genesys 800 (a) 18,450
Coventry Health Care 2,900 (a) 52,925
Datascope 1,100 38,088
Edwards Lifesciences 1,300 (a) 17,469
Foundation Health Systems, Cl. A 3,700 (a) 74,694
Henry Schein 1,000 (a) 24,375
Invitrogen 700 (a) 53,244
STERIS 1,500 (a) 22,500
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
Scott Technologies 1,300 (a) 29,900
Sunrise Assisted Living 1,000 (a) 23,375
Trigon Healthcare 700 (a) 50,181
Varian Medical Systems 1,100 (a) 53,763
560,588
INTEREST SENSITIVE--23.1%
Amli Residential Properties Trust 1,900 43,938
Arden Realty 1,900 45,600
Avalonbay Communities 1,000 45,938
BRE Properties, CL. A 1,500 47,438
BSB Bancorp 1,200 17,400
BancorpSouth 2,500 32,656
BancWest 1,200 24,525
Banknorth Group 3,100 56,188
CBL & Associates Properties 1,400 32,375
CVB Financial 3,200 53,400
Cabot Industrial Trust 1,800 33,975
Camden Property Trust 900 25,762
City National 1,000 34,375
Corus Bankshares 1,100 43,656
Cullen/Frost Bankers 3,200 106,600
Dain Rauscher 400 37,525
Downey Financial 1,700 81,175
Eaton Vance 700 34,869
First Industrial Realty Trust 1,300 40,137
Franchise Finance Corp. of America 1,600 32,500
Fulton Financial 1,900 41,562
Harbor Florida Bancshares 1,500 18,375
Highwoods Properties 2,000 43,250
Hospitality Properties Trust 1,400 30,187
Imperial Bancorp 1,500 (a) 36,469
Investment Technology Group 500 (a) 18,000
JDN Realty 1,800 19,687
Jefferies Group 1,400 38,150
Kilroy Realty 1,000 26,062
MAF Bancorp 2,500 60,000
Nationwide Health Properties 2,700 40,331
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
PFF Bancorp 1,700 31,450
Queens County Bancorp 1,100 30,800
Reckson Associates Realty 2,900 65,613
Regency Realty 1,800 40,500
Silicon Valley Bancshares 700 (a) 32,375
Southwest Bancorporation of Texas 1,200 (a) 43,800
Summit Properties 1,800 43,200
Washington Federal 2,500 55,781
Webster Financial 1,900 46,313
Weingarten Realty Investors 1,100 46,131
Westamerica Bancorporation 1,700 61,094
Whitney Holding 900 33,244
1,772,406
INTERNET RELATED--1.0%
AXENT Technologies 1,500 (a) 28,781
OTG Software 700 22,050
Tut Systems 700 (a) 23,275
74,106
INSURANCE--4.5%
Alfa 1,700 32,725
CNA Surety 2,300 26,737
Commerce Group 1400 35,788
Fidelity National Financial 900 22,106
Leucadia National 1300 32,337
MONY Group 600 24,675
Presidential Life 2800 40,775
Radian Group 700 49,613
StanCorp Financial Group 1,500 61,125
Triad Guaranty 800 23,250
349,131
PRODUCER GOODS--21.2%
ATMI 900 (a) 16,987
Albemarle 1,600 37,100
Alexander & Baldwin 1,200 29,925
AptarGroup 700 14,481
Arkansas Best 1,400 (a) 22,400
Ball 1,100 38,637
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
Belden 1,000 25,937
Brooks Automation 600 (a) 15,900
Cable Design Technologies 2,100 (a) 48,431
Carpenter Technology 1,300 40,300
Centex 1,200 44,400
Commercial Metals 1,800 49,050
Cymer 500 (a) 12,500
Cytec Industries 1,500 (a) 51,938
D.R. Horton 1,635 30,247
Flowserve 2,300 46,288
GaSonics International 1,100 (a) 22,481
Great Lakes Chemical 600 20,025
Helix Technology 1,200 33,450
IDEX 1,600 51,600
JLG Industries 2,100 29,269
Kaufman and Broad Home 1,400 41,650
Lennar 1,500 48,188
Lincoln Electric Holdings 2,000 34,375
M.D.C. Holdings 2,700 73,913
Manitowoc 1,200 32,625
Milacron 1,200 19,125
Minerals Technologies 800 25,050
Newport News Shipbuilding 600 29,512
OM Group 500 23,125
Olin 2,300 40,825
Pactiv 4,900 (a) 51,450
Pope & Talbot 1,900 29,569
Precision Castparts 1,500 56,625
Pulte 1,500 49,969
Rayonier 1,400 49,263
Reliance Steel & Aluminum 1,600 38,000
Roadway Express 2,300 47,294
Spartech 1,600 24,700
Stewart & Stevenson Services 1,900 45,600
Thomas Industries 2,700 56,700
Toll Brothers 1,000 (a) 32,500
Trinity Industries 1,700 40,906
COMMON STOCKS (CONTINUED) Shares Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
USFreightways 1,500 38,625
United Stationers 700 (a) 21,044
1,631,979
SERVICES--6.9%
ADVO 600 (a) 22,087
Audiovox, Cl. A 1,000 (a) 13,687
Banta 900 20,756
Entercom Communications 500 (a) 19,594
Hall, Kinion & Associates 1,800 (a) 47,588
Keynote Systems 1,300 (a) 31,200
Leap Wireless International 500 (a) 24,875
National Data 700 26,687
Penton Media 1,400 42,788
Pharmaceutical Product Development 1,100 (a) 34,444
PurchasePro.com 1,000 (a) 27,000
Rent-A-Center 900 (a) 26,269
Ryder System 2,200 43,450
Scholastic 500 (a) 40,000
Spherion 1,600 (a) 19,000
Sylvan Learning Systems 1,900 (a) 29,331
Universal Compression Holdings 800 23,100
Waste Connections 1,400 (a) 35,788
527,644
TECHNOLOGY--5.6%
ACT Manufacturing 500 (a) 16,438
Alliance Semiconductor 1,200 (a) 24,000
Anixter International 1,000 (a) 24,250
Black Box 500 (a) 32,938
C-Cube Microsystems 1,600 (a) 31,200
Daisytek International 3,300 (a) 16,087
General Cable 2,300 13,800
Integrated Silicon Solution 600 (a) 8,025
KEMET 1,100 (a) 30,663
ONYX Software 1,000 (a) 15,875
Park Electrochemical 400 26,425
Phoenix Technologies 1,600 (a) 25,700
Puma Technology 1,300 (a) 17,631
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Rogers 800 (a) 28,600
SymmetriCom 2,400 (a) 30,600
THQ 800 (a) 16,400
Take-Two Interactive Software 2,000 (a) 24,875
Therma-Wave 900 18,450
Varian Semiconductor Equipment 400 (a) 9,200
Zebra Technologies, Cl. A 500 (a) 21,906
433,063
UTILITIES--4.9%
ALLETE 2,400 51,750
CH Energy Group 1,000 39,375
Cleco 1,100 52,319
Conectiv 1,600 28,700
Dycom Industries 400 (a) 15,050
IDACORP 1,300 64,106
Public Service Company of New Mexico 1,900 52,369
RGS Energy Group 500 14,750
Sierra Pacific Resources 1,600 27,500
Western Resources 1,600 34,200
380,119
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $7,046,500) 99.1% 7,624,348
CASH AND RECEIVABLES (NET) .9% 72,782
NET ASSETS 100.0% 7,697,130
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 7,046,500 7,624,348
Cash 76,334
Dividends receivable 7,422
7,708,104
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 10,875
Payable for shares of Capital Stock redeemed 99
10,974
--------------------------------------------------------------------------------
NET ASSETS ($) 7,697,130
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 7,794,405
Accumulated undistributed investment income--net 26,590
Accumulated net realized gain (loss) on investments (701,713)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 577,848
--------------------------------------------------------------------------------
NET ASSETS ($) 7,697,130
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R Class T
------------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 4,392,443 1,658,276 1,014,078 631,200 1,133
Shares Outstanding 373,859 143,397 87,680 53,481 96.712
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE ($) 11.75 11.56 11.57 11.80 11.72
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends 141,857
Interest 8,436
TOTAL INCOME 150,293
EXPENSES:
Management fee--Note 2(a) 89,858
Distribution and service plan fees--Note 2(b) 33,781
Loan commitment fees--Note 4 64
TOTAL EXPENSES 123,703
INVESTMENT INCOME--NET 26,590
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (376,388)
Net unrealized appreciation (depreciation) on investments 1,050,907
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 674,519
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 701,109
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
---------------------------------
2000(a) 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income (loss)--net 26,590 (3,552)
Net realized gain (loss) on investments (376,388) (208,895)
Net unrealized appreciation (depreciation)
on investments 1,050,907 278,088
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 701,109 65,641
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares -- (9,456)
Class R shares -- (2,327)
TOTAL DIVIDENDS -- (11,783)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 1,006,866 1,354,136
Class B shares 895,564 575,937
Class C shares 496,085 173,901
Class R shares 64,987 405,000
Class T shares 1,000 --
Dividends reinvested:
Class A shares -- 9,165
Class R shares -- 2,327
Cost of shares redeemed:
Class A shares (1,458,573) (139,346)
Class B shares (368,656) (230,496)
Class C shares (228,978) (135,853)
Class R shares (3,000) (327,019)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 405,295 1,687,752
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,106,404 1,741,610
-------------------------------------------------------------------------------
NET ASSETS ($)
Beginning of Period 6,590,726 4,849,116
END OF PERIOD 7,697,130 6,590,726
Undistributed investment income--net 26,590 --
(A) FROM MARCH 1, 2000 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 2000
FOR CLASS T SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
--------------------------------
2000(a) 1999
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A (B)
Shares sold 93,549 125,449
Shares issued for dividends reinvested -- 843
Shares redeemed (136,508) (12,631)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (42,959) 113,661
--------------------------------------------------------------------------------
CLASS B (B)
Shares sold 83,464 54,531
Shares redeemed (33,988) (22,016)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 49,476 32,515
--------------------------------------------------------------------------------
CLASS C
Shares sold 46,104 15,787
Shares redeemed (20,975) (12,867)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 25,129 2,920
--------------------------------------------------------------------------------
CLASS R
Shares sold 5,936 36,359
Shares issued for dividends reinvested -- 214
Shares redeemed (260) (28,894)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 5,676 7,679
--------------------------------------------------------------------------------
CLASS T
SHARES SOLD 97 --
(A) FROM MARCH 1, 2000 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 2000
FOR CLASS T SHARES.
(B) DURING THE PERIOD ENDED OCTOBER 31, 2000, 242 CLASS B SHARES REPRESENTING
$2,490 WERE AUTOMATICALLY CONVERTED TO 240 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year Ended October 31,
--------------------------------------------
CLASS A SHARES 2000 1999 1998(a)
-----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.63 10.45 12.50
Investment Operations:
Investment income--net .06(b) .01(b) .03
Net realized and unrealized gain (loss)
on investments 1.06 .20 (2.08)
Total from Investment Operations 1.12 .21 (2.05)
Distributions:
Dividends from investment income--net -- (.03) --
Net asset value, end of period 11.75 10.63 10.45
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 10.54 2.01 (16.40)(d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.50 1.50 .88(d)
Ratio of net investment income
to average net assets .59 .12 .24(d)
Portfolio Turnover Rate 101.02 53.87 19.72(d)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 4,392 4,432 3,169
(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.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
------------------------------------------
CLASS B SHARES 2000 1999 1998(a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.54 10.41 12.50
Investment Operations:
Investment (loss)--net (.02)(b) (.07)(b) (.02)
Net realized and unrealized gain (loss)
on investments 1.04 .20 (2.07)
Total from Investment Operations 1.02 .13 (2.09)
Net asset value, end of period 11.56 10.54 10.41
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 9.68 1.25 (16.72)(d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.25 2.25 1.32(d)
Ratio of net investment (loss)
to average net assets (.15) (.63) (.20)(d)
Portfolio Turnover Rate 101.02 53.87 19.72(d)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,658 990 639
(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.
Year Ended October 31,
----------------------------------------
CLASS C SHARES 2000 1999 1998a
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.55 10.41 12.50
Investment Operations:
Investment (loss)--net (.02)(b) (.07)(b) (.02)
Net realized and unrealized gain (loss)
on investments 1.04 .21 (2.07)
Total from Investment Operations 1.02 .14 (2.09)
Net asset value, end of period 11.57 10.55 10.41
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 9.67 1.34 (16.72)(d)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 2.25 2.25 1.32(d)
Ratio of net investment (loss)
to average net assets (.17) (.63) (.19)(d)
Portfolio Turnover Rate 101.02 53.87 19.72(d)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,014 660 621
(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.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
-----------------------------------------
CLASS R SHARES 2000 1999 1998(a)
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.65 10.47 12.50
Investment Operations:
Investment income--net .09(b) .04(b) .04
Net realized and unrealized gain (loss)
on investments 1.06 .20 (2.07)
Total from Investment Operations 1.15 .24 (2.03)
Distributions:
Dividends from investment income--net -- (.06) --
Net asset value, end of period 11.80 10.65 10.47
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 10.80 2.26 (16.24)(c)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.25 .73(c)
Ratio of net investment income
to average net assets .84 .36 .38(c)
Portfolio Turnover Rate 101.02 53.87 19.72(c)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 631 509 420
(A) FROM APRIL 1, 1998 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Year Ended October 31,
CLASS T SHARES 2000(a)
-------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.34
Investment Operations:
Investment income--net .02(b)
Net realized and unrealized gain (loss)
on investments 1.36
Total from Investment Operations 1.38
Net asset value, end of period 11.72
-------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 13.35(d)
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.17(d)
Ratio of net investment income
to average net assets .21(d)
Portfolio Turnover Rate 101.02
--------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1
(A) FROM MARCH 1, 2000 (COMMENCEMENT OF INITIAL OFFERING) TO OCTOBER 31, 2000.
(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 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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000 Premier Mutual Fund Services, Inc. was the distributor. 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 and 200
million shares 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 B shares automatically convert to Class A shares after six years. 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.
As of October 31, 2000, MBC Investment Corp., an indirect subsidiary of Mellon
Financial Corporation, held the following shares:
Class A 280,799 Class C 40,000
Class B 40,000 Class R 40,214
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 accounting
principles generally accepted in the United States of America 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) 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) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
(d) 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 $683,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, $116,000 of the carryover expires in fiscal 2006, $197,000 expires in
fiscal 2007 and $370,000 expires in fiscal 2008.
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 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.
DSC retained $260 during the period ended October 31, 2000 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 their average daily net assets to compensate the
distributor for shareholder servicing 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 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 the Class B, Class C and Class T
shares pay 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, 2000, Class A, Class B, Class C and Class T
shares were charged $10,869 $10,921, $6,260 and $2, respectively, pursuant to
the Plan, of which $7,105, $7,830, $4,594 and $2 for Class A, Class B, Class C
and Class T shares, respectively, were paid to DSC and Class B, Class C and
Class T shares were charged $3,640, $2,087 and $2, respectively, pursuant to the
service plan, of which $2,610, $1,531 and $2, for Class B, Class C and Class T
shares, respectively, were paid to DSC.
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, 2000, amounted to
$7,715,435 and $7,110,970, respectively.
At October 31, 2000, accumulated net unrealized appreciation on investments was
$577,848, consisting of $1,068,562 gross unrealized appreciation and $490,714
gross unrealized depreciation.
At October 31, 2000, 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, 2000, 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 (the "Fund")of The Dreyfus/Laurel Funds, Inc.
including the statement of investments, as of October 31, 2000, 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 and from April 1,
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 auditing standards generally accepted
in the United States of America. 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, 2000, 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 Small Cap Value Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 2000, 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,
and from April 1, 1998 (commencement of operations) to October 31, 1998, in
conformity with accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 148AR0010
Dreyfus
U.S. Treasury
Reserves
ANNUAL REPORT October 31, 2000
(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
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, 1999 through October 31, 2000.
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.
Yields on money market instruments generally rose over the reporting period as
the Federal Reserve Board (the "Fed") continued to raise short-term interest
rates at its February, March and May 2000 meetings. However, amid signs that its
previous interest-rate hikes had begun to slow the economy, the Fed refrained
from raising rates further at its meetings in June and August of 2000. Other
factors such as higher energy prices and a weak euro also served to slow
economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above historical averages, establishing
unrealistic expectations for some investors. In our opinion, as the risks of the
stock market have become more apparent due to recent volatility, the safety and
income potential of money market funds can make them an attractive investment as
part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a customer service representative, call us at 1-800-782-6620.
Thank you for investing in Dreyfus U.S. Treasury Reserves.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus U.S. Treasury Reserves'
Investor shares produced an annualized yield of 5.28% while its Class R shares
produced an annualized yield of 5.48%. After taking into account the effects of
compounding, the annualized effective yields for Investor shares and Class R
shares were 5.41% and 5.62%, respectively.(1)
We attribute the fund's positive performance to our strategy of maintaining a
relatively short average maturity. This position enabled us to capture higher
yields more quickly as interest rates rose during much of the period. 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 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?
The fund was primarily influenced by higher short-term interest rates over the
past year. Higher interest rates were primarily the result
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
of a more restrictive monetary policy on the part of the Federal Reserve Board
(the "Fed").
When the reporting period began, the U.S. economy was growing quickly, fueling
concerns that long-dormant inflationary pressures might reemerge. The Fed raised
interest rates by 0.25 percentage points each in November 1999, February 2000
and March 2000, and by 0.50 percentage points in May 2000. As might be expected,
the money markets reacted to the Fed's interest-rate hikes in the form of higher
yields.
During the first calendar quarter of 2000, the economy grew at a strong 4.8%,
well above the level most analysts believed may trigger destructive levels of
inflation. In addition, rising energy prices began to add to inflation concerns,
strong domestic demand for goods and services continued, and overseas demand for
raw materials accelerated as well.
In the second calendar quarter, economic growth accelerated to an even more
robust 5.6% . Consumer confidence and consumer spending showed few signs of
abating despite sharp declines in the technology sector of the stock market. The
tightest U.S. labor market in the past 30 years added the threat of wage-driven
inflation.
From July through the end of the reporting period, however, we saw signs
that the Fed' s rate hikes may have begun to have the desired effect of slowing
the economy. Retail sales declined, housing starts slowed dramatically, and
inflation appeared to be relatively benign. As a result, the Fed chose not to
raise rates further at its June, August or October meetings. Indeed,
third-quarter GDP slowed to a more sustainable growth rate of approximately
2.7%. What's more, the corrections in the Nasdaq stock market during the
reporting period may have had a "reverse wealth effect," causing consumer
spending to moderate as investors became less confident in the stock market's
returns. As a result of these factors, money market rates began to trend lower
toward the end of the reporting period.
What is the fund's current strategy?
In an effort to earn as much income as possible for the fund, we have continued
to allocate a large portion of the fund's assets to repurchase agreements.
However, we recently began to extend the fund's average maturity from the
shorter than average position we had maintained through most of the reporting
period. We have chosen to move to a slightly longer average maturity because the
economy has continued to slow, suggesting that the Fed is unlikely to raise
interest rates again in 2000. In fact, some analysts believe that the Fed's next
move may be to reduce interest rates if the economy slows too much.
November 15, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR
THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
The Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C>
STATEMENT OF INVESTMENTS
October 31, 2000
Annualized
Yield on
Date of Principal
U.S. TREASURY BILLS--67.5% Purchase (%) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
11/2/2000 5.13 224,519,000 224,486,992
12/21/2000 6.43 200,000,000 198,231,944
TOTAL U.S. TREASURY BILLS
(cost $422,718,936) 422,718,936
-----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--16.8%
-----------------------------------------------------------------------------------------------------------------------------------
5.75%, 11/15/2000 6.04 30,000,000 29,994,505
8.50%, 11/15/2000 5.97 10,000,000 10,008,203
5.625%, 5/15/2001 6.75 15,000,000 14,904,416
6.50%, 8/31/2001 6.30 50,000,000 50,047,344
TOTAL U.S. TREASURY NOTES
(cost $104,954,468) 104,954,468
-----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--47.0%
-----------------------------------------------------------------------------------------------------------------------------------
First Boston Corp.
dated 10/31/2000, due 11/1/2000 in the
amount of $50,009,056 (fully collateralized by
$40,332,000 U.S. Treasury Notes,
8.125%, due 8/15/2021, value $50,999,814) 6.52 50,000,000 50,000,000
Merrill Lynch & Co.
dated 10/31/2000, due 11/1/2000 in the
amount of $100,018,056 (fully collateralized by
$91,595,000 U.S. Treasury Notes,
7.25% to 9.375%, due from 8/15/2004 to
2/15/2006, value $102,024,125) 6.50 100,000,000 100,000,000
SBC Warburg Dillon Read, Inc.
dated 10/31/2000, due 11/1/2000 in the
amount of $144,343,250 (fully collateralized by
$147,782,000 U.S. Treasury Bonds,
5.50% to 13.25%, due from 5/15/2014 to
8/15/2028, value $147,205,180) 6.55 144,317,000 144,317,000
TOTAL REPURCHASE AGREEMENTS
(cost $294,317,000) 294,317,000
----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $821,990,404) 131.3% 821,990,404
LIABILITIES, LESS CASH AND RECEIVABLES (31.3%) (196,042,338)
NET ASSETS 100.0% 625,948,066
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
-------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments
(including Repurchase Agreements of $294,317,000)
--Note 1(c) 821,990,404 821,990,404
Cash 50,271,424
Interest receivable 2,189,304
874,451,132
-------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 285,982
Payable for investment securities purchased 248,217,084
248,503,066
-------------------------------------------------------------------------------
NET ASSETS ($) 625,948,066
-------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 625,977,648
Accumulated net realized gain (loss) on investments (29,582)
--------------------------------------------------------------------------------
NET ASSETS ($) 625,948,066
NET ASSET VALUE PER SHARE
Investor Shares Class R Shares
--------------------------------------------------------------------------------
Net Assets ($) 34,481,821 591,466,245
Shares Outstanding 34,492,734 591,484,914
--------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 1.00 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
-------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 37,307,121
EXPENSES:
Management fee--Note 2(a) 3,114,268
Distribution fees (Investor Shares)--Note 2(b) 73,278
TOTAL EXPENSES 3,187,546
INVESTMENT INCOME--NET 34,119,575
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): 486
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 34,120,061
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
------------------------------------
2000 1999
-------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 34,119,575 29,565,748
Net realized gain (loss) on investments 486 8,819
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 34,120,061 29,574,567
-------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Investor shares (1,933,581) (3,995,726)
Class R shares (32,185,994) (25,570,022)
TOTAL DIVIDENDS (34,119,575) (29,565,748)
-------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Investor shares 75,794,151 547,120,345
Class R shares 2,000,763,033 1,600,623,062
Dividends reinvested:
Investor shares 1,875,165 3,916,616
Class R shares 27,873,030 22,586,362
Cost of shares redeemed:
Investor shares (79,562,728) (630,281,989)
Class R shares (2,001,944,216) (1,672,499,479)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 24,798,435 (128,535,083)
TOTAL INCREASE (DECREASE) IN NET ASSETS 24,798,921 (128,526,264)
-------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 601,149,145 729,675,409
END OF PERIOD 625,948,066 601,149,145
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information reflects financial results for a
single fund share. Total return shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the fund's
financial statements.
Year Ended October 31,
-------------------------------------------------------------------
INVESTOR SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .053 .042 .048 .048 .046
Distributions:
Dividends from investment income--net (.053) (.042) (.048) (.048) (.046)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.42 4.27 4.95 4.89 4.74
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .70 .70 .70 .70 .70
Ratio of net investment income
to average net assets 5.28 4.16 4.85 4.81 4.64
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 34,482 36,375 115,622 112,900 21,826
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
-------------------------------------------------------------------
CLASS R SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .055 .044 .050 .050 .048
Distributions:
Dividends from investment income--net (.055) (.044) (.050) (.050) (.048)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.64 4.48 5.16 5.10 4.94
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 .50 .50 .50 .50
Ratio of net investment income
to average net assets 5.49 4.40 5.03 4.98 4.79
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 591,466 564,774 614,053 522,178 464,303
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. (" Mellon Bank" ), which is a wholly-owned
subsidiary of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 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 accounting
principles generally accepted in the United States of America, 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,
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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 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, 2000. If not applied, the
carryover expires in fiscal 2006.
At October 31, 2000, 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% (currently limited by the Company's Board of Directors to .20%) of the
value of the average daily net assets attributable to its Investor shares to
compensate the distributor for shareholder servicing activities and expenses
primarily intended to result in the sale of Investor shares. The Class R shares
bear no distribution fee. During the period October 31, 2000, Investor shares
were charged $73,278 pursuant to the Plan, of which $47,963 was paid to DSC.
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, 2000, 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 (the "Fund") of The Dreyfus/Laurel Funds, Inc., including
the statement of investments, as of October 31, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus U.S. Treasury Reserves of The Dreyfus/Laurel Funds, Inc. as of October
31, 2000, 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 accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the fund hereby designates 23.39% of
the ordinary income dividends paid during its fiscal year ended October 31, 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 326AR0010
Dreyfus Premier
Limited Term
Income Fund
ANNUAL REPORT October 31, 2000
(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
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, 1999 through October
31, 2000. 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.
Bond prices were mixed over the 12-month reporting period, with prices of U.S.
Treasury securities generally ending the period higher while prices of
investment-grade corporate bonds generally ended the period at modestly lower
levels than where they began. More recently, most sectors of the U.S. bond
market have been affected by slowing economic growth. Additionally, the
moderating effects of the Federal Reserve Board's (the "Fed") interest-rate
hikes during the first half of 2000 helped the Fed to achieve its goal of
slowing the U.S. economy. Other factors such as higher energy prices and a weak
euro also served to slow economic growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above their historical averages,
establishing unrealistic expectations for some investors. We believe that as the
risks of the stock market have become more apparent recently, the relative
stability and income potential of bonds can make them an attractive investment
as part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620
Thank you for investing in Dreyfus Premier Limited Term Income Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
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, 2000, Dreyfus Premier Limited Term
Income Fund' s Class A shares provided a total return of 6.43% and its Class B
shares provided a total return of 5.90%. Class C and R shares provided total
returns of 5.80% and 6.59% , respectively. The fund also produced income
dividends of $0.6155, $0.5652, $0.5565 and $0.6407 per share for the fund's
Class A, B, C, and R shares, respectively.(1) The fund's benchmark, the Lehman
Brothers Aggregate Bond Index, produced a total return of 7.30% for the same
period.(2)
We attribute the fund' s slight relative underperformance to our security
selection strategy, which emphasized U.S. Government agency bonds,
mortgage-backed securities and corporate securities during a period in which
generally higher returns were generated by U.S. Treasury securities.
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 bond 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
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
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.
What other factors influenced the fund's performance?
Four primary factors influenced the fund' s performance over the reporting
period: lower returns from most other fixed-income securities compared to U.S.
Treasury securities; the recent government buyback program for U.S. Treasury
securities; a series of short-term interest-rate hikes initiated by the Federal
Reserve Board (the "Fed" ) earlier in the period; and the consolidation of
broker-dealers within the fixed-income marketplace.
First, the difference in yields between U.S. Treasury securities and most other
fixed-income securities widened over the last 12 months to levels not seen in
approximately 10 years. One explanation may be an increasing number of
credit-quality downgrades that were being issued by the major independent rating
services. These rating sources cited excessive corporate debt levels and a
change in the business cycle as some reasons for these downgrades. As a result,
corporate bonds -- especially those with the lowest credit ratings -- have
experienced the steepest declines.
Second, in mid-January the U.S. Government announced that it would use a portion
of the federal budget surplus to buy back some outstanding U.S. Treasury
securities with relatively high yields. This announcement triggered a wave of
investor purchases of long-term Treasury securities, which helped drive yields
of 30-year U.S. Treasury bonds below those of shorter term Treasuries.
Third, in four separate moves during November, February, March and May, the Fed
raised interest rates for a total of 1.25 percentage points in an attempt to
slow economic growth and forestall the buildup of inflationary pressures. While
no changes in monetary policy have been made since May, the rising interest-rate
environment during the first half of the reporting period created increased
volatility for the fund.
Finally, a consolidation within the broker-dealer industry, which began in 1998,
has negatively affected the corporate bond market. Several large brokerage firms
have purchased smaller ones, thereby reducing the number of brokers available to
invest capital in the bond market. Some large brokerage firms have abandoned
this line of business altogether, choosing instead to pursue more profitable
products. The reduced number of brokers has, in turn, constrained liquidity in
the overall bond market, and has contributed to wider yield differences among
individual market sectors.
As a result of these influences, the best returns over the past 12 months for
the fund were provided by U.S. Treasuries, followed by mortgage-backed
securities and corporate securities.
What is the fund's current strategy?
As of October 31, 2000, the largest portion of the fund's assets, 49.7%, was
invested in mortgage-backed securities, followed by 36.4% in corporate
securities, 10.7% in U.S. Treasuries, 1.6% in government agency bonds and 1.6%
in repurchase agreements. These percentages represent an exposure to agencies
and mortgage-backed securities that was greater than that of the fund's
benchmark. Of course, portfolio composition is subject to change at any time.
November 15, 2000
(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: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS AGGREGATE BOND INDEX
IS A WIDELY ACCEPTED, UNMANAGED INDEX OF CORPORATE, U.S. GOVERNMENT AND U.S.
GOVERNMENT AGENCY DEBT INSTRUMENTS, MORTGAGE-BACKED SECURITIES AND ASSET-BACKED
SECURITIES WITH AN AVERAGE MATURITY OF 1-10 YEARS.
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: LIPPER 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 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, U.S. GOVERNMENT AND U.S. 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 10/31/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
WITH SALES CHARGE (3.0%) 4/7/94 3.22% 4.60% 5.29%
WITHOUT SALES CHARGE 4/7/94 6.43% 5.25% 5.77%
CLASS B SHARES
WITH REDEMPTION((+)) 12/19/94 2.90% 4.62% 5.97%
WITHOUT REDEMPTION 12/19/94 5.90% 4.78% 5.97%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 12/19/94 5.05% 4.47% 5.71%
WITHOUT REDEMPTION 12/19/94 5.80% 4.47% 5.71%
CLASS R SHARES
7/11/91 6.59% 5.52% 6.52%
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 FIVE YEARS. CLASS B SHARES CONVERT TO CLASS A SHARES
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, 2000
STATEMENT OF INVESTMENTS
Principal
BONDS AND NOTES--97.9% Amount ($) Value ($)
--------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED CTFS.--5.5%
American Express Credit Account Master Trust,
Ser. 1997-1, Cl. A, 6.4%, 2005 1,000,000 996,075
Citibank Credit Card Master Trust,
Ser. 1998-1, Cl. A, 5.75%, 2003 1,500,000 1,497,081
Peco Energy Transition Trust,
Ser. 1999-A, Cl. A-2, 5.63%, 2005 500,000 487,302
WFS Financial Owner Trust,
Ser. 1999-B, Cl. A-3, 6.32%, 2003 250,000 249,000
3,229,458
BANKING--5.2%
Bank of Boston,
Sub. Notes, 6.625%, 2004 750,000 737,498
Barnett Capital I,
Gtd. Capital Securities, 8.06%, 2026 435,000 409,137
HSBC Holding,
Sub. Notes, 7.5%, 2009 1,000,000 1,001,700
Washington Mutual Capital I,
Gtd. Capital Securities, 8.375%, 2027 500,000 453,023
Wells Fargo,
Notes, 6.625%, 2004 500,000 493,397
3,094,755
CHEMICALS--.7%
Pharmacia,
Deb., 6.6%, 2028 500,000 443,067
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--1.4%
Bear Stearns Commercial Mortgage,
Ser. 1999-WF2, Cl. A-1, 6.8%, 2008 263,919 262,806
DLJ Commercial Mortgage,
Ser. 1999-CG3, Cl. A1-A, 7.12%, 2009 265,010 266,898
Morgan (J.P.) Commercial Mortgage Finance,
Ser. 2000-C10, Cl. A-2, 7.37%, 2010 290,000 293,127
822,831
FINANCIAL SERVICES--8.2%
Citigroup,
Sub. Notes, 7.25%, 2010 500,000 496,880
Ford Motor Credit,
Notes, 8%, 2002 500,000 508,644
GMAC,
Deb., 6.125%, 2008 1,000,000 921,759
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
Goldman Sachs,
Notes, 7.8%, 2010 500,000 505,673
Household Finance,
Sr. Sub. Notes, 5.875%, 2009 500,000 443,095
International Lease Finance,
Notes, 5.625%, 2002 1,000,000 985,359
Lehman Brothers,
Sr. Sub. Notes, 6.125%, 2001 200,000 199,569
Merrill Lynch,
Notes, 6%, 2009 500,000 455,808
Morgan Stanley Dean Witter,
Sr. Notes, 7.125%, 2003 300,000 301,914
4,818,701
FOREIGN--5.4%
AT&T Canada,
Sr. Notes, 7.65%, 2006 500,000 489,674
Australia & New Zealand Banking Group,
Sub. Notes, 6.25%, 2004 1,000,000 972,413
Hydro-Quebec,
Deb., 8.4%, 2022 201,000 218,979
Korea Development Bank,
Notes, 6.75%, 2005 174,000 163,881
Province of British Columbia,
Bonds, 6.5%, 2026 500,000 452,223
Province of Saskatchewan, C.D.A.,
Notes, 6.625%, 2003 500,000 495,824
Santander Financial Issuances,
Sub. Notes, 6.375%, 2011 250,000 223,880
Swiss Bank,
Sub. Deb, 7%, 2015 200,000 187,673
3,204,547
INDUSTRIAL--.4%
USX,
Deb., 9.125%, 2013 200,000 218,146
INSURANCE--.2%
GE Global Insurance Holding,
Notes, 6.45%, 2019 150,000 132,715
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
MEDICAL--1.4%
Baxter International,
Deb., 6.625%, 2028 200,000 167,059
Merck,
Deb., 6.3%, 2026 300,000 271,065
Zeneca Wilmington,
Deb., 7%, 2023 400,000 384,361
822,485
OIL AND GAS--.8%
Atlantic Richfield,
Notes, 5.55%, 2003 500,000 488,890
RETAIL--.9%
Wal-Mart Stores,
Notes, 7.55%, 2030 500,000 520,533
TELEPHONE AND TELEGRAPH--2.3%
Bell Atlantic Pennsylvania,
Deb., 6%, 2028 500,000 400,622
MCI WorldCom,
Sr. Notes, 6.4%, 2005 500,000 481,325
TCI Communications,
Deb., 7.875%, 2026 300,000 279,690
Vodafone Airtouch,
Notes, 7.625%, 2005 200,000 (a) 203,578
1,365,215
TRANSPORTATION--.8%
Burlington Northern Santa Fe,
Deb., 7.5%, 2023 500,000 463,436
UTILITIES--3.0%
National Rural Utilities,
Collateral Trust, 5.5%, 2005 500,000 474,989
Niagara Mohawk Power,
First Mortgage Bonds, 7.75%, 2006 300,000 304,098
PP&L Resources,
First Mortgage Bonds, 6.125%, 2001 1,000,000 (b) 993,660
1,772,747
U.S. GOVERNMENTS--10.7%
U.S. Treasury Bonds:
6.25%, 8/15/2023 630,000 650,066
8.125%, 8/15/2019 1,000,000 1,235,620
8.125%, 5/15/2021 500,000 623,970
8.5%, 2/15/2020 500,000 640,805
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENTS (CONTINUED)
U.S. Treasury Bonds (continued):
8.75%, 5/15/2017 250,000 321,278
8.875%, 2/15/2019 500,000 657,505
11.25%, 2/15/2015 250,000 375,000
12%, 8/15/2013 200,000 273,642
12.375%, 5/15/2004 400,000 481,172
U.S. Treasury Notes:
6.5%, 10/15/2006 500,000 515,790
6.5%, 2/15/2010 500,000 523,555
6,298,403
U.S. GOVERNMENT AGENCIES/MORTGAGE-BACKED--51.0%
Federal Home Loan Banks,
Notes, 5.8%, 2008 1,000,000 948,191
Federal Home Loan Mortgage Corp.:
5.5%, 8/1/2013 216,376 206,503
6%, 6/1/2012-5/1/2029 1,445,942 1,376,232
6.5%, 3/1/2011-9/1/2029 2,783,847 2,704,340
7%, 3/1/2012-9/1/2030 1,822,550 1,795,628
7.5%, 12/1/2024-9/1/2030 1,061,484 1,064,517
8%, 10/1/2019-10/1/2030 526,247 535,105
8.5%, 7/1/2030 98,382 100,749
9%, 8/1/2030 109,816 113,419
Federal National Mortgage Association:
Notes, 5.25%, 2009 1,300,000 1,184,469
Notes, 6%, 2008 1,100,000 1,059,828
Notes, 6.375%, 2009 500,000 489,930
Notes, 6.5%, 2004 500,000 499,868
Notes, 6.625%, 2009 2,100,000 2,095,010
Bonds, 7.125%, 2005 1,900,000 1,942,347
7% 100,000 (c) 98,062
5.5%, 12/1/2013-2/1/2014 211,950 202,080
6%, 9/1/2013-8/1/2029 1,599,441 1,523,378
6.5%, 3/1/2011-8/1/2029 2,656,430 2,565,688
7%, 6/1/2011-1/1/2030 1,965,513 1,938,497
7.5%, 3/1/2012-1/1/2030 1,580,375 1,584,026
8%, 5/1/2013-8/1/2030 694,253 705,130
8.5%, 5/1/2030 149,727 153,095
Government National Mortgage Association I:
6%, 1/15/2029 358,813 338,515
6.5%, 9/15/2008-6/15/2029 1,201,501 1,167,599
7%, 8/15/2025-9/15/2030 1,422,336 1,405,798
7.5%, 12/15/2026-8/15/2030 970,969 976,900
8%, 12/15/2026-9/15/2030 873,819 889,737
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES/MORTGAGE-BACKED (CONTINUED)
Government National Mortgage Association I (continued):
8.5%, 4/15/2025 248,889 256,978
9%, 10/15/2027 130,377 135,224
9.5%, 2/15/2025 119,828 125,370
30,182,213
TOTAL BONDS AND NOTES
(cost $58,493,927) 57,878,142
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--1.6%
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Goldman, Sachs & Co., Tri-Party
Repurchase Agreement, 6.55%, dated 10/31/2000,
due 11/1/2000 in the amount of $922,200 (fully
collateralized by $887,000 U.S. Treasury Notes,
6.5% due 2/15/2010 value $941,214)
(cost $922,032) 922,032 922,032
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $59,415,959) 99.5% 58,800,174
CASH AND RECEIVABLES (NET) .5% 317,398
NET ASSETS 100.0% 59,117,572
(A) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT OCTOBER 31, 2000, THIS SECURITY
AMOUNTED TO $203,578 OR .3% OF NET ASSETS.
(B) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED
MATRUITY IS 5/1/2006.
(C) PURCHASED ON A FORWARD COMMITMENT BASIS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(c) 59,415,959 58,800,174
Interest receivable 775,756
Receivable for shares of Capital Stock subscribed 393,001
59,968,931
-------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates--Note 2 38,371
Cash overdraft due to Custodian 32,463
Payable for investment securities purchased 780,525
851,359
--------------------------------------------------------------------------------
NET ASSETS ($) 59,117,572
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 62,129,066
Accumulated net realized gain (loss) on investments (2,395,709)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (615,785)
--------------------------------------------------------------------------------
NET ASSETS ($) 59,117,572
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
------------------------------------------------------------------------------------------------------------------
Net Assets ($) 6,656,874 9,812,628 2,156,255 40,491,815
Shares outstanding 625,546 918,927 204,723 3,805,157
NET ASSET VALUE PER SHARE ($) 10.64 10.68 10.53 10.64
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 3,888,662
EXPENSES:
Management fee--Note 2(a) 347,169
Distribution and service fees--Note 2(b) 99,051
Loan commitment fees--Note 4 590
TOTAL EXPENSES 446,810
INVESTMENT INCOME--NET 3,441,852
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (648,029)
Net unrealized appreciation (depreciation) on investments 726,998
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 78,969
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,520,821
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
Year Ended October 31,
------------------------------------
2000 1999
---------------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,441,852 3,129,815
Net realized gain (loss) on investments (648,029) (1,085,712)
Net unrealized appreciation (depreciation) on investments 726,998 (2,865,975)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,520,821 (821,872)
--------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (313,427) (351,005)
Class B shares (521,647) (442,015)
Class C shares (91,931) (72,478)
Class R shares (2,514,734) (2,264,430)
TOTAL DIVIDENDS (3,441,739) (3,129,928)
-----------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 12,369,351 12,059,310
Class B shares 6,754,147 11,986,879
Class C shares 2,117,728 1,929,966
Class R shares 11,358,364 10,142,313
Dividends reinvested:
Class A shares 244,852 243,578
Class B shares 216,332 180,992
Class C shares 69,937 50,085
Class R shares 1,351,255 1,508,068
Cost of shares redeemed:
Class A shares (11,018,913) (12,172,203)
Class B shares (7,230,150) (6,869,077)
Class C shares (1,848,564) (1,144,120)
Class R shares (9,463,852) (13,649,898)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 4,920,487 4,265,893
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,999,569 314,093
-----------------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 54,118,003 53,803,910
END OF PERIOD 59,117,572 54,118,003
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended October 31,
---------------------------------
2000 1999
-----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A (A)
Shares sold 1,180,160 1,110,255
Shares issued for dividends reinvested 23,337 22,422
Shares redeemed (1,053,589) (1,129,873)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 149,908 2,804
------------------------------------------------------------------------------------------------
CLASS B (A)
Shares sold 641,343 1,082,346
Shares issued for dividends reinvested 20,560 16,653
Shares redeemed (687,798) (629,249)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (25,895) 469,750
--------------------------------------------------------------------------------
CLASS C
Shares sold 202,745 178,774
Shares issued for dividends reinvested 6,739 4,692
Shares redeemed (177,350) (106,959)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 32,134 76,507
--------------------------------------------------------------------------------
CLASS R
Shares sold 1,072,880 914,656
Shares issued for dividends reinvested 128,995 138,448
Shares redeemed (904,624) (1,256,689)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 297,251 (203,585)
(A) DURING THE PERIOD ENDED OCTOBER 31, 2000, 38,470 CLASS B SHARES
REPRESENTING $372,990 WERE AUTOMATICALLY CONVERTED TO 38,504 CLASS A SHARES AND
DURING THE PERIOD ENDED OCTOBER 31, 1999, 13,685 CLASS B SHARES REPRESENTING
$145,726 WERE AUTOMATICALLY CONVERTED TO 13,733 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Year Ended October 31,
--------------------------------------------
CLASS A SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.60 11.31 10.96 10.78 10.84
Investment Operations:
Investment income--net .62 .57 .58 .62 .58
Net realized and unrealized gain (loss)
on investments .04 (.71) .35 .19 (.07)
Total from Investment Operations .66 (.14) .93 .81 .51
Distributions:
Dividends from investment income-net (.62) (.57) (.58) (.63) (.57)
Net asset value, end of period 10.64 10.60 11.31 10.96 10.78
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) 6.43 (1.26) 8.73 7.80 4.85
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .85 .85 .85 .85 .85
Ratio of net investment income
to average net assets 5.87 5.22 5.20 5.80 5.38
Portfolio Turnover Rate 72.30 161.28 149.08 129.94 153.63
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 6,657 5,044 5,349 1,169 1,001
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
--------------------------------------------
CLASS B SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.64 11.35 11.00 10.78 10.84
Investment Operations:
Investment income--net .57 .52 .52 .56 .52
Net realized and unrealized gain (loss)
on investments .04 (.71) .35 .23 (.07)
Total from Investment Operations .61 (.19) .87 .79 .45
Distributions:
Dividends from investment income-net (.57) (.52) (.52) (.57) (.51)
Net asset value, end of period 10.68 10.64 11.35 11.00 10.78
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) 5.90 (1.73) 8.14 7.56 4.33
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.35 1.35 1.35 1.35 1.35
Ratio of net investment income
to average net assets 5.37 4.72 4.49 5.06 4.86
Portfolio Turnover Rate 72.30 161.28 149.08 129.94 153.63
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 9,813 10,056 5,391 542 143
(A) EXCLUSIVE OF SALES CHARGE
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended October 31,
--------------------------------------------
CLASS C SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.50 11.20 10.84 10.73 10.84
Investment Operations:
Investment income (loss)--net .56 .51 .52 (1.98) 3.05
Net realized and unrealized gain (loss)
on investments .03 (.70) .35 2.65 (2.65)
Total from Investment Operations .59 (.19) .87 .67 .40
Distributions:
Dividends from investment income--net (.56) (.51) (.51) (.56) (.51)
Net asset value, end of period 10.53 10.50 11.20 10.84 10.73
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) 5.80 (1.74) 8.25 6.49 3.83
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.35 1.35 1.35 1.35 1.41
Ratio of net investment income
to average net assets 5.34 4.72 4.61 4.98 5.50
Portfolio Turnover Rate 72.30 161.28 149.08 129.94 153.63
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,156 1,812 1,076 349 -
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended October 31,
--------------------------------------------
CLASS R SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 10.61 11.31 10.96 10.78 10.84
Investment Operations:
Investment income--net .64 .60 .61 .65 .60
Net realized and unrealized gain (loss)
on investments .03 (.70) .35 .19 (.06)
Total from Investment Operations .67 (.10) .96 .84 .54
Distributions:
Dividends from investment income--net (.64) (.60) (.61) (.66) (.60)
Net asset value, end of period 10.64 10.61 11.31 10.96 10.78
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 6.59 (.91) 9.02 8.09 5.12
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .60 .60 .60 .60 .60
Ratio of net investment income
to average net assets 6.12 5.47 5.51 6.06 5.62
Portfolio Turnover Rate 72.30 161.28 149.08 129.94 153.63
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 40,492 37,207 41,988 47,532 49,664
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 , while Class B and Class C shares are subject to a contingent
deferred sales charge ("CDSC"). Class B shares automatically convert to Class A
shares after six years.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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 accounting
principles generally accepted in the United States of America, 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.
In November 2000 the American Institute of Certified Public Accountants (AICPA)
issued a revised version of the AICPA Audit and Accounting Guide for Investment
Companies (the Guide) . The revised version of the Guide is effective for
financial statements issued for fiscal years beginning after December 15, 2000.
One of the new provisions in the Guide requires investment companies to amortize
premiums on fixed income securities which the fund does not currently do. Upon
adoption, the fund will be required to record a cumulative effect adjustment to
conform with accounting principles generally accepted in the United States of
America. The effect of this adjustment will be to decrease net investment income
with an offsetting increase to unrealized appreciation (depreciation) on
securities. This adjustment will therefore, have no effect on the net assets of
the fund. At this time, the fund has not completed its analysis of the impact of
this accounting change.
(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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) Dividends to shareholders: It is the policy of the fund to declare dividends
daily from investment income-net; such dividends are paid monthly. Dividends
from net realized capital gain, if any, are normally declared and paid annually,
but the fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code 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 $2,350,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 2000. If not
applied, $344,000 of the carryover expires in fiscal 2002, $274,000 expires in
fiscal 2003, $1,085,000 expires in fiscal 2007 and $647,000 expires in fiscal
2008.
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 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 and service plan: Under the Distribution Plan ("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 for
shareholder servicing 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 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 2000, Class A, Class B and Class C shares were charged $13,342,
$48,533 and $8,607, respectively, pursuant to the Plan, of which $8,801, $31,741
and $5,731 for Class A, Class B and Class C shares, respectively, were paid to
DSC. Class B and Class C shares were charged $24,266 and $4,303, respectively,
pursuant to the service plan, of which $15,871 and $2,866 for Class B and Class
C shares, respectively, were paid to DSC.
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 purchase and sales (including paydowns) of investment
securities, excluding short-term securities, during the period ended October 31,
2000, amounted to $44,942,794 and $40,822,931, respectively.
At October 31, 2000, accumulated net unrealized depreciation on investments was
$615,785, consisting of $442,442 gross unrealized appreciation and $1,058,227
gross unrealized depreciation.
At October 31, 2000, 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, 2000, 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, including
the statement of investments, of Dreyfus Premier Limited Term Income Fund (the
" Fund" ) of The Dreyfus/Laurel Funds, Inc., as of October 31, 2000, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years 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 auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the custodian
and brokers and other appropriate procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier Limited Term Income Fund of The Dreyfus/Laurel Funds, Inc. as of
October 31, 2000, the results of its operations for the year then ended, the
changes in its net assets for each of the two years period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America.
New York, New York
December 8, 2000
The Fund
NOTES
For More Information
Dreyfus Premier Limited Term Income Fund
200 Park Avenue
New York, NY 10166
Investment Adviser
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 345AR0010