N-CSR 1 form.htm FORM NCSR form
    UNITED STATES 
    SECURITIES AND EXCHANGE COMMISSION 
    Washington, D.C. 20549 
 
 
    FORM N-CSR 
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT 
    INVESTMENT COMPANIES 
 
Investment Company Act file number 811-5270 
 
    The Dreyfus/Laurel Funds, Inc. (see Attachment A) 
    (Exact name of Registrant as specified in charter) 
 
 
    c/o The Dreyfus Corporation 
    200 Park Avenue 
    New York, New York 10166 
    (Address of principal executive offices) (Zip code) 
 
    Mark N. Jacobs, Esq. 
    200 Park Avenue 
    New York, New York 10166 
    (Name and address of agent for service) 
 
Registrant's telephone number, including area code: (212) 922-6000 
 
Date of fiscal year end:    10/31 
 
Date of reporting period:    10/31/04 

Attachment A

The following N-CSR relates only to the Registrant's series listed below and does not affect Dreyfus Premier Core Equity Fund, a series of the Registrant with a fiscal year end of August 31. A separate N-CSR will be filed for that series, as appropriate.

Dreyfus Bond Market Index Fund
Dreyfus Premier Midcap Stock Fund
Dreyfus Disciplined Stock Fund
Dreyfus Premier Large Company Stock Fund
Dreyfus Institutional Government Money Market Fund
Dreyfus Institutional Prime Money Market Fund
Dreyfus Institutional U.S. Treasury Money Market Fund
Dreyfus Money Market Reserves
Dreyfus Municipal Reserves
Dreyfus Premier Tax Managed Growth Fund
Dreyfus BASIC S&P 500 Stock Index Fund
Dreyfus U.S. Treasury Reserves
Dreyfus Premier Balanced Fund
Dreyfus Premier Limited Term Income Fund
Dreyfus Premier Small Cap Value Fund

FORM N-CSR

Item 1. Reports to Stockholders.

Dreyfus 
Bond Market 
Index Fund 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
7    Understanding Your Fund's Expenses 
7    Comparing Your Fund's Expenses 
With Those of Other Funds
8    Statement of Investments 
25    Statement of Assets and Liabilities 
26    Statement of Operations 
27    Statement of Changes in Net Assets 
29    Financial Highlights 
31    Notes to Financial Statements 
38    Report of Independent Registered 
    Public Accounting Firm 
39    Important Tax Information 
40    Board Members Information 
42    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus
Bond Market Index Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Bond Market Index Fund, covering the 12-month period from November 1, 2003, through October 31,2004.Inside,you'll find valuable information about how the fund was managed during the reporting period,including a discussion with the fund's portfolio manager, Laurie Carroll.

The Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, and higher commodity prices suggest that inflationary pressures may be rising over the near term. On the other hand, lackluster job growth, low capacity utilization and greater worker productivity should help to keep a lid on inflation over the longer term.The probable result of these conflicting market forces, in our judgment, is a U.S. bond market that trades primarily within a relatively well-defined range and favors higher-quality bonds, but that may occasionally overshoot in both directions.

In uncertain markets such as these, the fixed-income investments that are right for you depend on your current needs, future goals, tolerance for risk and the composition of your current portfolio.As always, your financial advisor may be in the best position to recommend the specific market sectors that will satisfy your income and capital preservation needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

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, 2004, the fund achieved total returns of 5.02% for its Investor shares and 5.29% for its BASIC shares.1 The fund's benchmark, the Lehman Brothers U.S. Aggregate Index (the "Index"), achieved a total return of 5.53% for the same period.2

Although the bond market generally produced positive returns over the reporting period, market volatility intensified during the reporting period's second half as investors' perceptions of the economy's strength changed and the Federal Reserve Board (the "Fed") began to raise short-term interest rates. Corporate bonds generally produced higher returns than other fixed-income market sectors as investors looked forward to better business conditions in the strengthening economy.We attribute the difference between the fund's return and the Index's return to the effects of fund fees and expenses to which the Index is not subject.

What is the fund's investment approach?

The fund seeks to match the total return of the Index.To pursue that goal, the fund invests primarily in securities that are included in the Index.

While the fund seeks to mirror the returns of the Index, it does not hold the same number of bonds. Instead, the fund holds approximately 350 securities as compared to 6,500 securities 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, 2004, the average effective duration of the fund was approximately 4.29 years.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

What other factors influenced the fund's performance?

Although the U.S. economy was expanding when the reporting period began, inflationary pressures appeared to remain low as the labor market proved to be sluggish and a significant portion of the nation's industrial capacity remained idle. In response, the Fed in its public statements suggested that it could be patient before moving away from the aggressively accommodative monetary policy it implemented in the aftermath of the September 2001 terrorist attacks.This benefited the more interest-rate-sensitive areas of the market, including most U.S. government securities.

In April 2004, the market environment began to change. Surging energy prices and stronger-than-expected labor statistics raised concerns among investors that inflationary forces might be resurfacing. In late June, the Fed increased short-term interest rates by 25 basis points at each of its three meetings between June and September 2004, driving the overnight federal funds rate from 1% to 1.75% by the reporting period's end. As investors' inflation concerns rose and interest-rate expectations changed in the spring, prices of U.S.Treasury securities fell sharply.

During the summer and early fall of 2004,however,it became clearer that labor markets remained sluggish and high energy prices were likely to erode the rate of economic growth, and inflation fears began to ease.As a result, longer-term securities in the more interest-rate-sensitive sectors of the bond market generally rallied from previously depressed levels.

In this rapidly changing environment, corporate bonds — which tend to respond more to business conditions than interest rates — generally fared well.Many corporate issuers took advantage of the previous downturn to refinance their debt at lower rates and strengthen their balance sheets.As business conditions began to improve, corporate bonds generally rallied, led by lower-quality securities in areas that previously had been severely punished, including the telecommunications, utilities, automobile and financial sectors.We shifted the fund to a neutral position for lower-rated investment-grade securities during the fall of 2003, enabling the fund to participate fully in the corporate bond market rally during 2004.

4

In contrast, mortgage-backed securities produced mixed results. Early in the reporting period, when short-term interest rates and longer-term mortgage rates were near historical lows, many homeowners refinanced their mortgages, effectively returning principal to bondholders. Because approximately one-third of the Index was allocated to mortgage-backed securities, higher levels of refinancing activity hindered the fund's overall performance during the first half of the reporting period. However, refinancing activity waned, and mortgage-backed securities produced better returns during the reporting period's second half.

What is the fund's current strategy?

The fund's goal is to seek to replicate the return of the Index. To achieve this goal, we attempt to mirror four key elements of the Index: average effective duration, industry group composition, credit quality and coupon rate.

As of the end of October, approximately 35% of the fund's assets were invested in mortgage-backed securities, followed by 29% in corporate bonds and asset-backed securities, 26% in U.S.Treasury securities, 9% in U.S. government agency bonds and 1% in repurchase agreements. In addition, the fund's corporate securities at the end of the reporting period were closely aligned with the overall sector distribution and credit quality of the Index.

November 15, 2004

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 U.S.Aggregate 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 5

FUND PERFORMANCE

Comparison of change in value of $10,000 investment in Dreyfus Bond Market Index Fund BASIC shares and Investor shares and the Lehman Brothers U.S. Aggregate Index

Average Annual Total Returns as of 10/31/04         
    1 Year    5 Years    10 Years 
BASIC shares    5.29%    7.24%    7.41% 
Investor shares    5.02%    6.97%    7.14% 

† Source: Lipper Inc.

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The above graph compares a $10,000 investment made in both the BASIC shares and Investor shares of Dreyfus Bond Market Index Fund on 10/31/94 to a $10,000 investment made in the Lehman Brothers U.S.Aggregate Index (the "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 on both BASIC and Investor shares.The 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.

  6

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Bond Market Index Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment     
assuming actual returns for the six months ended October 31, 2004     
    Investor Shares    BASIC Shares 
Expenses paid per $1,000    $ 2.05    $ 0.77 
Ending value (after expenses)    $1,039.20    $1,041.60 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Investor Shares    BASIC Shares 
Expenses paid per $1,000 †    $ 2.03    $ 0.76 
Ending value (after expenses)    $1,023.13    $1,024.38 

† Expenses are equal to the fund's annualized expense ratio of .40% for Investor shares and .15% for Basic shares;
multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

The Fund 7

STATEMENT OF INVESTMENTS
October 31, 2004
    Principal     
Bonds and Notes—98.3%    Amount ($)    Value ($) 
Aerospace & Defense—.7%         
Boeing:         
Debs., 7.25%, 2025    150,000    178,689 
Debs., 8.1%, 2006    25,000    27,318 
General Dynamics,         
Sr. Notes, 2.125%, 2006    500,000    495,702 
Lockheed Martin,         
Notes, 8.2%, 2009    200,000    238,631 
Northrop Grumman,         
Debs., 7.75%, 2016    500,000    615,217 
Raytheon,         
Notes, 6.75%, 2007    550,000    601,138 
United Technologies:         
Debs., 8.75%, 2021    50,000    68,207 
Notes, 6.1%, 2012    575,000    640,217 
        2,865,119 
Asset—Backed Ctfs.—Auto Loans—.3%     
WFS Financial Owner Trust,         
Ser. 2003-4, Cl. A4, 3.15%, 2011    1,000,000    1,001,089 
Asset—Backed Ctfs.—Credit Cards—.9%     
Bank One Issuance Trust,         
Ser. 2004-A1, Cl. A1, 3.45%, 2011    950,000    946,165 
Capital One Master Trust:         
Ser. 2001-3A, Cl. A, 5.45%, 2009    1,000,000    1,034,582 
Ser. 2001-5, Cl. A, 5.3%, 2009    400,000    416,748 
Chemical Master Credit Card Trust 1,         
Ser. 1996-3, Cl. A, 7.09%, 2009    700,000    747,592 
MBNA Master Credit Card Trust,         
Ser. 1995-C, Cl. A, 6.45%, 2008    400,000    409,992 
        3,555,079 
Asset-Backed Ctfs.—Utilities—.5%         
CPL Transition Funding,         
Ser. 2002-1, Cl. A4, 5.96%, 2015    550,000    603,586 
California Infrastructure PG&E-1,         
Ser. 1997-1, Cl. A8, 6.48%, 2009    850,000    919,936 
Peco Energy Transition Trust,         
Ser. 1999-A, Cl. A7, 6.13%, 2009    235,000    254,838 
        1,778,360 

8
    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Automotive—2.1%             
DaimlerChrysler:             
Debs., 7.45%, 2027    50,000        55,391 
Notes, 4.05%, 2008    1,225,000        1,234,282 
Delphi Automotive Systems,             
Debs., 7.125%, 2029    125,000        120,252 
Ford Motor,             
Global Landmark Securities, 7.45%, 2031    150,000    a    146,498 
Ford Motor Credit,             
Bonds, 7.375%, 2011    1,925,000        2,090,856 
GMAC:             
Debs., 6%, 2011    70,000        70,089 
Notes, 6.75%, 2006    3,200,000        3,312,739 
General Motors:             
Debs., 7.7%, 2016    300,000        320,608 
Debs., 8.375%, 2033    450,000        469,567 
Debs., 8.8%, 2021    150,000        163,179 
Toyota Motor Credit,             
Notes, 4.35%, 2010    150,000        154,084 
            8,137,545 
Banking—3.8%             
BB&T,             
Sub. Notes, 4.75%, 2012    325,000        329,273 
Bank of America:             
Sub. Notes, 6.875%, 2005    10,000        10,124 
Sub. Notes, 7.8%, 2010    1,150,000        1,356,043 
Sub. Notes, 7.8%, 2016    160,000        197,946 
Bank of New York,             
Sr. Notes, 5.2%, 2007    450,000        473,511 
Bank One:             
Notes, 6.875%, 2006    500,000        535,071 
Sub. Notes, 5.9%, 2011    500,000        541,721 
Bayerische Landesbank New York,             
Sub. Notes, Ser. F, 5.875%, 2008    300,000        326,075 
Capital One Bank,             
Notes, 4.25%, 2008    275,000        279,330 
Citigroup:             
Debs., 6.625%, 2028    100,000        111,953 
Notes, 6%, 2012    750,000    a    833,381 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Banking (continued)             
Dresdner Bank-New York,             
Sub. Debs., 7.25%, 2015    145,000        170,846 
FleetBoston Financial,             
Sub. Notes, 7.375%, 2009    175,000        202,104 
HSBC,             
Sub. Notes, 7.5%, 2009    200,000        231,509 
J.P. Morgan Chase & Co.:             
Sr. Notes, 4%, 2008    1,000,000        1,018,357 
Sr. Notes, 5.625%, 2006    500,000    a    523,558 
Key Bank,             
Sub. Debs., 6.95%, 2028    100,000        113,750 
MBNA America Bank,             
Sub. Notes, 6.75%, 2008    100,000    b    109,532 
NB Capital Trust IV,             
Capital Securities, 8.25%, 2027    55,000        62,247 
PNC Funding,             
Sub. Notes, 5.25%, 2015    450,000        461,940 
Regions Financial,             
Notes, 4.375%, 2010    400,000        404,543 
Royal Bank of Scotland,             
Sub. Notes, 6.375%, 2011    410,000        455,556 
Sanwa Finance Aruba,             
Notes, 8.35%, 2009    150,000        176,917 
SouthTrust,             
Sub. Notes, 5.8%, 2014    500,000        538,112 
State Street Bank & Trust,             
Sub. Notes, 5.25%, 2018    200,000        205,520 
U.S. Bancorp,             
Capital Securities, 8.09%, 2026    100,000        111,905 
U.S. Bank,             
Sub. Notes, 6.375%, 2011    100,000        112,270 
Wachovia,             
Sub. Notes, 5.25%, 2014    650,000        672,749 
Wachovia Bank,             
Sub. Notes, 5%, 2015    250,000        252,787 
Washington Mutual Finance,             
Sr. Notes, 6.25%, 2006    500,000        526,751 
Wells Fargo & Co.:             
Notes, 5.25%, 2007    1,600,000        1,691,562 
Sub. Notes, 6.375%, 2011    420,000        471,600 

10

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Banking (continued)         
Wells Fargo Capital I,         
Capital Securities, 7.96%, 2026    30,000 a    33,688 
Westpac Banking,         
Sub. Notes, 4.625%, 2018    500,000    479,992 
Zions Bancorp,         
Sub. Notes, 6%, 2015    250,000    268,705 
        14,290,928 
Broadcasting & Media—.4%         
COX Communications,         
Bonds, 5.5%, 2015    100,000    99,307 
Clear Channel Communications,         
Notes, 4.25%, 2009    750,000    747,086 
Comcast Cable Communications,         
Sr. Notes, 6.75%, 2011    600,000    673,949 
Liberty Media,         
Sr. Notes, 5.7%, 2013    25,000    25,296 
        1,545,638 
Building & Construction—.1%         
Centex,         
Sr. Notes, 5.125%, 2013    250,000    250,520 
Chemicals—.2%         
Eastman Chemical,         
Notes, 3.25%, 2008    700,000    688,605 
Potash-Saskatchewan,         
Notes, 7.75%, 2011    200,000    237,094 
        925,699 
Commercial Mortgage Pass—Through Ctfs.—2.7%     
Asset Securitization,         
Ser. 1997-D4, Cl. A1D, 7.49%, 2029    289,238    314,062 
Bear Stearns Commercial Mortgage Securities,     
Ser. 1999-WF2, Cl. A2, 7.08%, 2031    250,000    283,032 
CS First Boston Mortgage Securities,         
Ser. 1999-C1, Cl. A2, 7.29%, 2041    1,050,000    1,195,997 
Chase Commercial Mortgage Securities,         
Ser. 2000-2, Cl. A2, 7.631%, 2032    250,000    294,572 
GE Capital Commercial Mortgage,         
Ser. 2002-1A, Cl. A3, 6.269%, 2035    850,000    947,061 
GMAC Commercial Mortgage Securities:         
Ser. 1998-C1, Cl. A2, 6.7%, 2030    225,000    245,244 
Ser. 1998-C2, Cl. A2, 6.42%, 2035    993,000    1,082,640 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Commercial Mortgage         
Pass—Through Ctfs. (continued)         
Heller Financial Commercial Mortgage Assets,     
Ser. 1999-PH-1, Cl. A2, 6.847%, 2031    500,000    556,602 
J.P. Morgan Chase Commercial Mortgage Securities,     
Ser. 2004-CB8, Cl. A4, 4.404%, 2039    1,000,000    981,236 
LB Commercial Conduit Mortgage Trust,         
Ser. 1999-C2, Cl. A2, 7.325%, 2032    200,000    228,052 
LB-UBS Commercial Mortgage Trust,         
Ser. 2000-C3, Cl. A2, 7.95%, 2025    1,100,000    1,296,350 
Morgan Stanley Capital I:         
Ser. 1998-WF1, Cl. A1, 6.25%, 2030    3,060    3,064 
Ser. 2003-HQ2, Cl. A2, 4.92%, 2035    500,000    513,644 
Ser. 2004-T13, Cl. A4, 4.66%, 2045    1,000,000    1,004,598 
Salomon Brothers Mortgage Securities VII,         
Ser. 2000-C1, Cl. A2, 7.52%, 2009    300,000    345,681 
Wachovia Bank Commercial Mortgage Trust,     
Ser. 2004-C11, Cl. A5, 5.215%, 2041    800,000    834,551 
        10,126,386 
Commercial Services—.1%         
Cendant,         
Sr. Notes, 7.375%, 2013    200,000    233,297 
Consumer—.3%         
Avon Products,         
Sr. Notes, 4.2%, 2018    250,000    232,552 
Procter & Gamble,         
Notes, 6.875%, 2009    750,000 a    856,768 
        1,089,320 
Data Processing—.1%         
First Data,         
Sr. Notes, 5.625%, 2011    250,000    269,268 
Drugs & Pharmaceuticals—.3%         
Bristol-Myers Squibb,         
Notes, 5.75%, 2011    250,000    270,211 
GlaxoSmithkline,         
Notes, 4.375%, 2014    500,000    493,140 

12
    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Drugs & Pharmaceuticals (continued)         
Merck & Co.,             
Debs., 6.4%, 2028    300,000        333,314 
Wyeth,             
Bonds, 6.5%, 2034    200,000        209,562 
            1,306,227 
Entertainment/Media—.4%             
News America,             
Debs., 8.25%, 2018    150,000        189,399 
Time Warner Cos.,             
Notes, 6.95%, 2028    600,000        661,202 
Viacom,             
Sr. Notes, 5.5%, 2033    250,000    a    243,502 
Walt Disney:             
Sr. Debs., 7.55%, 2093    100,000        114,906 
Sr. Notes, 7%, 2032    150,000    a    172,578 
Sr. Notes, Ser. B, 6.75%, 2006    20,000        21,076 
            1,402,663 
Financial Services—3.1%             
Aetna,             
Debs., 7.625%, 2026    50,000        60,402 
American General Finance,             
Notes, Ser. F, 5.875%, 2006    350,000        367,071 
CIT,             
Sr. Notes, 5.5%, 2007    1,350,000        1,430,394 
Countrywide Capital Industries,             
Notes, 8%, 2026    200,000        212,487 
Countrywide Home Loan,             
Notes, Ser. J, 5.5%, 2006    400,000        416,794 
Credit Suisse First Boston USA,             
Notes, 5.125%, 2014    550,000    a    561,727 
General Electric Capital:             
Debs., 8.3%, 2009    15,000        17,859 
Notes, Ser. A, 5%, 2007    2,100,000        2,192,001 
Notes, Ser. A, 5%, 2007    650,000    a    680,952 
Notes, Ser. A, 5.45%, 2013    650,000        694,999 

The Fund 13

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Financial Services (continued)         
Goldman Sachs:         
Notes, Ser. B, 7.35%, 2009    100,000    115,159 
Sr. Notes, 6.6%, 2012    1,000,000    1,125,118 
Sub. Notes, Ser. B, 6.345%, 2034    350,000    357,901 
Household Finance,         
Notes, 8%, 2010    630,000    748,916 
Lehman Brothers,         
Notes, 6.625%, 2012    650,000    734,166 
Merrill Lynch & Co.,         
Notes, 6.875%, 2018    150,000    172,394 
Morgan Stanley,         
Notes, 7.25%, 2032    600,000 a    724,409 
Paine Webber,         
Sr. Notes, 6.55%, 2008    150,000    164,531 
SLM,         
Notes, 5.125%, 2012    850,000    879,503 
        11,656,783 
Food & Beverages—1.1%         
Archer-Daniels-Midland,         
Debs., 7.125%, 2013    300,000    353,368 
Bottling Group,         
Notes, 4.625%, 2012    350,000    357,057 
Coca-Cola Enterprises:         
Debs., 6.7%, 2036    250,000 a    291,313 
Debs., 8.5%, 2022    100,000    133,333 
Coors Brewing,         
Sr. Notes, 6.375%, 2012    130,000    144,410 
General Mills,         
Notes, 6%, 2012    125,000    136,163 
H.J. Heinz,         
Debs., 6.375%, 2028    100,000    111,146 
Hershey Foods,         
Debs., 8.8%, 2021    30,000    40,892 
Kellogg,         
Notes, Ser. B, 6%, 2006    300,000    313,332 
Kraft Foods,         
Notes, 4.625%, 2006    450,000    463,381 
Kroger:         
Sr. Notes, 7.25%, 2009    550,000    621,987 
Sr. Notes, 8.05%, 2010    400,000    471,892 

14

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Food & Beverages (continued)         
Nabisco,         
Debs., 7.55%, 2015    40,000    48,119 
Safeway,         
Sr. Notes, 5.8%, 2012    210,000 a    222,096 
Sara Lee,         
Notes, 6.25%, 2011    300,000    335,946 
Unilever Capital,         
Notes, 5.9%, 2032    250,000    263,464 
        4,307,899 
Foreign—3.8%         
Asian Development Bank,         
Sr. Notes, 4.5%, 2012    750,000    772,228 
European Investment Bank:         
Notes, 4.625%, 2007    500,000    519,538 
Notes, 4.625%, 2014    500,000    516,387 
Hydro-Quebec:         
Debs., Ser. HH, 8.5%, 2029    200,000    289,674 
Debs., Ser. HK, 9.375%, 2030    20,000    31,276 
Inter-American Development Bank,         
Bonds, 5.75%, 2008    1,600,000    1,731,278 
International Bank for Reconstruction & Development,     
Notes, 5%, 2006    2,000,000    2,067,012 
KFW International Finance:         
Debs., 8%, 2010    35,000    41,841 
Notes, 5.25%, 2006    300,000    313,383 
Kingdom of Spain,         
Notes, 7%, 2005    200,000    206,489 
Korea Development Bank:         
Bonds, 7.25%, 2006    300,000    320,261 
Notes, 5.5%, 2012    350,000 a    374,600 
Malaysia,         
Notes, 8.75%, 2009    330,000    396,775 
PEMEX Project Funding Master Trust,         
Notes, 7.375%, 2014    400,000    444,200 
Province of British Columbia,         
Bonds, 6.5%, 2026    25,000    29,249 
Province of Manitoba,         
Debs., 8.8%, 2020    10,000    14,180 
Province of Ontario,         
Sr. Unsub. Notes, 5.5%, 2008    500,000    537,850 

The Fund 15

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Foreign (continued)         
Province of Quebec,         
Debs., 7.5%, 2023    600,000 a    769,624 
Republic of Chile,         
Bonds, 5.5%, 2013    350,000    367,115 
Republic of Finland,         
Bonds, 6.95%, 2026    25,000    30,516 
Republic of Italy:         
Debs., 6.875%, 2023    70,000    83,998 
Notes, 5.375%, 2033    550,000    554,386 
Sr. Notes, 2.75%, 2006    500,000 a    500,564 
Republic of Korea,         
Notes, 8.875%, 2008    840,000    991,410 
Republic of South Africa,         
Notes, 6.5%, 2014    170,000    185,088 
United Mexican States,         
Notes, Ser. A, 9.875%, 2010    2,025,000    2,518,088 
        14,607,010 
Health Care—.1%         
UnitedHealth,         
Notes, 5%, 2014    300,000    304,502 
Industrial—.5%         
Emerson Electric,         
Notes, 6.3%, 2005    35,000    36,168 
John Deere Capital,         
Notes, 7%, 2012    600,000    697,972 
Praxair,         
Notes, 2.75%, 2008    900,000    877,800 
Tyco International,         
Notes, 6.875%, 2029    235,000    267,778 
Waste Management,         
Sr. Notes, 7%, 2028    150,000    167,901 
        2,047,619 
Insurance—.5%         
Anthem,         
Bonds, 6.8%, 2012    300,000    337,303 
GE Global Insurance,         
Notes, 7%, 2026    150,000    164,717 

16
    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Insurance (continued)         
Marsh & McLennan Cos.,         
Sr. Notes, 5.875%, 2033    200,000    183,441 
MetLife,         
Sr. Notes, 6.125%, 2011    260,000    283,865 
Nationwide Financial Services,         
Sr. Notes, 6.25%, 2011    350,000    382,361 
Progressive,         
Sr. Notes, 6.625%, 2029    100,000    111,257 
Safeco Capital Trust I,         
Capital Securities, 8.072%, 2037    300,000    351,107 
Torchmark,         
Debs., 8.25% 2009    150,000    172,530 
        1,986,581 
Metals & Mining—.2%         
Alcan,         
Debs., 7.25%, 2031    350,000    421,604 
Alcoa,         
Notes, 6%, 2012    150,000    165,506 
        587,110 
Oil & Gas—1.2%         
Anadarko Finance,         
Notes, Ser. B, 6.75%, 2011    300,000    341,894 
ChevronTexaco Capital,         
Notes, 3.5%, 2007    500,000    506,475 
ConocoPhillips:         
Notes, 5.9%, 2032    500,000    521,408 
Notes, 8.75%, 2010    200,000    248,145 
Devon Financing,         
Notes, 7.875%, 2031    275,000    347,998 
Encana,         
Bonds, 7.2%, 2031    150,000    176,399 
Kerr-McGee,         
Notes, 6.875%, 2011    250,000    284,360 
Kinder Morgan,         
Sr. Notes, 6.5%, 2012    650,000    721,065 
Marathon Oil,         
Notes, 5.375%, 2007    200,000    210,480 

The Fund 17

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Oil & Gas (continued)         
Occidental Petroleum,         
Sr. Notes, 5.875%, 2007    1,000,000    1,058,519 
Transocean,         
Notes, 7.5%, 2031    150,000    182,512 
        4,599,255 
Paper Products—.3%         
International Paper:         
Notes, 7.625%, 2007    10,000    10,888 
Sr. Notes, 6.75%, 2011    200,000    225,109 
MeadWestvaco,         
Notes, 6.85%, 2012    600,000 a    675,959 
Weyerhaeuser,         
Debs., 7.375%, 2032    200,000    234,044 
        1,146,000 
Real Estate Investment Trusts—.2%     
EOP Operating,         
Notes, 4.75%, 2014    300,000    292,214 
ERP Operating,         
Notes, 5.2%, 2013    600,000    616,168 
        908,382 
Retail—.5%         
Federated Department Stores,         
Debs., 7.45%, 2017    350,000    419,415 
Home Depot,         
Sr. Notes, 3.75%, 2009    875,000 b    877,485 
May Department Stores,         
Notes, 6.7%, 2034    200,000 b    209,417 
NIKE,         
Sr. Notes, 5.5%, 2006    400,000    419,023 
Target,         
Debs., 7%, 2031    125,000    151,429 
        2,076,769 
State Government—.1%         
State of Illinois,         
Bonds, 5.1%, 2033    450,000    435,200 
Technology—.2%         
Hewlett-Packard,         
Sr. Notes, 5.5%, 2007    150,000    158,811 
IBM:         
Debs., 7%, 2025    320,000    379,553 
Debs., 7.5%, 2013    75,000    90,770 

18

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Technology (continued)             
Motorola,             
Debs., 7.5%, 2025    150,000        174,981 
            804,115 
Telecommunications—2.0%             
ALLTEL,             
Sr. Notes, 7.6%, 2009    200,000        229,146 
AT&T Wireless Services,             
Sr. Notes, 7.875%, 2011    475,000        566,595 
BellSouth Telecommunications,             
Debs., 6.375%, 2028    100,000        104,823 
British Telecom,             
Bonds, 8.875%, 2030    150,000    c    201,078 
Comcast Cable Communications,             
Notes, 9.455%, 2022    304,000        418,342 
Deutsche Telekom International Finance,         
Notes, 8.75%, 2030    300,000    c    397,054 
France Telecom:             
Notes, 7.95%, 2006    950,000    c    1,010,972 
Notes, 9.25%, 2031    150,000    c    203,090 
Koninklijke KPN,             
Sr. Unsub. Notes, 8.375%, 2030    250,000        326,743 
New Jersey Bell Telephone,             
Debs., 8%, 2022    25,000        30,016 
Pacific Bell,             
Debs., 7.125%, 2026    310,000        350,847 
Sprint Capital,             
Sr. Notes, 7.625%, 2011    1,200,000    a    1,405,249 
Telecom Italia Capital,             
Notes, Cl. B, 5.25%, 2013    800,000    a    820,578 
Telefonica Europe,             
Notes, 7.75%, 2010    200,000        237,365 
Verizon Global Funding,             
Sr. Notes, 7.25%, 2010    500,000        583,951 
Vodafone,             
Sr. Notes, 7.75%, 2010    580,000        683,183 
            7,569,032 
Transportation—.3%             
Burlington Northern Santa Fe,             
Debs., 7%, 2025    100,000        114,162 
Canadian National Railway,             
Notes, 6.9%, 2028    100,000        115,055 

The Fund 19

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Transportation (continued)         
Continental Airlines,         
Pass-Through Certificates, Ser. 974A, 6.9%, 2018    173,476    167,556 
FedEx,         
Notes, 9.65%, 2012    225,000    295,306 
Norfolk Southern:         
Bonds, 7.8%, 2027    250,000    310,218 
Debs., 9%, 2021    10,000    13,392 
United Parcel Service,         
Debs., 8.375%, 2030    10,000    13,806 
        1,029,495 
U.S. Government—25.8%         
U.S. Treasury Bonds:         
5.375%, 2/15/2031    3,900,000    4,237,116 
5.5%, 8/15/2028    2,350,000    2,560,019 
7.125%, 2/15/2023    350,000    451,073 
7.875%, 2/15/2021    5,330,000    7,282,272 
8.75%, 5/15/2020    2,030,000    2,963,942 
8.875%, 8/15/2017    3,325,000    4,778,890 
11.25%, 2/15/2015    25,000    39,970 
12%, 8/15/2013    1,445,000    1,902,603 
12.5%, 8/15/2014    40,000    56,137 
12.75%, 11/15/2010    75,000    82,963 
14%, 11/15/2011    30,000    36,838 
U.S. Treasury Notes:         
1.875%, 11/30/2005    2,000,000 a    1,992,500 
2.5%, 5/31/2006    6,600,000 a    6,610,058 
3.5%, 11/15/2006    11,000,000 a    11,205,810 
3.625%, 5/15/2013    3,700,000 a    3,635,250 
4%, 2/15/2014    4,850,000 a    4,851,707 
4.375%, 8/15/2012    2,550,000 a    2,645,926 
5%, 8/15/2011    2,300,000 a    2,484,621 
5.625%, 5/15/2008    8,000,000 a    8,713,680 
5.75%,11/15/2005    8,200,000 a    8,495,610 
6%, 8/15/2009    8,550,000 a    9,584,293 
6.125%, 8/15/2007    6,100,000 a    6,648,024 
6.5%, 10/15/2006    2,900,000    3,118,283 
7%, 7/15/2006    3,500,000 a    3,764,810 
        98,142,395 
U.S. Government Agencies—8.6%         
Federal Home Loan Banks:         
Bonds, Ser. 422, 1.875%, 6/15/2006    3,250,000    3,210,711 
Bonds, Ser. 432, 4.5%, 9/16/2013    1,500,000    1,526,482 
Sr. Notes, Ser. 100, 5.8%, 9/2/2008    850,000    923,680 

20

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government Agencies (continued)         
Federal Home Loan Mortgage Corp:         
Notes, 3.5%, 9/15/2007    4,100,000    4,156,412 
Notes, 3.625%, 9/15/2008    1,000,000    1,011,737 
Notes, 4.875%, 3/15/2007    3,600,000    3,764,722 
Notes, 5.5%, 9/15/2011    2,500,000    2,717,112 
Notes, 5.5%, 8/20/2019    500,000    498,631 
Notes, 6.25%, 7/15/2032    650,000    747,650 
Sub. Notes, 5.875%, 3/21/2011    750,000    820,732 
Federal National Mortgage Association:         
Bonds, 6.25%, 5/15/2029    1,900,000    2,161,814 
Notes, 5.25%, 1/15/2009    5,525,000    5,911,087 
Notes, 5.375%, 11/15/2011    1,250,000    1,348,780 
Notes, 7.25%, 1/15/2010    1,450,000    1,691,297 
Financing Corp:         
Bonds, 8.6%, 9/26/2019    40,000    55,257 
Bonds, Ser. E, 9.65%, 11/2/2018    510,000    755,687 
Tennessee Valley Authority:         
Bonds, Ser. C, 6%, 3/15/2013    450,000    503,120 
Notes, Ser. C, 4.75%, 8/1/2013    750,000    770,261 
        32,575,172 
U.S. Government Agencies/Mortgage-Backed—35.2%     
Federal Home Loan Mortgage Corp:         
4%, 9/1/2008—9/1/2018    2,582,892    2,552,877 
4.5%, 5/1/2010-8/1/2033    8,633,616    8,653,772 
5%, 11/1/2007-9/1/2034    13,540,487    13,660,921 
5.5%    500,000 d    509,375 
5.5%, 9/1/2009-8/1/2034    11,266,490    11,527,591 
6%, 12/1/2013-10/1/2033    6,078,824    6,323,612 
6.5%, 3/1/2011-11/1/2033    3,601,146    3,793,501 
7%, 9/1/2011-7/1/2034    1,469,054    1,561,638 
7.5%, 7/1/2010-10/1/2033    522,495    561,317 
8%, 5/1/2026-10/1/2031    331,161    359,911 
8.5%, 6/1/2030    8,991    9,822 
Federal National Mortgage Association:         
4%, 12/1/2018-3/1/2019    1,393,721    1,371,028 
4.5%, 4/1/2018-10/1/2033    6,938,420    6,917,853 
5%, 4/1/2010-7/1/2034    17,198,735    17,328,279 
5.5%    800,000 d    814,744 
5.5%, 1/1/2017-8/1/2034    20,070,789    20,525,789 
6%, 6/1/2011-3/1/2034    10,118,820    10,526,009 
6.5%, 1/1/2005-1/1/2034    5,852,657    6,174,134 
7%, 8/1/2008-11/1/2032    2,239,713    2,380,318 
7.5%, 8/1/2015-3/1/2032    638,966    686,101 

The Fund 21

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government Agencies/         
Mortgage-Backed (continued)         
Federal National Mortgage Association (continued):     
8%, 5/1/2027-10/1/2030    111,491    121,465 
8.5%, 2/1/2025-2/1/2031    33,922    37,155 
9%, 10/1/2030    8,138    8,977 
Government National Mortgage Association I:     
4.5%, 6/15/2019-8/15/2033    1,492,292    1,486,699 
5%, 3/15/2018-5/15/2034    3,192,493    3,221,741 
5.5%    1,000,000 d    1,023,120 
5.5%, 2/15/2033-3/15/2034    4,005,388    4,107,613 
6%, 4/15/2017-6/15/2034    3,471,557    3,618,794 
6.5%, 9/15/2008-11/15/2033    2,033,641    2,155,108 
7%, 10/15/2011-8/15/2032    1,009,227    1,078,365 
7.5%, 12/15/2026-10/15/2032    400,508    431,990 
8%, 8/15/2024-3/15/2032    187,275    204,448 
8.5%, 10/15/2026    42,441    46,605 
9%, 2/15/2022-2/15/2023    49,370    55,776 
        133,836,448 
Utilities/Gas & Electric—1.7%         
Cincinnati Gas & Electric,         
Notes, 5.7%, 2012    185,000    197,991 
Duke Capital,         
Sr. Notes, 8%, 2019    225,000    274,054 
Florida Power & Light,         
First Mortgage Bonds, 5.625%, 2034    250,000    256,363 
Georgia Power,         
Sr. Notes, Ser. J, 4.875%, 2007    400,000    416,496 
MidAmerican Energy,         
Sr. Notes, 5.875%, 2012    350,000    375,126 
Niagara Mohawk Power,         
First Mortgage Bonds, 7.75%, 2006    500,000    536,034 
NiSource Finance,         
Bonds, 5.4%, 2014    150,000    155,197 

22
    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Utilities/Gas & Electric (continued)         
Oncor Electric Delivery,         
Sr. Secured Notes, 7%, 2032    250,000    292,137 
PPL Electric Utilities,         
Secured Bonds, 6.25%, 2009    300,000    330,266 
Pacific Gas & Electric,         
First Mortgage Bonds, 6.05%, 2034    175,000    180,864 
Progress Energy,         
Sr. Notes, 7.1%, 2011    500,000    567,792 
Public Service Company of Colorado,         
First Mortgage Bonds, 7.875%, 2012    350,000    429,080 
Sempra Energy,         
Sr. Notes, 7.95%, 2010    500,000    584,190 
South Carolina Electric & Gas,         
First Mortgage Bonds, 6.625%, 2032    200,000    231,871 
Southern California Edison,         
Notes, 6.65%, 2029    100,000    111,723 
Southern Power,         
Sr. Notes, Ser. D, 4.875%, 2015    300,000    296,069 
Virginia Electric & Power,         
Sr. Notes, Ser. A, 5.375%, 2007    1,000,000    1,046,825 
        6,282,078 
Total Bonds and Notes         
(cost $366,339,937)        373,678,983 
 
 
Short-Term Investments—2.2%         
Repurchase Agreement;         
Goldman Sachs & Co., Tri-Party         
Repurchase Agreement, 1.75%, dated 10/29/2004,     
due 11/1/2004 in the amount of $8,137,761 (fully     
collateralized by $5,837,000 U.S. Treasury Bonds,     
8%, due 11/15/2021, value $8,300,712)     
(cost $8,136,574)    8,136,574    8,136,574 

The Fund 23

STATEMENT OF INVESTMENTS (continued)

Investment of Cash Collateral         
for Securities Loaned—18.0%    Shares    Value ($) 
Registered Investment Company,         
Dreyfus Institutional Cash Advantage Plus Fund         
(cost $68,447,014)    68,447,014 e    68,447,014 
Total Investments (cost $442,923,525)    118.5%    450,262,571 
Liabilities, Less Cash and Receivables    (18.5%)    (70,202,109) 
Net Assets    100.0%    380,060,462 

a All or a portion of these securities are on loan.At October 31, 2004, the total market value of the fund's securities 
on loan is $78,043,878 and the total market value of the collateral held by the fund is $80,583,444, consisting of 
cash collateral of $68,447,014 and U.S. Government and Agency securities valued at $12,136,430. 
b Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold 
in transactions exempt from registration, normally to qualified institutional buyers.These securities have been 
determined to be liquid by the Board of Directors. At October 31, 2004, these securities amounted to 
$1,196,434 or .3% of net assets. 
c Variable rate security—interest rate subject to periodic change. 
d Purchased on a forward commitment basis. 
e Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
U.S.Government/Agency Securities    69.6    Mortgage/Asset Backed Securities    4.4 
Corporate Bonds    20.4    Foreign Securities    3.8 
Short-Term/        State Government    .1 
Money Market Investments    20.2        118.5 

† Based on net assets.
See notes to financial statements.

24

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—See Statement of         
Investments (including securities on loan,         
valued at $78,043,878)—Note 1(b):         
Unaffiliated issuers    374,476,511    381,815,557 
Affiliated issuers    68,447,014    68,447,014 
Cash        275,580 
Interest receivable        3,900,183 
Receivable for shares of Capital Stock subscribed    372,789 
        454,811,123 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    94,361 
Liability for securities on loan—Note 1(b)        68,447,014 
Payable for investment securities purchased        6,005,150 
Payable for shares of Capital Stock redeemed        204,136 
        74,750,661 
Net Assets ($)        380,060,462 
Composition of Net Assets ($):         
Paid-in capital        372,123,993 
Accumulated undistributed investment income—net    17,836 
Accumulated net realized gain (loss) on investments    579,587 
Accumulated net unrealized appreciation         
(depreciation) on investments        7,339,046 
Net Assets ($)        380,060,462 

Net Asset Value Per Share         
    Investor Shares    BASIC Shares 
Net Assets ($)    208,233,676    171,826,786 
Shares Outstanding    20,055,303    16,534,724 
Net Asset Value Per Share ($)    10.38    10.39 

See notes to financial statements.

The Fund 25

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Interest    16,566,360 
Income on securities lending    23,527 
Total Income    16,589,887 
Expenses:     
Management fee—Note 3(a)    573,508 
Distribution fee (Investor Shares)—Note 3(b)    540,313 
Loan commitment fees—Note 2    2,874 
Total Expenses    1,116,695 
Investment Income—Net    15,473,192 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    1,295,818 
Net unrealized appreciation (depreciation) on investments    2,615,812 
Net Realized and Unrealized Gain (Loss) on Investments    3,911,630 
Net Increase in Net Assets Resulting from Operations    19,384,822 

See notes to financial statements.

26

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    15,473,192    12,724,130 
Net realized gain (loss) on investments    1,295,818    3,985,889 
Net unrealized appreciation         
(depreciation) on investments    2,615,812    (4,270,503) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    19,384,822    12,439,516 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (9,000,973)    (7,050,693) 
BASIC shares    (7,349,709)    (7,162,885) 
Net realized gain on investments:         
Investor shares    (993,873)    (88,995) 
BASIC shares    (710,630)    (57,242) 
Total Dividends    (18,055,185)    (14,359,815) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Investor shares    93,204,485    201,562,124 
BASIC shares    75,296,765    124,159,472 
Dividends reinvested:         
Investor shares    9,587,604    6,806,308 
BASIC shares    5,897,214    5,468,769 
Cost of shares redeemed:         
Investor shares    (113,902,366)    (98,287,288) 
BASIC shares    (50,333,121)    (92,925,677) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    19,750,581    146,783,708 
Total Increase (Decrease) in Net Assets    21,080,218    144,863,409 
Net Assets ($):         
Beginning of Period    358,980,244    214,116,835 
End of Period    380,060,462    358,980,244 
Undistributed investment income—net    17,836    — 

The Fund 27

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Year Ended October 31, 
    2004    2003 
Capital Share Transactions         
Investor Shares         
Shares sold    9,014,756    19,215,031 
Shares issued for dividends reinvested    929,077    651,244 
Shares redeemed    (11,024,045)    (9,412,671) 
Net Increase (Decrease) in Shares Outstanding    (1,080,212)    10,453,604 
BASIC Shares         
Shares sold    7,292,526    11,875,497 
Shares issued for dividends reinvested    571,043    521,572 
Shares redeemed    (4,869,359)    (8,786,695) 
Net Increase (Decrease) in Shares Outstanding    2,994,210    3,610,374 

See notes to financial statements.

28

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    2004    2003    2002 a    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    10.35    10.38    10.34    9.62    9.63 
Investment Operations:                     
Investment income—net    .41b    .40b    .51b    .59    .60 
Net realized and unrealized                     
gain (loss) on investments    .10    .02    .05    .72    (.01) 
Total from Investment Operations    .51    .42    .56    1.31    .59 
Distributions:                     
Dividends from investment income—net    (.43)    (.45)    (.52)    (.59)    (.60) 
Dividends from net realized                     
gain on investments    (.05)    (.00)c    —    —    — 
Total Distributions    (.48)    (.45)    (.52)    (.59)    (.60) 
Net asset value, end of period    10.38    10.35    10.38    10.34    9.62 
Total Return (%)    5.02    4.10    5.68    13.99    6.34 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .40    .40    .40    .40    .40 
Ratio of net investment income                     
to average net assets    3.94    3.77    5.04    5.85    6.25 
Portfolio Turnover Rate    44.84    99.57    37.69    90.97    67.33 
Net Assets, end of period ($ x 1,000)    208,234    218,731    110,923    62,314    35,613 

a    As required, effective November 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting 
    Guide for Investment Companies and began accreting discount on fixed income securities on a scientific basis and 
    including paydown gains and losses in interest income.The effect of this change for the period ended October 31, 
    2002 was to decrease net investment income per share and increase net realized and unrealized gain (loss) on 
    investments per share by $.01 and decrease the ratio of net investment income to average net assets from 5.11% to 
    5.04%. Per share data and ratios/supplemental data for periods prior to November 1, 2001 have not been restated 
    to reflect this change in presentation. 
b    Based on average shares outstanding at each month end. 
c    Amount represents less than $.01. 
See notes to financial statements. 

The Fund 29

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
BASIC Shares    2004    2003    2002 a    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    10.36    10.39    10.35    9.63    9.64 
Investment Operations:                     
Investment income—net    .43b    .43b    .54b    .61    .62 
Net realized and unrealized                     
gain (loss) on investments    .11    .02    .05    .72    (.01) 
Total from Investment Operations    .54    .45    .59    1.33    .61 
Distributions:                     
Dividends from investment income—net    (.46)    (.48)    (.55)    (.61)    (.62) 
Dividends from net realized                     
gain on investments    (.05)    (.00)c    —    —    — 
Total Distributions    (.51)    (.48)    (.55)    (.61)    (.62) 
Net asset value, end of period    10.39    10.36    10.39    10.35    9.63 
Total Return (%)    5.29    4.36    5.95    14.25    6.63 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .15    .15    .15    .15    .15 
Ratio of net investment income                     
to average net assets    4.19    4.06    5.32    6.11    6.53 
Portfolio Turnover Rate    44.84    99.57    37.69    90.97    67.33 
Net Assets, end of period ($ x 1,000)    171,827    140,249    103,194    82,050    70,040 

a    As required, effective November 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting 
    Guide for Investment Companies and began accreting discount on fixed income securities on a scientific basis and 
    including paydown gains and losses in interest income.The effect of this change for the period ended October 31, 
    2002 was to decrease net investment income per share and increase net realized and unrealized gain (loss) on 
    investments per share by $.01 and decrease the ratio of net investment income to average net assets from 5.40% to 
    5.32%. Per share data and ratios/supplemental data for periods prior to November 1, 2001 have not been restated 
    to reflect this change in presentation. 
b    Based on average shares outstanding at each month end. 
c    Amount represents less than $.01. 
See notes to financial statements. 

30

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 sixteen 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" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares. The fund is authorized to issue 150 million shares 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. Income, expenses (other then expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities (excluding short-term investments other than U.S.Treasury Bills) are valued each business day by an independent pricing service (the "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 judg-

The Fund 31

NOTES TO FINANCIAL STATEMENTS (continued)

ment 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 valued 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. Restricted securities, as well as securities or other assets for which recent market quotations are not readily available,that are not valued by a pricing service approved by the Board of Directors, or are determined by the fund not to reflect accurately fair value (such as when an event occurs after the close of the exchange on which the security is principally traded and that is determined by the fund to have changed the value of the security), are valued at fair value as determined in good faith under the direction of the Board of Directors.The factors that may be considered when fair valuing a security include: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. 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, including where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

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

32

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.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction.Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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

The Fund 33

NOTES TO FINANCIAL STATEMENTS (continued)

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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $17,836, undistributed capital gains $469,474 and unrealized appreciation $7,449,159.

The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, were as follows: ordinary income $16,350,682 and $14,213,578, and long term capital gains $1,704,503 and $146,237, respectively.

During the period ended October 31, 2004, as a result of permanent book to tax differences primarily due to the tax treatment for paydown gains and losses on mortgage backed securities, the fund increased accumulated undistributed investment income-net by $895,326, decreased accumulated net realized gain (loss) on investments by $687,626 and decreased paid-in capital by $207,700. Net assets were not affected by this reclassification.

NOTE 2—Bank Line Of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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

34

charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. For the period ended October 31, 2004, the fund did not borrow under the Facility.

NOTE 3—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 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 Company,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

The Fund 35

NOTES TO FINANCIAL STATEMENTS (continued)

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.

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, 2004, the Investor shares were charged $540,313 pursuant to the Plan.

Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of majority of those Directors who are not "interested persons" of the Company and who have no direct or indirect financial interest in the operation or in any agreement related to the Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $50,658 and Rule 12b-1 distribution plan fees $43,703.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales (including paydowns) of investment securities, excluding short-term securities, during the period ended October 31, 2004, amounted to $184,340,431 and $167,632,710, respectively.

At October 31, 2004, the cost of investments for federal income tax purposes was $442,813,412; accordingly, accumulated net unrealized appreciation on investments was $7,449,159, consisting of $8,357,661 gross unrealized appreciation and $908,502 gross unrealized depreciation.

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus Funds, on behalf of a pur-

36

ported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors, and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

The Fund 37

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004, 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian and bro-kers.As for securities purchased but not yet received, we perform other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Bond Market Index Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

New York, New York
December 13, 2004

38

IMPORTANT TAX INFORMATION (Unaudited)

For federal tax purposes, the fund hereby designates $.0469 per share as a long-term capital gain distribution paid on December 19, 2003.

The Fund 39

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

40

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
———————
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
———————
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
———————

Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.

  Ruth Marie Adams, Emeritus Board Member
Francis P. Brennan, Emeritus Board Member

The Fund 41

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

42

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

The Fund 43

NOTES

For More    Information 
 
Dreyfus    Transfer Agent & 
Bond Market Index Fund    Dividend Disbursing Agent 
200 Park Avenue    Dreyfus Transfer, Inc. 
New York, NY 10166    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue    Dreyfus Service Corporation 
New York, NY 10166    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0310AR1004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
7    Understanding Your Fund's Expenses 
7    Comparing Your Fund's Expenses 
With Those of Other Funds
8    Statement of Investments 
24    Statement of Financial Futures 
25    Statement of Assets and Liabilities 
26    Statement of Operations 
27    Statement of Changes in Net Assets 
28    Financial Highlights 
29    Notes to Financial Statements 
36    Report of Independent Registered 
    Public Accounting Firm 
37    Important Tax Information 
38    Board Members Information 
40    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus BASIC
S&P 500 Stock Index Fund

The Fund

LETTER FROM THE CHAIRMAN

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, 2003, through October 31, 2004. 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,Tom Durante, CFA.

The Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, the rate of corporate earnings growth appears to have slowed dramatically and high energy prices threaten to erode the rate of economic growth.Though these factors may suggest the U.S. economy is moving toward a new phase of the business cycle, we believe the current economic cycle still favors higher-quality stocks, which currently offer favorable relative and absolute valuations.

Of course, the specific investments that may be right for you in today's economic and market environment depend on your current needs, future goals, tolerance for risk and the composition of your overall portfolio.As always, your financial advisor may be in the best position to recommend the specific asset classes and investments that will satisfy your financial needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Tom Durante, CFA, Portfolio Manager

How did Dreyfus BASIC S&P 500 Stock Index Fund perform relative to its benchmark?

For the 12-month period ended October 31, 2004, the fund produced a total return of 9.19% .1 The Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"), the fund's benchmark, produced a 9.42% return for the same period.2,3

We attribute the fund's performance to a gradually improving U.S. economy, which benefited from stronger global growth, low interest rates and low inflation.The difference between the fund's return and the S&P 500 Index's return was primarily the result of transaction costs and other operating expenses that are not reflected by the S&P 500 Index.

What is the fund's investment approach?

The fund seeks to match the total return of the S&P 500 Index.To pursue this goal, the fund generally invests in all 500 stocks in the S&P 500 Index in proportion to their weighting in the S&P 500 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 across 10 economic sectors.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 reflect the industries of the U.S. economy. 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 composition of the S&P 500 Index.The fund does not attempt to manage market volatility.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

What other factors influenced the fund's performance?

When the reporting period began, the U.S. economy already had begun to show signs of strengthening in an environment characterized by low inflation and low interest rates. Many U.S. companies took advantage of the low interest-rate environment to strengthen their balance sheets by refinancing their outstanding debt at lower rates. At the same time, reductions in personal and corporate income tax rates provided support for consumer and business spending. Stronger global economic activity, especially in China and India, helped further boost U.S. business conditions, especially for exporters.

Offsetting these favorable influences were a number of forces that weighed heavily on investor sentiment, including surging oil prices, moves by the Federal Reserve Board toward higher interest rates, the presidential election and the insurgency in Iraq. As a result, investors became more concerned about the sustainability of the economic recovery, and they focused primarily on value-oriented stocks that they believed were likely to produce competitive results even if the economy weakened.

In this environment, the market's best returns of the reporting period stemmed from the energy sector, where the major integrated oil companies benefited from record oil prices.The fund received particularly strong results from oil refineries, which achieved greater pricing power as a result of limited refining capacity and rising global demand. Large banks and financial services companies also fared well as the improving economy supported higher loan origination volumes, fewer defaults and greater securities trading and investment banking activity.

In the industrials group, a number of companies attempted to meet rising global demand by building new factories in the United States and abroad. Demand from China and other emerging markets for the commodities and services used in creating a larger industrial infrastructure particularly benefited U.S. industrial parts manufacturers, construction

4

companies, mining businesses, chemical producers and electrical equipment manufacturers. Defense stocks also performed well during the reporting period, mainly due to the war in Iraq, and many electric utilities boosted earnings by refinancing their debt at lower interest rates.

On the other hand, semiconductor stocks represented the single largest detractor from the S&P 500 Index's performance over the reporting period. Unexpectedly low customer demand led to higher inventories of unsold goods and higher expenses, which eroded profit margins. Large pharmaceutical stocks also lagged market averages, primarily due to investors' concerns regarding competition from generic drug makers and an apparent lack of new products under development.

What is the fund's current strategy?

As an index fund, our strategy is to attempt to replicate the returns of the S&P 500 Index.Accordingly, as of the end of the reporting period, the percentage of the fund's assets invested in each market sector closely approximated its representation in the S&P 500 Index.

November 15, 2004

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 daily 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. 
3    "Standard & Poor's®,""S&P®,""Standard & Poor's® 500" and "S&P 500®" are trademarks 
    of The McGraw-Hill companies, Inc., and have been licensed for use by the fund.The fund is not 
    sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no 
    representation regarding the advisability of investing in the fund. 

The Fund 5

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 10/31/04         
    1 Year    5 Years    10 Years 
Fund    9.19%    (2.42)%    10.72% 

† Source: Lipper Inc.
Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not
reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
The above graph compares a $10,000 investment made in Dreyfus BASIC S&P 500 Stock Index Fund on
10/31/94 to a $10,000 investment made in the Standard & Poor's 500 Composite Stock Price Index (the "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 Index is a
widely accepted, unmanaged index of U.S. stock market performance and reflects the reinvestment of dividends
daily.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.

6

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus BASIC S&P 500 Stock Index Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment assuming actual returns for the six months ended October 31, 2004

Expenses paid per $1,000 †    $ 1.02 
Ending value (after expenses)    $1,028.90 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

Expenses paid per $1,000 †    $ 1.02 
Ending value (after expenses)    $1,024.13 

† Expenses are equal to the fund's annualized expense ratio of .20%; multiplied by the average account value over the
period, multiplied by 184/366 (to reflect the one-half year period).

The Fund 7

  STATEMENT OF INVESTMENTS
October 31, 2004
Common Stocks—96.6%    Shares    Value ($) 
Consumer Cyclical—9.5%         
Albertson's    45,186    1,030,692 
AutoNation    32,700 a    563,421 
AutoZone    10,200 a    834,462 
Bed Bath & Beyond    36,900 a    1,505,151 
Best Buy    39,900 b    2,362,878 
Big Lots    14,200 a,b    175,938 
Brunswick    11,750    551,310 
CVS    49,068    2,132,495 
Circuit City Stores- Circuit City Group    24,386    396,273 
Coach    23,100 a    1,077,153 
Cooper Tire & Rubber    9,153    178,300 
Costco Wholesale    56,600    2,713,404 
Dana    18,349    273,583 
Darden Restaurants    19,350 b    474,075 
Delphi    68,972    580,055 
Delta Air Lines    15,450 a,b    84,203 
Dillard's, Cl. A    10,300    211,047 
Dollar General    40,346    776,660 
Eastman Kodak    35,250 b    1,067,370 
Eaton    18,642    1,192,155 
Family Dollar Stores    20,700    611,685 
Federated Department Stores    22,100    1,114,945 
Ford Motor    224,711    2,927,984 
Gap    111,050    2,218,779 
General Motors    69,350 b    2,673,443 
Genuine Parts    21,500 b    857,635 
Harley-Davidson    36,250    2,086,913 
Harrah's Entertainment    13,794    807,225 
Hasbro    21,675    383,431 
Hilton Hotels    47,250    940,275 
Home Depot    269,700    11,079,276 
International Game Technology    42,300    1,397,592 
J.C. Penney    35,350    1,222,757 
Johnson Controls    23,356    1,339,466 
Jones Apparel Group    15,300    540,090 
Kohl's    42,000 a    2,131,920 

8

Common Stocks (continued)    Shares    Value ($) 
Consumer Cyclical (continued)         
Kroger    90,800 a    1,371,988 
Limited Brands    58,000    1,437,240 
Liz Claiborne    13,200    539,616 
Lowe's Cos.    95,800    5,391,624 
Marriott International, Cl. A    28,150 b    1,533,894 
Mattel    50,850    890,384 
May Department Stores    35,800    932,948 
Maytag    9,700    168,780 
McDonald's    154,300    4,497,845 
NIKE, Cl. B    32,350    2,630,379 
Navistar International    8,600 a    297,130 
Nordstrom    17,250    744,855 
Office Depot    38,450 a    622,505 
PACCAR    21,274    1,474,500 
RadioShack    19,652    588,184 
Reebok International    7,265 b    268,805 
Safeway    54,850 a    1,000,463 
Sears, Roebuck & Co.    26,050    911,750 
Southwest Airlines    97,093 b    1,531,157 
Staples    61,100    1,817,114 
Starbucks    48,850 a    2,583,188 
Starwood Hotels & Resorts Worldwide    25,550    1,219,502 
TJX Cos.    60,050 b    1,439,999 
Target    110,950    5,549,719 
Tiffany & Co.    17,900    525,007 
Toys R Us    26,300 a    473,663 
V. F.    13,550    729,397 
Visteon    15,896    113,021 
Wal-Mart Stores    521,100    28,097,712 
Walgreen    125,800    4,514,962 
Wendy's International    13,997    467,080 
Whirlpool    8,150    478,813 
Winn-Dixie Stores    17,450 b    60,028 
Yum! Brands    35,660    1,551,210 
        126,968,503 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares        Value ($) 
Consumer Staples—7.4%             
Adolph Coors, Cl. B    4,565    b    304,486 
Alberto-Culver, Cl. B    11,116        498,663 
Altria Group    252,000        12,211,920 
Anheuser-Busch Cos.    98,400    b    4,915,080 
Archer-Daniels-Midland    79,935        1,548,340 
Avon Products    58,072        2,296,748 
Brown-Forman, Cl. B    14,900        669,010 
Campbell Soup    50,450        1,354,078 
Clorox    26,150        1,427,790 
Coca-Cola    298,000        12,116,680 
Coca-Cola Enterprises    57,650        1,205,461 
Colgate-Palmolive    65,200        2,909,224 
ConAgra Foods    64,882        1,712,885 
Fortune Brands    17,721        1,290,443 
General Mills    46,700        2,066,475 
Gillette    123,100        5,106,188 
H.J. Heinz    42,950        1,561,233 
Hershey Foods    30,200        1,530,838 
International Flavors & Fragrances    11,600        452,980 
Kellogg    50,750        2,182,250 
Kimberly-Clark    60,700        3,621,969 
McCormick & Co.    16,800        595,224 
Newell Rubbermaid    33,778        728,254 
Pactiv    18,450    a    437,081 
Pepsi Bottling Group    31,200        874,848 
PepsiCo    208,120        10,318,590 
Procter & Gamble    312,300        15,983,514 
Reynolds American    18,150        1,249,809 
SUPERVALU    16,700        492,483 
Sara Lee    97,400        2,267,472 
Sysco    78,508        2,533,453 
UST    20,300        835,548 
Wm. Wrigley Jr.    27,650    b    1,808,310 
            99,107,327 
Energy—7.3%             
Amerada Hess    11,150        899,916 
Anadarko Petroleum    30,775        2,075,773 

10

Common Stocks (continued)    Shares    Value ($) 
Energy (continued)         
Apache    40,026    2,029,318 
BJ Services    19,800    1,009,800 
Baker Hughes    40,970    1,754,745 
Burlington Resources    48,512    2,013,248 
ChevronTexaco    261,620    13,881,557 
ConocoPhillips    84,637    7,135,745 
Devon Energy    29,650    2,193,211 
Dynegy, Cl. A    46,650 a    229,985 
EOG Resources    14,450    961,792 
El Paso    78,736    703,900 
Exxon Mobil    799,056    39,329,536 
Halliburton    54,200    2,007,568 
Kerr-McGee    18,539    1,097,880 
KeySpan    19,700    787,015 
Kinder Morgan    15,200    978,424 
Marathon Oil    42,500    1,619,675 
Nabors Industries    18,300 a    898,896 
Nicor    5,450    204,484 
NiSource    32,350    693,908 
Noble    16,450 a    751,436 
Occidental Petroleum    48,100    2,685,423 
Peoples Energy    4,620    197,644 
Rowan Cos.    13,160 a    335,975 
Schlumberger    72,500    4,563,150 
Sempra Energy    28,442    953,945 
Sunoco    9,218    685,450 
Transocean    39,450 a    1,390,613 
Unocal    32,500    1,356,875 
Valero Energy    31,400    1,349,258 
Williams Cos.    68,200    853,182 
        97,629,327 
Health Care—12.1%         
Abbott Laboratories    191,750    8,174,302 
Aetna    18,877    1,793,315 
Allergan    16,150    1,155,694 
AmerisourceBergen    13,850    762,304 
Amgen    155,466 a    8,830,468 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
Anthem    17,150 a    1,378,860 
Applera—Applied Biosystems Group    24,800 b    473,184 
Bausch & Lomb    6,514    397,093 
Baxter International    75,500    2,322,380 
Becton, Dickinson & Co.    30,800    1,617,000 
Biogen Idec    41,540 a    2,415,966 
Biomet    31,175 b    1,455,249 
Boston Scientific    103,400 a    3,650,020 
Bristol-Myers Squibb    238,900    5,597,427 
C.R. Bard    12,900 b    732,720 
Cardinal Health    52,850    2,470,737 
Caremark Rx    57,200 a    1,714,284 
Chiron    23,100 a    748,902 
Eli Lilly & Co.    138,850    7,624,254 
Express Scripts    9,500 a    608,000 
Fisher Scientific International    14,100 a    808,776 
Forest Laboratories    45,500 a    2,029,300 
Genzyme    28,050 a    1,471,783 
Gilead Sciences    52,900 a    1,831,927 
Guidant    38,600    2,571,532 
HCA    59,250    2,176,252 
Health Management Associates, Cl. A    29,850    616,701 
Hospira    19,145 a    610,916 
Humana    19,550 a    374,383 
Johnson & Johnson    364,596    21,285,114 
King Pharmaceuticals    29,650 a    323,482 
Manor Care    10,750    351,955 
McKesson    36,104    962,533 
Medco Health Solutions    33,469 a    1,134,934 
MedImmune    30,650 a,b    871,073 
Medtronic    148,600    7,594,946 
Merck & Co.    272,550    8,533,541 
Millipore    6,050 a    278,240 
Mylan Laboratories    33,000 b    568,260 
Pfizer    927,440    26,849,388 
Quest Diagnostics    12,550    1,098,627 
Schering-Plough    180,900    3,276,099 

12

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
St. Jude Medical    21,750 a    1,665,398 
Stryker    49,300    2,124,337 
Tenet Healthcare    57,250 a    613,720 
Thermo Electron    20,100 a    582,900 
UnitedHealth Group    81,650    5,911,460 
Waters    14,500 a,b    598,705 
Watson Pharmaceuticals    13,450 a    377,004 
WellPoint Health Networks    19,300 a    1,884,838 
Wyeth    163,850    6,496,653 
Zimmer Holdings    30,120 a,b    2,337,011 
        162,133,947 
Interest Sensitive—23.3%         
ACE    34,900    1,328,294 
AFLAC    62,300    2,235,324 
Allstate    85,150    4,094,863 
Ambac Financial Group    13,300    1,038,198 
American Express    155,700    8,262,999 
American International Group    319,996    19,426,957 
AmSouth Bancorporation    43,450    1,146,645 
Aon    38,750 b    790,887 
Apartment Investment & Management, Cl. A    11,600    425,604 
BB&T    68,100    2,799,591 
Bank of America    499,582    22,376,277 
Bank of New York    95,528    3,100,838 
Bear Stearns Cos.    12,698    1,203,135 
CIGNA    16,900 b    1,072,474 
CIT Group    26,000    1,050,400 
Capital One Financial    29,700    2,190,672 
Charles Schwab    167,850 b    1,535,828 
Chubb    23,500    1,695,055 
Cincinnati Financial    20,645    861,928 
Citigroup    636,326    28,233,784 
Comerica    21,100    1,297,861 
Countrywide Financial    69,198    2,209,492 
E*TRADE Financial    45,800 a    590,820 
Equity Office Properties Trust    49,500    1,391,940 
Equity Residential    34,450    1,148,908 

The Fund 13

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive (continued)         
Fannie Mae    118,850    8,337,328 
Federated Investors, Cl. B    13,350    387,017 
Fifth Third Bancorp    69,991    3,442,857 
First Horizon National    15,200    657,856 
Franklin Resources    30,600    1,854,972 
Freddie Mac    84,350    5,617,710 
General Electric    1,296,850    44,248,522 
Golden West Financial    18,800    2,198,096 
Goldman Sachs Group    59,650    5,868,367 
H&R Block    20,250    962,887 
Hartford Financial Services Group    36,000    2,105,280 
Huntington Bancshares    28,176    674,815 
J.P. Morgan Chase & Co.    437,548    16,889,353 
Janus Capital Group    29,400 b    448,350 
Jefferson-Pilot    16,800    811,272 
KeyCorp    49,950 b    1,677,821 
Lehman Brothers Holdings    33,350    2,739,703 
Lincoln National    21,650    948,270 
Loews    22,800    1,365,720 
M&T Bank    14,400    1,483,200 
MBIA    17,600    1,018,336 
MBNA    156,918    4,021,808 
MGIC Investment    12,150 b    781,367 
Marsh & McLennan Cos.    63,900    1,767,474 
Marshall & Ilsley    27,350    1,147,880 
Mellon Financial    52,100    1,505,690 
Merrill Lynch    115,350    6,221,979 
MetLife    92,100    3,532,035 
Morgan Stanley    134,960    6,895,106 
National City    81,400    3,172,158 
North Fork Bancorporation    38,350    1,691,235 
Northern Trust    26,950    1,146,453 
PNC Financial Services Group    34,650    1,812,195 
Plum Creek Timber    22,500 b    816,525 
Principal Financial Group    38,450    1,451,872 
Progressive    24,600 b    2,301,330 
ProLogis    22,300 b    869,254 

14

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive (continued)         
Providian Financial    35,950 a    559,023 
Prudential Financial    63,750    2,962,463 
Regions Financial    56,786    1,992,053 
SLM    53,550    2,423,673 
Safeco    15,500    716,720 
Simon Property Group    27,150    1,583,388 
SouthTrust    40,850    1,779,835 
Sovereign Bancorp    42,200    913,630 
St. Paul Travelers Cos.    82,127    2,789,033 
State Street    41,300    1,860,565 
SunTrust Banks    43,900    3,089,682 
Synovus Financial    38,000 b    1,033,220 
T. Rowe Price Group    15,650    872,801 
Torchmark    13,516    730,134 
U.S. Bancorp    230,857    6,604,819 
UnumProvident    36,372    496,842 
Wachovia    160,834    7,914,641 
Washington Mutual    107,185    4,149,131 
Wells Fargo    207,380    12,384,734 
XL Capital, Cl. A    17,000    1,232,500 
Zions Bancorporation    10,950    724,562 
        311,194,316 
Producer Goods—9.7%         
Air Products & Chemicals    27,950    1,486,381 
Alcoa    106,838    3,472,235 
Allegheny Technologies    11,733    197,232 
American Power Conversion    24,650    475,252 
American Standard Cos.    26,250 a    959,962 
Ashland    8,700    501,294 
Avery Dennison    13,592    826,937 
Ball    13,800    549,930 
Bemis    13,100    346,757 
Black & Decker    9,850    790,758 
Boeing    103,144    5,146,885 
Boise Cascade    10,814 a    319,229 
Burlington Northern Santa Fe    45,717    1,911,427 
CSX    26,350    961,775 

The Fund 15

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares        Value ($) 
Producer Goods (continued)             
Caterpillar    42,050        3,386,707 
Centex    15,228    b    790,942 
Cooper Industries, Cl. A    11,600        741,240 
Crane    7,200        200,664 
Cummins    5,447        381,726 
Deere & Co.    30,500        1,823,290 
Dover    25,000        981,750 
Dow Chemical    115,413        5,186,660 
E. I. du Pont de Nemours    122,594        5,255,605 
Eastman Chemical    9,526        452,199 
Ecolab    31,650        1,071,353 
Emerson Electric    51,600        3,304,980 
Engelhard    15,300        432,990 
FedEx    36,892        3,361,599 
Fluor    10,239    b    475,499 
Freeport-McMoRan Copper & Gold, Cl. B    21,700        785,974 
General Dynamics    24,550        2,507,046 
Georgia-Pacific    31,687        1,096,053 
Goodrich    14,600        450,118 
Goodyear Tire & Rubber    21,500    a,b    216,720 
Great Lakes Chemical    6,203        158,921 
Hercules    13,750    a    196,350 
Honeywell International    105,600        3,556,608 
ITT Industries    11,350        920,939 
Illinois Tool Works    37,150        3,428,202 
Ingersoll-Rand, Cl. A    21,250        1,454,350 
International Paper    59,738        2,300,510 
KB HOME    5,650        464,713 
Leggett & Platt    23,500        661,055 
Lockheed Martin    54,650        3,010,669 
Louisiana-Pacific    13,400        328,434 
Masco    53,218        1,823,249 
MeadWestvaco    24,746        780,241 
Molex    23,325        689,720 
Monsanto    32,788        1,401,687 
Newmont Mining    54,424        2,586,228 

16

Common Stocks (continued)    Shares        Value ($) 
Producer Goods (continued)             
Norfolk Southern    48,400        1,643,180 
Nucor    19,500        823,485 
PPG Industries    21,121        1,346,464 
Pall    15,353        397,029 
Parker-Hannifin    14,690        1,037,555 
Phelps Dodge    11,575        1,013,276 
Praxair    39,900        1,683,780 
Pulte Homes    15,596        855,908 
Raytheon    55,400        2,020,992 
Rockwell Automation    22,600        942,194 
Rockwell Collins    21,700        769,699 
Rohm & Haas    27,555    b    1,168,056 
Sealed Air    10,281    a    509,321 
Sherwin-Williams    17,500        747,600 
Sigma-Aldrich    8,500    b    472,940 
Snap-On    7,150        210,067 
Stanley Works    10,077        448,628 
3M    96,100        7,454,477 
Temple-Inland    6,850        404,972 
Textron    17,050        1,161,958 
Tyco International    246,782        7,687,259 
Union Pacific    31,850        2,005,595 
United Parcel Service, Cl. B    138,150        10,938,717 
United States Steel    13,950        512,244 
United Technologies    62,878        5,836,336 
Vulcan Materials    12,550    b    624,739 
W.W. Grainger    11,200        656,208 
Weyerhaeuser    29,400        1,841,616 
Worthington Industries    10,750        213,388 
            130,038,728 
Services—6.2%             
ALLTEL    37850        2,079,101 
Affiliated Computer Services, Cl. A    15,700    a    856,435 
Allied Waste Industries    39,100    a    319,056 
Apollo Group, Cl. A    23,700    a    1,564,200 
Automatic Data Processing    71,750        3,113,232 

The Fund 17

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Services (continued)         
Carnival    77,800    3,933,568 
Cendant    129,686    2,670,234 
Cintas    21,000    905,940 
Clear Channel Communications    72,450    2,419,830 
Comcast, Cl. A    274,496 a    8,097,632 
Computer Sciences    23,150 a    1,149,860 
Convergys    17,550 a    228,326 
Deluxe    6,100    232,349 
Dow Jones & Co.    10,050    444,712 
Electronic Data Systems    62,950    1,338,946 
Equifax    16,750    438,012 
First Data    105,272    4,345,628 
Fiserv    23,950 a    851,183 
Gannett    32,650 b    2,708,318 
IMS Health    28,700    607,866 
Interpublic Group of Companies    51,900 a    636,294 
Knight-Ridder    9,550    654,462 
McGraw-Hill Cos.    23,300    2,009,625 
Meredith    6,160    301,840 
Monster Worldwide    14,550 a,b    408,128 
Moody's    18,200    1,416,142 
NEXTEL Communications, Cl. A    136,750 a    3,622,508 
New York Times, Cl. A    17,986    720,339 
Omnicom Group    22,950    1,810,755 
Paychex    46,475    1,524,101 
R. R. Donnelley & Sons    26,900    846,005 
Robert Half International    21,150 b    561,110 
Ryder System    7,950    398,295 
SunGard Data Systems    35,450 a    939,071 
Time Warner    561,600 a    9,345,024 
Tribune    39,141 b    1,690,891 
Unisys    41,100 a,b    436,482 
Univision Communications, Cl. A    39,650 a    1,227,564 
Viacom, Cl. B    213,100    7,776,019 
Walt Disney    252,400    6,365,528 
Waste Management    71,242    2,028,972 
        83,023,583 

18

Common Stocks (continued)    Shares    Value ($) 
Technology—15.7%         
ADC Telecommunications    99,350 a    219,563 
Adobe Systems    29,500    1,652,885 
Advanced Micro Devices    43,600 a    733,352 
Agilent Technologies    59,608 a    1,493,776 
Altera    45,700 a    1,038,761 
Analog Devices    46,500    1,872,090 
Andrew    19,800 a    276,804 
Apple Computer    47,600 a    2,500,428 
Applied Materials    208,550 a,b    3,357,655 
Applied Micro Circuits    38,500 a    140,140 
Autodesk    13,900    733,225 
Avaya    55,568 a,b    800,179 
BMC Software    27,450 a,b    519,354 
Broadcom, Cl. A    39,550 a    1,069,827 
CIENA    69,900 a    172,653 
Cisco Systems    830,550 a    15,954,865 
Citrix Systems    20,750 a    500,697 
Computer Associates International    71,900    1,992,349 
Compuware    47,450 a    274,735 
Comverse Technology    24,050 a    496,392 
Corning    171,200 a    1,960,240 
Danaher    37,900 b    2,089,427 
Dell    306,700 a    10,752,902 
EMC    295,400 a    3,801,798 
eBay    81,150 a    7,921,052 
Electronic Arts    37,300 a,b    1,675,516 
Gateway    45,800 a    267,930 
Hewlett-Packard    370,965    6,922,207 
Intel    787,900    17,538,654 
International Business Machines    205,800    18,470,550 
Intuit    23,550 a    1,068,228 
JDS Uniphase    176,900 a    560,773 
Jabil Circuit    24,700 a    600,457 
KLA-Tencor    24,100 a    1,097,273 
LSI Logic    47,232 a    214,906 
Laboratory Corporation of America Holdings    17,100 a    783,180 
Lexmark International    15,900 a    1,321,449 

The Fund 19

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Technology (continued)         
Linear Technology    37,800    1,431,864 
Lucent Technologies    529,371 a    1,879,267 
Maxim Integrated Products    39,850    1,753,002 
Mercury Interactive    11,450 a    497,274 
Micron Technology    75,150 a    915,327 
Microsoft    1,335,450    37,379,246 
Motorola    290,206    5,008,956 
NCR    11,550 a    650,843 
NVIDIA    20,500 a    296,635 
National Semiconductor    44,000    734,800 
Network Appliance    43,950 a    1,075,457 
Northrop Grumman    44,012    2,277,621 
Novell    47,500 a    341,525 
Novellus Systems    17,550 a    454,721 
Oracle    635,150 a    8,040,999 
PMC-Sierra    21,750 a,b    223,155 
Parametric Technology    33,050 a    171,530 
PeopleSoft    45,100 a    936,727 
PerkinElmer    15,782    324,162 
Pitney Bowes    28,356    1,240,575 
Power-One    10,300 a    72,306 
QLogic    11,300 a,b    367,250 
QUALCOMM    199,900    8,357,819 
Sabre Holdings    16,826    361,927 
Sanmina-SCI    64,050 a,b    512,400 
Scientific-Atlanta    18,800    514,932 
Siebel Systems    62,100 a    589,950 
Solectron    118,150 a    616,743 
Sun Microsystems    408,500 a    1,850,505 
Symantec    38,700 a    2,203,578 
Symbol Technologies    29,400    431,886 
Tektronix    11,268    341,758 
Tellabs    51,150 a    409,200 

20
Common Stocks (continued)    Shares    Value ($) 
Technology (continued)         
Teradyne    23,850 a    394,956 
Texas Instruments    212,600    5,198,070 
VERITAS Software    53,130 a    1,162,484 
Xerox    103,098 a    1,522,757 
Xilinx    42,600    1,303,560 
Yahoo!    167,100 a    6,047,349 
        210,739,388 
Utilities—5.4%         
AES    79,400 a    865,460 
AT&T    97,649    1,670,774 
Allegheny Energy    16,800 a,b    307,608 
Ameren    23,850    1,144,800 
American Electric Power    48,590    1,600,069 
BellSouth    224,900    5,998,083 
CMS Energy    23,350 a    218,556 
Calpine    65,400 a,b    162,846 
CenterPoint Energy    37,744    396,689 
CenturyTel    16,600    532,694 
Cinergy    22,150    875,368 
Citizens Communications    40,700    545,380 
Consolidated Edison    29,700 b    1,290,465 
Constellation Energy Group    21,550    875,361 
DTE Energy    21,300    909,723 
Dominion Resources    40,534    2,607,147 
Duke Energy    115,222    2,826,396 
Edison International    40,000    1,220,000 
Entergy    27,850    1,820,276 
Exelon    81,074    3,212,152 
FPL Group    22,800    1,570,920 
FirstEnergy    40,531    1,675,146 
PG&E    49,200 a    1,576,368 
PPL    23,250    1,209,000 
Pinnacle West Capital    11,200    477,344 

The Fund 21

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Utilities (continued)         
Progress Energy    30,324    1,252,381 
Public Service Enterprise Group    29,150    1,241,499 
Qwest Communications International    222,974 a,b    762,571 
SBC Communications    407,028    10,281,527 
Southern    90,650    2,863,634 
Sprint (FON Group)    178,400    3,737,480 
TECO Energy    24,400 b    341,600 
TXU    36,470    2,232,693 
Verizon Communications    340,092    13,297,597 
Xcel Energy    49,080    839,268 
        72,438,875 
Total Common Stocks         
(cost $1,023,170,871)        1,293,273,994 

    Principal     
Short-Term Investments—3.4%    Amount ($)    Value ($) 
Repurchase Agreement—3.2%         
Goldman Sachs & Co., Tri-Party Repurchase         
Agreement, 1.75%, dated 10/29/2004,         
due 11/1/2004 in the amount of $42,406,183     
(fully collateralized by $ 43,269,000 of         
various U.S. Government Agency Obligations,     
value $43,248,856)    42,400,000    42,400,000 
U.S. Treasury Bills—.2%         
1.40%, 11/12/2004    600,000 c    599,700 
1.53%, 11/26/2004    500,000 c    499,414 
1.65%, 12/30/2004    2,000,000 c    1,994,060 
        3,093,174 
Total Short-Term Investments         
(cost $45,493,819)        45,493,174 

22

Investment of Cash Collateral         
for Securities Loaned—2.9%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Fund         
(cost $38,010,968)    38,010,968 d    38,010,968 
Total Investments (cost $1,106,675,658)    102.9%    1,376,778,136 
Liabilities, Less Cash and Receivables    (2.9%)    (38,455,078) 
Net Assets    100.0%    1,338,323,058 

a Non-income producing. 
b All or a portion of these securities are on loan.At October 31, 2004, the total market value of the fund's securities 
on loan is $36,614,878 and the total market value of the collateral held by the fund is $38,010,968. 
c Partially held by a broker in a segregated account as collateral for open financial futures positions. 
d Investment in affiliated money market mutual fund. 

Portfolio Summary    (Unaudited) †         
 
    Value (%)        Value (%) 
Interest Sensitive    23.3    Short-Term/     
Technology    15.7    Money Market Investments    6.3 
Health Care    12.1    Services    6.2 
Producer Goods    9.7    Utilities    5.4 
Consumer Cyclical    9.5    Futures Contracts    .0 
Consumer Staples    7.4         
Energy    7.3        102.9 

† Based on net assets.
See notes to financial statements.

The Fund 23

STATEMENT OF FINANCIAL FUTURES
October 31, 2004
        Market Value        Unrealized 
        Covered by        Appreciation 
    Contracts    Contracts ($)    Expiration    at 10/31/2004 ($) 
 
Financial Futures Long                 
Standard & Poor's 500    165    46,624,875    December 2004    283,675 

See notes to financial statements.

24

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—See Statement         
of Investments (including securities on loan     
valued at $36,614,878)—Note 1(b):         
Unaffiliated issuers    1,068,664,690    1,338,767,168 
Affiliated issuers    38,010,968    38,010,968 
Cash        192,638 
Dividends and interest receivable        1,673,216 
Receivable for investment securities sold        228,787 
Receivable for futures variation margin—Note 4    111,672 
        1,378,984,449 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(a)    222,708 
Liability for securities on loan—Note 1(b)        38,010,968 
Payable for shares of Capital Stock redeemed    1,644,877 
Payable for investment securities purchased    782,838 
        40,661,391 
Net Assets ($)        1,338,323,058 
Composition of Net Assets ($):         
Paid-in capital        1,286,301,175 
Accumulated undistributed investment income—net    7,488,878 
Accumulated net realized gain (loss) on investments    (225,853,148) 
Accumulated net unrealized appreciation (depreciation)     
on investments (including $283,675 net unrealized     
appreciation on financial futures)        270,386,153 
Net Assets ($)        1,338,323,058 
Shares Outstanding         
(150 million shares of $.001 par value Capital Stock authorized)    56,566,390 
Net Asset Value, offering and redemption price per share ($)    23.66 

See notes to financial statements.

The Fund 25

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Cash dividends    22,658,372 
Interest    218,863 
Income from securities lending    26,293 
Total Income    22,903,528 
Expenses:     
Management fee—Note 3(a)    2,667,947 
Loan commitment fees—Note 2    10,688 
Interest expense—Note 2    5,938 
Total Expenses    2,684,573 
Investment Income—Net    20,218,955 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    (48,574,124) 
Net realized gain (loss) on financial futures    1,816,605 
Net Realized Gain (Loss)    (46,757,519) 
Net unrealized appreciation (depreciation) on investments (including 
$277,225 net unrealized appreciation on financial futures)    142,636,199 
Net Realized and Unrealized Gain (Loss) on Investments    95,878,680 
Net Increase in Net Assets Resulting from Operations    116,097,635 

See notes to financial statements.

26

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    20,218,955    19,630,422 
Net realized gain (loss) on investments    (46,757,519)    (50,216,155) 
Net unrealized appreciation         
(depreciation) on investments    142,636,199    268,052,604 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    116,097,635    237,466,871 
Dividends to Shareholders from ($):         
Investment income—net    (19,461,638)    (17,717,410) 
Capital Stock Transactions ($):         
Net proceeds from shares sold    302,924,387    372,738,581 
Dividends reinvested    17,625,867    16,072,034 
Cost of shares redeemed    (410,410,373)    (391,152,994) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (89,860,119)    (2,342,379) 
Total Increase (Decrease) in Net Assets    6,775,878    217,407,082 
Net Assets ($):         
Beginning of Period    1,331,547,180    1,114,140,098 
End of Period    1,338,323,058    1,331,547,180 
Undistributed investment income—net    7,488,878    6,854,563 
Capital Share Transactions (Shares):         
Shares sold    13,000,240    19,235,475 
Shares issued for dividends reinvested    784,433    831,457 
Shares redeemed    (17,775,102)    (19,695,068) 
Net Increase (Decrease) in Shares Outstanding    (3,990,429)    371,864 

See notes to financial statements.

The Fund 27

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,     
    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    21.99    18.51    22.16    29.94    28.76 
Investment Operations:                     
Investment income—net a    .35    .31    .29    .28    .31 
Net realized and unrealized                     
gain (loss) on investments    1.65    3.45    (3.64)    (7.72)    1.38 
Total from Investment Operations    2.00    3.76    (3.35)    (7.44)    1.69 
Distributions:                     
Dividends from investment income—net (.33)    (.28)    (.30)    (.30)    (.28) 
Dividends from net realized                     
gain on investments    —    —    —    (.04)    (.23) 
Total Distributions    (.33)    (.28)    (.30)    (.34)    (.51) 
Net asset value, end of period    23.66    21.99    18.51    22.16    29.94 
Total Return (%)    9.19    20.56    (15.32)    (25.08)    5.92 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .20    .20    .20    .20    .20 
Ratio of net investment income                     
to average net assets    1.51    1.59    1.35    1.10    1.04 
Portfolio Turnover Rate    4.21    8.01    4.72    6.34    4.16 
Net Assets, end of period                     
($ x 1,000)    1,338,323 1,331,547    1,114,140    1,292,792    1,989,765 

a Based on average shares outstanding at each month end.
See notes to financial statements.

28

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 sixteen 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" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial"). Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares, which are sold to the public without a sales charge.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sale price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is avail-able.When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events

The Fund 29

NOTES TO FINANCIAL STATEMENTS (continued)

after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADR's and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. Financial futures are valued at the last sales price.

(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, accretion of discount and amortization of premium on investments is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

30

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.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

The Fund 31

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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $7,439,100, accumulated capital losses $197,191,966 and unrealized appreciation $241,774,749

The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $44,810,490 of the carryover expires in fiscal 2009, $62,001,872 expires in fiscal 2010, $45,030,585 expires in fiscal 2011 and $45,349,019 expires in fiscal 2012.

The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, were as follows: ordinary income $19,461,638 and $17,717,410, respectively.

During the period ended October 31, 2004, as a result of permanent book to tax differences primarily due to the tax treatment for real estate investment trusts, the fund decreased accumulated undistributed investment income-net by $123,002, increased accumulated net realized gain (loss) on investments by $152,931 and decreased paid-in capital by $29,929. Net assets were not affected by this reclassification.

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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 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, 2004 was approximately $407,000, with a related weighted average annualized interest rate of 1.46% .

32

NOTE 3—Investment Management Fee And Other Transactions with Affiliates:

(a) 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 Company, 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.

The Fund 33

NOTES TO FINANCIAL STATEMENTS (continued)

The component of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $222,708.

NOTE 4—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, 2004, amounted to $55,662,905 and $173,191,848, respectively.

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 broker, which consist of cash or cash equivalents.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 31,2004,are set forth in the Statement of Financial Futures.

At October 31, 2004, the cost of investments for federal income tax purposes was $1,135,003,387; accordingly, accumulated net unrealized appreciation on investments was $241,774,749, consisting of $394,503,229 gross unrealized appreciation and $152,728,480 gross unrealized depreciation.

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations

34

of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors, and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

The Fund 35

  REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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, 2004, and the related statement of operations for the year then ended, the statement 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 standards of the Public Company Accounting Oversight Board (United States). 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, 2004, by correspondence with the custodian and broker. As to securities purchased and sold but not yet received or delivered, we performed other appropriate audit 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, 2004, 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 U.S. generally accepted accounting principles.

New York, New York
December 13, 2004

36

IMPORTANT TAX INFORMATION (Unaudited)

In accordance with federal tax law, the fund hereby designates 100% of the ordinary dividends paid during the fiscal year ended October 31, 2004 as qualifying for the corporate dividends received deduction. For the fiscal year ended October 31,2004,certain dividends paid by the fund may be subject to a maximum tax rate of 15%,as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $12,639,964 represents the maximum amount that may be considered qualified dividend income. Shareholders will receive notification in January 2005 of the percentage applicable to the preparation of their 2004 income tax returns.

The Fund 37

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

38

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

The Fund 39

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

40

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The the Manager Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

The Fund 41

For More    Information 
 
Dreyfus BASIC    Transfer Agent & 
S&P 500 Stock Index Fund    Dividend Disbursing Agent 
200 Park Avenue     
    Dreyfus Transfer, Inc. 
New York, NY 10166     
    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue     
    Dreyfus Service Corporation 
New York, NY 10166     
    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0713AR1004

Dreyfus Disciplined 
Stock Fund 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
7    Understanding Your Fund's Expenses 
7    Comparing Your Fund's Expenses 
With Those of Other Funds
8    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 
24    Report of Independent Registered 
    Public Accounting Firm 
25    Important Tax Information 
26    Board Members Information 
28    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus
Disciplined Stock Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Disciplined Stock Fund, covering the 12-month period from November 1, 2003, through October 31, 2004. 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, Sean P. Fitzgibbon.

The Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, the rate of corporate earnings growth appears to have slowed dramatically and high energy prices threaten to erode the rate of economic growth.Though these factors may suggest the U.S. economy is moving toward a new phase of the business cycle, we believe the current economic cycle still favors higher-quality stocks, which currently offer favorable relative and absolute valuations.

Of course, the specific investments that may be right for you in today's economic and market environment depend on your current needs, future goals, tolerance for risk and the composition of your overall portfolio.As always, your financial advisor may be in the best position to recommend the specific asset classes and investments that will satisfy your financial needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Sean P. Fitzgibbon, Portfolio Manager

How did Dreyfus Disciplined Stock Fund perform relative to its benchmark?

For the 12-month period ended October 31, 2004, the fund produced a total return of 5.54% .1 For the same period, the fund's benchmark, the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), produced a total return of 9.41% .2

Continuing U.S. and global economic growth proved particularly beneficial to areas related to industrial activity, such as energy, industrial machinery and raw materials. Despite geopolitical uncertainties related to the war in Iraq and difficult business conditions for some industry groups, these conditions produced a generally favorable environment for stocks. While the fund generally shared in the market's advance, weak business fundamentals hurt several of the fund's holdings in the technology and services sectors. As a result, the fund's return over the reporting period lagged that of the benchmark.

Effective October 20, 2004, I became the fund's primary portfolio manager. I've been employed by Dreyfus since October 2004. I am also a senior vice president, portfolio manager, analyst and member of the U.S. Large Cap Core Equity Team of The Boston Company Asset Management, LLC, an affiliate of Dreyfus, which I joined in 1991.

What is the fund's investment approach?

The fund seeks capital appreciation. Effective October 1, 2004, the fund changed its investment objective to its current objective.To pursue its goal, the fund normally invests at least 80% of its assets in stocks of large-cap companies.

The fund invests in a diversified portfolio of large-cap companies that we believe meet our strict standards for value and growth.We identify potential investments through a quantitative analytic process that sifts through a universe of approximately 1,000 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 momen-

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

tum.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 to purchase and whether any current holdings should be sold.

In addition to identifying what we believe are attractive investment opportunities, our approach has been designed to manage the risks associated with modifying the fund's sector and industry exposure often in an effort to capitalize on those sectors and industries currently in favor.We do not believe that the advantages of attempting to rotate in and out of various industry sectors outweigh the risks of such moves. Instead, our goal is to minimize 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 reporting period, the fund held positions in approximately 98 stocks across 9 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?

Fueled by robust industrial demand and sharply rising oil and gas prices, the energy sector generated stronger performance than any other large-cap stock market sector during the reporting period.The fund's returns in the energy sector were bolstered by its stock selection strategy and slightly greater-than-average exposure to the area. Top performers included independent exploration and production companies Occidental Petroleum, Devon Energy and Apache, and integrated oil and gas producer ConocoPhillips.

The fund's performance also benefited from strong stock selections in the health care and utilities sectors. In the health care area, the fund successfully avoided the brunt of weakness among troubled pharmaceutical companies, focusing instead on service providers such as Aetna and UnitedHealth Group. Similarly, among utilities, the fund de-emphasized telecommunications utilities, which faced difficult business conditions, focusing instead on dividend-paying electric utilities, such as Exelon, PPL and Entergy. Strong performers in other areas included conglomerates Tyco International and Pentair, which benefited from

4

global industrial growth, and regional bank SouthTrust, which rose in response to a buy-out offer from Wachovia.

The fund's lagging performance relative to its benchmark is primarily the result of disappointments in the technology sector. Unexpectedly weak demand undermined earnings of semiconductor-related holdings, such as Intel, Texas Instruments, KLA-Tencor, and Agilent Technologies, while accounting difficulties caused declines in communications equipment company Nortel Networks and software developer Veritas.The fund's relative performance also suffered in the services sector, where media holdings such as Viacom and News Corporation were hurt by weaker-than-expected advertising revenues. Holdings that depend heavily on employment growth, such as Paychex and Manpower, declined in response to a lackluster labor market. Finally, a few other holdings, including Comcast, St. Paul Travelers Companies, Union Pacific and Coca-Cola, experienced company-specific difficulties that undermined their stock prices.

What is the fund's current strategy?

I assumed responsibility for the fund's management on October 20,2004, and I have maintained the fund's longstanding investment strategy and profile. Accordingly, the fund's assets remain diversified across market sectors in proportions that approximate those of the benchmark. However, because of favorable industry fundamentals we have placed slightly greater emphasis than the benchmark on energy stocks.Within other sectors, we have attempted to identify specific businesses and industries that we believe are likely to thrive in the current economic environment, such as industrial machinery producers and financial companies in businesses that tend to be less sensitive to changing interest rates.

November 15, 2004

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. Return figures provided reflect the 
    absorption of fund expenses by The Dreyfus Corporation in effect from February 1, 2004, 
    through April 4, 2005, at which time it may be extended, terminated or modified. Had these 
    expenses not been absorbed, the fund's returns would have been lower. 
2    SOURCE: LIPPER INC. — Reflects the monthly 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 5

FUND PERFORMANCE

Average Annual Total Returns as of 10/31/04         
    1 Year    5 Years    10 Years 
Fund    5.54%    (4.14)%    9.36% 

† Source: Lipper Inc.

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 0.10% Rule 12b-1 fee) from December 16, 1997, through October 31, 2004.

The above graph compares a $10,000 investment made in Dreyfus Disciplined Stock Fund on 10/31/94 to a $10,000 investment made in the Standard & Poor's 500 Composite Stock Price Index (the "Index") on that date. All dividends and capital gain distributions are reinvested.

Effective October 1, 2004, the fund changed its investment objective to seek capital appreciation. Historical performance of the fund for periods before such date reflects the prior objective.

The fund's performance shown in the line graph takes into account all applicable fees and expenses.The 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.

6

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Disciplined Stock Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment 
assuming actual returns for the six months ended October 31, 2004 
 
Expenses paid per $1,000 †    $ 4.57 
Ending value (after expenses)    $1,018.00 

COMPARING YOUR FUND'S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended October 31, 2004
Expenses paid per $1,000 †    $ 4.57 
Ending value (after expenses)    $1,020.61 

† Expenses are equal to the fund's annualized expense ratio of .90%; multiplied by the average account value over the
period, multiplied by 184/366 (to reflect the one-half year period).

The Fund 7

  STATEMENT OF INVESTMENTS
October 31, 2004
Common Stocks—100.0%    Shares    Value ($) 
Consumer Cyclical—6.6%         
Coach    323,550 a    15,087,137 
McDonald's    409,110    11,925,557 
PACCAR    132,730    9,199,516 
Target    263,050    13,157,761 
Wal-Mart Stores    395,190    21,308,645 
Walgreen    311,800    11,190,502 
        81,869,118 
Consumer Staples—5.5%         
Archer-Daniels-Midland    597,060    11,565,052 
Brown-Forman, Cl. B    138,200    6,205,180 
Estee Lauder, Cl. A    195,700    8,405,315 
Kellogg    257,700    11,081,100 
Kimberly-Clark    171,220    10,216,697 
Procter & Gamble    420,770    21,535,009 
        69,008,353 
Energy Related—8.7%         
Anadarko Petroleum    105,820    7,137,559 
Chesapeake Energy    376,570    6,055,245 
ChevronTexaco    228,610    12,130,047 
ConocoPhillips    221,500    18,674,665 
Devon Energy    173,206    12,812,048 
Exxon Mobil    749,080    36,869,718 
Newfield Exploration    98,950 a    5,758,890 
Weatherford International    177,340 a    9,267,788 
        108,705,960 
Health Care—11.8%         
Aetna    84,830    8,058,850 
Amgen    191,420 a    10,872,656 
Boston Scientific    243,070 a    8,580,371 
Genzyme    80,430 a    4,220,162 
Hospira    200,460 a    6,396,679 
IVAX    366,480 a    6,633,288 
Johnson & Johnson    290,630    16,966,979 
Laboratory Corporation of America Holdings    159,000 a    7,282,200 
Medtronic    122,090    6,240,020 
Pfizer    1,100,594    31,862,196 
WellPoint Health Networks    134,990 a    13,183,123 

8

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
Wyeth    340,340    13,494,481 
Zimmer Holdings    167,890 a    13,026,585 
        146,817,590 
Interest Sensitive—23.1%         
Ambac Financial Group    44,600    3,481,476 
American Express    213,990    11,356,449 
American International Group    386,440    23,460,772 
Bank of America    768,550    34,423,355 
Capital One Financial    204,970    15,118,587 
Chubb    183,120    13,208,446 
Citigroup    908,090    40,291,953 
Franklin Resources    372,520    22,582,162 
General Electric    1,020,990    34,836,179 
Goldman Sachs Group    257,260    25,309,239 
J.P. Morgan Chase & Co.    413,680    15,968,048 
Legg Mason    141,020    8,984,384 
Merrill Lynch    107,180    5,781,289 
Morgan Stanley    125,050    6,388,805 
Radian Group    196,790    9,432,145 
Wachovia    338,630    16,663,982 
        287,287,271 
Producer Goods—9.9%         
Air Products & Chemicals    146,690    7,800,974 
Alcoa    416,450    13,534,625 
Boeing    186,900    9,326,310 
Burlington Northern Santa Fe    149,700    6,258,957 
Deere & Co.    123,840    7,403,155 
Dow Chemical    142,130    6,387,322 
E. I. du Pont de Nemours    189,540    8,125,580 
Eaton    147,640    9,441,578 
FedEx    73,040    6,655,405 
Ingersoll-Rand, Cl. A    123,840    8,475,610 
Norfolk Southern    196,280    6,663,706 
3M    111,690    8,663,793 
Tyco International    404,380    12,596,437 
United Technologies    133,080    12,352,486 
        123,685,938 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Services—13.1%         
Boston Properties    94,790    5,660,859 
Carnival    270,800    13,691,648 
Charles River Laboratories International    135,040 a    6,318,521 
Comcast, Cl. A    505,310 a    14,906,645 
Costco Wholesale    330,100    15,824,994 
Manpower    210,600    9,529,650 
Marriott International, Cl. A    269,720    14,697,043 
PETCO Animal Supplies    171,000 a    6,116,670 
Staples    469,000    13,948,060 
Time Warner    742,500 a    12,355,200 
Verizon Communications    495,770    19,384,607 
Viacom, Cl. B    309,610    11,297,669 
Walt Disney    780,430    19,682,445 
        163,414,011 
Technology—17.8%         
Alliance Data Systems    138,000 a    5,834,640 
Altera    354,630 a    8,060,740 
Analog Devices    227,370    9,153,916 
Autodesk    130,180    6,866,995 
Cisco Systems    1,749,120 a    33,600,595 
Cognizant Technology Solutions    378,330 a    12,863,220 
Corning    1,100,880 a    12,605,076 
Dell    169,720 a    5,950,383 
eBay    80,110 a    7,819,537 
Fisher Scientific International    169,960 a    9,748,906 
Intel    756,510    16,839,913 
International Business Machines    143,600    12,888,100 
Microsoft    1,403,790    39,292,082 
QUALCOMM    338,780    14,164,392 
Symantec    212,500 a    12,099,750 
Textron    102,310    6,972,426 
Waters    162,880 a    6,725,315 
        221,485,986 
Utilities—3.5%         
Constellation Energy Group    163,090    6,624,716 
Exelon    266,070    10,541,693 
PG&E    433,670 a    13,894,787 

10

Common Stocks (continued)    Shares    Value ($) 
Utilities (continued)         
SBC Communications    246,000    6,213,960 
Sempra Energy    182,920    6,135,137 
        43,410,293 
Total Common Stocks         
(cost $1,022,274,047)        1,245,684,520 
    Principal     
Short-Term Investments—.5%    Amount ($)    Value ($) 
U.S Treasury Bills:         
1.52%, 11/18/2004    5,657,000    5,652,644 
1.66%, 11/26/2004    902,000    900,942 
Total Short-Term Investments         
(cost $6,553,900)        6,553,586 
 
Investment of Cash Collateral         
for Securities Loaned—.1%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Fund         
(cost $1,224,986)    1,224,986 b    1,224,986 
Total Investments (cost $1,030,052,933)    100.6%    1,253,463,092 
Liabilities, Less Cash and Receivables    (.6%)    (8,119,447) 
Net Assets    100.0%    1,245,343,645 

a Non-income producing. 
b Investment in affiliated money market mutual fund. 
The News Corp. holding is out on loan until the sale settles.At October 31, 2004, the total market value of the 
fund's security on loan is $1,162,296 and the total market value of the collateral held by the fund is $1,224,986. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Interest Sensitive    23.1    Energy Related    8.7 
Technology    17.8    Consumer Cyclical    6.6 
Services    13.1    Other    9.6 
Health Care    11.8         
Producer Goods    9.9        100.6 

† Based on net assets.
See notes to financial statements.

The Fund 11

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including securities     
on loan, valued at $1,162,296)—Note 1(b):     
Unaffiliated issuers    1,028,827,947    1,252,238,106 
Affiliated issuers    1,224,986    1,224,986 
Receivable for investment securities sold    15,280,852 
Dividends and interest receivable        1,184,525 
Receivable for shares of Capital Stock subscribed    49,389 
        1,269,977,858 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    946,992 
Cash overdraft due to Custodian        11,365,959 
Payable for investment securities purchased    9,434,290 
Liability for securities on loan—Note 1(b)    1,224,986 
Payable for shares of Capital Stock redeemed    1,661,986 
        24,634,213 
Net Assets ($)        1,245,343,645 
Composition of Net Assets ($):         
Paid-in capital        1,224,548,265 
Accumulated undistributed investment income—net    2,685,167 
Accumulated net realized gain (loss) on investments    (205,299,946) 
Accumulated net unrealized appreciation     
(depreciation) on investments        223,410,159 
Net Assets ($)        1,245,343,645 
Shares Outstanding         
(165 million shares of $.001 par value Capital Stock authorized)    41,487,323 
Net Asset Value, offering and redemption price per share ($)    30.02 

See notes to financial statements.

12
STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Cash dividends (net of $40,698 foreign taxes witheld at source)    21,420,409 
Interest    88,342 
Income from securities lending    36,658 
Total Income    21,545,409 
Expenses:     
Management fee—Note 3(a)    12,230,304 
Distribution fees—Note 3(b)    1,358,923 
Loan commitment fees—Note 2    10,982 
Interest expense—Note 2    8,740 
Total Expenses    13,608,949 
Less—reduction in management fee due to     
undertaking—Note 3(a)    (990,649) 
Net Expenses    12,618,300 
Investment Income—Net    8,927,109 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    182,011,874 
Net unrealized appreciation (depreciation) on investments    (113,290,391) 
Net Realized and Unrealized Gain (Loss) on Investments    68,721,483 
Net Increase in Net Assets Resulting from Operations    77,648,592 

See notes to financial statements.

The Fund 13

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    8,927,109    9,453,795 
Net realized gain (loss) on investments    182,011,874    (5,509,786) 
Net unrealized appreciation         
(depreciation) on investments    (113,290,391)    193,705,562 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    77,648,592    197,649,571 
Dividends to Shareholders from ($):         
Investment income—net    (8,969,807)    (9,724,617) 
Capital Stock Transactions ($):         
Net proceeds from shares sold    56,770,640    155,147,645 
Dividends reinvested    8,320,272    8,937,741 
Cost of shares redeemed    (352,706,942)    (448,170,741) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (287,616,030)    (284,085,355) 
Total Increase (Decrease) in Net Assets    (218,937,245)    (96,160,401) 
Net Assets ($):         
Beginning of Period    1,464,280,890    1,560,441,291 
End of Period    1,245,343,645    1,464,280,890 
Undistributed investment income—net    2,685,167    2,733,647 
Capital Share Transactions (Shares):         
Shares sold    1,901,342    6,158,463 
Shares issued for dividends reinvested    285,532    347,253 
Shares redeemed    (11,834,458)    (17,632,652) 
Net Increase (Decrease) in Shares Outstanding    (9,647,584)    (11,126,936) 

See notes to financial statements.

14

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,     
    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    28.64    25.06    29.57    42.34    40.96 
Investment Operations:                     
Investment income—net a    .19    .17    .12    .05    .01 
Net realized and unrealized                     
gain (loss) on investments    1.38    3.58    (4.53)    (10.87)    2.78 
Total from Investment Operations    1.57    3.75    (4.41)    (10.82)    2.79 
Distributions:                     
Dividends from investment                     
income—net    (.19)    (.17)    (.10)    (.03)    (.02) 
Dividends from net realized                     
gain on investments    —    —    —    (1.92)    (1.39) 
Total Distributions    (.19)    (.17)    (.10)    (1.95)    (1.41) 
Net asset value, end of period    30.02    28.64    25.06    29.57    42.34 
Total Return (%)    5.54    14.99    (14.96)    (26.63)    6.88 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.00    1.00    1.00    1.00    1.00 
Ratio of net expenses                     
to average net assets    .93    1.00    1.00    1.00    1.00 
Ratio of net investment income                     
to average net assets    .66    .66    .41    .16    .02 
Portfolio Turnover Rate    79.49    50.96    41.46    53.68    50.32 
Net Assets, end of period                     
($ x 1,000)    1,245,344    1,464,281    1,560,441    2,362,569    3,514,925 

a Based on average shares outstanding at each month end.
See notes to financial statements.

The Fund 15

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 sixteen series, including the fund. Prior to October 1, 2004, the fund's investment objective was to seek investment returns (consisting of capital appreciation and income) that were consistently superior to the Standard & Poor's 500 Composite Stock Price Index. On July 20, 2004, the Board of Directors approved changing the fund's investment objective. Effective October 1, 2004, the fund's investment objective is to seek capital appreciation.The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial"). Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares, which are sold to the public without a sales charge.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sale price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is avail-able.When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as

16

when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADR's and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers.

(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, accretion of discount and amortization of premium on investments is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

The Fund 17

NOTES TO FINANCIAL STATEMENTS (continued)

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.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

18

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $2,685,167, accumulated capital losses $203,197,565 and unrealized appreciation $221,307,778.

The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $33,399,694 of the carryover expires in fiscal 2009, $162,812,878 expires in fiscal 2010 and $6,984,993 expires in fiscal 2011.

The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, were as follows: ordinary income $8,969,807 and $9,724,617, respectively.

During the period ended October 31, 2004, as a result of permanent book to tax differences primarily due to the tax treatment for real estate investment trusts, the fund decreased accumulated undistributed investment income-net by $5,782 and increased accumulated net realized gain (loss) on investments by the same amount. Net assets were not affected by this reclassification.

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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 Fund 19

NOTES TO FINANCIAL STATEMENTS (continued)

The average daily amount of borrowings outstanding under the Facility during the period ended October 31, 2004 was approximately $586,300, with a related weighted average annualized interest rate of 1.49% .

NOTE 3—Investment Management Fee and Other Transactions With Affiliates:

(a) 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 Company, 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

20

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.

The Manager has agreed to waive receipt of a portion of the fund's management fee, in the amount of .10 of 1% of the value of the fund's average daily net assets from February 1, 2004 through April 4, 2005. The reduction in management fee, pursuant to the undertaking, amounted to $990,649 during the period ended October 31, 2004.

(b) 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 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, 2004, the fund was charged $1,358,923 pursuant to the Plan.

Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of a majority of those Directors who are not "interested persons" of the Company and who have no direct or indirect financial interest in the operation of or in any agreement related to the Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $946,992 and Rule 12b-1 distribution plan fees $104,835, which are offset against an expense reimbursement currently in effect in the amount of $104,835.

(c) Pursuant to an exemptive order from the Securities and Exchange Commission, the fund may invest its available cash balances in affiliated money market mutual funds. Management fees of the underlying money market mutual funds have been waived by the Manager.

The Fund 21

NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended October 31, 2004, amounted to $1,075,562,771 and $1,356,480,164, respectively.

At October 31, 2004, the cost of investments for federal income tax purposes was $1,032,155,314; accordingly, accumulated net unrealized appreciation on investments was $221,307,778, consisting of $225,962,037 gross unrealized appreciation and $4,654,259 gross unrealized depreciation.

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state

22

and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

The Fund 23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian.As to securities purchased and sold but not yet received or delivered, we performed other appropriate auditing procedures.An audit also includes assessing the accounting principles used and significant estimates made by manage-ment,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, 2004, 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 U.S. generally accepted accounting principles.

New York, New York
December 13, 2004

24

IMPORTANT TAX INFORMATION (Unaudited)

In accordance with federal tax law, the fund hereby designates 100% of the ordinary dividends paid during the fiscal year ended October 31, 2004 as qualifying for the corporate dividends received deduction. For the fiscal year ended October 31, 2004, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $8,969,807 represents the maximum amount that may be considered qualified dividend income. Shareholders will receive notification in January 2005 of the percentage applicable to the preparation of their 2004 income tax returns.

The Fund 25

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) Chairman of the Board (1999)

Principal Occupation During Past 5 Years:

• Corporate Director and Trustee

Other Board Memberships and Affiliations:

• The Muscular Dystrophy Association, Director

• Levcor International, Inc., an apparel fabric processor, Director

• Century Business Services, Inc., a provider of outsourcing functions for small and medium size companies, Director • The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills and paperboard converting plants, Director • Azimuth Trust, an institutional asset management firm, Member of Board of Managers and Advisory Board

No. of Portfolios for which Board Member Serves: 186

———————

James Fitzgibbons (70) Board Member (1994)

Principal Occupation During Past 5 Years:

• Chairman of the Board, Davidson Cotton Company (1998-2002)

No. of Portfolios for which Board Member Serves: 23

———————

J.Tomlinson Fort (76) Board Member (1987)

Principal Occupation During Past 5 Years:

• Retired; Of Counsel, Reed Smith LLP (1998-2004)

Other Board Memberships and Affiliations:

• Allegheny College, Emeritus Trustee • Pittsburgh Ballet Theatre,Trustee • American College of Trial Lawyers, Fellow

No. of Portfolios for which Board Member Serves: 23

———————

Kenneth A. Himmel (58) Board Member (1994)

Principal Occupation During Past 5 Years:

• President and CEO,Related Urban Development,a real estate development company (1996-present) • President and CEO, Himmel & Company, a real estate development company (1980-present) • CEO, American Food Management, a restaurant company (1983-present)

No. of Portfolios for which Board Member Serves: 23

26

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

The Fund 27

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

28

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

The Fund 29

For More    Information 
 
Dreyfus    Transfer Agent & 
Disciplined Stock Fund    Dividend Disbursing Agent 
200 Park Avenue    Dreyfus Transfer, Inc. 
New York, NY 10166    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue    Dreyfus Service Corporation 
New York, NY 10166    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0728AR1004

Dreyfus Institutional 
Government Money 
Market Fund 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Understanding Your Fund's Expenses 
6    Comparing Your Fund's Expenses 
With Those of Other Funds
7    Statement of Investments 
9    Statement of Assets and Liabilities 
10    Statement of Operations 
11    Statement of Changes in Net Assets 
12    Financial Highlights 
13    Notes to Financial Statements 
19    Report of Independent Registered 
    Public Accounting Firm 
20    Board Members Information 
22    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Institutional
Government Money Market Fund

The Fund

LETTER FROM THE CHAIRMAN

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, 2003, through October 31, 2004. 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.

Although the U.S. economy recently has shown signs of weakness, the Federal Reserve Board raised short-term interest rates three times since the beginning of the summer.This shift in monetary policy represents the first increases in short-term rates in more than four years, and many analysts believe that additional increases are likely to follow. As a result, money-market yields have begun to rise from the historically low levels of the past few years.

At times such as these, when market conditions are in a period of transition, we believe it is especially important for investors to stay in close touch with their financial advisors.Your financial advisor can help you rebalance your portfolio in a way that is designed to respond to the challenges and opportunities of today's changing investment environment.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

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, 2004, Dreyfus Institutional Government Money Market Fund produced a 0.88% yield and,after taking into account the effects of compounding,an effective yield of 0.88% .1

We attribute the fund's performance primarily to low interest rates in a gradually recovering economy. However, interest rates began to rise during the reporting period's second half, when in three separate moves the Federal Reserve Board (the "Fed") raised its target for the overnight federal funds rate from 1% to 1.75% .

What is the fund's investment approach?

The fund seeks a high level of current income consistent with stability of principal and conservative investment risk. To pursue its goal, the fund normally invests at least 80% of its assets in money market instruments issued or guaranteed by the U.S. government and its agencies and instrumentalities. The fund may also invest in repurchase agreements, including tri-party repurchase agreements.

What other factors influenced the fund's performance?

When the reporting period began, the economy already had begun to strengthen, even as labor markets remained sluggish and inflation appeared to stay low.As a result, the Fed left short-term interest rates unchanged at 1% during the final months of 2003, suggesting that it could be "patient" before raising short-term interest rates in the recovering economy.With no rate-hikes imminent, we extended the fund's weighted average maturity to a position we considered slightly

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

longer than average, enabling the fund to capture modestly higher yields from money market instruments toward the longer end of their maturity range.We generally maintained this position through the first quarter of 2004.

In April 2004,economic and market conditions began to change rapidly. Surprisingly strong labor statistics, surging oil and gas prices and renewed pricing power in certain industries indicated that inflationary pressures might be resurfacing, and investors revised forward their expectations of the timing of the Fed's move toward higher interest rates. Accordingly, we adopted a more defensive investment posture, reducing the fund's weighted average maturity toward a range that we considered in line with industry averages. This strategy was designed to give us greater flexibility to capture higher yields as they became available.

Our move toward a more neutral weighted average maturity proved to be a prudent one. In late June, the Fed implemented a rate increase of 25 basis points, its first increase of short-term interest rates in more than four years.Two additional rate hikes followed, and by the end of the reporting period the overnight federal funds rate stood at 1.75% . Yields of shorter-term money market instruments rose accordingly, and the fund was in a position to capture higher yields as they arose.

Because yields of U.S.Treasury bills remained relatively low compared to other types of short-term U.S. government securities during most of the reporting period, we generally allocated the largest portion of the fund's assets to higher-yielding U.S. government agency securities and government-issued floating-rate notes on which yields are reset daily or weekly.

4

What is the fund's current strategy?

As of the end of the reporting period, the U.S. economy appears to be strengthening.We have been encouraged by persistently robust home sales, improving labor statistics and signs of strength in consumer spending. In our judgment, the Fed is likely to again raise its target for the federal funds rate at one or both of its remaining meetings in 2004.

On October 31, 2004, approximately 50% of the fund's assets were allocated to U.S. government agency securities, 14% to U.S. government-issued floating-rate notes, 31% to repurchase agreements and 5% to U.S.Treasury bills. In anticipation of further interest rate hikes, we recently began to shorten the fund's weighted average maturity toward a position that is slightly shorter than industry averages.As a result, the fund's average maturity on October 31, 2004 was 35 days, down from 42 days when the reporting period began.As always, we intend to continue to monitor economic and market conditions, and we are prepared to adjust our strategies as circumstances change.

November 15, 2004

1 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 any other government agency.Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The Fund 5

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Institutional Government Money Market Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment 
assuming actual returns for the six months ended October 31, 2004 
 
Expenses paid per $1,000 †    $ 1.51 
Ending value (after expenses)    $1,005.10 

COMPARING YOUR FUND'S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

Expenses paid per $1,000 †    $ 1.53 
Ending value (after expenses)    $1,023.63 

† Expenses are equal to the fund's annualized expense ratio of .30%, multiplied by the average account value over the
period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS
October 31, 2004
    Annualized         
    Yield on         
    Date of    Principal     
U.S. Treasury Bills—4.8%    Purchase (%)    Amount ($)    Value ($) 
11/26/2004             
(cost $9,989,806)    1.47    10,000,000    9,989,806 
 
 
U.S. Government Agencies—64.5%             
Federal Home Loan Banks, Floating Rate Notes         
9/16/2005    1.83 a    20,000,000    19,993,378 
Federal Home Loan Mortgage Corp.,             
Discount Notes             
11/15/2004    1.07    10,000,000    9,995,857 
12/1/2004    1.66    7,500,000    7,489,656 
12/14/2004    1.89    10,000,000    9,977,425 
12/28/2004    1.75    7,500,000    7,479,338 
1/4/2005    1.97    10,000,000    9,965,156 
1/24/2005    1.97    10,000,000    9,954,267 
2/15/2005    2.09    10,000,000    9,938,785 
Federal National Mortgage Association,             
Discount Notes             
11/3/2004    1.54    10,000,000    9,999,150 
11/10/2004    1.77    10,000,000    9,995,575 
12/7/2004    1.85    10,000,000    9,981,600 
4/15/2005    2.12    10,000,000    9,903,750 
Federal National Mortgage Association,             
Floating Rate Notes             
9/6/2005    1.75 a    10,000,000    9,993,756 
Total U.S. Government Agencies             
(cost $134,667,693)            134,667,693 
 
 
Repurchase Agreements—30.8%             
Goldman Sachs & Co.             
dated 10/29/2004, due 11/1/2004 in the         
amount of $24,387,036 (fully collateralized by         
$23,128,000 U.S. Treasury Bonds 5.25%,         
due 11/15/2028, value $24,871,544)    1.75    24,383,480    24,383,480 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

    Annualized         
    Yield on         
    Date of    Principal     
Repurchase Agreements (continued)    Purchase (%)    Amount ($)    Value ($) 
Salomon Smith Barney Inc.             
dated 10/29/2004, due 11/1/2004             
in the amount of $40,006,233             
(fully collateralized by $41,016,000             
Federal Home Loan Mortgage Corp. Notes             
3.375%, due 4/15/2009, value $40,800,769)    1.87    40,000,000    40,000,000 
Total Repurchase Agreements             
(cost $64,383,480)            64,383,480 
 
Total Investments (cost $209,040,979)        100.1%    209,040,979 
 
Liabilities, Less Cash and Receivables        (.1%)    (232,041) 
 
Net Assets        100.0%    208,808,938 

a Variable interest rate—subject to periodic change.

Portfolio Summary (Unaudited) † 
 
    Value (%) 
Government Agency    69.3 
Repurchase Agreements    30.8 
    100.1 

  † Based on net assets.
See notes to financial statements.

8

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—See Statement of         
Investments (including Repurchase         
Agreements of $64,383,480)—Note 1(b)    209,040,979    209,040,979 
Cash        3 
Interest receivable        51,702 
        209,092,684 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    51,414 
Dividends payable        232,332 
        283,746 
Net Assets ($)        208,808,938 
Composition of Net Assets ($):         
Paid-in capital        208,851,569 
Accumulated net realized gain (loss) on investments        (42,631) 
Net Assets ($)        208,808,938 
Shares Outstanding         
(2 billion shares of $.001 par value shares of Capital Stock authorized)    208,851,569 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

The Fund 9

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Interest Income    3,403,000 
Expenses:     
Management fee—Note 3(a)    450,154 
Shareholder servicing costs—Note 3(b)    450,154 
Total Expenses    900,308 
Investment Income—Net, representing net     
increase in net assets resulting from operations    2,502,692 

See notes to financial statements.

10

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    2,502,692    5,778,886 
Net realized gain (loss) from investments    —    27,210 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    2,502,692    5,806,096 
Dividends to Shareholders from ($):         
Investment income—net    (2,502,692)    (5,778,886) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold    5,027,651,050    3,761,589,853 
Dividends reinvested    45    72 
Cost of shares redeemed    (5,148,251,988)    (4,254,703,107) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (120,600,893)    (493,113,182) 
Total Increase (Decrease) in Net Assets    (120,600,893)    (493,085,972) 
Net Assets ($):         
Beginning of Period    329,409,831    822,495,803 
End of Period    208,808,938    329,409,831 

See notes to financial statements.

The Fund 11

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,     
    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .009    .009    .016    .045    .058 
Distributions:                     
Dividends from investment income—net    (.009)    (.009)    (.016)    (.045)    (.058) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .89    .93    1.66    4.59    5.94 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .30    .30    .30    .30    .30 
Ratio of net investment income                     
to average net assets    .83    .97    1.65    4.08    5.81 
Net Assets, end of period ($ x 1,000)    208,809    329,410    822,496    624,020    292,672 

See notes to financial statements.

12

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 sixteen 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 quality money market instruments issued or guaranteed by the U.S. Government and its agencies and instrumentalities.The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser.The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial"). Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares, which are sold to the public without a sales charge.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the 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

The Fund 13

NOTES TO FINANCIAL STATEMENTS (continued)

income, adjusted for accretion of discount and amortization of premium on investments is earned from settlement date and recognized on the accrual basis. Cost of investments represents amortized cost.

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.

(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, if such qualification is in the best interests of its shareholders, by complying with the applicable pro-

14

visions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.

At October 31, 2004, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The accumulated capital loss carryover of $42,631 is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $10,982 of the carryover expires in fiscal 2006 and $31,649 expires in fiscal 2007.

The tax character of all distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, was all ordinary income.

At October 31, 2004, 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—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 based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2004, the fund did not borrow under the line of credit.

NOTE 3—Investment Management Fee and Other Transactions with Affiliates:

(a) 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

The Fund 15

NOTES TO FINANCIAL STATEMENTS (continued)

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 Company,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) 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, 2004, the fund was charged $450,154 pursuant to the Plan.

16

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 components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $25,707 and shareholder services plan fees $25,707.

NOTE 4—Legal Matters:

Two class actions have been filed against Mellon Financial,Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper.The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13,2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

The Fund 17

NOTES TO FINANCIAL STATEMENTS (continued)

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  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, 2004, 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 standards of the Public Company Accounting Oversight Board (United States).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, 2004, 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 Government Money Market Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 19

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

20

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

The Fund 21

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

22

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

The Fund 23

NOTES

For More    Information 
 
Dreyfus Institutional    Transfer Agent & 
Government Money    Dividend Disbursing Agent 
Market Fund    Dreyfus Transfer, Inc. 
200 Park Avenue    200 Park Avenue 
New York, NY 10166    New York, NY 10166 
Manager    Distributor 
The Dreyfus Corporation    Dreyfus Service Corporation 
200 Park Avenue    200 Park Avenue 
New York, NY 10166    New York, NY 10166 
Custodian     
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
Information regarding how the fund voted proxies relating to portfolio securities for the 12- 
month period ended June 30, 2004, is available on the SEC's website at http://www.sec.gov 
and without charge, upon request, by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0919AR1004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Understanding Your Fund's Expenses 
6    Comparing Your Fund's Expenses 
With Those of Other Funds
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    Report of Independent Registered 
    Public Accounting Firm 
21    Board Members Information 
23    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Institutional
Prime Money Market Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Institutional Prime Money Market Fund, covering the 12-month period from November 1,2003,through October 31,2004.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.

Although the U.S. economy recently has shown signs of weakness, the Federal Reserve Board raised short-term interest rates three times since the beginning of the summer.This shift in monetary policy represents the first increases in short-term rates in more than four years, and many analysts believe that additional increases are likely to follow.As a result, money-market yields have begun to rise from the historically low levels of the past few years.

At times such as these, when market conditions are in a period of transition, we believe it is especially important for investors to stay in close touch with their financial advisors. Your financial advisor can help you rebalance your portfolio in a way that is designed to respond to the challenges and opportunities of today's changing investment environment.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

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, 2004, Dreyfus Institutional Prime Money Market Fund produced a 0.93% yield and, after taking into account the effects of compounding, an effective yield of 0.93% .1

We attribute the fund's performance primarily to low interest rates in a gradually recovering economy. However, interest rates began to rise during the reporting period's second half, when in three separate moves the Federal Reserve Board (the "Fed") raised its target for the overnight federal funds rate from 1% to 1.75% .

What is the fund's investment approach?

The fund seeks a high level of current income consistent with the stability of principal. To pursue its goal, the fund invests in a diversified portfolio of high-quality, short-term debt securities, including:

  • Securities issued or guaranteed by the U.S. government or its agen- cies and instrumentalities
  • Certificates of deposit, time deposits, bankers' acceptances and other short-term securities issued by U.S. or foreign banks or their sub- sidiaries or branches
  • Repurchase agreements, including tri-party repurchase agreements
  • Asset-backed securities
  • Domestic and dollar-denominated foreign commercial paper, and other short-term corporate obligations, including those with float- ing or variable rates of interest

What other factors influenced the fund's performance?

When the reporting period began, the economy already had begun to strengthen, even as labor markets remained sluggish and inflation appeared to stay low. As a result, the Fed left short-term interest rates

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

unchanged at 1% during the final months of 2003, suggesting that it could be "patient" before raising short-term interest rates in the recovering economy.With no rate-hikes imminent, we extended the fund's weighted average maturity to a position we considered slightly longer than average, enabling the fund to capture modestly higher yields from money market instruments toward the longer end of their maturity range. We generally maintained this position through the first quarter of 2004.

In April 2004, economic and market conditions began to change rapidly. Surprisingly strong labor statistics and surging oil and gas prices indicated that inflationary pressures might be resurfacing, and investors revised forward their expectations of the timing of the Fed's move toward higher interest rates. Accordingly, we adopted a more defensive investment posture, reducing the fund's weighted average maturity toward a range that we considered in line with industry aver-ages.This strategy was designed to give us greater flexibility to capture higher yields as they became available.

Our move toward a more neutral weighted average maturity proved to be a prudent one. In late June, the Fed implemented a rate increase of 25 basis points, its first increase of short-term interest rates in more than four years.Two additional rate hikes followed, and by the end of the reporting period the overnight federal funds rate stood at 1.75% . Yields of shorter-term money market instruments rose accordingly, and the fund was in a position to capture prevailing higher yields.

Because yields of U.S. Treasury bills and repurchase agreements remained relatively low compared to other types of money market instruments during most of the reporting period, we generally allocated the largest portion of the fund's assets to higher-yielding commercial paper. Short-term U.S. government agency securities also provided what we considered relatively attractive yields.

4

What is the fund's current strategy?

As of the end of the reporting period, the U.S. economy appears to us to be strengthening.We have been encouraged by persistently robust home sales, improving labor statistics and signs of strength in consumer spending. In our judgment, the Fed is likely to again raise its target for the federal funds rate at one or both of its remaining meetings in 2004.

We have continued to allocate the largest portion of the fund's assets to commercial paper, followed by repurchase agreements, corporate notes and time deposits. In anticipation of further interest-rate hikes, we recently began to shorten the fund's weighted average maturity toward a range that is slightly shorter than industry averages. As a result, the fund's average maturity on October 31, 2004, was 31 days, down from 38 days when the reporting period began. As always, we intend to continue to monitor economic and market conditions, and we are prepared to adjust our strategies as circumstances change.

November 15, 2004

1 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 any other government agency.Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The Fund 5

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Institutional Prime Money Market Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment assuming actual returns for the six months ended October 31, 2004

Expenses paid per $1,000 †    $ 1.51 
Ending value (after expenses)    $1,005.40 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

Expenses paid per $1,000 †    $ 1.53 
Ending value (after expenses)    $1,023.63 

  • Expenses are equal to the fund's annualized expense ratio of .30%; multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS
October 31, 2004
    Principal     
Negotiable Bank Certificates of Deposit—2.0%    Amount ($)    Value ($) 
Barclays Bank PLC (Yankee)         
1.79%, 11/8/2004         
(cost $9,999,961)    10,000,000 a    9,999,961 
 
Commercial Paper—40.0%         
AEGON Funding Corp.         
1.89%, 12/28/2004    10,000,000 b    9,970,233 
Alliance & Leicester PLC         
2.07%, 2/14/2005    10,000,000 b    9,939,917 
Amstel Funding Corp.         
2.06%, 2/17/2005    10,000,000 b    9,938,800 
Archer Daniels Midland Co.         
2.07%, 1/20/2005    10,000,000 b    9,954,222 
Atlantis One Funding Corp.         
2.10%, 3/22/2005    10,000,000 b    9,918,533 
Bank of America Corp.         
1.98%, 1/5/2005    10,000,000    9,964,431 
Britannia Building Society         
2.05%, 1/18/2005    10,000,000 b    9,955,800 
Charta Corporation         
1.84%, 11/17/2004    10,000,000 b    9,991,822 
Citigroup Global Markets Holdings Inc.         
1.82%, 12/8/2004    10,000,000 b    9,981,397 
Erasmus Capital Corp.         
1.92%, 1/25/2005    7,500,000 b    7,466,354 
Goldman Sachs Group Inc.         
1.66%, 11/23/2004    10,000,000    9,989,917 
Long Lane Master Trust         
1.82%, 12/7/2004    10,000,000 b    9,981,900 
Metlife Funding Inc.         
1.63%, 11/10/2004    10,000,000    9,995,950 
Natexis Banques Populaires         
1.12%, 12/17/2004    10,000,000    9,985,817 
National Rural Utilities Cooperative Finance Corp.         
1.80%, 11/5/2004    10,000,000    9,998,000 
Nestle Finance France S.A.         
1.62%, 11/2/2004    10,000,000    9,999,553 
Old Line Funding LLC         
1.99%, 12/21/2004    10,000,000 b    9,972,500 
Sheffield Receivables Corp.         
1.83%, 11/15/2004    10,000,000 b    9,992,883 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

    Principal     
Commercial Paper (continued)    Amount ($)    Value ($) 
Unilever Capital Corp.         
1.79%, 11/29/2004    10,000,000 b    9,986,155 
Westpac Capital Corp.         
2.16%, 3/2/2005    10,000,000    9,928,072 
Total Commercial Paper         
(cost $196,912,256)        196,912,256 
 
 
Corporate Notes—16.7%         
American Honda Finance Corp.         
2.05%, 10/20/2005    10,000,000 a,b    10,009,054 
Caterpillar Finance Services Corp.         
1.68%, 8/15/2005    10,000,000 a    10,006,859 
Johnson Controls Inc.         
1.84%, 9/15/2005    10,000,000 a    10,009,124 
Lehman Brothers Holdings Inc.         
1.86%, 5/16/2005    12,000,000 a    12,000,000 
Manufacturers & Traders Trust Company     
1.68%, 11/18/2004    10,000,000 a    9,999,956 
Merrill Lynch & Co. Inc.         
2.05%, 4/28/2005    10,000,000 a    10,011,591 
Northern Rock PLC         
2.03%, 7/13/2005    10,000,000 a,b    10,003,627 
SLM Corporation         
1.85%, 8/15/2005    10,000,000 a    10,008,557 
Total Corporate Notes         
(cost $82,048,768)        82,048,768 

8
    Principal     
Short-Term Bank Notes—7.2%    Amount ($)    Value ($) 
Abbey National Treasury Services PLC         
1.90%, 5/26/2005    10,000,000 a    9,998,148 
American Express Centurion Bank         
1.81%, 1/12/2005    10,000,000 a    10,000,000 
HSBC USA Inc.         
1.69%, 8/18/2005    10,000,000 a    10,010,322 
Natexis Banques Populaires         
1.87%, 8/16/2005    5,500,000 a    5,498,033 
Total Short-Term Bank Notes         
(cost $35,506,503)        35,506,503 
 
 
Time Deposits—7.0%         
South Trust Bank (Grand Cayman)         
1.75%, 11/1/2004    20,000,000    20,000,000 
Suntrust Bank Atlanta         
(Grand Cayman)         
1.75%, 11/1/2004    14,700,000    14,700,000 
Total Time Deposits         
(cost $34,700,000)        34,700,000 
 
 
U.S. Government Agencies—2.0%         
Federal National Mortgage Association,         
Discount Notes         
1.62%, 11/3/2004         
(cost $9,999,106)    10,000,000    9,999,106 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

    Principal     
Repurchase Agreements—27.3%    Amount ($)    Value ($) 
Goldman Sachs & Co.         
1.75% dated 10/29/2004, due 11/1/2004         
in the amount of $23,962,266         
(fully collateralized by $22,725,000         
U.S. Treasury Bonds 5.25%,         
due 11/15/2028, value $24,438,163)    23,958,772    23,958,772 
Salomon Smith Barney Inc.         
1.87% dated 10/29/2004, due 11/1/2004         
in the amount of $110,417,204         
(fully collateralized by $27,992,000         
Federal Home Loan Mortgage Corporation Notes     
3.375%, due 4/15/2009 and $85,611,000         
Federal Home Loan Mortgage Corporation         
Discount Notes, due 4/12/2005,         
value $112,608,563)    110,400,000    110,400,000 
Total Repurchase Agreements         
(cost $134,358,772)        134,358,772 
 
Total Investments (cost $503,525,366)    102.2%    503,525,366 
 
Liabilities, Less Cash and Receivables    (2.2%)    (11,071,402) 
 
Net Assets    100.0%    492,453,964 

a Variable interest rate—subject to periodic change. 
b Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in 
transactions exempt from registration, normally to qualified institutional buyers.These securities have been determined 
to be liquid by the Board of Directors.At October 31, 2004, these securities amounted to $147,063,197 or 29.9% 
of net assets. 

Portfolio Summary    (Unaudited) †         
 
    Value (%)        Value (%) 
Banking    34.5    Government Agency    4.1 
Repurchase Agreements    27.3    Insurance    4.1 
Finance & Financial    10.2    Other    15.5 
Brokerage Firms    6.5        102.2 

† Based on net assets.
See notes to financial statements.

10

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $134,358,772)—Note 1(b)    503,525,366    503,525,366 
Interest receivable        245,245 
        503,770,611 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        117,971 
Cash overdraft due to Custodian        658,393 
Payable for investment securities purchased        9,928,072 
Dividend payable        612,211 
        11,316,647 
Net Assets ($)        492,453,964 
Composition of Net Assets ($):         
Paid-in capital        492,448,702 
Accumulated undistributed investment income—net        2,375 
Accumulated net realized gain (loss) on investments        2,887 
Net Assets ($)        492,453,964 
Shares Outstanding         
(2 billion shares of $.001 par value Capital Stock authorized)    492,448,702 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

The Fund 11

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Interest Income    5,976,568 
Expenses:     
Management fee—Note 3(a)    730,795 
Shareholder servicing costs—Note 3(b)    730,794 
Total Expenses    1,461,589 
Investment Income—Net    4,514,979 
Net Realized Gain (Loss) on Investments—Note 1(b) ($)    2,887 
Net Increase in Net Assets Resulting from Operations    4,517,866 

See notes to financial statements.

12

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    4,514,979    6,310,798 
Net realized gain (loss) on investments    2,887    2,375 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    4,517,866    6,313,173 
Dividends to Shareholders from ($):         
Investment income—net    (4,514,979)    (6,310,798) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold    3,487,112,401    4,256,007,126 
Dividends reinvested    398,856    463,759 
Cost of shares redeemed    (3,557,588,810)    (4,414,896,630) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (70,077,553)    (158,425,745) 
Total Increase (Decrease) in Net Assets    (70,074,666)    (158,423,370) 
Net Assets ($):         
Beginning of Period    562,528,630    720,952,000 
End of Period    492,453,964    562,528,630 
Undistributed investment income—net    2,375    — 

See notes to financial statements.

The Fund 13

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,     
    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value,                     
beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .009    .010    .017    .047    .060 
Distributions:                     
Dividends from investment                     
income—net    (.009)    (.010)    (.017)    (.047)    (.060) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .93    .98    1.68    4.76    6.13 
Ratios/Supplemental Data (%):                 
Ratio of total expenses                     
to average net assets    .30    .30    .30    .30    .30 
Ratio of net investment income                 
to average net assets    .93    .98    1.66    4.69    5.98 
Net Assets, end of period                     
($ x 1,000)    492,454    562,529    720,952    670,915    677,756 

See notes to financial statements.

14

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 sixteen series including the fund.The fund's investment objective is to seek a high level of current income consistent with stability of princi-pal.The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial"). Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares, which are sold to the public without a sales charge.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the 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 accretion of discount and amortization of premium on investments, is earned from settlement date and is recognized on the accrual basis. Cost of investments represents amortized cost.

The Fund 15

NOTES TO FINANCIAL STATEMENTS (continued)

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.

(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, if any, 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.

At October 31, 2004, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

16

The tax character of all distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, was all ordinary income.

During the period ended October 31, 2004, as a result of permanent book to tax differences, the fund decreased accumulated net realized gain (loss) on investments by $2,375 and increased accumulated undistributed investment income-net by the same amount. Net assets were not affected by this reclassification.

At October 31, 2004, 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—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 based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2004, the fund did not borrow under the line of credit.

NOTE 3—Investment Management Fee and Other Transactions with Affiliates:

(a) 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 addi-

The Fund 17

NOTES TO FINANCIAL STATEMENTS (continued)

tion, 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 Company, 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) 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, 2004, the fund was charged $730,794 pursuant to the Plan.

Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of majority of those Directors who are not "interested persons" of the Company and who have no direct or indirect financial interest in the operation of or in any agreement related to the Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $58,986 and shareholder servicing plan fees $58,985.

18

NOTE 4—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

The Fund 19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian and bro-kers.As to securities purchased but not yet received, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Institutional Prime Money Market Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

New York, New York
December 13, 2004

20

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 21

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

22

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 23

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The the Manager Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

24

For More    Information 
 
Dreyfus Institutional    Transfer Agent & 
Prime Money Market Fund    Dividend Disbursing Agent 
200 Park Avenue    Dreyfus Transfer, Inc. 
New York, NY 10166    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue    Dreyfus Service Corporation 
New York, NY 10166    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
Information regarding how the fund voted proxies relating to portfolio securities for the 12- 
month period ended June 30, 2004, is available on the SEC's website at http://www.sec.gov 
and without charge, upon request, by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0922AR1004

Dreyfus Institutional 
U.S. Treasury 
Money Market Fund 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Understanding Your Fund's Expenses 
6    Comparing Your Fund's Expenses 
With Those of Other Funds
7    Statement of Investments 
9    Statement of Assets and Liabilities 
10    Statement of Operations 
11    Statement of Changes in Net Assets 
12    Financial Highlights 
13    Notes to Financial Statements 
19    Report of Independent Registered 
    Public Accounting Firm 
20    Important Tax Information 
21    Board Members Information 
23    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

Dreyfus Institutional
U.S. Treasury Money Market Fund

The Fund

LETTER FROM THE CHAIRMAN

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, 2003, through October 31, 2004. 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.

Although the U.S. economy recently has shown signs of weakness, the Federal Reserve Board raised short-term interest rates three times since the beginning of the summer.This shift in monetary policy represents the first increases in short-term rates in more than four years, and many analysts believe that additional increases are likely to follow. As a result, money-market yields have begun to rise from the historically low levels of the past few years.

At times such as these, when market conditions are in a period of transition, we believe it is especially important for investors to stay in close touch with their financial advisors.Your financial advisor can help you rebalance your portfolio in a way that is designed to respond to the challenges and opportunities of today's changing investment environment.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

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, 2004, Dreyfus Institutional U.S. Treasury Money Market Fund produced a 0.83% yield and, after taking into account the effects of compounding, an effective yield of 0.84% .1

We attribute the fund's performance primarily to low interest rates in a gradually recovering economy. However, interest rates began to rise during the reporting period's second half, when in three separate moves the Federal Reserve Board (the "Fed") raised its target for the overnight federal funds rate from 1% to 1.75% .

What is the fund's investment approach?

The fund seeks a high level of current income consistent with stability of principal and conservative investment risk.As a U.S.Treasury money market fund, we attempt 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?

When the reporting period began, the economy already had begun to strengthen, even as labor markets remained sluggish and inflation appeared to stay low. As a result, the Fed left short-term interest rates

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

unchanged at 1% during the final months of 2003, suggesting that it could be "patient" before raising short-term interest rates in the recovering economy. With no rate-hikes imminent, we extended the fund's weighted average maturity to a position we considered slightly longer than average, enabling the fund to capture modestly higher yields from U.S.Treasury bills toward the longer end of their eligible maturity range. We generally maintained this position through the first quarter of 2004.

In April 2004,economic and market conditions began to change rapidly. Surprisingly strong labor statistics, surging oil and gas prices and renewed pricing power in certain industries indicated that inflationary pressures might be resurfacing, and investors revised forward their expectations of the timing of the Fed's move toward higher interest rates. Accordingly, we adopted a more defensive investment posture, reducing the fund's weighted average maturity toward a range that we considered in line with industry averages. This strategy was designed to give us greater flexibility to capture higher yields as they became available.

Our move toward a more neutral weighted average maturity proved to be a prudent one. In late June, the Fed implemented a rate increase of 25 basis points, its first increase of short-term interest rates in more than four years.Two additional rate hikes followed, and by the end of the reporting period the overnight federal funds rate stood at 1.75% . Yields of shorter-term U.S. Treasury securities rose accordingly, and the fund was in a position to capture higher yields as they arose.

In addition, yields of U.S.Treasury bills were influenced by an increase in the volume of newly issued U.S.Treasury securities to finance a ballooning federal budget deficit. At the same time, demand for high-quality U.S. Treasury securities generally subsided as investors grew more comfortable assuming greater risks in the recovering economy. These supply-and-demand factors put upward pressure on yields as more securities competed for investor's interest.

4

What is the fund's current strategy?

As of the end of the reporting period, the U.S. economy appears to us to be strengthening. We have been encouraged by persistently robust home sales, improving labor statistics and signs of strength in consumer spending. In our judgment, the Fed is likely to again raise its target for the federal funds rate at one or both of its remaining meetings in 2004.

On October 31, 2004, approximately 61% of the fund's assets were invested in U.S. Treasury bills, and 33% were allocated to repurchase agreements. These percentages represent a modest increase in U.S. Treasury bills and a decrease in repurchase agreements between the start of the reporting period and its end. In anticipation of further interest-rate hikes, we recently began to shorten the fund's weighted average maturity toward a position that is slightly shorter than industry averages. As a result, the fund's average maturity on October 31, 2004, was 35 days, down from 43 days when the reporting period began. As always, we intend to continue to monitor economic and market conditions, and we are prepared to adjust our strategies as circumstances change.

November 15, 2004

1 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 any other government agency.Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The Fund 5

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Institutional U.S.Treasury Money Market Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment assuming actual returns for the six months ended October 31, 2004

Expenses paid per $1,000 †    $ 1.51 
Ending value (after expenses)    $1,004.90 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

Expenses paid per $1,000 †    $ 1.53 
Ending value (after expenses)    $1,023.63 

† Expenses are equal to the fund's annualized expense ratio of .30%; multiplied by the average account value over the
period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS
October 31, 2004
    Annualized         
    Yield on         
    Date of    Principal     
U.S. Treasury Bills—47.0%    Purchase (%)    Amount ($)    Value ($) 
11/4/2004    1.50    20,000,000    19,997,502 
11/12/2004    1.55    20,000,000    19,990,568 
11/18/2004    1.57    10,000,000    9,992,586 
11/26/2004    1.61    7,500,000    7,491,641 
12/2/2004    1.64    10,000,000    9,985,964 
12/9/2004    1.55    10,000,000    9,983,692 
12/16/2004    1.65    10,000,000    9,979,500 
12/23/2004    1.62    10,000,000    9,976,817 
1/6/2005    1.67    7,500,000    7,477,154 
1/13/2005    1.69    10,000,000    9,965,933 
1/20/2005    1.73    10,000,000    9,961,778 
2/3/2005    1.76    7,500,000    7,465,729 
2/10/2005    1.84    10,000,000    9,948,602 
2/17/2005    1.95    10,000,000    9,941,875 
2/24/2005    1.97    10,000,000    9,937,549 
Total U.S. Treasury Bills             
(cost $162,096,890)            162,096,890 
 
U.S. Treasury Notes—13.8%             
5.875%, 11/15/2004    1.20    10,000,000    10,017,707 
2%, 11/30/2004    1.48    10,000,000    10,003,879 
1.75%, 12/31/2004    1.54    10,000,000    10,002,841 
1.625%, 1/31/2005    1.71    10,000,000    9,996,909 
1.50%, 2/28/2005    1.82    7,500,000    7,491,971 
Total U.S. Treasury Notes             
(cost $47,513,307)            47,513,307 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

    Annualized         
    Yield on         
    Date of    Principal     
Repurchase Agreements—33.3%    Purchase (%)    Amount ($)    Value ($) 
Barclays Capital Inc.             
dated 10/29/2004, due 11/1/2004 in the             
amount of $45,006,713 (fully collateralized by             
$35,503,000 U.S. Treasury Inflation Index Notes         
3.375%, due 1/15/2007, value $45,901,080)    1.79    45,000,000    45,000,000 
Credit Suisse First Boston Inc.             
dated 10/29/2004, due 11/1/2004 in the             
amount of $45,006,638 (fully collateralized by             
$38,378,000 U.S. Treasury Inflation Index Notes         
3%-3.625%, due 1/15/2008-7/15/2012,             
value $45,900,484)    1.77    45,000,000    45,000,000 
Goldman Sachs & Co.             
dated 10/29/2004, due 11/1/2004 in the             
amount of $25,048,563 (fully collateralized by             
$25,528,000 U.S. Treasury Notes             
1.50%, due 2/28/2005, value $25,546,527)    1.75    25,044,911    25,044,911 
Total Repurchase Agreements             
(cost $115,044,911)            115,044,911 
 
Total Investments (cost $324,655,108)        94.1%    324,655,108 
 
Cash and Receivables (Net)        5.9%    20,191,437 
 
Net Assets        100.0%    344,846,545 

Portfolio Summary    (Unaudited) †         
    Value (%)        Value (%) 
U.S. Treasury    60.8    Repurchase Agreements    33.3 
            94.1 

† Based on net assets.
See notes to financial statements.

8

STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $115,044,911)—Note 1(b)    324,655,108    324,655,108 
Cash        769 
Receivable for investment securities sold        20,000,000 
Interest receivable        704,753 
        345,360,630 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        92,781 
Dividends payable        421,304 
        514,085 
Net Assets ($)        344,846,545 
Composition of Net Assets ($):         
Paid-in capital        344,836,134 
Accumulated undistributed investment income—net        11,467 
Accumulated net realized gain (loss) on investments        (1,056) 
Net Assets ($)        344,846,545 
Shares Outstanding         
(2 billion shares of $.001 par value Capital Stock authorized)    344,836,134 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

The Fund 9

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Interest Income    4,111,854 
Expenses:     
Management fee—Note 3(a)    542,496 
Shareholder servicing costs—Note 3(b)    542,496 
Total Expenses    1,084,992 
Investment Income—Net    3,026,862 
Net Realized Gain (Loss) on Investments—Note 1(b) ($)    (1,056) 
Net Increase in Net Assets Resulting from Operations    3,025,806 

See notes to financial statements.

10

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    3,026,862    4,406,185 
Net realized gain (loss) on investments    (1,056)    11,845 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    3,025,806    4,418,030 
Dividends to Shareholders from ($):         
Investment income—net    (3,026,862)    (4,406,185) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold    2,165,674,933    2,900,700,179 
Dividends reinvested    5,683    10,479 
Cost of shares redeemed    (2,362,382,045)    (2,974,315,288) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (196,701,429)    (73,604,630) 
Total Increase (Decrease) in Net Assets    (196,702,485)    (73,592,785) 
Net Assets ($):         
Beginning of Period    541,549,030    615,141,815 
End of Period    344,846,545    541,549,030 
Undistributed investment income—net    11,467    — 

See notes to financial statements.

The Fund 11

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,     
    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value,                     
beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .008    .009    .016    .044    .055 
Distributions:                     
Dividends from investment                     
income—net    (.008)    (.009)    (.016)    (.044)    (.055) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .84    .88    1.59    4.53    5.64 
Ratios/Supplemental Data (%):                 
Ratio of total expenses                     
to average net assets    .30    .30    .30    .30    .30 
Ratio of net investment income                 
to average net assets    .84    .89    1.56    4.52    5.53 
Net Assets, end of period                     
($ x 1,000)    344,847    541,549    615,142    420,096    462,366 

See notes to financial statements.

12

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 sixteen 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 oblig-ations.The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser.The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial"). Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares, which are sold to the public without a sales charge.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the 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 accretion of discount and amortization of pre-

The Fund 13

NOTES TO FINANCIAL STATEMENTS (continued)

mium on investments is earned from settlement date and recognized on the accrual basis. Cost of investments represents amortized cost.

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 credit-worthiness of those banks and dealers with which the fund enters into repurchase agreements to evaluate potential risks.

(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, 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.

14

At October 31, 2004, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The accumulated capital loss carryover of $1,056 is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, the carryover expires in fiscal 2012.

The tax character of all distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, was all ordinary income.

During the period ended October 31, 2004, as a result of permanent book to tax differences, the fund decreased accumulated net realized gain (loss) on investments by $11,467 and increased accumulated undistributed investment income-net by the same amount. Net assets were not affected by this reclassification.

At October 31, 2004, 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—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 based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2004, the fund did not borrow under the line of credit.

NOTE 3—Investment Management Fee and Other Transactions with Affiliates:

(a) 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 contrac-

The Fund 15

NOTES TO FINANCIAL STATEMENTS (continued)

tually 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 Company, 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) Under the Shareholder Servicing Plan (the "Plan"), the fund may pay up to .15% of the value of the average daily net assets to compensate certain banks, brokers, dealers or other financial institutions for shareholder services. During the period ended October 31, 2004, the fund was charged $542,496 pursuant to the Plan.

Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of majority of

16

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 components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $46,390 and shareholder services plan fees $46,391.

NOTE 4—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

The Fund 17

NOTES TO FINANCIAL STATEMENTS (continued)

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  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, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Institutional U.S.Treasury Money Market Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 19

IMPORTANT TAX INFORMATION (Unaudited)

For State individual income tax purposes, the fund hereby designates 54.67% of the ordinary income dividends paid during its fiscal year ended October 31, 2004 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.

20

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 21

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) Board Member (1994)

Principal Occupation During Past 5 Years:

• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company (2000-present) • Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000)

Other Board Memberships and Affiliations:

• BDML Holdings, an insurance company, Chairman of the Board

• Affiliated Managers Group, an investment management company, Director

No. of Portfolios for which Board Member Serves: 23 ———————

Roslyn Watson (55) Board Member (1994)

Principal Occupation During Past 5 Years:

• Principal,Watson Ventures, Inc., a real estate investment company (1993-present)

Other Board Memberships and Affiliations:

• American Express Centurion Bank, Director

• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee • National Osteoporosis Foundation,Trustee

No. of Portfolios for which Board Member Serves: 23 ———————

Benaree Pratt Wiley (58) Board Member (1998)

Principal Occupation During Past 5 Years:

• President and CEO,The Partnership, an organization dedicated to increasing the representation of African Americans in positions of leadership, influence and decision-making in Boston, MA (1991-present)

Other Board Memberships and Affiliations:

• Boston College, Associate Trustee

• The Greater Boston Chamber of Commerce, Director • Mass. Development, Director • Commonwealth Institute, Director • Efficacy Institute, Director • PepsiCo African-American, Advisory Board

No. of Portfolios for which Board Member Serves: 23

Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

22

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 23

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

24

For More    Information 
 
Dreyfus Institutional    Transfer Agent & 
U.S. Treasury    Dividend Disbursing Agent 
Money Market Fund    Dreyfus Transfer, Inc. 
200 Park Avenue    200 Park Avenue 
New York, NY 10166    New York, NY 10166 
Manager    Distributor 
The Dreyfus Corporation    Dreyfus Service Corporation 
200 Park Avenue    200 Park Avenue 
New York, NY 10166    New York, NY 10166 
Custodian     
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
Information regarding how the fund voted proxies relating to portfolio securities for the 12- 
month period ended June 30, 2004, is available on the SEC's website at http://www.sec.gov 
and without charge, upon request, by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0930AR1004

Dreyfus 
Money Market 
Reserves 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Understanding Your Fund's Expenses 
6    Comparing Your Fund's Expenses 
With Those of Other Funds
7    Statement of Investments 
11    Statement of Assets and Liabilities 
12    Statement of Operations 
13    Statement of Changes in Net Assets 
14    Financial Highlights 
16    Notes to Financial Statements 
22    Report of Independent Registered 
    Public Accounting Firm 
23    Board Members Information 
25    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus
Money Market Reserves

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Money Market Reserves, covering the 12-month period from November 1, 2003, through October 31, 2004. 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.

Although the U.S. economy recently has shown signs of weakness, the Federal Reserve Board raised short-term interest rates three times since the beginning of the summer.This shift in monetary policy represents the first increases in short-term rates in more than four years, and many analysts believe that additional increases are likely to follow.As a result, money market yields have begun to rise from the historically low levels of the past few years.

At times such as these, when market conditions are in a period of transition, we believe it is especially important for investors to stay in close touch with their financial advisors.Your financial advisor can help you rebalance your portfolio in a way that is designed to respond to the challenges and opportunities of today's changing investment environment.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Laurie Carroll, Portfolio Manager

How did Dreyfus Money Market Reserves perform during the period?

For the 12-month period ended October 31, 2004, the fund's Investor shares produced a yield of 0.54% while its Class R shares produced a yield of 0.74% . Taking into account the effects of compounding, the effective yields for the fund's Investor shares and Class R shares were also 0.54% and 0.74%, respectively.1

We attribute the fund's performance to low interest rates in a gradually recovering economy. However, interest rates began to rise during the second half of the reporting period, when the Federal Reserve Board (the "Fed") raised its target for the overnight federal funds rate in three separate moves from 1% to 1.75% .

What is the fund's investment approach?

The fund seeks a high level of current income consistent with stability of principal.To pursue its goal, the fund invests in a diversified portfolio of high-quality, short-term debt securities, including:

  • securities issued or guaranteed by the U.S. government or its agencies and instrumentalities
  • certificates of deposit, time deposits, bankers' acceptances and other short-term securities issued by domestic or foreign banks or their subsidiaries or branches
  • repurchase agreements
  • asset-backed securities
  • domestic and dollar-denominated foreign commercial paper and other short-term corporate obligations, including those with float- ing or variable rates of interest

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

What other factors influenced the fund's performance?

When the reporting period began, the economy already had begun to strengthen, even as labor markets remained sluggish and inflation appeared to stay low. As a result, the Fed left short-term interest rates unchanged at 1% during the final months of 2003, suggesting that it could be "patient" before raising short-term interest rates in the recovering economy.With no rate-hikes imminent, we extended the fund's weighted average maturity to a position we considered slightly longer than average, enabling the fund to capture modestly higher yields from money market instruments toward the longer end of their maturity range. We generally maintained this position through the first quarter of 2004.

In April 2004, however, market conditions began to change. Surging oil and gas prices and unexpectedly strong labor statistics suggested that inflationary pressures might be resurfacing.Accordingly, investors began to revise forward their expectations of the timing of eventual rate-hikes from the Fed, and yields at the longer end of the maturity range began to rise. We adjusted the fund's investment posture to reflect a more defensive posture, reducing its weighted average maturity toward a range that we considered to be in line with industry averages.

Our move to a more neutral weighted average maturity proved to be a prudent one. In late June, the Fed implemented a rate increase of 25 basis points, its first increase of short-term interest rates in more than four years. Two additional rate-hikes, each 25 basis points, followed, bringing the overnight federal funds rate to 1.75% . As interest rates rose, so did yields of shorter-term money market instruments.

The fund's strongest returns stemmed from its commercial paper holdings, where we allocated the largest portion of the fund's total assets during the reporting period. Short-term U.S. government agency securities also provided relatively attractive yields, while returns from repurchase agreements and U.S.Treasury bills were more

4

modest. By the middle of the reporting period, we sold the fund's investments in U.S. Treasury bills and reduced its exposure to U.S. government agency bonds, choosing instead to allocate those assets to higher-yielding commercial paper holdings. Also in an attempt to capture incrementally higher yields, we increased the fund's exposure to repurchase agreements.

What is the fund's current strategy?

As of the end of the reporting period, the fund maintained a low weighted average maturity in order to preserve the flexibility we need to capture higher yields as the Fed continues to raise interest rates. Indeed, less than two weeks after the close of the reporting period, the Fed raised its target for the federal funds rate to 2%.As of October 31, 2004, the fund's weighted average maturity was 30 days, the same as it was when the reporting period began.At the same time, approximately 46% of the fund's assets were allocated to commercial paper, followed by about 24% to repurchase agreements, 24% to corporate floating rate notes, 2% to U.S. government agency securities and the balance in bank deposits.The fund held no U.S.Treasury securities as of the end of the reporting period. Of course, we are prepared to change our strategies as economic and market conditions evolve.

November 15, 2004

1 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 any other government agency.Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The Fund 5

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Money Market Reserves from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment     
assuming actual returns for the six months ended October 31, 2004     
    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.53    $ 2.52 
Ending value (after expenses)    $1,003.40    $1,004.40 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.56    $ 2.54 
Ending value (after expenses)    $1,021.62    $1,022.62 

† Expenses are equal to the fund's annualized expense ratio of .70% for Investor shares and .50% for Class R shares;
multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS
October 31, 2004
    Principal     
Negotiable Bank Certificates of Deposit—1.9%    Amount ($)    Value ($) 
Barclays Bank PLC (Yankee)         
1.79%, 11/8/2004         
(cost $9,999,961)    10,000,000 a    9,999,961 
 
Commercial Paper—46.1%         
AEGON Funding Corp.         
1.89%, 12/28/2004    10,000,000 b    9,970,233 
Alcon Capital Corp.         
1.75%, 11/5/2004    10,000,000 b    9,998,055 
Allianz Finance Corp.         
1.61%, 11/1/2004    10,000,000 b    10,000,000 
Amstel Funding Corp.         
1.82%, 12/15/2004    10,000,000 b    9,977,877 
Atlantis One Funding Corp.         
1.71%, 11/16/2004    10,000,000 b    9,992,917 
Bank of America Corp.         
1.98%, 1/5/2005    10,000,000    9,964,430 
CBA (Delaware) Finance Inc.         
1.85%, 12/15/2004    10,000,000 b    9,977,511 
CIT Group Inc.         
2.03%, 1/24/2005    10,000,000    9,952,867 
Coca-Cola Co. (The)         
1.86%, 12/20/2004    10,000,000    9,974,819 
Coca-Cola Enterprises Inc.         
1.75%, 11/4/2004    10,000,000 b    9,998,542 
Commonwealth Bank of Australia         
2.15%, 4/14/2005    10,000,000    9,902,967 
Gannett Co.         
1.84%, 11/17/2004    10,000,000 b    9,991,822 
Goldman Sachs Group Inc.         
1.67%, 11/23/2004    10,000,000    9,989,856 
Grampian Funding Ltd.         
1.64%, 11/4/2004    10,000,000 b    9,998,642 
Irish Life & Permanent PLC         
1.66%, 11/9/2004    10,000,000 b    9,996,333 
Knight Ridder Inc.         
1.84%, 12/2/2004    10,000,000 b    9,984,156 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

    Principal     
Commercial Paper (continued)    Amount ($)    Value ($) 
Moat Funding LLC         
1.74%, 11/19/2004    10,000,000 b    9,991,350 
National Rural Utilities         
Cooperative Finance Corp.         
1.86%, 11/16/2004    10,000,000    9,992,250 
Nestle Capital Corp.         
1.86%, 12/16/2004    10,000,000 b    9,976,813 
PACCAR Financial Corp.         
1.81%, 12/1/2004    6,750,000    6,739,819 
Scaldis Capital LLC         
1.88%, 12/14/2004    10,000,000    9,977,664 
Thunder Bay Funding Inc.         
1.81%, 12/20/2004    10,000,000 b    9,975,500 
Unilever Capital Corp.         
1.84%, 12/6/2004    10,000,000 b    9,982,208 
Wal-Mart Stores Inc.         
1.64%, 11/30/2004    11,220,000 b    11,205,268 
WestLB Covered Bond Bank PLC         
2.05%, 2/14/2005    10,000,000 b    9,940,500 
Total Commercial Paper         
(cost $247,452,399)        247,452,399 
 
Corporate Notes—13.0%         
CSFB (USA) Inc.         
1.71%, 2/8/2005    10,000,000 a    10,008,131 
Canadian Imperial Bank of Commerce         
1.92%, 5/31/2005    10,000,000 a    9,999,124 
Johnson Controls Inc.         
1.84%, 9/15/2005    10,000,000 a    10,009,124 
Lehman Brothers Holdings Inc.         
1.86%, 5/16/2005    10,000,000 a    10,000,000 
Manufacturers & Traders Trust Company     
1.68%, 11/18/2004    10,000,000 a    9,999,956 

8
    Principal     
Corporate Notes (continued)    Amount ($)    Value ($) 
Merrill Lynch & Co. Inc.         
2.05%, 4/28/2005    10,000,000 a    10,011,591 
National City Bank         
1.92%, 10/3/2005    10,000,000 a    9,996,772 
Total Corporate Notes         
(cost $70,024,698)        70,024,698 
 
Short-Term Bank Notes—9.3%         
 
Abbey National Treasury Services         
1.90%, 5/26/2005    10,000,000 a    9,998,148 
American Express Centurion Bank         
1.81%, 1/12/2005    10,000,000 a    10,000,000 
Natexis Banques Populaires         
1.89%, 6/22/2005    10,000,000 a    9,997,430 
Northern Rock PLC         
2.02%, 1/13/2005    10,000,000 a,b    10,000,000 
Royal Bank of Scotland PLC         
1.85%, 6/20/2005    10,000,000 a    9,998,080 
Total Short-Term Bank Notes         
(cost $49,993,658)        49,993,658 
 
Time Deposits—3.7%         
 
Branch Banking & Trust Co. (Grand Cayman)     
1.81%, 11/1/2004         
(cost $20,000,000)    20,000,000    20,000,000 
 
U.S. Government Agencies—1.9%         
 
Federal National Mortgage Association,         
Discount Notes         
2.04%, 2/1/2005         
(cost $9,948,122)    10,000,000    9,948,122 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

    Principal     
Repurchase Agreements—24.1%    Amount ($)    Value ($) 
Goldman Sachs & Co.         
1.75% dated 10/29/2004, due 11/1/2004         
in the amount of $29,410,602 (fully collateralized by     
$31,627,361 U.S. Treasury Strips, due 11/15/2006,     
value $29,994,440)    29,406,314    29,406,314 
Salomon Smith Barney Holdings Inc.         
1.87% dated 10/29/2004, due 11/1/2004         
in the amount of $100,015,583 (fully collateralized     
by $98,929,000 Federal National Mortgage         
Association Notes 5.125%, due 11/7/2013,         
value $102,000,361)    100,000,000    100,000,000 
Total Repurchase Agreements         
(cost $129,406,314)        129,406,314 
 
Total Investments (cost $536,825,152)    100.0%    536,825,152 
 
Liabilities, Less Cash and Receivables    (.0%)    (109,991) 
 
Net Assets    100.0%    536,715,161 

a Variable interest rate—subject to periodic change. 
b Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold 
in transactions exempt from registration, normally to qualified institutional buyers.These securities have been 
determined to be liquid by the Board of Directors. At October 31, 2004, these securities amounted to 
$180,957,727 or 33.7% of net assets. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Banking    33.5    Insurance/Miscalleneous    5.5 
Repurchase Agreements    24.1    Beverages/Soft Drink    3.7 
Asset-Backed Ctfs.    5.6    Publishing/Newspapers    3.7 
Brokerage Firms    5.6    Other    12.7 
Finance    5.6        100.0 

† Based on net assets.
See notes to financial statements.

10

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $129,406,314)—Note 1(b)    536,825,152    536,825,152 
Cash        492,842 
Interest receivable        204,793 
        537,522,787 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        286,090 
Dividend payable        521,520 
Payable for Capital Stock redeemed        16 
        807,626 
Net Assets ($)        536,715,161 
Composition of Net Assets ($):         
Paid-in capital        536,716,404 
Accumulated net realized gain (loss) on investments        (1,243) 
Net Assets ($)        536,715,161 

Net Asset Value Per Share         
    Investor Shares    Class R Shares 
Net Assets ($)    357,163,188    179,551,973 
Shares Outstanding    357,162,210    179,554,194 
Net Asset Value Per Share ($)    1.00    1.00 

See notes to financial statements.

The Fund 11

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Interest Income    7,125,303 
Expenses:     
Management fee—Note 3(a)    2,904,391 
Distribution fees (Investor Shares)—Note 3(b)    742,661 
Total Expenses    3,647,052 
Investment Income—Net    3,478,251 
Net Realized Gain (Loss) on Investments—Note 1(b) ($)    (619) 
Net Increase in Net Assets Resulting from Operations    3,477,632 

See notes to financial statements.
12

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    3,478,251    4,528,551 
Net realized gain (loss) on investments    (619)    — 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    3,477,632    4,528,551 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (1,975,321)    (2,577,224) 
Class R shares    (1,502,930)    (1,951,327) 
Total Dividends    (3,478,251)    (4,528,551) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold:         
Investor shares    1,218,842,895    1,210,475,432 
Class R shares    765,162,295    824,082,066 
Dividends reinvested:         
Investor shares    1,965,555    2,559,070 
Class R shares    301,076    205,716 
Cost of shares redeemed:         
Investor shares    (1,242,909,692)    (1,266,585,325) 
Class R shares    (800,022,958)    (858,339,686) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (56,660,829)    (87,602,727) 
Total Increase (Decrease) in Net Assets    (56,661,448)    (87,602,727) 
Net Assets ($):         
Beginning of Period    593,376,609    680,979,336 
End of Period    536,715,161    593,376,609 

See notes to financial statements.

The Fund 13

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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .005    .006    .016    .044    .056 
Distributions:                     
Dividends from investment income—net    (.005)    (.006)    (.016)    (.044)    (.056) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .54    .64    1.58    4.47    5.70 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .70    .70    .70    .70    .70 
Ratio of net investment income                     
to average net assets    .53    .64    1.63    3.91    5.56 
Net Assets, end of period ($ X 1,000)    357,163    379,265    432,816    871,945    333,377 

See notes to financial statements.

14

        Year Ended October 31,     
Class R Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .007    .008    .018    .046    .058 
Distributions:                     
Dividends from investment income—net    (.007)    (.008)    (.018)    (.046)    (.058) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .74    .83    1.79    4.68    5.91 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .50    .50    .50    .50    .50 
Ratio of net investment income                     
to average net assets    .72    .84    1.82    4.54    5.80 
Net Assets, end of period ($ X 1,000)    179,552    214,112    248,164    419,057    393,117 

See notes to financial statements.

The Fund 15

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 sixteen 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 a diversified portfolio of high-quality, short-term debt securities. The Dreyfus Corporation (the "Manager"or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares.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 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. Income, expenses (other expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the Board of Directors to represent the fair value of the fund's investments.

16

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 accretion of discount and amortization of premium on investments is earned from settlement date and recognized on the accrual basis. Cost of investments represents amortized cost.

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.

(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 Fund 17

NOTES TO FINANCIAL STATEMENTS (continued)

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 qualifications is in the best interest 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.

At October 31, 2004, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The accumulated capital loss carryover of $1,243 is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $624 of the carryover expires in fiscal 2005 and $619 expires in fiscal 2012.

The tax character of all distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003 was all ordinary income.

At October 31, 2004, 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—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 based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2004, the fund did not borrow under the line of credit.

NOTE 3—Investment Management Fee and Other Transactions With Affiliates:

(a) 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,

18

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 Company, 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) 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

The Fund 19

NOTES TO FINANCIAL STATEMENTS (continued)

shares to compensate the Distributor for shareholder servicing activities and activities primarily intended to result in the sale of Investor shares. During the period ended October 31, 2004, Investor shares were charged $742,661 pursuant to the Plan.

Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of majority of those Directors who are not "interested persons" of the Company and who have no direct or indirect financial interest in the operation of or in any agreement related to the Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $226,045 and Rule 12b-1 distribution plan fees $60,045.

NOTE 4—Legal Matters:

Two class actions have been filed against Mellon Financial,Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper.The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation

20

expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13,2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

The Fund 21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004, 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 standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian.An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Money Market Reserves of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

New York, New York
December 13, 2004

22

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 23

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

24

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 25

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

26

NOTES

For More    Information 
 
Dreyfus    Transfer Agent & 
Money Market Reserves    Dividend Disbursing Agent 
200 Park Avenue    Dreyfus Transfer, Inc. 
New York, NY 10166    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue    Dreyfus Service Corporation 
New York, NY 10166    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
Information regarding how the fund voted proxies relating to portfolio securities for the 12- 
month period ended June 30, 2004, is available on the SEC's website at http://www.sec.gov 
and without charge, upon request, by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0317AR1004

Dreyfus     
Municipal    Reserves 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Understanding Your Fund's Expenses 
6    Comparing Your Fund's Expenses 
With Those of Other Funds
7    Statement of Investments 
12    Statement of Assets and Liabilities 
13    Statement of Operations 
14    Statement of Changes in Net Assets 
15    Financial Highlights 
17    Notes to Financial Statements 
23    Report of Independent Registered 
    Public Accounting Firm 
24    Important Tax Information 
25    Board Members Information 
27    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus
Municipal Reserves

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Municipal Reserves, covering the 12-month period from November 1, 2003, through October 31,2004.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, J. Christopher Nicholl.

Although the U.S. economy recently has shown signs of weakness, the Federal Reserve Board raised short-term interest rates three times since the beginning of the summer.This shift in monetary policy represents the first increases in short-term rates in more than four years, and many analysts believe that additional increases are likely to follow. As a result, tax-exempt money-market yields have begun to rise from the historically low levels of the past few years.

At times such as these, when market conditions are in a period of transition, we believe it is especially important for investors to stay in close touch with their financial advisors.Your financial advisor can help you rebalance your portfolio in a way that is designed to respond to the challenges and opportunities of today's changing investment environment.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

J. Christopher Nicholl, Portfolio Manager

How did Dreyfus Municipal Reserves perform during the period?

For the 12-month period ended October 31, 2004, the fund's Investor shares produced a yield of 0.43% and, taking into account the effects of compounding, an effective yield of 0.43% . The fund's Class R shares provided a 0.63% yield and a 0.63% effective yield for the same period.1

Although tax-exempt money market yields remained near historical lows for much of the reporting period, they began to rise during the reporting period's second half, when the Federal Reserve Board (the "Fed") raised short-term interest rates from 1% to 1.75% in three separate moves.

What is the fund's investment approach?

The fund seeks a high level of current income, consistent with stability of principal, that is exempt from federal income tax.To pursue its goal, the fund invests at least 80% of its assets in tax-exempt municipal obligations, including short-term municipal debt securities. Among these are municipal notes, short-term municipal bonds, tax-exempt commercial paper and municipal leases.The fund reserves the right to invest up to 20% of total assets in taxable money market securities, such as U.S. government obligations, U.S. and foreign bank and corporate obligations and commercial paper. Municipal obligations are typically of two types:

  • General obligation bonds, which are secured by the full faith and credit of the issuer and its taxing power; and
  • Revenue bonds, which are payable from the revenues derived from a specific revenue source, such as charges for water and sewer service or highway tolls.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

What other factors influenced the fund's performance?

The fund was primarily influenced by investors' shifting perceptions of the strength of U.S. economic growth and their expectations regarding the timing of the Fed's moves to a less accommodative monetary policy. When the reporting period began, tax-exempt money market yields remained near historical lows, anchored by a federal funds rate of 1%.While the economy was growing, inflation pressures at the time remained low, and the Fed in its public comments suggested that it could be "patient" before raising interest rates.

In April 2004, however, signs of renewed inflation pressures emerged when energy prices surged and the U.S. Labor Department released an unexpectedly robust employment report.As a result of these developments, investors revised forward their expectations of the timing of eventual rate hikes. For its part, the Fed indicated that any future increases were likely to be "measured."Yields of longer-term money market instruments rose in this new market environment to reflect heightened inflation concerns. However, shorter-term yields remained anchored by the 1% federal funds rate.

In late June, the Fed implemented its first rate hike in more than four years, raising its target for the federal funds rate to 1.25% . Two additional rate hikes followed in August and September, driving the federal funds rate to 1.75% by the reporting period's end. However, the U.S. economy appeared to hit a "soft patch" during the summer, causing investor's inflation fears to moderate and longer-term yields to decline. The combination of higher short-term rates and lower yields on longer-term money market instruments moved yield "spreads" toward levels that were below historical averages.

In this environment, we managed the fund's weighted average maturity to reflect prevailing market conditions. In the fall of 2003 and the winter of 2004, because there was little incentive to assume the risks of longer-term securities, we maintained a weighted average duration in a range that was slightly shorter than industry averages. When

4

longer-term yields rose in the spring, we moved toward a more neutral position to capture and lock in higher yields.We returned to the slightly shorter-than-average range over the summer when longer-term yields became less attractive.

We also actively managed the fund's composition over the course of the reporting period, gradually increasing its holdings of variable-rate demand notes on which yields are reset daily or weekly. In the spring, we added to the fund's holdings of longer-term municipal notes. Later in the reporting period, we shifted our focus away from municipal notes to commercial paper with maturities in the 60- to 90-day range.

What is the fund's current strategy?

In anticipation of further rate hikes from the Fed, we have continued to maintain the fund's weighted average maturity in a range we consider shorter than average. Indeed, less than two weeks after the end of the reporting period, the Fed raised its target for the federal funds rate to 2% in its fourth consecutive move away from the aggressively accommodative monetary policy it had established. Signs of recent economic strength suggest that more rate hikes could be in store, possibly as soon as the Fed's next meeting in December. Accordingly, in our judgment, a generally defensive investment posture remains prudent in today's changing market environment.

November 15, 2004

1 Effective yield is based upon dividends declared daily and reinvested monthly. Past performance is no guarantee of future results.Yields fluctuate. Income may be subject to state and local taxes and some income may be subject to the federal alternative minimum tax (AMT) for certain investors. An investment in the fund is not insured or guaranteed by the FDIC or any other government agency.Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The Fund 5

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Municipal Reserves from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment     
assuming actual returns for the six months ended October 31, 2004     
    Investor    Class R 
Expenses paid per $1,000 †    $ 3.57    $ 2.57 
Ending value (after expenses)    $1,002.70    $1,003.70 

COMPARING YOUR FUND'S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Investor    Class R 
Expenses paid per $1,000 †    $ 3.61    $ 2.59 
Ending value (after expenses)    $1,021.57    $1,022.57 

† Expenses are equal to the fund's annualized expense ratio of .71% for Investor and .51% for Class R, multiplied by
the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS
October 31, 2004
    Principal         
Tax Exempt Investments—102.8%    Amount ($)    Value ($) 
Alabama—4.0%             
Port City Medical Clinic Board             
Health Care Facilities Revenue             
VRDN (Infirmary Health Systems)             
1.74% (Insured; AMBAC and Liquidity Facility:         
Bank of Nova Scotia and KBC Bank)    6,000,000    a    6,000,000 
Alaska—1.5%             
Alaska Industrial Development Authority             
Health Care Facilities Revenue, VRDN             
(Providence Medical Office Building)             
1.70% (LOC; KBC Bank)    2,260,000    a    2,260,000 
California—4.0%             
San Francisco City and County Unified School District         
GO Notes, TRAN 2%, 12/3/2004    6,000,000        6,000,603 
Colorado—12.0%             
Aurora Centretech Metropolitan District, GO Notes         
1.30%, 12/1/2004 (LOC; BNP Paribas)    1,000,000        1,000,000 
Castlewood Ranch Metropolitan District, GO Notes         
1.15%, 12/1/2004 (LOC; U.S. Bank N.A.)    2,650,000        2,650,000 
Central Platte Valley Metropolitan District, GO Notes         
1.30%, 12/1/2004 (LOC; U.S. Bank N.A.)    3,000,000        3,000,000 
Dove Valley Metropolitan District Arapahoe County         
GO Notes:             
1.20%, 11/1/2004 (LOC; BNP Paribas)    5,090,000        5,090,000 
1.95%, 11/1/2005 (LOC; BNP Paribas)    2,500,000        2,500,000 
Interstate South Metropolitan District, GO Notes         
Refunding:             
1.20%, 11/1/2004 (LOC; BNP Paribas)    1,975,000        1,975,000 
1.95%, 11/1/2005 (LOC; BNP Paribas)    1,975,000        1,975,000 
Connecticut—1.7%             
Town of North Haven, GO Notes             
BAN 2%, 4/27/2005    2,500,000        2,505,951 
Florida—3.2%             
Florida Housing Finance Agency, MFMR, VRDN         
(Town Colony Associates)             
1.81% (LOC; Credit Suisse First Boston)    4,800,000    a    4,800,000 
Georgia—3.2%             
Athens-Clarke County Unified Government             
Development Authority, College and University         
Revenue, VRDN (University of Georgia             
Athletic Association Project)             
1.75% (LOC; Bank of America)    1,400,000    a    1,400,000 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

    Principal         
Tax Exempt Investments (continued)    Amount ($)    Value ($) 
Georgia (continued)             
De Kalb County Development Authority             
Private Schools Revenue, VRDN             
(Marist School Inc. Project)             
1.77% (LOC; SunTrust Bank)    3,500,000    a    3,500,000 
Illinois—23.0%             
City of Chicago, GO Notes 1.05%, 1/13/2005             
(LOC; State Street Bank and Trust)    5,500,000        5,500,000 
Chicago School Finance Authority, GO Notes             
Refunding 5.20%, 6/1/2005 (Insured; FGIC)    2,780,000        2,841,379 
Illinois Development Finance Authority, IDR             
VRDN (Heritage Tool and Manufacturing Inc.)             
1.86% (LOC; Bank of Montreal)    4,285,000    a    4,285,000 
Illinois Educational Facilities Authority, Recreational             
Revenue, VRDN (Shedd Aquarium Society)             
1.77% (LOC; Bank One)    4,300,000    a    4,300,000 
Illinois Health Facilities Authority, Revenue, VRDN:             
(Memorial Medical Center) 1.77% (LOC; KBC Bank)    2,400,000    a    2,400,000 
(Rush Presbyterian St. Luke's Medical Center)             
1.77% (LOC; Northern Trust Co.)    3,800,000    a    3,800,000 
(The Carle Foundation)             
1.77% (Insured; AMBAC and Liquidity             
Facility; Northern Trust Co.)    3,900,000    a    3,900,000 
Illinois Student Assistance Commission             
Student Loan Revenue, VRDN             
1.84% (LOC; Bank One)    3,300,000    a    3,300,000 
Jackson-Union Counties Regional Port District             
Port Facilities Revenue, Refunding, VRDN             
(Enron Transportation Services)             
1.76% (LOC; Wachovia Bank)    4,400,000    a    4,400,000 
Indiana—8.5%             
Indiana Health Facilities Financing Authority             
Health Care Facilities Revenue, VRDN, Capital Access         
Designated Program 1.78% (LOC; Comerica Bank)    1,725,000    a    1,725,000 
City of Seymour, EDR, VRDN             
(Pedcor Investments Project) 1.82% (LOC; FHLB)    3,922,000    a    3,922,000 
City of Wabash, EDR, VRDN             
(Wabash Alloys Project)             
1.83% (LOC; Bank of America)    7,250,000    a    7,250,000 
Iowa—.9%             
Iowa Finance Authority, Private College Revenue             
VRDN (Drake University Project)             
1.74% (LOC; Wells Fargo Bank)    1,300,000    a    1,300,000 

8

    Principal         
Tax Exempt Investments (continued)    Amount ($)    Value ($) 
Kentucky—.1%             
County of Ohio, PCR, VRDN             
(Big Rivers Electric Corp. Project) 1.78%             
(Insured; AMBAC and Liquidity Facility;             
Credit Suisse First Boston)    200,000    a    200,000 
Louisiana—6.0%             
South Louisiana Port Commission, Port Revenue, VRDN         
(Holnam Inc. Project) 1.85% (LOC; Wachovia Bank)    9,000,000    a    9,000,000 
Massachusetts—4.0%             
Massachusetts Health and Educational Facilities Authority         
College and University Revenue, VRDN:             
Capital Asset Program 1.73%             
(LOC; Bank of America)    2,000,000    a    2,000,000 
(Simmons College) 1.75% (Insured; AMBAC and             
Liquidity Facility; Bank of America)    200,000    a    200,000 
City of Salem, GO Notes, BAN 1.50%, 1/13/2005    4,000,000        4,003,313 
Michigan—5.0%             
Michigan State Building Authority, Revenue, CP             
1.42%, 11/4/2004 (LOC: Bank of New York and             
State Street Bank and Trust)    2,500,000        2,500,000 
Michigan State Strategic Fund, LOR, VRDN             
(Henry Ford Museum Village Project)             
1.74% (LOC; Comerica Bank)    5,100,000    a    5,100,000 
Mississippi—.7%             
County of Jackson, Port Facilities Revenue, Refunding             
VRDN (Chevron USA Inc. Project) 1.74%    1,000,000    a    1,000,000 
New Jersey—1.1%             
New Jersey Economic Development Authority             
Water Facilities Revenue, Refunding, VRDN             
(United Water New Jersey Inc. Project) 1.70%             
(Insured; AMBAC and Liquidity Facility;             
Bank of New York)    1,600,000    a    1,600,000 
New Mexico—2.1%             
City of Santa Fe, Gross Receipts Tax Revenue, VRDN             
(Wastewater Systems) 1.79% (LOC; BNP Paribas)    3,200,000    a    3,200,000 
New York—1.7%             
City of New York, GO Notes, VRDN 1.68%             
(LOC; State Street Bank and Trust )    2,600,000    a    2,600,000 
Ohio—.5%             
County of Hamilton, Hospital Facilities Revenue, VRDN             
(Health Alliance) 1.73% (Insured; MBIA and             
Liquidity Facility; Credit Suisse First Boston)    800,000    a    800,000 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

    Principal         
Tax Exempt Investments (continued)    Amount ($)    Value ($) 
Oklahoma—.8%             
Tulsa County Industrial Authority, Revenue, VRDN             
(Montercau) 1.74% (LOC; BNP Paribas)    1,180,000    a    1,180,000 
Pennsylvania—.6%             
Lehigh County Industrial Development Authority, PCR             
VRDN (Allegheny Electric Cooperative)             
1.60% (LOC; Rabobank Nederland)    920,000    a    920,000 
Texas—2.7%             
Grand Prairie Sports Facilities Development Corporation             
Sales Tax Revenue, Refunding 1.75%, 9/15/2005             
(Insured; FSA and Liquidity Facility; Dexia Credit Locale)    2,015,000        2,015,000 
North Central Texas Health Facility Development             
Corporation, Health Care Facilities Revenue             
VRDN (Methodist Hospital of Dallas)             
1.74% (Insured; MBIA and Liquidity Facility;             
Dexia Credit Locale)    1,600,000    a    1,600,000 
Southwest Higher Education Authority             
College and University Revenue,VRDN             
(Southern Methodist University) 1.73%             
(LOC; Landesbank Hessen-Thuringen Girozentrale)    500,000    a    500,000 
Washington—10.7%             
Washington Housing Finance Commission, VRDN:             
MFHR (Anchor Village Apartments Project)             
1.81% (Insured; FNMA)    10,750,000    a    10,750,000 
MFMR (Wandering Creek Project)             
1.83% (Insured; FHLMC and             
Liquidity Facility; FHLMC)    5,300,000    a    5,300,000 
Washington Public Power Supply System Project No. 2             
Electric Revenue, Refunding, VRDN             
1.74% (Insured; MBIA and Liquidity Facility;             
Credit Suisse First Boston)    100,000    a    100,000 
Wisconsin—4.8%             
Wisconsin Health and Educational Facilities Authority             
Health Care Facilities Revenue, VRDN             
1.76% (Wheaton Franciscan Services)             
(LOC; U.S. Bank N.A.)    2,000,000    a    2,000,000 
University of Wisconsin Hospitals and Clinics Authority             
Health Care Facilities Revenue, VRDN 1.77%             
(Insured; MBIA and Liquidity Facility; U.S. Bank N.A.)    5,300,000    a    5,300,000 
 
Total Investments (cost $155,448,246)    102.8%        155,448,246 
Liabilities, Less Cash and Receivables    (2.8%)    (4,230,215) 
Net Assets    100.0%        151,218,031 

10

Summary of Abbreviations         
 
AMBAC    American Municipal Bond    FSA    Financial Security Assurance 
    Assurance Corporation    GO    General Obligation 
BAN    Bond Anticipation Notes    IDR    Industrial Development Revenue 
CP    Commercial Paper    LOC    Letter of Credit 
EDR    Economic Development Revenue    LOR    Limited Obligation Revenue 
FGIC    Financial Guaranty Insurance    MBIA    Municipal Bond Investors Assurance 
    Company        Insurance Corporation 
FHLB    Federal Home Loan Bank    MFHR    Multi-Family Housing Revenue 
FHLMC    Federal Home Loan Mortgage    MFMR    Multi-Family Mortgage Revenue 
    Corporation    PCR    Pollution Control Revenue 
FNMA    Federal National Mortgage    TRAN    Tax and Revenue Anticipation Notes 
    Association    VRDN    Variable Rate Demand Notes 

Summary of Combined Ratings (Unaudited)     
 
Fitch    or    Moody's    or    Standard & Poor's    Value (%)† 
F1+, F1        VMIG1, MIG1, P1        SP1+, SP1, A1+, A1    93.1 
AAA, AA, A b        Aaa, Aa, A b        AAA, AA, A b    5.3 
Not Rated c        Not Rated c        Not Rated c    1.6 
                    100.0 

†    Based on total investments. 
a    Securities payable on demand.Variable interest rate—subject to periodic change. 
b    Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. 
c    Securities which, while not rated by Fitch, Moody's and Standard & Poor's, have been determined by the Manager to 
    be of comparable quality to those rated securities in which the fund may invest. 
See notes to financial statements. 

The Fund 11

  STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments    155,448,246    155,448,246 
Cash        927,033 
Interest receivable        521,065 
        156,896,344 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        63,141 
Payable for investment securities purchased        4,475,000 
Bank loan payable—Note 2        1,000,000 
Dividends payable        139,715 
Interest payable—Note 2        457 
        5,678,313 
Net Assets ($)        151,218,031 
Composition of Net Assets ($):         
Paid-in capital        151,222,531 
Accumulated net realized gain (loss) on investments        (4,500) 
Net Assets ($)        151,218,031 

Net Asset Value Per Share         
    Investor Shares    Class R Shares 
Net Assets ($)    26,379,997    124,838,034 
Shares Outstanding    26,381,752    124,840,779 
Net Asset Value Per Share ($)    1.00    1.00 

See notes to financial statements.

12

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Interest Income    2,537,158 
Expenses:     
Management fee—Note 3(a)    1,143,676 
Distribution fees (Investor Shares)—Note 3(b)    59,337 
Interest expense—Note 2    13,182 
Total Expenses    1,216,195 
Investment Income—Net, representing net increase     
in net assets resulting from operations    1,320,963 

See notes to financial statements.

The Fund 13

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    1,320,963    2,237,750 
Net realized gain (loss) on investments    —    (2,787) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    1,320,963    2,234,963 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (127,486)    (174,081) 
Class R shares    (1,193,477)    (2,063,669) 
Total Dividends    (1,320,963)    (2,237,750) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold:         
Investor shares    66,325,162    118,427,509 
Class R shares    512,954,857    694,361,504 
Dividends reinvested:         
Investor shares    118,559    129,832 
Class R shares    149,592    145,926 
Cost of shares redeemed:         
Investor shares    (71,374,586)    (119,147,931) 
Class R shares    (637,509,901)    (762,363,992) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (129,336,317)    (68,447,152) 
Total Increase (Decrease) in Net Assets    (129,336,317)    (68,449,939) 
Net Assets ($):         
Beginning of Period    280,554,348    349,004,287 
End of Period    151,218,031    280,554,348 

See notes to financial statements.

14

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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .004    .004    .009    .026    .033 
Distributions:                     
Dividends from investment income—net    (.004)    (.004)    (.009)    (.026)    (.033) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .44    .44    .87    2.60    3.38 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .71    .70    .71    .71    .71 
Ratio of net investment income                     
to average net assets    .43    .45    .86    2.64    3.35 
Net Assets, end of period ($ X 1,000)    26,380    31,311    31,902    26,955    39,694 

See notes to financial statements.

The Fund 15

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class R Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .006    .006    .011    .028    .035 
Distributions:                     
Dividends from investment income—net    (.006)    (.006)    (.011)    (.028)    (.035) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .64    .65    1.07    2.78    3.59 
Ratios/Supplemental Data (%):                     
Ratio of total expenses to                     
average net assets    .51    .50    .51    .51    .51 
Ratio of net investment income                     
to average net assets    .60    .65    1.07    2.72    3.52 
Net Assets, end of period ($ X 1,000)    124,838    249,243    317,102    341,092    264,215 

See notes to financial statements.

16

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 sixteen series including the fund.The fund's investment objective is to seek income, consistent with stability of principal, that is exempt from federal income tax. The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares.The fund is authorized to issue 1 billion shares of $.001 par value Capital Stock in each of the following classes of shares: Investor and Class R. Investor shares are sold primarily to retail investors and bear a distribution fee. Class R shares are sold primarily to bank trust departments and other financial service providers (including Mellon 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. Income, expenses (other expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

The Fund 17

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 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 accretion of discount and amortization of premium on investments, is earned from settlement date and 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 income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.

18

At October 31, 2004, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $1,713 of the carryover expires in fiscal 2005 and $2,787 expires in fiscal 2011.

The tax character of all distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003 was all tax exempt income.

At October 31, 2004, 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—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 based on prevailing market rates in effect at the time of borrowings.

The average amount of borrowings outstanding under the line of credit during the period ended October 31, 2004 was approximately $797,000 with a related weighted average annualized interest rate of 1.65% .

NOTE 3—Investment Management Fee and Other Transactions With Affiliates:

(a) 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

The Fund 19

NOTES TO FINANCIAL STATEMENTS (continued)

Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .50% of the value of the fund's average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, Rule 12b-1 distribution fees and expenses, fees and expenses of non-interested Directors (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund's allocable portion of fees and expenses of the non-interested Directors (including counsel fees). Each director receives $40,000 per year, plus $5,000 for each joint Board meeting of the Company, 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) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Investor shares may pay annually up to .25% of the value of the average daily net assets (currently limited by the Company's Board of Directors to .20%) attributable to its Investor shares to com-

20

pensate the Distributor for shareholder servicing activities and activities primarily intended to result in the sale of Investor shares. During the period ended October 31, 2004, Investor shares were charged $59,337 pursuant to the Plan.

Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of majority of those Directors who are not interested persons of the Company and who have no direct or indirect financial interest in the operation of or in any agreement related to the Plan.

The components of Due to The Dreyfus Corporation and affiliates consists of: management fees $58,728 and Rule 12b-1 distribution plan fees $4,413.

NOTE 4—Legal Matters:

Two class actions have been filed against Mellon Financial,Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors, and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state

The Fund 21

NOTES TO FINANCIAL STATEMENTS (continued)

and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

22

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  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, 2004, 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian.As to securities purchased but not yet received, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Municipal Reserves of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 23

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, 2004 as "exempt-interest dividends" (not generally subject to regular federal income tax).

24

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 25

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
———————
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
———————
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 

——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

26

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 27

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

28

For More    Information 
 
Dreyfus    Transfer Agent & 
Municipal Reserves    Dividend Disbursing Agent 
200 Park Avenue    Dreyfus Transfer, Inc. 
New York, NY 10166    200 Park Avenue 
Investment Adviser    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue    Dreyfus Service Corporation 
New York, NY 10166    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
Information regarding how the fund voted proxies relating to portfolio securities for the 12- 
month period ended June 30, 2004, is available on the SEC's website at http://www.sec.gov 
and without charge, upon request, by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0324AR1004

  Dreyfus Premier
Balanced Fund

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
8    Understanding Your Fund's Expenses 
8    Comparing Your Fund's Expenses 
With Those of Other Funds
9    Statement of Investments 
18    Statement of Assets and Liabilities 
19    Statement of Operations 
20    Statement of Changes in Net Assets 
22    Financial Highlights 
27    Notes to Financial Statements 
37    Report of Independent Registered 
    Public Accounting Firm 
38    Important Tax Information 
39    Board Members Information 
41    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Premier
Balanced Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Premier Balanced Fund,covering the 12-month period from November 1,2003, through October 31,2004.Inside,you'll find valuable information about how the fund was managed during the reporting period,including a discussion with Emerson Tuttle, who manages the equity component of the fund, and Gerald E.Thunelius, Director of the Dreyfus Taxable Fixed Income Team that manages the fixed-income component of the fund.

The Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, the rate of corporate earnings growth appears to have slowed dramatically and high energy prices threaten to erode the rate of economic growth. Though these factors may suggest the U.S. economy is moving toward a new phase of the business cycle, we believe the current economic cycle still favors higher-quality stocks, which currently offer favorable relative and absolute valuations. If inflation remains subdued, as we expect, higher-quality bonds also may benefit, despite the likelihood of further moves by the Fed toward higher short-term interest rates.

Of course, the specific investments that may be right for you in today's economic and market environment depend on your current needs, future goals, tolerance for risk and the composition of your overall portfolio.As always, your financial advisor may be in the best position to recommend the specific asset classes and investments that will satisfy your financial needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Emerson Tuttle, Portfolio Manager

Gerald E. Thunelius, Director, Dreyfus Taxable Fixed Income Team

How did Dreyfus Premier Balanced Fund perform relative to its benchmark?

For the 12-month period ended October 31, 2004, the fund produced total returns of 4.90% for Class A shares, 4.13% for Class B shares, 4.20% for Class C shares,5.25% for Class R shares and 4.73% for Class T shares.1 In comparison, the fund's benchmark, a hybrid index composed of 60% Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") and 40% Lehman Brothers U.S. Aggregate Index ("Lehman Aggregate Index"), provided a total return of 7.86% for the same period. Separately, the S&P 500 Index and the Lehman Aggregate Index provided total returns of 9.41% and 5.53%, respectively, for the same period.2

The stock and bond markets generally rose on the strength of robust U.S. economic growth and low inflation, respectively, although the stock market's gains were constrained during the second half of the reporting period by geopolitical and economic uncertainties. While the fund participated in the stock market's overall climb, disappointing returns from a variety of individual equity investments undermined the fund's performance compared to its hybrid benchmark.The fund's bond portfolio produced returns that were roughly in line with those of the Lehman Aggregate Index.

What is the fund's investment approach?

The fund is a balanced fund, with an allocation under normal circumstances of 60% stocks and 40% bonds, corresponding to the fund's benchmark. 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 returns and risks of each asset class, using a model that analyzes several factors, including interest-rate-adjusted price-to-earnings ratios, the

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

valuation and volatility levels of stocks relative to bonds, and economic factors such as interest rates.

What other factors influenced the fund's performance?

The fund emphasized stocks over bonds, a strategy that enhanced returns throughout the reporting period as the U.S. economy continued to grow and business conditions generally improved. Among equities, energy stocks generated particularly strong gains in response to rising oil and gas prices.The fund roughly matched the benchmark's returns in the energy sector, with good individual stock selections compensating for the fund's relatively light position.Top energy performers included XTO Energy,Anadarko Petroleum and ExxonMobil.The fund generally outperformed the benchmark in the consumer discretionary area with strong results from travel and recreational activities companies, such as Hilton Hotels and cruise line operator Carnival, and specialty retailers, such as PETsMART.

Other stock market sectors provided mixed results. In the financial and health care areas, relatively strong gains in some holdings were balanced by relatively weak returns in others. Returns compared to the benchmark suffered most in the technology sector, where computer hardware and semiconductor capital equipment holdings such as EMC, Hewlett-Packard, KLA-Tencor and Applied Materials lost ground.Among industrials stocks, disappointments included for-profit education provider Corinthian Colleges and European discount airline Ryanair Holdings. In the telecommunications services sector, the fund's lack of exposure to wireless communications stocks further undermined its relative performance.

The fund's bond portfolio produced returns that generally were in line with those of the Lehman Aggregate Index. Despite moves by the Federal Reserve Board toward higher interest rates during the second half of the reporting period, longer-term bonds generally gained value as inflationary pressures appeared to remain low. Corporate bonds continued to rally amid improving business conditions, and mortgage-backed securities benefited from a substantial abatement in refinancing activity among homeowners.

4

What is the fund's current strategy?

In a growing economy characterized by rising interest rates, we have continued to devote a slightly higher percentage of the fund's assets to stocks than the blended benchmark.

Emerson Tuttle stepped in as manager of the fund's equity portion as of October 5, 2004.While maintaining the fund's basic investment strategy and profile, we have begun to modify the fund's equity holdings to better reflect top-down economic analyses and bottom-up analyst recommendations. More specifically, we began to adjust the fund's sector allocations and reduce the number of stocks in the portfolio. These shifts are designed to increase the fund's emphasis on the specific stocks we view most favorably.As a result, as of the end of the reporting period, the fund maintained a modest emphasis on technology stocks and relatively light positions in consumer staples and telecommunications services stocks.

Among bonds, we have continued to attempt to mirror the composition of the Lehman Aggregate Index.This strategy is designed to participate in the bond market's returns without adding measurably to the risks already incurred through the fund's stock portfolio.

November 15, 2004

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. Return figures 
    provided reflect the absorption of fund expenses by The Dreyfus Corporation pursuant to an 
    agreement in effect through April 4, 2005, at which time it may be extended, terminated or 
    modified. Had these expenses not been absorbed, the fund's returns would have been lower. 
    Part of the fund's recent performance is attributable to positive returns from its initial public 
    offering (IPO) investments.There can be no guarantee that IPOs will have or continue to 
    have a positive effect on the fund's performance. 
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 Lehman Brothers U.S.Aggregate 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 5

FUND PERFORMANCE

Comparison of change in value of $10,000 investment in Dreyfus Premier Balanced Fund Class A shares and Class R shares with the Standard & Poor's 500 Composite Stock Price Index, the Lehman Brothers U.S. Aggregate Index and the Hybrid Index

† Source: Lipper Inc.

Past performance is not predictive of future performance.

Part of the fund's recent performance is attributable to positive returns from its initial public offering (IPO) investments. There can be no guarantee that IPOs will have or continue to have a positive effect on the fund's performance. The above graph compares a $10,000 investment made in Class A shares and Class R shares of Dreyfus Premier Balanced Fund on 10/31/94 to a $10,000 investment made on that date in each of the following: the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"); the Lehman Brothers U.S. Aggregate Index (the "Lehman Index"); and an unmanaged hybrid index composed of 60% S&P 500 Index and 40% Lehman Index (the "Hybrid Index"). All dividends and capital gain distributions are reinvested.The Hybrid Index is calculated on a year-to-year basis. 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 S&P 500 Index is a widely accepted, unmanaged index of U.S. stock market performance.The Lehman 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.All indices do 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.

6

Average Annual Total Returns as of 10/31/04             
 
    Inception                From 
    Date    1 Year    5 Years    10 Years    Inception 
Class A shares                     
with maximum sales charge (5.75%)        (1.16)%    (3.89)%    6.97%     
without sales charge        4.90%    (2.74)%    7.61%     
Class B shares                     
with applicable redemption charge †    12/19/94    0.13%    (3.85)%    —    7.45%†† 
without redemption    12/19/94    4.13%    (3.48)%    —    7.45%†† 
Class C shares                     
with applicable redemption charge †††    12/19/94    3.20%    (3.47)%    —    7.18% 
without redemption    12/19/94    4.20%    (3.47)%    —    7.18% 
Class R shares        5.25%    (2.51)%    7.87%     
Class T shares                     
with applicable sales charge (4.5%)    8/16/99    0.02%    (3.88)%    —    (3.43)% 
without sales charge    8/16/99    4.73%    (2.99)%    —    (2.57)% 

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

† The maximum contingent deferred sales charge for Class B shares is 4%.After six years Class B shares convert to
Class A shares.
Assumes the conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
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 7

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Premier Balanced Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment             
assuming actual returns for the six months ended October 31, 2004         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.85    $ 9.64    $ 9.64    $ 4.58    $ 7.12 
Ending value (after expenses)    $1,023.10    $1,019.30    $1,019.30    $1,024.40    $1,021.90 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.84    $ 9.63    $ 9.63    $ 4.57    $ 7.10 
Ending value (after expenses)    $1,019.36    $1,015.58    $1,015.58    $1,020.61    $1,018.10 

† Expenses are equal to the fund's annualized expense ratio of 1.15% for Class A, 1.90% for Class B, 1.90% for
Class C, .90% for Class R and 1.40% for Class T; multiplied by the average account value over the period,
multiplied by 184/366 (to reflect the one-half year period).
8
STATEMENT OF INVESTMENTS
October 31, 2004
Common Stocks—62.9%    Shares    Value ($) 
Consumer Discretionary—7.3%         
Carnival    28,400    1,435,904 
Clear Channel Communications    13,000    434,200 
Comcast, Cl. A    29,937 a    883,142 
Corinthian Colleges    22,000 a,b    315,920 
Disney (Walt)    47,000    1,185,340 
DreamWorks Animation SKG, Cl. A    4,200 a    164,010 
Federated Department Stores    19,000    958,550 
Hilton Hotels    43,000    855,700 
Home Depot    46,000    1,889,680 
International Game Technology    22,000    726,880 
Lamar Advertising    26,000 a    1,076,920 
Liberty Media    85,000 a    758,200 
PetSmart    31,000    991,380 
Staples    48,000    1,427,520 
Target    21,900    1,095,438 
Time Warner    78,300 a    1,302,912 
Univision Communications, Cl. A    26,000 a,b    804,960 
Viacom, Cl. B    49,000    1,788,010 
        18,094,666 
Consumer Staples—5.4%         
Altria Group    36,800    1,783,328 
Colgate-Palmolive    19,000    847,780 
Dean Foods    23,000 a    686,550 
General Mills    10,000    442,500 
Kellogg    19,000    817,000 
PepsiCo    62,900    3,118,582 
Procter & Gamble    44,000    2,251,920 
Wal-Mart Stores    64,100 b    3,456,272 
        13,403,932 
Energy—5.0%         
Anadarko Petroleum    26,000    1,753,700 
BP, ADR    16,000    932,000 
ChevronTexaco    38,000    2,016,280 
ConocoPhillips    9,000    758,790 
Exxon Mobil    140,800    6,930,176 
        12,390,946 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Financial—13.0%         
American Express    20,000    1,061,400 
American International Group    42,700    2,592,317 
Axis Capital Holdings    23,000    576,380 
Bank of America    71,538    3,204,187 
Bank of New York    38,300    1,243,218 
Capital One Financial    15,000    1,106,400 
CIT Group    40,000    1,616,000 
Citigroup    95,700    4,246,209 
Countrywide Financial    69,398    2,215,878 
Federal National         
Mortgage Association    26,900    1,887,035 
Fidelity National Financial    20,400    769,896 
Fifth Third Bancorp    15,000    737,850 
Goldman Sachs Group    15,300    1,505,214 
J.P. Morgan Chase & Co.    51,280    1,979,408 
Merrill Lynch    24,000    1,294,560 
Morgan Stanley    24,000    1,226,160 
Wachovia    26,000    1,279,460 
Wells Fargo    35,400    2,114,088 
Willis Group Holdings    41,600    1,495,520 
        32,151,180 
Health Care—8.3%         
Abbott Laboratories    18,300    780,129 
Bard (C.R.)    9,000    511,200 
Becton, Dickinson & Co.    18,000    945,000 
Bristol-Myers Squibb    31,000    726,330 
Community Health Systems    23,000 a    616,860 
Genzyme    22,900 a    1,201,563 
Gilead Sciences    23,900 a    827,657 
Guidant    9,000    599,580 
Hospira    39,330 a    1,255,020 
Johnson & Johnson    49,300    2,878,134 
Lilly (Eli) & Co.    17,100    938,961 
Medtronic    36,500    1,865,515 
Merck & Co.    29,100    911,121 
Novartis, ADR    38,800    1,862,788 
PacifiCare Health Systems    18,000 a    641,160 
Pfizer    94,700    2,741,565 

10

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
Schering-Plough    42,000    760,620 
Thermo Electron    19,700 a    571,300 
        20,634,503 
Industrials—7.0%         
AMR    47,000 a    362,840 
Caterpillar    19,300    1,554,422 
Danaher    20,000    1,102,600 
Deere & Co.    17,000    1,016,260 
Eaton    17,600    1,125,520 
Emerson Electric    14,000    896,700 
General Electric    178,600    6,093,832 
Rockwell Collins    20,000    709,400 
3M    13,200    1,023,924 
Tyco International    39,000    1,214,850 
United Parcel Service, Cl. B    19,400    1,536,092 
United Technologies    9,000    835,380 
        17,471,820 
Information Technology—11.2%         
Accenture    31,000 a    750,510 
Altera    27,000 a,b    613,710 
Amdocs    34,000 a    855,100 
Cisco Systems    107,700 a    2,068,917 
Computer Sciences    18,000 a    894,060 
Dell    67,300 a    2,359,538 
First Data    24,000    990,720 
Hewlett-Packard    53,640    1,000,922 
Intel    102,300    2,277,198 
International Business Machines    31,200    2,800,200 
Microsoft    192,100    5,376,879 
Motorola    44,000    759,440 
National Semiconductor    44,000 a    734,800 
Oracle    85,100 a,b    1,077,366 
QUALCOMM    25,000    1,045,250 
SAP, ADR    15,000    639,750 
SunGard Data Systems    33,000 a    874,170 
Texas Instruments    38,000    929,100 
VeriSign    59,000 a    1,582,970 
        27,630,600 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Materials—2.0%         
Air Products & Chemicals    20,000    1,063,600 
du Pont (E.I.) de Nemours    20,000    857,400 
Praxair    38,800    1,637,360 
Sigma-Aldrich    13,000    723,320 
Weyerhaeuser    12,000    751,680 
        5,033,360 
Telecommunication Services—1.8%         
SBC Communications    72,600    1,833,876 
Sprint (FON Group)    42,500    890,375 
Verizon Communications    43,000    1,681,300 
        4,405,551 
Utilities—1.9%         
Consolidated Edison    19,000 b    825,550 
Dominion Resources    13,000    836,160 
Exelon    21,400 b    847,868 
FPL Group    11,000    757,900 
KeySpan    15,000    599,250 
Southern    26,000    821,340 
        4,688,068 
Total Common Stocks         
(cost$128,067,855)        155,904,626 

    Principal     
Bonds and Notes—37.6%    Amount ($)    Value ($) 
Airlines—.0%         
Continental Airlines,         
Pass-Through Ctfs., Ser. 1998-1, Cl. A,         
6.648%, 9/15/2017    63,437    59,661 
Asset-Backed Certificates—1.0%         
MBNA Master Credit Card Note Trust,         
Ser. 2002-C1, 6.8%, 7/15/2014    1,228,300    1,370,624 
Saxon Asset Securities Trust,         
Ser. 2004-2, Cl AF2, 4.15%, 08/25/35    1,081,000    1,089,281 
        2,459,905 

12

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Auto Manufactering—.1%             
General Motors,             
Sr. Notes, 8.375%, 7/15/2033    269,000        280,697 
Banking—.7%             
Bank of America,             
Sr. Notes, 4.375%, 12/1/2010    1,675,000    b    1,700,259 
Commercial Mortgage Pass-Through Certificates—.7%         
CS First Boston Mortgage Securities,             
Ser. 1998-C1, Cl. A1A, 6.26%, 5/17/2040    441,066        449,117 
Salomon Brothers Mortgage Securities VII,             
Ser. 2002-KEY2, Cl. A1, 3.222%, 3/18/2036    1,431,896        1,435,245 
            1,884,362 
Commercial Services—.7%             
Pitney Bowes,             
Notes, 4.75%, 5/15/2018    1,715,000        1,685,576 
Computers—.1%             
International Business Machines,             
Sr. Notes, 4.75%, 11/29/2012    210,000    b    214,870 
Consumer Products—.3%             
Kimberly-Clark,             
Notes, 5%, 8/15/2013    760,000        794,283 
Data Processing—.3%             
First Data,             
Notes, 4.85%, 10/1/2014    657,000        665,830 
Diversified Financial Services—.8%             
Boeing Capital,             
Bonds, 5.8%, 1/15/2013    201,000    b    218,136 
Ford Motor Credit:             
Notes, 2.07%, 3/13/2007    159,000    c    156,209 
Notes, 2.79%, 9/28/2007    405,000    c    401,973 
Morgan Stanley,             
Sub. Notes, 4.75%, 4/1/2014    575,000        564,345 
Goldman Sachs,             
Notes, 3.875%, 1/15/2009    640,000    b    644,968 
            1,985,631 

The Fund 13

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Electric—.6%         
Public Service Company of Colorado,         
First Collateral Trust Bonds, Ser. 12,     
4.875%, 3/1/2013    541,000    554,022 
TXU Energy,         
Sr. Notes, 7%, 3/15/2013    800,000    909,765 
        1,463,787 
Electrical Components & Equipment—.3%     
Emerson Electric,         
Bonds, 4.5%, 5/1/2013    685,000    687,158 
Food & Beverages—.3%         
Miller Brewing,         
Notes, 4.25%, 8/15/2008    400,000 d    408,464 
Pepsi Bottling,         
Sr. Notes, Ser. B, 7%, 3/1/2029    235,000    282,482 
        690,946 
Forest Products & Paper—.1%         
International Paper,         
Notes, 5.85%, 10/30/2012    150,000    160,403 
Insurance—.3%         
Aspen Insurance,         
Sr. Notes, 6%, 8/15/2014    565,000 d    574,372 
Chubb,         
Notes, 6%, 11/15/2011    185,000    200,316 
        774,688 
Mining—.1%         
Alcoa,         
Notes, 4.25%, 8/15/2007    130,000    133,756 
Oil & Gas—.1%         
ConocoPhillips,         
Notes, 4.75%, 10/15/2012    285,000    293,150 

14

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Real Estate—.1%         
EOP Operating,         
Sr. Notes, 7%, 7/15/2011    190,000    215,642 
Residential Mortgage         
Pass-Through Certificates—1.3%         
Argent Securities,         
Ser. 2004-W5, Cl. AF4, 4.01%, 4/25/2034    800,000    789,951 
Equity One ABS,         
Ser. 2004-3, Cl. AF3, 4.265%, 7/25/2034    748,000    753,952 
Residential Asset Mortgage Products,         
Ser. 2003-RS8, Cl. A4, 4.223%, 9/25/2028    1,600,000    1,621,254 
        3,165,157 
Restaurants—.3%         
Tricon Global,         
Sr. Notes, 8.875%, 2011    660,000    824,793 
Structured Index—1.3%         
Morgan Stanley Traded Custody Receipts,         
Ser. 2002-1, 5.878%, 3/1/2007    3,045,000 d,e    3,186,465 
Telecommunications—.6%         
British Telecommunications,         
Notes, 8.375%, 12/15/2010    727,000    883,273 
Sprint Capital,         
Notes, 6%, 1/15/2007    142,000    150,234 
Verizon Florida,         
Debs., 6.125%, 1/15/2013    411,000    444,513 
Verizon Wireless Capital,         
Notes, 5.375%, 12/15/2006    115,000    120,595 
        1,598,615 
U.S. Government—9.8%         
U.S. Treasury Bonds;         
5.375%, 2/15/2031    8,242,000 b    8,954,438 

The Fund 15

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government (continued)         
U.S. Treasury Notes:         
1.625%, 2/28/2006    176,000    174,426 
1.5%, 3/31/2006    84,000    83,039 
4.75%, 5/15/2014    1,774,000    1,876,271 
6.25%, 2/15/2007    2,090,000 b    2,257,346 
U.S Treasury Inflation Protection Securities:     
3.375%, 4/15/2032    7,004,458    8,937,418 
2%, 7/15/2014    2,022,684    2,082,106 
        24,365,044 
U.S. Government Agencies/         
Mortgage-Backed—17.7%         
Federal Home Loan Mortgage Corp.:         
Mortgage Backed;         
5.5%, 7/1/2034-9/1/2034    135,517    139,418 
REMIC, Gtd. Multiclass Mortgage Participation Cfts.:     
Ser. 2612, Cl. LJ, 4%, 7/15/2022    324,083    327,720 
Ser. 2693, Cl. MH, 4%, 9/15/2027    2,000,000    1,961,072 
Federal National Mortgage Association;         
Mortgage Backed:         
5.5%, 9/1/2034    3,980,289    4,062,259 
6%, 8/1/2032-9/1/2034    2,335,994    2,429,338 
6.88%, 2/1/2028    737,907    838,091 
Government National Mortgage Association I;     
Mortgage Backed:         
5.5%, 12/20/2029-9/15/2034    11,608,583    11,904,505 
6%, 5/15/2028-12/15/2033    21,435,281    22,327,700 
        43,990,103 
Total Bonds and Notes         
(cost $92,775,821)        93,280,781 

Other Investments—.5%    Shares    Value ($) 
Registered Investment Companies;         
Dreyfus Institutional Preferred Plus Money Market Fund     
(cost $1,302,000)    1,302,000 f    1,302,000 

16

Investment of Cash Collateral         
for Securities Loaned—7.4%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Money Market Fund     
(cost $18,448,423)    18,448,423 f    18,448,423 
Total Investments (cost $240,594,099)    108.4%    268,935,830 
Liabilities, Less Cash and Receivables    (8.4%)    (21,023,896) 
Net Assets    100.0%    247,911,934 

a Non-income producing. 
b All or a portion of these securities are on loan.At October 31, 2004, the total market value of the fund's securities 
on loan is $17,910,869 and the total market value of the collateral held by fund is $18,448,423. 
c Variable rate security—interest rate subject to periodic change. 
d Securities exempt from registration under rule 144A of the Securities Act of 1933.These securities may be sold 
in transactions exempt from registration, normally to qualified institutional buyers.These securities have been 
determined to be liquid by the Board of Directors. At October 31, 2004, these securities amount to $4,169,301 
or 1.7% of the net assets. 
e Security linked to a portfolio of investment grade debt securities. 
f Investments in affiliated money market mutual funds. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
U.S. Government Agencies/        Consumer Staples    5.4 
Mortgage-Backed    17.7    Energy    5.0 
Financial    13.0    Materials    2.0 
Information Technology    11.2    Utilities    1.9 
U.S. Government    9.8    Short-Term/     
Health Care    8.3    Money Market Investments    7.9 
Consumer Discretionary    7.3    Other    11.9 
Industrials    7.0        108.4 

† Based on net assets.
See notes to financial statements.

The Fund 17

  STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
    Cost    Value 
Assets ($):         
Investments in securities—See Statement         
of Investments (including securities on loan     
valued at $17,910,869)—Note 1(b):         
Unaffiliated issuers    220,843,676    249,185,407 
Affiliated issuers    19,750,423    19,750,423 
Receivable for investment securities sold        10,951,278 
Dividends and interest receivable        891,863 
Receivable for shares of Capital Stock subscribed    24,277 
        280,803,248 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    291,124 
Cash overdraft due to Custodian        15,878 
Liability for securities on loan—Note 1(b)        18,448,423 
Payable for investment securities purchased    13,366,101 
Payable for shares of Capital Stock redeemed    769,788 
        32,891,314 
Net Assets ($)        247,911,934 
Composition of Net Assets ($):         
Paid-in capital        445,431,005 
Accumulated undistributed investment income—net    1,422,498 
Accumulated net realized gain (loss) on investments    (227,283,300) 
Accumulated net unrealized appreciation         
(depreciation) on investments        28,341,731 
Net Assets ($)        247,911,934 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    98,545,777    78,262,366    16,426,326    54,428,599    248,866 
Shares Outstanding    8,004,507    6,382,399    1,334,959    4,418,632    20,231 
Net Asset Value                     
Per Share ($)    12.31    12.26    12.30    12.32    12.30 

See notes to financial statements.

18

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Interest    3,962,673 
Cash dividends (net of $9,380 foreign taxes withheld at source):     
Unaffiliated issuers    3,557,250 
Affiliated issuers    132,993 
Income from securities lending    23,849 
Total Income    7,676,765 
Expenses:     
Management fee—Note 3(a)    3,225,198 
Distribution and service fees—Note 3(b)    1,390,676 
Dividends on securities sold short    15,480 
Loan commitment fees—Note 2    2,660 
Total Expenses    4,634,014 
Less—reduction in management fee     
due to undertaking—Note 3(a)    (235,699) 
Net Expenses    4,398,315 
Investment Income—Net    3,278,450 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments:     
Long transactions    18,235,907 
Short sale transactions    (163,814) 
Net realized gain (loss) on financial futures    (1,829,999) 
Net Realized Gain (Loss)    16,242,094 
Net unrealized appreciation (depreciation) on investments    (4,559,373) 
Net Realized and Unrealized Gain (Loss) on Investments    11,682,721 
Net Increase in Net Assets Resulting from Operations    14,961,171 

See notes to financial statements.

The Fund 19

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    3,278,450    3,304,279 
Net realized gain (loss) on investments    16,242,094    (41,937,771) 
Net unrealized appreciation         
(depreciation) on investments    (4,559,373)    84,395,022 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    14,961,171    45,761,530 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (1,593,781)    (1,635,519) 
Class B shares    (616,845)    (371,108) 
Class C shares    (122,547)    (80,194) 
Class R shares    (1,676,548)    (2,536,285) 
Class T shares    (3,622)    (3,338) 
Total Dividends    (4,013,343)    (4,626,444) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    28,703,307    31,942,055 
Class B shares    4,328,838    6,411,710 
Class C shares    2,035,294    1,148,146 
Class R shares    21,794,470    21,709,250 
Class T shares    85,353    230,654 
Dividends reinvested:         
Class A shares    1,038,390    947,612 
Class B shares    490,306    292,272 
Class C shares    70,625    48,470 
Class R shares    1,670,880    2,532,492 
Class T shares    3,347    2,924 
Cost of shares redeemed:         
Class A shares    (63,587,557)    (96,121,460) 
Class B shares    (33,934,852)    (31,813,694) 
Class C shares    (6,719,516)    (8,956,678) 
Class R shares    (71,578,657)    (174,633,286) 
Class T shares    (169,288)    (398,514) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (115,769,060)    (246,658,047) 
Total Increase (Decrease) in Net Assets    (104,821,232)    (205,522,961) 
Net Assets ($):         
Beginning of Period    352,733,166    558,256,127 
End of Period    247,911,934    352,733,166 
Undistributed investment income—net    1,422,498    1,453,351 

20

    Year Ended October 31, 
    2004    2003 
Capital Share Transactions:         
Class A a         
Shares sold    2,343,349    2,873,319 
Shares issued for dividends reinvested    86,481    86,369 
Shares redeemed    (5,228,334)    (8,805,556) 
Net Increase (Decrease) in Shares Outstanding    (2,798,504)    (5,845,868) 
Class B a         
Shares sold    353,483    579,890 
Shares issued for dividends reinvested    40,940    26,821 
Shares redeemed    (2,782,403)    (2,911,193) 
Net Increase (Decrease) in Shares Outstanding    (2,387,980)    (2,304,482) 
Class C         
Shares sold    165,695    101,979 
Shares issued for dividends reinvested    5,876    4,435 
Shares redeemed    (549,861)    (813,527) 
Net Increase (Decrease) in Shares Outstanding    (378,290)    (707,113) 
Class R         
Shares sold    1,750,591    2,008,521 
Shares issued for dividends reinvested    139,050    231,306 
Shares redeemed    (5,838,704)    (15,737,305) 
Net Increase (Decrease) in Shares Outstanding    (3,949,063)    (13,497,478) 
Class T         
Shares sold    7,011    20,036 
Shares issued for dividends reinvested    278    267 
Shares redeemed    (13,946)    (35,436) 
Net Increase (Decrease) in Shares Outstanding    (6,657)    (15,133) 

a During the period ended October 31, 2004, 918,817 Class B shares representing $11,247,441 were automatically converted to 916,217 Class A shares and during the period ended October 31, 2003, 554,499 Class B shares representing $6,062,358 were automatically converted to 553,053 Class A shares.

See notes to financial statements.

The Fund 21

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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value,                     
beginning of period    11.90    10.73    12.44    15.23    15.69 
Investment Operations:                     
Investment income—net a    .15    .09    .13    .22    .44 
Net realized and unrealized gain                     
(loss) on investments    .43    1.19    (1.68)    (2.71)    (.19) 
Total from Investment Operations    .58    1.28    (1.55)    (2.49)    .25 
Distributions:                     
Dividends from investment                     
income—net    (.17)    (.11)    (.16)    (.30)    (.38) 
Dividends from net realized                     
gain on investments    —    —    —    —    (.33) 
Total Distributions    (.17)    (.11)    (.16)    (.30)    (.71) 
Net asset value, end of period    12.31    11.90    10.73    12.44    15.23 
Total Return (%) b    4.90    12.05    (12.62)    (16.65)    1.66 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.25    1.25    1.25    1.25    1.25 
Ratio of net expenses                     
to average net assets    1.18    1.25    1.25    1.25    1.25 
Ratio of net investment income                     
to average net assets    1.20    .86    1.06    1.57    2.83 
Portfolio Turnover Rate    215.48    305.24    268.17    150.98    100.47 
Net Assets, end of period                     
($ x 1,000)    98,546    128,519    178,679    290,331    379,670 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

22

        Year Ended October 31,     
Class B Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value,                     
beginning of period    11.85    10.69    12.40    15.18    15.65 
Investment Operations:                     
Investment income—net a    .05    .01    .04    .11    .32 
Net realized and unrealized                     
gain (loss) on investments    .44    1.19    (1.68)    (2.70)    (.19) 
Total from Investment Operations    .49    1.20    (1.64)    (2.59)    .13 
Distributions:                     
Dividends from investment                     
income—net    (.08)    (.04)    (.07)    (.19)    (.27) 
Dividends from net realized                     
gain on investments    —    —    —    —    (.33) 
Total Distributions    (.08)    (.04)    (.07)    (.19)    (.60) 
Net asset value, end of period    12.26    11.85    10.69    12.40    15.18 
Total Return (%) b    4.13    11.21    (13.29)    (17.27)    .84 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.00    2.00    2.00    2.00    2.00 
Ratio of net expenses                     
to average net assets    1.93    2.00    2.00    2.00    2.00 
Ratio of net investment income                     
to average net assets    .44    .12    .31    .83    2.07 
Portfolio Turnover Rate    215.48    305.24    268.17    150.98    100.47 
Net Assets, end of period                     
($ x 1,000)    78,262    103,904    118,415    174,172    223,096 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 23

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class C Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value,                     
beginning of period    11.89    10.73    12.45    15.23    15.70 
Investment Operations:                     
Investment income—net a    .05    .01    .04    .12    .32 
Net realized and unrealized                     
gain (loss) on investments    .44    1.19    (1.69)    (2.71)    (.19) 
Total from Investment Operations    .49    1.20    (1.65)    (2.59)    .13 
Distributions:                     
Dividends from investment                     
income—net    (.08)    (.04)    (.07)    (.19)    (.27) 
Dividends from net realized                     
gain on investments    —    —    —    —    (.33) 
Total Distributions    (.08)    (.04)    (.07)    (.19)    (.60) 
Net asset value, end of period    12.30    11.89    10.73    12.45    15.23 
Total Return (%) b    4.20    11.17    (13.32)    (17.26)    .90 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.00    2.00    2.00    2.00    2.00 
Ratio of net expenses                     
to average net assets    1.93    2.00    2.00    2.00    2.00 
Ratio of net investment income                     
to average net assets    .45    .11    .31    .83    2.07 
Portfolio Turnover Rate    215.48    305.24    268.17    150.98    100.47 
Net Assets, end of period                     
($ x 1,000)    16,426    20,370    25,970    43,451    60,237 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

24

        Year Ended October 31,     
Class R Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value,                     
beginning of period    11.91    10.74    12.45    15.24    15.70 
Investment Operations:                     
Investment income—net a    .18    .12    .16    .25    .47 
Net realized and unrealized                     
gain (loss) on investments    .43    1.19    (1.68)    (2.71)    (.18) 
Total from Investment Operations    .61    1.31    (1.52)    (2.46)    .29 
Distributions:                     
Dividends from investment                     
income—net    (.20)    (.14)    (.19)    (.33)    (.42) 
Dividends from net realized                     
gain on investments    —    —    —    —    (.33) 
Total Distributions    (.20)    (.14)    (.19)    (.33)    (.75) 
Net asset value, end of period    12.32    11.91    10.74    12.45    15.24 
Total Return (%)    5.25    12.19    (12.38)    (16.43)    1.86 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.00    1.00    1.00    1.00    1.00 
Ratio of net expenses                     
to average net assets    .93    1.00    1.00    1.00    1.00 
Ratio of net investment income                     
to average net assets    1.46    1.10    1.31    1.83    3.07 
Portfolio Turnover Rate    215.48    305.24    268.17    150.98    100.47 
Net Assets, end of period                     
($ x 1,000)    54,429    99,620    234,741    300,882    424,083 

a Based on average shares outstanding at each month end.
See notes to financial statements.

The Fund 25

  FINANCIAL HIGHLIGHTS (continued)
        Year Ended October 31,     
Class T Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value,                     
beginning of period    11.88    10.72    12.43    15.21    15.68 
Investment Operations:                     
Investment income—net a    .12    .07    .10    .18    .36 
Net realized and unrealized                     
gain (loss) on investments    .44    1.18    (1.68)    (2.70)    (.15) 
Total from Investment Operations    .56    1.25    (1.58)    (2.52)    .21 
Distributions:                     
Dividends from investment                     
income—net    (.14)    (.09)    (.13)    (.26)    (.35) 
Dividends from net realized                     
gain on investments    —    —    —    —    (.33) 
Total Distributions    (.14)    (.09)    (.13)    (.26)    (.68) 
Net asset value, end of period    12.30    11.88    10.72    12.43    15.21 
Total Return (%) b    4.73    11.69    (12.86)    (16.82)    1.35 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.50    1.50    1.50    1.50    1.50 
Ratio of net expenses                     
to average net assets    1.43    1.50    1.50    1.50    1.50 
Ratio of net investment income                     
to average net assets    .95    .62    .78    1.31    2.52 
Portfolio Turnover Rate    215.48    305.24    268.17    150.98    100.47 
Net Assets, end of period                     
($ x 1,000)    249    320    451    1,074    1,154 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

26

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 sixteen series, including the fund. The fund's investment objective is to outperform an unmanaged hybrid index, 60% of which is the Standard & Poor's 500 Composite Stock Price Index and 40% of which is the Lehman Brothers U.S. Aggregate Index.The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the Distributor of the fund's shares.The fund is authorized to issue 50 million shares of $.001 par value Capital Stock in each of the following classes of shares: Class A, Class B, Class C and Class R 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 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 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. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The Fund 27

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 U.S. generally accepted accounting principles, 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. Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sale price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is available. When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been sig-

28

nificantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the fund's Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADR's and futures contracts. For other securities that are fair valued by the fund's Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. Financial futures are valued at the last sales price.

(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, accretion of discount and amortization of premium on investments is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At originations, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized,

The Fund 29

NOTES TO FINANCIAL STATEMENTS (continued)

the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $1,423,053, accumulated capital losses $226,015,598 and unrealized appreciation $27,073,474.

The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $4,315,489 of the carryover expires in fiscal 2008, $105,290,796 expires in fiscal 2009, $72,687,006 expires in fiscal 2010 and $43,722,307 expires in fiscal 2011.

30

The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, were as follows: ordinary income $4,013,343 and $4,626,444, respectively.

During the period ended October 31, 2004, as a result of permanent book to tax differences primarily due to the tax treatment of treasury protected securities, the fund increased accumulated undistributed investment income-net by $704,040, decreased accumulated net realized gain (loss) on investments by the same amount. Net assets were not affected by this reclassification.

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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 based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2004, the fund did not borrow under the Facility.

NOTE 3—Investment Management Fee And Other Transactions With Affiliates:

(a) 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

The Fund 31

NOTES TO FINANCIAL STATEMENTS (continued)

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 Company, 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.

The Manager has agreed from February 1, 2004 through April 4, 2005 to waive receipt of a portion of the fund's management fee, in the amount of .10 of 1% of the value of the fund's average daily net assets. The reduction in management fee pursuant to the undertaking, amounted to $235,699 during the period ended October 31, 2004.

During the period ended October 31, 2004, the Distributor retained $18,056 and $27 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $279,352 and $1,827 from contingent deferred sales charges on redemptions of the fund's Class B and Class C shares, respectively.

32

(b) Under separate Distribution Plans (the "Plans") 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. 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 (the "Service Plan"), under which Class B, Class C and Class T shares pay the Distributor for providing certain services to the holders of their 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, 2004, Class A, Class B, Class C and Class T shares were charged $277,571, $695,000, $138,684 and $763, respectively, pursuant to their respective Plans. During the period ended October 31, 2004 Class B, Class C and Class T shares were charged $231,667, $46,228 and $763, respectively, pursuant to the Service Plan.

Under its terms, the Plans 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 Plans or Service Plan.

The components of Due to The Dreyfus Corporation and affiliates in the statement of Assets and Liabilities consist of: management fees $210,551, Rule 12b-1 distribution plan fees $81,440 and shareholder services plan fees $20,188, which are offset against an expense reimbursement currently in effect in the amount of $21,055.

The Fund 33

NOTES TO FINANCIAL STATEMENTS (continued)

(c) Pursuant to an exemptive order from the Securities and Exchange Commission, the fund may invest its available cash balances in affiliated money market mutual funds. Management fees of the underlying money market mutual funds have been waived by the Manager.

NOTE 4—Securities Transactions:

The following summarizes the aggregate amount of purchases and sales of investment securities, excluding short-term securities, financial futures and short sales, during the period ended October 31, 2004, of which $48,666,629 in purchases and $48,763,873 in sales were from dollar roll transactions:

    Purchases ($)    Sales ($) 
Long transactions    678,213,621    799,876,619 
Short sale transactions    1,349,961    — 
Total    679,563,582    799,876,619 

A mortgage dollar roll transaction involves a sale by the fund of mortgage related securities that it holds with an agreement by the fund to repurchase similar securities at an agreed upon price and date. The securities purchased will bear the same interest rate as these sold, but generally will be collateralized by pools of mortgages with different prepayment histories than those securities sold.

The fund is engaged in short-selling which obligates the fund to replace the security borrowed by purchasing the security at current market value. The fund would realize a gain, limited to the price at which the fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of a short sale. Until the fund replaces the borrowed security, the fund will maintain daily a segregated account with a broker or custodian, of permissible liquid assets sufficient to cover its short position. At October 31, 2004, there were no securities sold short outstanding.

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

34

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 broker, which consist of cash or cash equivalents.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, 2004, there were no open financial futures contracts.

At October 31, 2004, the cost of investments for federal income tax purposes was $241,862,356; accordingly, accumulated net unrealized appreciation on investments was $27,073,474, consisting of $32,908,118 gross unrealized appreciation and $5,834,644 gross unrealized depreciation.

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state

The Fund 35

NOTES TO FINANCIAL STATEMENTS (continued)

and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

NOTE 6—Proposed Plan of Reorganization:

On July 20, 2004, the fund's Board of Directors approved an Agreement and Plan of Reorganization, subject to the approval of shareholders, on or about January 19, 2005, under which all of the fund's assets will be transferred in a tax-free reorganization to Dreyfus Premier Balanced Opportunity Fund.

36

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
  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 Balanced Fund (the "Fund") of the The Dreyfus/Laurel Funds, Inc., as of October 31, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2004, by correspondence with the custodian and brokers.With respect to securities purchased or sold but not yet received or delivered we performed other appropriate audit 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, 2004, 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 the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 37

IMPORTANT TAX INFORMATION (Unaudited)

In accordance with federal tax law, the fund hereby designates 92.01% of the ordinary dividends paid during the fiscal year ended October 31, 2004 as qualifying for the corporate dividends received deduction. For the fiscal year ended October 31, 2004, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $2,388,179 represents the maximum amount that may be considered qualified dividend income. Shareholders will receive notification in January 2005 of the percentage applicable to the preparation of their 2004 income tax returns.

38

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 39

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

40

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 41

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

42

NOTES

For More    Information 
 
Dreyfus Premier    Transfer Agent & 
Balanced Fund    Dividend Disbursing Agent 
200 Park Avenue     
    Dreyfus Transfer, Inc. 
New York, NY 10166     
    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue     
    Dreyfus Service Corporation 
New York, NY 10166     
    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone Call your financial representative or 1-800-554-4611 
Mail The Dreyfus Premier Family of Funds 
144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0342AR1004

Dreyfus Premier 
Large Company 
Stock Fund 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
8    Understanding Your Fund's Expenses 
8    Comparing Your Fund's Expenses 
With Those of Other Funds
9    Statement of Investments 
13    Statement of Assets and Liabilities 
14    Statement of Operations 
15    Statement of Changes in Net Assets 
17    Financial Highlights 
22    Notes to Financial Statements 
31    Report of Independent Registered 
    Public Accounting Firm 
32    Important Tax Information 
33    Board Members Information 
35    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Premier
Large Company Stock Fund

The Fund

LETTER FROM THE CHAIRMAN

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, 2003, through October 31, 2004. 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, Sean P. Fitzgibbon.

The Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, the rate of corporate earnings growth appears to have slowed dramatically and high energy prices threaten to erode the rate of economic growth.Though these factors may suggest the U.S. economy is moving toward a new phase of the business cycle, we believe the current economic cycle still favors higher-quality stocks, which currently offer favorable relative and absolute valuations.

Of course, the specific investments that may be right for you in today's economic and market environment depend on your current needs, future goals, tolerance for risk and the composition of your overall portfolio.As always, your financial advisor may be in the best position to recommend the specific asset classes and investments that will satisfy your financial needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Sean Fitzgibbon, Portfolio Manager

How did Dreyfus Premier Large Company Stock Fund perform relative to its benchmark?

For the 12-month period ended October 31, 2004, the fund produced total returns of 6.05% for Class A shares, 5.34% for Class B shares, 5.28% for Class C shares, 6.35% for Class R shares, and 5.82% for Class T shares.1 For the same period, the total return of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), the fund's benchmark, was 9.41% .2

We attribute these results primarily to continued U.S. and global economic growth, which supported stock prices in spite of an uncertain geopolitical environment.While the fund participated in the market's advance to a significant degree, weak business fundamentals hurt several holdings in the technology and services sectors. As a result, the fund's returns underperformed the benchmark.

Effective October 20, 2004, I became the fund's primary portfolio manager. I have been employed by Dreyfus since October 2004. I am also a senior vice president, portfolio manager, analyst and member of the U.S. Large Cap Core Equity Team of The Boston Company Asset Management, LLC, an affiliate of Dreyfus, which I joined in 1991.

What is the fund's investment approach?

The fund seeks capital appreciation. Effective October 1, 2004, the fund changed its investment objective to its current objective.To pursue its goal, the fund normally invests at least 80% of its assets in stocks of large-cap companies.

The fund invests in a diversified portfolio of large companies that we believe meet our strict standards for value and growth. We identify potential investments through a quantitative analytic process that sifts through a universe of approximately 1,000 stocks in search of those that are not only undervalued according to our criteria, but also exhibit what we believe to be higher-than-expected earnings momen-tum.A team of experienced analysts examines the fundamentals of the

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

top-ranked candidates for investment. Armed with these analytical insights, the portfolio manager decides which stocks to purchase and whether any current holdings should be sold.

In addition to identifying what we believe are attractive investment opportunities, our approach has been designed to manage the risks associated with modifying the fund's sector and industry exposure often in an effort to capitalize on those sectors and industries currently in favor.We do not believe that the advantages of attempting to rotate in and out of various industry sectors outweigh the risks of such moves. Instead, our goal is to minimize 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 reporting period, the fund held positions in approximately 98 stocks across 9 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?

Energy stocks proved particularly strong during the reporting period as oil and gas prices moved sharply higher. The fund benefited from this trend through its successful stock selection strategy and relatively heavy exposure to the energy sector. Top performers included independent exploration and production companies, such as Occidental Petroleum, Devon Energy and Apache, as well as integrated oil and gas producers, such as ConocoPhillips.

The fund's performance also benefited from strong stock selections in health care and utilities. In health care, the fund emphasized service providers, such as Aetna and UnitedHealth Group, while de-emphasizing the troubled large-cap pharmaceutical area. Similarly, among utilities, the fund focused on dividend-paying electric utilities, such as Exelon, PPL and Entergy, while avoiding telecommunications providers facing persistently difficult business conditions. Other notably good performers during the reporting period included conglomerates Tyco International and Pentair, which rose on the strength of global industrial growth, and regional bank SouthTrust, which rose in response to a buy-out offer.

4

On the other hand, the fund received disappointing contributions from some of its technology investments.Accounting problems undermined communications equipment company Nortel Networks and software developer Veritas, and unexpectedly weak demand hurt semiconductor-related holdings, such as Intel, Texas Instruments and Agilent Technologies.The fund's performance relative to its benchmark also suffered in the services sector, particularly among media holdings such as Viacom and News Corporation, which lost ground due to weaker-than-expected advertising revenues. Companies that depend on employment growth, such as Paychex and Manpower, declined in response to a weak job creation environment. In addition, a few other holdings — including Comcast, St. Paul Travelers Companies, Union Pacific and Coca-Cola — experienced company-specific difficulties that drove their stock prices lower.

What is the fund's current strategy?

I have assumed responsibility for the fund's management on October 20, 2004, and I have generally maintained the fund's longstanding investment strategy. As of the end of the reporting period, the fund's sector allocations generally matched those of the benchmark.The fund has continued to place slightly greater emphasis on energy stocks than the benchmark, largely due to favorable industry fundamentals. Within other sectors, however, we have attempted to identify specific businesses and industries that we believe are positioned to thrive in the current economic environment, such as industrial machinery producers and financial companies in businesses that tend to be less sensitive to changing interest rates.

November 15, 2004 
 
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. Return figures 
    provided reflect the absorption of fund expenses by The Dreyfus Corporation in effect from 
    February 1, 2004, through April 4, 2005, at which time it may be extended, terminated or 
    modified. Had these expenses not been absorbed, the fund's returns would have been lower. 
2    SOURCE: LIPPER, INC. — Reflects the monthly 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 5

FUND PERFORMANCE

Comparison of change in value of $10,000 investment in Dreyfus Premier Large Company Stock Fund Class A shares 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 10/31/94 to a $10,000 investment made in the Standard & Poor's 500 Composite Stock Price Index (the "Index") on that date. 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.

Effective October 1, 2004, the fund changed its investment objective to seek capital appreciation. Historical performance of the fund for periods before such date reflects the prior objective.

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 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.

6

Average Annual Total Returns as of 10/31/04             
 
    Inception                From 
    Date    1 Year    5 Years    10 Years    Inception 
Class A shares                     
with maximum sales charge (5.75%)        (0.04)%    (5.32)%    8.57%     
without sales charge        6.05%    (4.19)%    9.21%     
Class B shares                     
with applicable redemption charge †    1/16/98    1.34%    (5.28)%    —    1.32%†† 
without redemption    1/16/98    5.34%    (4.90)%    —    1.32%†† 
Class C shares                     
with applicable redemption charge †††    1/16/98    4.28%    (4.90)%    —    1.24% 
without redemption    1/16/98    5.28%    (4.90)%    —    1.24% 
Class R shares        6.35%    (3.95)%    9.48%     
Class T shares                     
with applicable sales charge (4.5%)    8/16/99    1.06%    (5.31)%    —    (4.80)% 
without sales charge    8/16/99    5.82%    (4.43)%    —    (3.96)% 

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

† The maximum contingent deferred sales charge for Class B shares is 4%.After six years Class B shares convert to
Class A shares.
Assumes the conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
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 7

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Premier Large Company Stock Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment             
assuming actual returns for the six months ended October 31, 2004         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.34    $ 9.14    $ 9.14    $ 4.07    $ 6.61 
Ending value (after expenses)    $1,023.90    $1,020.50    $1,019.90    $1,024.80    $1,022.60 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 5.33    $ 9.12    $ 9.12    $ 4.06    $ 6.60 
Ending value (after expenses)    $1,019.86    $1,016.09    $1,016.09    $1,021.11    $1,018.60 

† Expenses are equal to the fund's annualized expense ratio of 1.05% for Class A, 1.80% for Class B, 1.80% for
Class C, .80% for Class R and 1.30% for Class T; multiplied by the average account value period, multiplied by
184/366 (to reflect the one-half year period).
8
STATEMENT OF INVESTMENTS
October 31, 2004
Common Stocks—99.4%    Shares    Value ($) 
Consumer Cyclical—6.5%         
Coach    25,940 a    1,209,582 
McDonald's    32,280    940,962 
PACCAR    10,640    737,458 
Target    20,730    1,036,915 
Wal-Mart Stores    31,160    1,680,147 
Walgreen    24,650    884,689 
        6,489,753 
Consumer Staples—5.5%         
Archer-Daniels-Midland    47,880    927,436 
Brown-Forman, Cl. B    11,020    494,798 
Estee Lauder, Cl. A    15,690    673,886 
Kellogg    20,660    888,380 
Kimberly-Clark    13,530    807,335 
Procter & Gamble    33,240    1,701,223 
        5,493,058 
Energy Related—8.7%         
Anadarko Petroleum    8,490    572,650 
Chesapeake Energy    30,200    485,616 
ChevronTexaco    18,330    972,590 
ConocoPhillips    17,450    1,471,209 
Devon Energy    13,700    1,013,389 
Exxon Mobil    59,190    2,913,332 
Newfield Exploration    7,930 a    461,526 
Weatherford International    14,220 a    743,137 
        8,633,449 
Health Care—11.7%         
Aetna    6,800    646,000 
Amgen    15,350 a    871,880 
Boston Scientific    19,490 a    687,997 
Genzyme    6,370 a    334,234 
Hospira    16,070 a    512,794 
IVAX    29,390 a    531,959 
Johnson & Johnson    22,910    1,337,486 
Laboratory Corporation of         
America Holdings    12,750 a    583,950 
Medtronic    9,640    492,700 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
Pfizer    86,963    2,517,579 
WellPoint Health Networks    10,760 a    1,050,822 
Wyeth    26,870    1,065,396 
Zimmer Holdings    13,460 a    1,044,361 
        11,677,158 
Interest Sensitive—22.7%         
Ambac Financial Group    3,600    281,016 
American Express    16,950    899,536 
American International Group    30,537    1,853,901 
Bank of America    61,630    2,760,408 
Capital One Financial    16,440    1,212,614 
Chubb    14,680    1,058,868 
Citigroup    72,810    3,230,580 
Franklin Resources    29,870    1,810,719 
General Electric    80,600    2,750,072 
Goldman Sachs Group    20,630    2,029,579 
J.P. Morgan Chase & Co.    33,170    1,280,362 
Legg Mason    5,010    319,187 
Merrill Lynch    8,590    463,345 
Morgan Stanley    9,840    502,726 
Radian Group    15,780    756,335 
Wachovia    27,150    1,336,052 
        22,545,300 
Producer Goods—9.9%         
Air Products & Chemicals    11,550    614,229 
Alcoa    33,390    1,085,175 
Boeing    14,990    748,001 
Burlington Northern Santa Fe    11,850    495,448 
Deere & Co.    9,780    584,648 
Dow Chemical    11,400    512,316 
E. I. du Pont de Nemours    14,980    642,193 
Eaton    11,840    757,168 
FedEx    5,860    533,963 
Ingersoll-Rand, Cl. A    9,780    669,343 
Norfolk Southern    15,740    534,373 
3M    8,790    681,840 
Tyco International    31,940    994,931 

The Fund 10

Common Stocks (continued)    Shares    Value ($) 
Producer Goods (continued)         
United Technologies    10,510    975,538 
        9,829,166 
Services—13.1%         
Boston Properties    7,600    453,872 
Carnival    21,710    1,097,658 
Charles River Laboratories International    10,830 a    506,736 
Comcast, Cl. A    40,320 a    1,189,440 
Costco Wholesale    26,470    1,268,972 
Manpower    16,890    764,273 
Marriott International, Cl. A    21,630    1,178,619 
PETCO Animal Supplies    13,700 a    490,049 
Staples    37,610    1,118,521 
Time Warner    59,540 a    990,746 
Verizon Communications    39,750    1,554,225 
Viacom, Cl. B    24,830    906,047 
Walt Disney    61,590    1,553,300 
        13,072,458 
Technology—17.8%         
Alliance Data Systems    10,900 a    460,852 
Altera    28,440 a    646,441 
Analog Devices    18,230    733,940 
Autodesk    10,440    550,710 
Cisco Systems    140,250 a    2,694,202 
Cognizant Technology Solutions    30,340 a    1,031,560 
Corning    88,270 a    1,010,691 
Dell    13,610 a    477,167 
eBay    6,330 a    617,871 
Fisher Scientific International    13,630 a    781,817 
Intel    60,660    1,350,292 
International Business Machines    11,330    1,016,868 
Microsoft    112,560    3,150,554 
QUALCOMM    26,780    1,119,672 
Symantec    16,750 a    953,745 
Textron    8,200    558,830 
Waters    13,060 a    539,247 
        17,694,459 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Utilities—3.5%         
Constellation Energy Group    12,840    521,561 
Exelon    21,020    832,812 
PG&E    34,770 a    1,114,031 
SBC Communications    19,650    496,359 
Sempra Energy    14,670    492,032 
        3,456,795 
Total Common Stocks         
(cost $83,874,616)        98,891,596 

    Principal     
Short-Term Investments—.9%    Amount ($)    Value ($) 
U.S. Treasury Bills:         
1.52%, 11/18/2004         
(cost $852,388)    853,000    852,343 
Total Investments (cost $84,727,004)    100.3%    99,743,939 
Liabilities, Less Cash and Receivables    (.3%)    (311,088) 
Net Assets    100.0%    99,432,851 

a Non-income producing.

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Interest Sensitive    22.7    Energy Related    8.7 
Technology    17.8    Consumer Cyclical    6.5 
Services    13.1    Consumer Staples    5.5 
Health Care    11.7    Other    4.4 
Producer Goods    9.9        100.3 

† Based on Net Assets
See notes to financial statements.

12

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments    84,727,004    99,743,939 
Cash        23,734 
Receivable for investment securities sold        704,372 
Dividends receivable        107,880 
Receivable for shares of Capital Stock subscribed        2,131 
        100,582,056 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        145,423 
Payable for investment securities purchased        752,418 
Payable for shares of Capital Stock redeemed        251,364 
        1,149,205 
Net Assets ($)        99,432,851 
Composition of Net Assets ($):         
Paid-in capital        148,239,959 
Accumulated undistributed investment income—net        306,151 
Accumulated net realized gain (loss) on investments        (64,130,194) 
Accumulated net unrealized appreciation         
(depreciation) on investments        15,016,935 
Net Assets ($)        99,432,851 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    33,185,249    45,297,415    10,271,414    10,019,032    659,741 
Shares Outstanding    1,722,081    2,455,647    556,678    514,489    34,651 
Net Asset Value                     
Per Share ($)    19.27    18.45    18.45    19.47    19.04 

See notes to financial statements.

The Fund 13

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Cash dividends (net of $4,521 foreign taxes withheld at source)    2,679,129 
Interest    14,928 
Income from securities lending    3,961 
Total Income    2,698,018 
Expenses:     
Management fee—Note 3(a)    1,533,590 
Distribution and service fees—Note 3(b)    878,189 
Loan commitment fees—Note 2    1,380 
Interest expense—Note 2    121 
Total Expenses    2,413,280 
Less—reduction in management fee     
due to undertaking—Note 3(a)    (124,924) 
Net Expenses    2,288,356 
Investment Income—Net    409,662 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    20,337,023 
Net unrealized appreciation (depreciation) on investments    (12,432,950) 
Net Realized and Unrealized Gain (Loss) on Investments    7,904,073 
Net Increase in Net Assets Resulting from Operations    8,313,735 

See notes to financial statements.

14

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    409,662    394,284 
Net realized gain (loss) on investments    20,337,023    (11,290,149) 
Net unrealized appreciation         
(depreciation) on investments    (12,432,950)    33,869,302 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    8,313,735    22,973,437 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (320,999)    (47,527) 
Class B shares    (46,771)    — 
Class C shares    (10,924)    — 
Class R shares    (55,405)    (13,410) 
Class T shares    (2,115)    — 
Total Dividends    (436,214)    (60,937) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    17,495,441    15,373,938 
Class B shares    1,488,743    2,903,606 
Class C shares    1,013,075    783,176 
Class R shares    124,048    109,531 
Class T shares    137,331    113,643 
Dividends reinvested:         
Class A shares    92,714    15,925 
Class B shares    40,897    — 
Class C shares    6,347    — 
Class R shares    42,321    10,095 
Class T shares    1,996    — 
Cost of shares redeemed:         
Class A shares    (86,545,097)    (25,753,225) 
Class B shares    (14,310,932)    (9,342,384) 
Class C shares    (4,485,029)    (3,485,995) 
Class R shares    (2,264,822)    (2,569,827) 
Class T shares    (258,433)    (408,499) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (87,421,400)    (22,250,016) 
Total Increase (Decrease) in Net Assets    (79,543,879)    662,484 
Net Assets ($):         
Beginning of Period    178,976,730    178,314,246 
End of Period    99,432,851    178,976,730 
Undistributed investment income—net    306,151    333,347 

The Fund 15

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Year Ended October 31, 
    2004    2003 
Capital Share Transactions:         
Class A a         
Shares sold    919,511    935,198 
Shares issued for dividends reinvested    5,085    995 
Shares redeemed    (4,595,891)    (1,577,617) 
Net Increase (Decrease) in Shares Outstanding    (3,671,295)    (641,424) 
Class B a         
Shares sold    81,079    183,949 
Shares issued for dividends reinvested    2,328    — 
Shares redeemed    (783,422)    (596,027) 
Net Increase (Decrease) in Shares Outstanding    (700,015)    (412,078) 
Class C         
Shares sold    55,655    49,916 
Shares issued for dividends reinvested    361    — 
Shares redeemed    (245,854)    (220,972) 
Net Increase (Decrease) in Shares Outstanding    (189,838)    (171,056) 
Class R         
Shares sold    6,521    6,678 
Shares issued for dividends reinvested    2,301    626 
Shares redeemed    (118,764)    (155,685) 
Net Increase (Decrease) in Shares Outstanding    (109,942)    (148,381) 
Class T         
Shares sold    7,522    7,191 
Shares issued for dividends reinvested    111    — 
Shares redeemed    (13,650)    (25,912) 
Net Increase (Decrease) in Shares Outstanding    (6,017)    (18,721) 

a During the period ended October 31, 2004, 311,169 Class B shares representing $5,714,601 were automatically
converted to 298,700 Class A shares and during the period ended October 31, 2003, 28,422 Class B shares
representing $454,744 were automatically converted to 27,438 Class A shares.
See notes to financial statements.
16

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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    18.23    15.90    18.71    25.59    23.97 
Investment Operations:                     
Investment income (loss)—net a    .10    .08    .05    .00b    (.03) 
Net realized and unrealized                     
gain (loss) on investments    1.00    2.26    (2.86)    (6.88)    1.66 
Total from Investment Operations    1.10    2.34    (2.81)    (6.88)    1.63 
Distributions:                     
Dividends from investment income—net    (.06)    (.01)    —    —    — 
Dividends from net realized                     
gain on investments    —    —    —    —    (.01) 
Total Distributions    (.06)    (.01)    —    —    (.01) 
Net asset value, end of period    19.27    18.23    15.90    18.71    25.59 
Total Return (%) c    6.05    14.71    (15.02)    (26.88)    6.80 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.15    1.15    1.15    1.15    1.15 
Ratio of net expenses                     
to average net assets    1.08    1.15    1.15    1.15    1.15 
Ratio of net investment income                     
(loss) to average net assets    .51    .50    .26    .02    (.11) 
Portfolio Turnover Rate    65.83    51.02    43.46    54.09    43.98 
Net Assets, end of period ($ x 1,000)    33,185    98,320    95,930    124,162    71,133 

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 17

  FINANCIAL HIGHLIGHTS (continued)
        Year Ended October 31,     
Class B Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    17.54    15.40    18.26    25.16    23.75 
Investment Operations:                     
Investment (loss)—net a    (.05)    (.04)    (.09)    (.15)    (.22) 
Net realized and unrealized                     
gain (loss) on investments    .98    2.18    (2.77)    (6.75)    1.64 
Total from Investment Operations    .93    2.14    (2.86)    (6.90)    1.42 
Distributions:                     
Dividends from investment income—net    (.02)    —    —    —    — 
Dividends from net realized                     
gain on investments    —    —    —    —    (.01) 
Total Distributions    (.02)    —    —    —    (.01) 
Net asset value, end of period    18.45    17.54    15.40    18.26    25.16 
Total Return (%) b    5.34    13.83    (15.66)    (27.42)    5.98 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.90    1.90    1.90    1.90    1.90 
Ratio of net expenses                     
to average net assets    1.83    1.90    1.90    1.90    1.90 
Ratio of net investment (loss)                     
to average net assets    (.25)    (.25)    (.49)    (.72)    (.87) 
Portfolio Turnover Rate    65.83    51.02    43.46    54.09    43.98 
Net Assets, end of period ($ x 1,000)    45,297    55,336    54,937    77,099    98,884 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

18

        Year Ended October 31,     
Class C Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    17.54    15.40    18.27    25.17    23.75 
Investment Operations:                     
Investment (loss)—net a    (.05)    (.04)    (.09)    (.15)    (.22) 
Net realized and unrealized                     
gain (loss) on investments    .98    2.18    (2.78)    (6.75)    1.65 
Total from Investment Operations    .93    2.14    (2.87)    (6.90)    1.43 
Distributions:                     
Dividends from investment income—net    (.02)    —    —    —    — 
Dividends from net realized                     
gain on investments    —    —    —    —    (.01) 
Total Distributions    (.02)    —    —    —    (.01) 
Net asset value, end of period    18.45    17.54    15.40    18.27    25.17 
Total Return (%) b    5.28    13.90    (15.71)    (27.41)    6.02 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.90    1.90    1.90    1.90    1.90 
Ratio of net expenses                     
to average net assets    1.83    1.90    1.90    1.90    1.90 
Ratio of net investment (loss)                     
to average net assets    (.25)    (.24)    (.50)    (.72)    (.86) 
Portfolio Turnover Rate    65.83    51.02    43.46    54.09    43.98 
Net Assets, end of period ($ x 1,000)    10,271    13,094    14,133    23,072    30,213 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 19

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class R Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    18.40    16.02    18.81    25.66    23.97 
Investment Operations:                     
Investment income-net a    .14    .13    .09    .06    .04 
Net realized and unrealized                     
gain (loss) on investments    1.02    2.27    (2.88)    (6.91)    1.66 
Total from Investment Operations    1.16    2.40    (2.79)    (6.85)    1.70 
Distributions:                     
Dividends from investment income—net    (.09)    (.02)    —    —    — 
Dividends from net realized                     
gain on investments    —    —    —    —    (.01) 
Total Distributions    (.09)    (.02)    —    —    (.01) 
Net asset value, end of period    19.47    18.40    16.02    18.81    25.66 
Total Return (%)    6.35    14.98    (14.83)    (26.70)    7.10 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .90    .90    .90    .90    .90 
Ratio of net expenses                     
to average net assets    .83    .90    .90    .90    .90 
Ratio of net investment income                     
to average net assets    .75    .76    .51    .28    .16 
Portfolio Turnover Rate    65.83    51.02    43.46    54.09    43.98 
Net Assets, end of period ($ x 1,000)    10,019    11,492    12,379    17,709    28,492 

a Based on average shares outstanding at each month end.
See notes to financial statements.

20

        Year Ended October 31,     
Class T Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    18.04    15.77    18.61    25.51    23.96 
Investment Operations:                     
Investment income (loss)—net a    .05    .04    .00b    (.05)    (.13) 
Net realized and unrealized                     
gain (loss) on investments    1.00    2.23    (2.84)    (6.85)    1.69 
Total from Investment Operations    1.05    2.27    (2.84)    (6.90)    1.56 
Distributions:                     
Dividends from investment income—net    (.05)    —    —    —    — 
Dividends from net realized                     
gain on investments    —    —    —    —    (.01) 
Total Distributions    (.05)    —    —    —    (.01) 
Net asset value, end of period    19.04    18.04    15.77    18.61    25.51 
Total Return (%) c    5.82    14.40    (15.26)    (27.08)    6.55 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.40    1.40    1.40    1.40    1.40 
Ratio of net expenses                     
to average net assets    1.33    1.40    1.40    1.40    1.40 
Ratio of net investment income                     
(loss) to average net assets    .25    .27    .01    (.23)    (.49) 
Portfolio Turnover Rate    65.83    51.02    43.46    54.09    43.98 
Net Assets, end of period ($ x 1,000)    660    734    936    1,423    1,310 

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 21

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 sixteen series, including the fund. Prior to October 1, 2004, the fund's investment objective was to seek investment returns (consisting of capital appreciation and income) that were consistently superior to the Standard & Poor's 500 Composite Stock Price Index. On July 20, 2004, the Board of Directors approved changing the fund's investment objective. Effective October 1, 2004, the fund's investment objective is to seek capital appreciation.The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser.The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares. The fund is authorized to issue 450 million shares of $.001 par value Capital Stock.The fund currently offers five classes of shares: Class A (20 million shares authorized), Class B (100 million shares authorized), Class C (100 million shares authorized), Class R (30 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 an investment account or relationship at such institution and bear no distribution or service fees. Class R shares are offered without

22

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. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sale price. 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.When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADR's and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be con-

The Fund 23

NOTES TO FINANCIAL STATEMENTS (continued)

sidered such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. Financial futures are valued at the last sales price.

(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, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

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

24

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.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $306,151, accumulated capital losses $63,227,215 and unrealized appreciation $14,113,956.

The Fund 25

NOTES TO FINANCIAL STATEMENTS (continued)

The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $19,034,476 of the carryover expires in fiscal 2009, $32,648,933 expires in fiscal 2010 and $11,543,806 expires in fiscal 2011.

The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2004 and October 31, 2003 were as follows: ordinary income $436,214 and $60,937, respectively.

During the period ended October 31, 2004, as a result of permanent book to tax differences primarily due to the tax treatment for real estate investment trusts, the fund decreased accumulated undistributed investment income-net by $644 and increased net realized gain (loss) on investments by the same amount. Net assets were not affected by this reclassification.

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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 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, 2004 was approximately $8,500 with a related weighted average annualized interest rate of 1.42% .

NOTE 3—Investment Management Fee And Other Transactions With Affiliates:

(a) 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, cus-

26

tody, 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 Company, 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.

The Fund 27

NOTES TO FINANCIAL STATEMENTS (continued)

The Manager has agreed to waive receipt of a portion of the fund's management fee in the amount of .10 of 1% of the value of the fund's average daily net assets from February 1, 2004 through April 4, 2005. The reduction in management fee, pursuant to a waiver, amounted to $124,924 during the period ended October 31, 2004.

During the period ended October 31, 2004, the Distributor retained $4,166 and $157 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $117,714 and $635 from contingent deferred sales charges on redemptions of the fund's Class B and Class C shares, respectively.

(b) Under separate Distribution Plans (the "Plans") 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. 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 (the "Service Plan") under which Class B, Class C and Class T shares pay the Distributor for providing services to the holders of their 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, 2004, Class A, Class B, Class C and Class T shares were charged $238,246, $388,840, $88,320 and $1,865, respectively, pursuant to their respective Plans. Class B, Class C and Class T shares were charged $129,613, $29,440 and $1,865, respectively, pursuant to the Service Plan.

28

Under its terms, the Plans 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 Plans or Service Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $97,040, Rule 12b-1 distribution plan fees $48,227, and shareholder services plan fees $11,822, which are offset against an expense reimbursement currently in effect in the amount of $11,666.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended October 31, 2004, amounted to $110,257,524 and $197,130,294, respectively.

At October 31, 2004, the cost of investments for federal income tax purposes was $85,629,983; accordingly, accumulated net unrealized appreciation on investments was $14,113,956 consisting of $15,219,691 gross unrealized appreciation and $1,105,735 gross unrealized depreciation.

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial,Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors, and (iv) that 12b-1

The Fund 29

NOTES TO FINANCIAL STATEMENTS (continued)

fees charged to certain funds that were closed to new investors were also improper.The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13,2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

30

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.

We have audited the accompanying statement of assets and liabilities, of Dreyfus Premier Large Company Stock Fund (the "Fund") of The Dreyfus/Laurel Funds, Inc., including the statement of investments, as of October 31, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing proce-dures.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, 2004, 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 the financial highlights for each of the five years in the period then ended, in conformity with U.S.generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 31

IMPORTANT TAX INFORMATION (Unaudited)

In accordance with Federal tax law, the fund hereby designates 100% of the ordinary dividends paid during the fiscal year ended October 31, 2004 as qualifying for the corporate dividends received deduction. For the fiscal year ended October 31, 2004, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003.Of the distributions paid during the fiscal year, $436,214 represents the maximum amount that may be considered qualified dividend income. Shareholders will receive notification in January 2005 of the percentage applicable to the preparation of their 2004 income tax returns.

32

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 33

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
———————
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
———————
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
———————

Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

34

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 35

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by Dreyfus. He is 33 years old and has been an employee of the Distributor since October 1998.

36

For More Information

Dreyfus Premier    Transfer Agent & 
Large Company Stock Fund    Dividend Disbursing Agent 
200 Park Avenue     
    Dreyfus Transfer, Inc. 
New York, NY 10166     
    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue     
    Dreyfus Service Corporation 
New York, NY 10166     
    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone Call your financial representative or 1-800-554-4611 
Mail The Dreyfus Premier Family of Funds 
144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0318AR1004

Dreyfus Premier 
Limited Term 
Income Fund 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
8    Understanding Your Fund's Expenses 
8    Comparing Your Fund's Expenses 
With Those of Other Funds
9    Statement of Investments 
21    Statement of Assets and Liabilities 
22    Statement of Operations 
23    Statement of Changes in Net Assets 
25    Financial Highlights 
29    Notes to Financial Statements 
37    Report of Independent Registered 
    Public Accounting Firm 
38    Important Tax Information 
39    Board Members Information 
41    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Premier
Limited Term Income Fund

The Fund

LETTER FROM THE CHAIRMAN

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, 2003, through October 31, 2004. 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, Chris Pellegrino.

The Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, and higher commodity prices suggest that inflationary pressures may be rising over the near term. On the other hand, lackluster job growth, low capacity utilization and greater worker productivity should help to keep a lid on inflation over the longer term.The probable result of these conflicting market forces, in our judgment, is a U.S. bond market that trades primarily within a relatively well-defined range and favors higher-quality bonds, but that may occasionally overshoot in both directions.

In uncertain markets such as these, the fixed-income investments that are right for you depend on your current needs, future goals, tolerance for risk and the composition of your current portfolio.As always, your financial advisor may be in the best position to recommend the specific market sectors that will satisfy your income and capital preservation needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Chris Pellegrino, CFA, Portfolio Manager

How did Dreyfus Premier Limited Term Income Fund perform relative to its benchmark?

For the 12-month period ended October 31, 2004, the fund achieved total returns of 4.76% for Class A shares, 4.32% for Class B shares, 4.25% for Class C shares and 5.02% for Class R shares.1 The fund's benchmark, the Lehman Brothers U.S.Aggregate Index (the "Index"), produced a total return of 5.53% for the same period.2

We attribute the fund and bond market's performance to an improving U.S. economy and three short-term interest-rate increases initiated by the Federal Reserve Board (the "Fed") during the second half of the reporting period. The fund's returns trailed the benchmark primarily due to its limited exposure to lower-rated investment-grade corporate securities, which produced better returns than the higher-quality investment-grade corporate securities on which the fund focused.

As of April 15, 2004, Chris Pellegrino became the fund's primary portfolio manager.

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. 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. Generally speaking,

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

bonds with longer maturities tend to offer higher yields but also can be expected to fluctuate more in price than their short-term counterparts. Although the portfolio manager may invest in individual bonds with different remaining maturities, the fund's dollar-weighted average portfolio maturity will be no more than 10 years.

What other factors influenced the fund's performance?

While the U.S. economy was expanding when the reporting period began, inflationary pressures were low as the labor markets were persistently sluggish and some of the nation's industrial capacity remained unused. In this environment, the Fed, in its public comments, implied that it could be patient before raising short-term interest rates. This benefited the more interest-rate-sensitive areas of the bond market, including most U.S. government securities.

By April 2004, however, surging energy prices and stronger-than-expected labor statistics raised concerns among investors that inflationary forces might be resurfacing. In late June, the Fed implemented the first of three short-term interest-rate hikes, which drove the overnight federal funds rate to 1.75% by the end of the reporting period. As investors anticipated the Fed's rate-hikes in the spring of 2004, prices of U.S.Treasury securities fell sharply.

During the summer and early fall of 2004, however, disappointing labor statistics and rising energy prices raised concerns among investors that the economy might not be growing as strongly as previously thought. As a result, longer-term securities in the more interest-rate-sensitive sectors of the bond market generally rallied from previously depressed levels.

In this changing environment, the fund's strongest returns stemmed from its holdings of corporate bonds. Many corporate issuers took advantage of the previous downturn to refinance their debt at lower rates and strengthen their balance sheets. As business conditions improved, corporate bonds generally rallied. Gains were especially

4

pronounced among lower-quality bonds that had been severely punished during the downturn.Although by the middle of the reporting period we began to intensify our focus on corporate bonds toward the lower end of the investment-grade range, the fund was not able to participate fully in their rally.

Among mortgage-backed securities, high levels of refinancing activity among homeowners during the first half of the reporting period hindered returns. When refinancing activity later waned, however, mortgage-backed securities produced better returns, contributing positively to the fund's overall performance.

What is the fund's current strategy?

As of October 31, 2004, we have continued to allocate the largest portion of the fund's assets to higher-quality corporate securities and mortgage-backed securities, followed by U.S. Treasury securities, U.S. government agency bonds and commercial mortgage-backed securities (CMBS). We recently have trimmed the fund's position in U.S. government agency securities, choosing to redeploy those assets to corporate securities and commercial mortgage-backed securities, where yields currently are higher. We are prepared to adjust our strategies as economic and market conditions evolve.

November 15, 2004

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. Had these charges been reflected, returns would have been lower. 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 U.S.Aggregate 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 5

FUND PERFORMANCE

Comparison of change in value of $10,000 investment in Dreyfus Premier Limited Term Income Fund Class A shares and Class R shares and the Lehman Brothers U.S. Aggregate Index

† Source: Lipper Inc.

Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in Class A shares and Class R shares of Dreyfus Premier Limited Term Income Fund on 10/31/94 to a $10,000 investment made in the Lehman Brothers U.S.Aggregate Index (the "Index") on that date.All dividends and capital gain distributions are reinvested. Performance for Class B and Class C 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 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.

6
Average Annual Total Returns as of 10/31/04             
 
    Inception                From 
    Date    1 Year    5 Years    10 Years    Inception 
Class A shares                     
with maximum sales charge (3.0%)        1.65%    5.83%    6.06%     
without sales charge        4.76%    6.48%    6.39%     
Class B shares                     
with applicable redemption charge †    12/19/94    1.32%    5.78%    —    6.17%†† 
without redemption    12/19/94    4.32%    5.94%    —    6.17%†† 
Class C shares                     
with applicable redemption charge †††    12/19/94    3.50%    5.91%    —    5.80% 
without redemption    12/19/94    4.25%    5.91%    —    5.80% 
Class R shares        5.02%    6.72%    6.66%     

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

† The maximum contingent deferred sales charge for Class B shares is 3%.After six years Class B shares convert to
Class A shares.
Assumes the conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
The maximum contingent deferred sales charge for Class C shares is .75% for shares redeemed within one year of
the date of purchase.

The Fund 7

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Premier Limited Term Income Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment             
assuming actual returns for the six months ended October 31, 2004         
    Class A    Class B    Class C    Class R 
Expenses paid per $1,000 †    $ 4.35    $ 6.91    $ 6.90    $ 3.08 
Ending value (after expenses)    $1,037.60    $1,035.00    $1,034.40    $1,039.00 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Class A    Class B    Class C    Class R 
Expenses paid per $1,000 †    $ 4.32    $ 6.85    $ 6.85    $ 3.05 
Ending value (after expenses)    $1,020.86    $1,018.35    $1,018.35    $1,022.12 

† Expenses are equal to the fund's annualized expense ratio of .85% for Class A, 1.35% for Class B, 1.35% for
Class C and .60% for Class R, multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period).
8
STATEMENT OF INVESTMENTS
October 31, 2004
    Principal         
Bonds and Notes—97.7%    Amount ($)    Value ($) 
Aerospace & Defense—.4%             
Raytheon,             
Sr. Notes, 5.375%, 2013    230,000    a    240,790 
Asset-Backed Ctfs./Auto Loans—9.9%             
BMW Vehicle Owner Trust,             
Ser. 2004-A, Cl. A4, 3.32%, 2009    700,000        703,340 
Capital Auto Receivables Asset Trust,             
Ser. 2004-1, Cl. A4, 2.64%, 2008    350,000        346,220 
Chase Manhattan Auto Owner Trust,             
Ser. 2003-C, Cl. A3, 2.26%, 2007    170,000        169,368 
DaimlerChrysler Auto Trust:             
Ser. 2003-A, Cl. A4, 2.88%, 2009    420,000        420,185 
Ser. 2004-B, Cl. A4, 3.71%, 2009    295,000        298,917 
Ford Credit Auto Owner Trust,             
Ser. 2004-A, Cl. C, 4.19%, 2009    100,000        100,568 
Honda Auto Receivables Owner Trust:             
Ser. 2003-2, Cl. A3, 1.69%, 2007    100,000        99,577 
Ser. 2004-1, Cl. A3, 2.4%, 2008    500,000        497,531 
Hyundai Auto Receivables Trust,             
Ser. 2004-A, Cl. B, 3.46%, 2011    80,000        80,007 
National City Auto Receivables Trust,             
Ser. 2004-A, Cl. A3, 2.11%, 2008    140,000        138,921 
Nissan Auto Receivables Owner Trust:             
Ser. 2003-C, Cl. A4, 2.7%, 2007    350,000        349,640 
Ser. 2004-A, Cl. A3, 2.01%, 2007    170,000        168,475 
Ser. 2004-C, Cl. A3, 2.85%, 2007    60,000        60,031 
USAA Auto Owner Trust:             
Ser. 2004-1, Cl. A3, 2.06%, 2008    700,000        694,292 
Ser. 2004-2, Cl. A4, 3.58%, 2011    255,000        257,551 
Volkswagen Auto Loan Enhanced Trust,             
Ser. 2003-1, Cl. A3, 1.49%, 2007    200,000        198,606 
WFS Financial Owner Trust:             
Ser. 2004-3, Cl. B, 3.51%, 2012    160,000        160,557 
Ser. 2004-4, Cl. A2, 2.5%, 2007    175,000        173,086 
Ser. 2004-4, Cl. C, 3.21%, 2012    235,000        234,266 
Whole Auto Loan Trust:             
Ser. 2003-1, Cl. A4, 2.58%, 2010    180,000        178,635 
Ser. 2004-1, Cl. A1, 2.15%, 2008    590,000        590,000 
            5,919,773 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Asset-Backed Ctfs./Credit Cards—2.0%             
Bank One Issuance Trust:             
Ser. 2002-A2, Cl. A2, 4.16%, 2008    700,000        706,615 
Ser. 2004-A1, Cl. A1, 3.45%, 2011    240,000        239,031 
Capital One Multi-Asset Execution Trust,             
Ser. 2004-C1, Cl. C1, 3.4%, 2009    250,000        249,401 
            1,195,047 
Asset-Backed Ctfs./Home Equity—3.6%             
Centex Home Equity:             
Ser. 2004-A, Cl. AF2, 2.67%, 2021    200,000        199,543 
Ser. 2004-2, Cl. A1, 2.129%, 2025    175,000    b    175,547 
Residential Asset Mortgage Products,             
Ser. 2004-RS8, Cl. AI2, 3.81%, 2026    120,000        120,955 
Ser. 2004-RS9, Cl. AI2, 3.675%, 2026    90,000        89,748 
Residential Asset Securities:             
Ser. 2002-KS4, Cl. AIIB, 1.7%, 2032    653,878    b    653,286 
Ser. 2004-KS3, Cl. AI2, 2.17%, 2024    400,000        394,868 
Ser. 2004-KS4, Cl. AI2, 2.53%, 2024    350,000        346,490 
Ser. 2004-KS10, Cl. AI1, 2.129%, 2013    175,000    b    175,000 
            2,155,437 
Asset-Backed Ctfs./Utilities—0%             
Detroit Edison Securitization Funding,             
Ser. 2001-1, Cl. A2, 5.51%, 2007    27,815        28,121 
Automotive—1.8%             
DaimlerChrysler:             
Notes, 7.3%, 2012    110,000        126,180 
Notes, Ser. D, 2.34%, 2006    150,000    b    150,845 
Ford Motor Credit,             
Global Landmark Securities, 7.25%, 2011    415,000        447,862 
GMAC,             
Notes, 7%, 2012    325,000        340,984 
            1,065,871 
Banking—7.2%             
BB&T,             
Sub. Notes, 5.2%, 2015    300,000        308,834 
Bank of America,             
Sub. Notes, 4.75%, 2013    220,000        221,645 
Bank of New York,             
Sr. Notes, 5.2%, 2007    300,000        315,674 
Glencore Funding,             
Notes, 6%, 2014    180,000    a,c    171,188 

The Fund 10

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Banking (continued)             
J.P. Morgan Chase & Co.,             
Sub. Notes, 5.125%, 2014    220,000        223,968 
Jefferies,             
Sr. Notes, 7.75%, 2012    250,000        291,843 
Landwirtschaftliche Rentenbank,             
Sr. Notes, 3.25%, 2008    100,000        99,778 
MBNA America Bank,             
Sub. Notes, 6.625%, 2012    300,000        336,042 
National City,             
Sr. Notes, 3.2%, 2008    460,000        456,013 
Northern Rock,             
Notes, 5.6%, 2049    350,000    c    362,390 
Rabobank Capital Funding Trust III,             
Non-Cumulative Preferred Security,         
5.254%, 2049    290,000    b,c    294,528 
Royal Bank of Scotland,             
Sub. Notes, 6.4%, 2009    150,000    a    165,782 
SouthTrust,             
Sub. Notes, 5.8%, 2014    100,000        107,622 
Swiss Bank,             
Sub. Debs., 7%, 2015    200,000        236,525 
Union Planters,             
Sub. Notes, 7.75%, 2011    90,000        107,115 
Wachovia,             
Sub. Notes, 5.25%, 2014    75,000        77,625 
Washington Mutual,             
Sub. Notes, 4.625%, 2014    90,000        86,865 
Wells Fargo & Co.,             
Sr. Notes, 5.125%, 2007    150,000    a    156,601 
Westpac Capital Trust IV,             
Notes, 5.256%, 2049    170,000    b,c    168,282 
Zions Bancorp,             
Sub. Notes, 6%, 2015    100,000        107,482 
            4,295,802 
Broadcasting & Media—.8%             
Clear Channel Communications,             
Sr. Notes, 7.65%, 2010    175,000        200,417 
Comcast Cable Communications,             
Sr. Notes, 6.75%, 2011    250,000        280,812 
            481,229 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Commercial Mortgage Pass-Through Ctfs.—5.9%     
Bear Stearns Commercial Mortgage Securities:     
Ser. 1999-WF2, Cl. A1, 6.8%, 2031    111,141    117,262 
Ser. 2003-T12, Cl. A4, 4.68%, 2039    200,000    201,468 
Ser. 2004-PWR5, Cl. A3, 4.565%, 2042    110,000    111,827 
CS First Boston Mortgage Securities,         
Ser. 2001-CF2, Cl. A4, 6.505%, 2034    200,000    224,188 
Capco America Securitization,         
Ser. 1998-D7, Cl. A1B, 6.26%, 2030    700,000    763,718 
DLJ Commercial Mortgage,         
Ser. 1999-CG1, Cl. A1B, 6.46%, 2032    370,000    408,425 
First Union-Lehman Brothers-Bank of America,     
Ser. 1998-C2, Cl. A2, 6.56%, 2035    300,000    326,572 
J.P. Morgan Commercial Mortgage Finance,         
Ser. 2000-C10, Cl. A2, 7.371%, 2032    290,000    333,285 
LB Commercial Conduit Mortgage Trust,         
Ser. 1999-C1, Cl. B, 6.93%, 2031    150,000    168,802 
Mach One Trust,         
Ser. 2004-1A, Cl. A1, 3.89%, 2040    211,476 c    212,767 
Morgan Stanley Capital I,         
Ser. 1998-WF1, Cl. A2, 6.55%, 2030    580,000    625,845 
        3,494,159 
Commercial Services—.2%         
Aramark Services,         
Sr. Notes, 6.375%, 2008    135,000    146,139 
Data Processing—.2%         
First Data,         
Notes, 4.7%, 2013    90,000    90,957 
Drugs & Pharmaceuticals—.2%         
Wyeth,         
Notes, 5.5%, 2014    125,000    128,314 
Entertainment/Media—.5%         
Carnival,         
Sr. Notes, 3.75%, 2007    100,000    100,853 
News America,         
Debs., 8.875%, 2023    150,000    197,755 
        298,608 
Financial Services—4.8%         
American General Finance,         
Notes, Ser. G, 5.375%, 2009    250,000    263,804 

12

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Financial Services (continued)             
Amvescap,             
Notes, 5.375%, 2013    100,000        102,349 
Boeing Capital,             
Sr. Notes, 5.75%, 2007    175,000    a    185,371 
Countrywide Home Loan,             
Notes, 4.125%, 2009    175,000        175,134 
General Electric Capital,             
Notes, Ser. A, 6.125%, 2011    325,000        359,767 
Goldman Sachs,             
Sub. Notes, 6.345%, 2034    325,000        332,337 
Household Finance,             
Notes, 6.75%, 2011    265,000        300,155 
Lehman Brothers:             
Notes, Ser. G, 4.8%, 2014    300,000        299,399 
Notes, Ser. F, 7.5%, 2006    200,000        216,939 
Morgan Stanley,             
Sub. Notes, 4.75%, 2014    250,000        245,367 
Pearson Dollar Finance,             
Notes, 4.7%, 2009    200,000    c    206,821 
SLM,             
Notes, 5.05%, 2014    200,000        201,930 
            2,889,373 
Food & Beverages—1.3%             
Coors Brewing,             
Sr. Notes, 6.375%, 2012    150,000        166,627 
Diageo Capital,             
Notes, 4.85%, 2018    20,000        19,717 
H.J. Heinz Finance,             
Notes, 6%, 2012    120,000        132,565 
Kroger,             
Sr. Notes, 6.2%, 2012    200,000    a    219,449 
Pepsi Bottling,             
Sr. Notes, Ser. B, 7%, 2029    100,000    a    120,205 
Safeway,             
Debs., 7.25%, 2031    100,000    a    113,157 
            771,720 
Foreign—.5%             
United Mexican States,             
Notes, Ser. A, 6.75%, 2034    305,000    a    298,900 

The Fund 13

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Health Care—.2%         
Laboratory Corporation of America,         
Sr. Notes, 5.5%, 2013    90,000    94,334 
Industrial—.9%         
John Deere Capital,         
Notes, 7%, 2012    60,000    69,797 
Pitney Bowes,         
Notes, 4.75%, 2018    30,000    29,485 
R.R. Donnelley & Sons,         
Notes, 4.95%, 2014    125,000    125,883 
Waste Management:         
Sr. Notes, 5%, 2014    140,000 a    141,821 
Sr. Notes, 6.875%, 2009    140,000    157,120 
        524,106 
Insurance—.9%         
Nationwide Mutual Insurance,         
Notes, 8.25%, 2031    190,000 c    231,665 
Pacific Life,         
Bonds, 6.6%, 2033    220,000 c    240,436 
Prudential Financial,         
Sr. Notes, 4.104%, 2006    45,000    45,848 
        517,949 
Metals & Mining—.4%         
Inco,         
Notes, 7.75%, 2012    180,000 a    214,414 
Oil & Gas—2.1%         
Apache,         
Sr. Notes, 6.25%, 2012    100,000    112,618 
ConocoPhillips,         
Debs., 6.65%, 2018    150,000    173,754 
Devon Financing,         
Notes, 6.875%, 2011    135,000    154,795 
Halliburton,         
Notes, 5.5%, 2010    65,000    68,819 
Marathon Oil,         
Notes, 5.375%, 2007    50,000    52,620 
Occidental Petroleum,         
Sr. Notes, 5.875%, 2007    350,000    370,482 
XTO Energy,         
Sr. Notes, 7.5%, 2012    250,000    296,231 
        1,229,319 

14

    Principal         
Bonds and Notes (continued)    Amount ($)    Value ($) 
Paper Products—.1%             
International Paper,             
Notes, 5.85%, 2012    65,000    a    69,508 
Real Estate Investment Trusts—2.2%             
Archstone-Smith Operating Trust,             
Notes, 5.625%, 2014    80,000        83,636 
Arden Realty,             
Notes, 5.2%, 2011    140,000        142,682 
Boston Properties,             
Sr. Notes, 6.25%, 2013    140,000        152,562 
Duke Realty,             
Sr. Notes, 5.25%, 2010    300,000        314,156 
EOP Operating,             
Notes, 4.75%, 2014    250,000    a    243,511 
ERP Operating,             
Notes, 5.25%, 2014    60,000        60,946 
Healthcare Realty Trust,             
Sr. Notes, 5.125%, 2014    200,000        195,598 
Simon Property,             
Notes, 5.625%, 2014    135,000    c    139,778 
            1,332,869 
Residential Mortgage Pass-Through Ctfs.—.8%         
Washington Mutual:             
Ser. 2003-AR10, Cl. A6, 4.082%, 2033    125,000    b    125,646 
Ser. 2004-AR7, Cl. A6, 3.963%, 2034    150,000    b    150,225 
Ser. 2004-AR9, Cl. A7, 4.267%, 2034    195,000    b    196,749 
            472,620 
Retail—.4%             
CVS,             
Notes, 4%, 2009    60,000    c    60,354 
May Department Stores,             
Notes, 6.65%, 2024    160,000    c    167,695 
            228,049 
State Government—.1%             
State of Illinois,             
Bonds, 5.1%, 2033    60,000        58,027 
Telecommunications—4.8%             
Deutsche Telekom International Finance,             
Notes, 8.5%, 2010    150,000    b    180,921 
France Telecom,             
Notes, 8.5%, 2011    90,000    b    108,228 

The Fund 15

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Telecommunications (continued)         
Koninklijke KPN,         
Sr. Notes, 8%, 2010    125,000    149,774 
SBC Communications:         
Bonds, 6.45%, 2034    395,000    416,612 
Notes, 5.625%, 2016    85,000    88,085 
Sprint Capital,         
Notes, 8.75%, 2032    325,000    427,153 
Verizon Global Funding,         
Notes, 7.75%, 2030    245,000    301,522 
Verizon Wireless Capital:         
Notes, 1.81%, 2005    1,000,000 b,c    999,840 
Notes, 5.375%, 2006    170,000    178,272 
        2,850,407 
Transportation—1.2%         
FedEx,         
Notes, 3.5%, 2009    70,000    69,167 
Union Pacific,         
Notes, 6.125%, 2012    400,000    437,169 
United Parcel Service,         
Debs., 8.375%, 2020    150,000    203,037 
        709,373 
U.S. Government—9.4%         
U.S. Treasury Bonds:         
5.375%, 2/15/2031    150,000    162,966 
6.25%, 5/15/2030    1,780,000    2,141,002 
U.S. Treasury Notes:         
2.5%, 5/31/2006    185,000 a    185,282 
3.875%, 5/15/2009    2,925,000 a    3,008,181 
4%, 11/15/2012    100,000    101,140 
        5,598,571 
U.S. Government Agencies—1.2%         
Federal Farm Credit Bank,         
Bonds, 2.375%, 10/2/2006    400,000    397,225 
Federal Home Loan Mortgage Corp.,         
Notes, 5.125%, 7/15/2012    300,000    318,378 
        715,603 

16
    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government Agencies/Mortgage-Backed—28.4%     
Federal Home Loan Mortgage Corp.:         
4%, 10/1/2009    100,000    101,156 
4.5%, 10/1/2009    170,016    173,204 
5%, 6/1/2033    445,172    445,172 
6%, 6/1/2012-2/1/2014    66,362    69,804 
6.5%, 11/1/2004-9/1/2029    146,260    154,424 
7%, 3/1/2012    39,820    42,259 
7.5%, 12/1/2025-1/1/2031    78,670    84,663 
8%, 10/1/2019-10/1/2030    50,116    54,458 
8.5%, 7/1/2030    4,160    4,545 
9%, 8/1/2030    4,895    5,426 
Federal National Mortgage Association:         
4.5%, 9/1/2018    921,328    926,506 
5%    775,000 d,e    772,334 
5%, 7/1/2011-9/1/2033    1,214,640    1,220,984 
5.5%    2,675,000 d,e    2,761,689 
5.5%, 10/1/2033-1/1/2034    1,312,704    1,339,771 
6%    3,895,000 d,e    4,028,956 
6%, 9/1/2013-5/1/2033    966,382    1,007,414 
6.5%    100,000 d,e    105,156 
7%, 7/1/2015-5/1/2031    78,549    83,540 
7.5%, 3/1/2012-3/1/2031    104,788    112,037 
8%, 5/1/2013-3/1/2031    58,953    63,905 
Grantor Trust,         
Ser. 2001-T11, Cl. B, 5.503%, 9/25/2011    210,000    225,092 
Government National Mortgage Association I:         
6%, 1/15/2029    76,262    79,599 
6.5%, 9/15/2008-6/15/2029    149,221    158,296 
7%, 8/15/2025-9/15/2031    144,920    155,056 
7.5%, 12/15/2026-1/15/2031    53,976    58,196 
8%, 1/15/2030-10/15/2030    50,664    55,271 
8.5%, 4/15/2025-9/15/2030    18,536    20,357 
9%, 10/15/2027    40,194    45,067 
9.5%, 2/15/2025    12,408    14,080 
Ser. 2003-64, Cl. A, 3.089%, 4/16/2024    327,812    325,177 
Ser. 2004-9, Cl. A, 3.36%, 8/16/2022    260,624    257,877 
Ser. 2004-25, Cl. AC, 3.377%, 1/16/2023    350,000    346,074 
Ser. 2004-43, Cl. A, 2.822%, 12/16/2019    295,717    289,787 
Ser. 2004-51, Cl. A, 4.145%, 2/16/2018    370,264    374,933 

The Fund 17

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
U.S. Government Agencies/Mortgage-Backed (continued)     
Government National Mortgage Association I (continued):     
Ser. 2004-57, Cl. A, 3.022%, 1/16/2019    148,251    146,279 
Ser. 2004-67, Cl. A, 3.648%, 9/16/2017    297,420    297,945 
Ser. 2004-77, Cl. A, 3.402%, 3/16/2020    274,083    271,946 
Ser. 2004-97, Cl. AB, 3.084%, 1/16/2022    260,000    256,099 
        16,934,534 
Utilities/Gas & Electric—5.3%         
Alabama Power,         
Sr. Notes, Ser. X, 3.125%, 2008    140,000    138,446 
Arizona Public Service,         
Sr. Notes, 6.5%, 2012    55,000    61,601 
Carolina Power & Light,         
First Mortgage Bonds, 5.125%, 2013    180,000    185,696 
Consolidated Edison Company of New York,         
Debs., Ser. 2002-B, 4.875%, 2013    200,000    205,327 
Duke Energy,         
Sr. Notes, 5.625%, 2012    50,000    52,993 
Florida Power & Light,         
First Mortgage Bonds, 5.625%, 2034    50,000    51,273 
MidAmerican Energy:         
Notes, 5.125%, 2013    345,000    360,734 
Sr. Notes, 3.5%, 2008    160,000    158,347 
National Rural Utilities:         
Notes, 5.5%, 2005    500,000    503,113 
Notes, 5.75%, 2009    230,000    248,581 
Niagara Mohawk Power,         
First Mortgage Bonds, 7.75%, 2006    300,000    321,620 
Ohio Power,         
Sr. Notes, Ser. G, 6.6%, 2033    20,000    22,299 
Pacific Gas & Electric,         
First Mortgage Bonds, 6.05%, 2034    100,000    103,351 

18
    Principal     
Bonds and Notes (continued)    Amount ($)    Value ($) 
Utilities/Gas & Electric (continued)         
Peco Energy,         
First Mortgage Bonds, 3.5%, 2008    135,000    135,419 
Pepco,         
Notes, 5.5%, 2007    285,000    299,627 
Southern California Edison,         
First Mortgage Bonds, 5%, 2014    70,000 a    71,844 
Virginia Electric & Power,         
Sr. Notes, Ser. A, 4.75%, 2013    215,000    216,546 
        3,136,817 
Total Bonds and Notes         
(cost $57,244,763)        58,186,740 
 
Short-Term Investments—14.9%         
Agency Discount Notes—8.6%         
Federal National Mortgage Association:         
1.76%, 11/12/2004    505,000    504,730 
1.77%, 11/12/2004    2,300,000    2,298,763 
1.72%, 11/15/2004    1,455,000    1,454,027 
1.9%, 11/18/2004    605,000    604,497 
1.98%, 11/30/2004    255,000    254,624 
        5,116,641 
U.S. Treasury Bills—6.3%         
1.53%, 12/9/2004    1,110,000    1,107,980 
1.87%, 3/17/2005    1,370,000    1,359,615 
1.95%, 3/31/2005    1,300,000    1,288,976 
        3,756,571 
Total Short-Term Investments         
(cost $8,874,258)        8,873,212 

The Fund 19

STATEMENT OF INVESTMENTS (continued)

Investment of Cash Collateral         
for Securities Loaned—11.2%    Shares    Value ($) 
Registered Investment Company,         
Dreyfus Institutional Cash Advantage Plus Fund         
(cost $6,665,150)    6,665,150 f    6,665,150 
Total Investments (cost $72,784,171)    123.8%    73,725,102 
Liabilities, Less Cash and Receivables    (23.8%)    (14,165,939) 
Net Assets    100.0%    59,559,163 

a All or a portion of these securities are on loan.At October 31, 2004, the total market value of the fund's securities 
on loan is $5,446,729 and the total market value of the collateral held by the fund is $5,636,400. U.S.Treasury 
Note, 2.5%, 5/31/2006, $1,000,000 par, is out on loan until the sale settles.At October 31, 2004, the market 
value of this security on loan is $1,001,520 and the total market value of the collateral held is $1,028,750. 
b Variable rate security—interest rate subject to periodic change. 
c Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in 
transactions exempt from registration, normally to qualified institutional buyers.These securities have been determined 
to be liquid by the Board of Directors.At October 31, 2004, these securities amounted to $3,255,744 or 5.5% of 
net assets. 
d Purchased on a forward commitment basis. 
e Securities acquired under mortgage dollar roll agreement—Note 4. 
f Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
U.S. Government/Agency    39.0    Mortgage/Asset Backed    22.2 
Corporate Bonds    35.9    Foreign    .5 
Short Term/        State Government    .1 
Money Market Investments    26.1        123.8 

  † Based on net assets.
See notes to financial statements.

20

  STATEMENT OF ASSETS AND LIABILITIES
October 31, 2004
    Cost    Value 
Assets ($):         
Investments in securities—See Statement of         
Investments (including securities on loan,         
valued at $6,448,249)—Note 1(b):         
Unaffiliated issuers    66,119,021    67,059,952 
Affiliated issuers    6,665,150    6,665,150 
Receivable for investment securities sold        1,132,878 
Interest receivable        462,125 
Receivable for shares of Capital Stock subscribed    20,337 
        75,340,442 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    51,408 
Cash overdraft due to Custodian        38,955 
Liability for securities on loan—Note 1(b)        6,665,150 
Payable for open mortgage-backed dollar rolls        5,929,765 
Payable for investment securities purchased        3,063,525 
Payable for shares of Capital Stock redeemed        32,476 
        15,781,279 
Net Assets ($)        59,559,163 
Composition of Net Assets ($):         
Paid-in capital        57,976,078 
Accumulated net realized gain (loss) on investments    642,154 
Accumulated net unrealized appreciation         
(depreciation) on investments        940,931 
Net Assets ($)        59,559,163 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R 
Net Assets ($)    19,292,796    17,224,934    9,838,008    13,203,425 
Shares Outstanding    1,667,626    1,484,129    859,597    1,141,326 
Net Asset Value Per Share ($)    11.57    11.61    11.44    11.57 

See notes to financial statements.

The Fund 21

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Interest    2,742,651 
Income from securities lending    6,247 
Total Income    2,748,898 
Expenses:     
Management fee—Note 3(a)    394,576 
Distribution and service fees—Note 3(b)    288,263 
Loan commitment fees—Note 2    534 
Total Expenses    683,373 
Investment Income—Net    2,065,525 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    712,481 
Net unrealized appreciation (depreciation) on investments    97,509 
Net Realized and Unrealized Gain (Loss) on Investments    809,990 
Net Increase in Net Assets Resulting from Operations    2,875,515 

See notes to financial statements.

22

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    2,065,525    2,163,332 
Net realized gain (loss) on investments    712,481    1,714,867 
Net unrealized appreciation         
(depreciation) on investments    97,509    (1,704,103) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    2,875,515    2,174,096 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (711,730)    (668,027) 
Class B shares    (614,499)    (732,897) 
Class C shares    (319,832)    (265,088) 
Class R shares    (502,819)    (609,264) 
Net realized gain on investments:         
Class A shares    (16,325)    — 
Class B shares    (17,993)    — 
Class C shares    (8,692)    — 
Class R shares    (10,781)    — 
Total Dividends    (2,202,671)    (2,275,276) 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    8,190,208    19,481,910 
Class B shares    2,388,335    11,730,524 
Class C shares    2,895,250    9,521,207 
Class R shares    749,859    1,508,539 
Dividends reinvested:         
Class A shares    401,442    359,673 
Class B shares    369,962    404,705 
Class C shares    211,766    140,886 
Class R shares    300,338    341,613 
Cost of shares redeemed:         
Class A shares    (9,666,106)    (16,774,875) 
Class B shares    (10,632,969)    (13,568,821) 
Class C shares    (4,475,397)    (6,120,401) 
Class R shares    (2,715,197)    (8,964,571) 
Increase (Decrease) in Net Assets from         
Capital Stock Transactions    (11,982,509)    (1,939,611) 
Total Increase (Decrease) in Net Assets    (11,309,665)    (2,040,791) 
Net Assets ($):         
Beginning of Period    70,868,828    72,909,619 
End of Period    59,559,163    70,868,828 
Undistributed investment income—net    —    246 

The Fund 23

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Year Ended October 31, 
    2004    2003 
Capital Share Transactions:         
Class A a         
Shares sold    714,540    1,685,356 
Shares issued for dividends reinvested    35,025    31,175 
Shares redeemed    (845,846)    (1,452,244) 
Net Increase (Decrease) in Shares Outstanding    (96,281)    264,287 
Class B a         
Shares sold    209,271    1,010,625 
Shares issued for dividends reinvested    32,168    34,960 
Shares redeemed    (925,209)    (1,173,435) 
Net Increase (Decrease) in Shares Outstanding    (683,770)    (127,850) 
Class C         
Shares sold    255,318    830,432 
Shares issued for dividends reinvested    18,675    12,346 
Shares redeemed    (395,804)    (533,059) 
Net Increase (Decrease) in Shares Outstanding    (121,811)    309,719 
Class R         
Shares sold    65,211    131,511 
Shares issued for dividends reinvested    26,203    29,609 
Shares redeemed    (236,382)    (779,986) 
Net Increase (Decrease) in Shares Outstanding    (144,968)    (618,866) 

a During the period ended October 31, 2004, 224,140 Class B shares representing $2,572,732 were automatically
converted to 224,845 Class A shares and during the period ended October 31, 2003, 185,087 Class B shares
representing $2,142,491 were automatically converted to 185,649 Class A shares.
See notes to financial statements.
24

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    2004    2003    2002 a    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    11.44    11.44    11.46    10.64    10.60 
Investment Operations:                     
Investment income—net    .38b    .37b    .49b    .60    .62 
Net realized and unrealized                     
gain (loss) on investments    .16    .01    .00c    .82    .04 
Total from Investment Operations    .54    .38    .49    1.42    .66 
Distributions:                     
Dividends from investment income—net    (.40)    (.38)    (.51)    (.60)    (.62) 
Dividends from net realized                     
gain on investments    (.01)    —    —    —    — 
Total Distributions    (.41)    (.38)    (.51)    (.60)    (.62) 
Net asset value, end of period    11.57    11.44    11.44    11.46    10.64 
Total Return (%) d    4.76    3.34    4.44    13.74    6.43 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .85    .85    .85    .85    .85 
Ratio of net investment income                     
to average net assets    3.33    3.13    4.44    5.41    5.87 
Portfolio Turnover Rate    202.27e    173.68    136.77    65.05    72.30 
Net Assets, end of period ($ x 1,000)    19,293    20,176    17,159    11,415    6,657 

a    As required, effective November 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting 
    Guide for Investment Companies and began accreting discount on fixed income securities on a scientific basis and 
    including paydown gains and losses in interest income.The effect of these changes for the period ended October 31, 
    2002 was to increase net investment income per share and decrease net realized and unrealized gain (loss) on 
    investments per share by less than $.01 and increase the ratio of net investment income to average net assets from 
    4.43% to 4.44%. Per share data and ratios/supplemental data for periods prior to November 1, 2001 have not 
    been restated to reflect this change in presentation. 
b    Based on average shares outstanding at each month end. 
c    Amount represents less than $.01 per share. 
d    Exclusive of sales charge. 
e    The portfolio turnover rate excluding mortgage dollar roll transactions was 144.28%. 
See notes to financial statements. 

The Fund 25

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class B Shares    2004    2003    2002 a    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    11.47    11.48    11.49    10.68    10.64 
Investment Operations:                     
Investment income—net    .32b    .30b    .44b    .55    .57 
Net realized and unrealized                     
gain (loss) on investments    .17    .01    .00c    .81    .04 
Total from Investment Operations    .49    .31    .44    1.36    .61 
Distributions:                     
Dividends from investment income—net    (.34)    (.32)    (.45)    (.55)    (.57) 
Dividends from net realized                     
gain on investments    (.01)    —    —    —    — 
Total Distributions    (.35)    (.32)    (.45)    (.55)    (.57) 
Net asset value, end of period    11.61    11.47    11.48    11.49    10.68 
Total Return (%) d    4.32    2.74    4.00    13.05    5.90 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.35    1.35    1.35    1.35    1.35 
Ratio of net investment income                     
to average net assets    2.83    2.64    3.93    4.94    5.37 
Portfolio Turnover Rate    202.27e    173.68    136.77    65.05    72.30 
Net Assets, end of period ($ x 1,000)    17,225    24,877    26,352    16,144    9,813 

a    As required, effective November 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting 
    Guide for Investment Companies and began accreting discount on fixed income securities on a scientific basis and 
    including paydown gains and losses in interest income.The effect of these changes for the period ended October 31, 
    2002 was to increase net investment income per share and decrease net realized and unrealized gain (loss) on 
    investments per share by less than $.01 and increase the ratio of net investment income to average net assets from 
    3.91% to 3.93%. Per share data and ratios/supplemental data for periods prior to November 1, 2001 have not 
    been restated to reflect this change in presentation. 
b    Based on average shares outstanding at each month end. 
c    Amount represents less than $.01 per share. 
d    Exclusive of sales charge. 
e    The portfolio turnover rate excluding mortgage dollar roll transactions was 144.28%. 
See notes to financial statements. 

26

        Year Ended October 31,     
Class C Shares    2004    2003    2002 a    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    11.31    11.32    11.33    10.53    10.50 
Investment Operations:                     
Investment income—net    .32b    .30b    .43b    .54    .56 
Net realized and unrealized                     
gain (loss) on investments    .15    .01    .00c    .80    .03 
Total from Investment Operations    .47    .31    .43    1.34    .59 
Distributions:                     
Dividends from investment income—net    (.33)    (.32)    (.44)    (.54)    (.56) 
Dividends from net realized                     
gain on investments    (.01)    —    —    —    — 
Total Distributions    (.34)    (.32)    (.44)    (.54)    (.56) 
Net asset value, end of period    11.44    11.31    11.32    11.33    10.53 
Total Return (%) d    4.25    2.73    4.00    13.05    5.80 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.35    1.35    1.35    1.35    1.35 
Ratio of net investment income                     
to average net assets    2.83    2.64    3.90    4.86    5.34 
Portfolio Turnover Rate    202.27e    173.68    136.77    65.05    72.30 
Net Assets, end of period ($ x 1,000)    9,838    11,104    7,603    3,713    2,156 

a    As required, effective November 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting 
    Guide for Investment Companies and began accreting discount on fixed income securities on a scientific basis and 
    including paydown gains and losses in interest income.The effect of these changes for the period ended October 31, 
    2002 was to increase net investment income per share and decrease net realized and unrealized gain (loss) on 
    investments per share by less than $.01 and increase the ratio of net investment income to average net assets from 
    3.88% to 3.90%. Per share data and ratios/supplemental data for periods prior to November 1, 2001 have not 
    been restated to reflect this change in presentation. 
b    Based on average shares outstanding at each month end. 
c    Amount represents less than $.01 per share. 
d    Exclusive of sales charge. 
e    The portfolio turnover rate excluding mortgage dollar roll transactions was 144.28%. 
See notes to financial statements. 

The Fund 27

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class R Shares    2004    2003    2002 a    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    11.44    11.44    11.46    10.64    10.61 
Investment Operations:                     
Investment income—net    .41b    .39b    .54b    .63    .64 
Net realized and unrealized                     
gain (loss) on investments    .15    .02    (.03)    .82    .03 
Total from Investment Operations    .56    .41    .51    1.45    .67 
Distributions:                     
Dividends from investment income—net    (.42)    (.41)    (.53)    (.63)    (.64) 
Dividends from net realized                     
gain on investments    (.01)    —    —    —    — 
Total Distributions    (.43)    (.41)    (.53)    (.63)    (.64) 
Net asset value, end of period    11.57    11.44    11.44    11.46    10.64 
Total Return (%)    5.02    3.61    4.70    14.02    6.59 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .60    .60    .60    .60    .60 
Ratio of net investment income                     
to average net assets    3.57    3.37    4.80    5.77    6.12 
Portfolio Turnover Rate    202.27c    173.68    136.77    65.05    72.30 
Net Assets, end of period ($ x 1,000)    13,203    14,711    21,796    24,322    40,492 

a    As required, effective November 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting 
    Guide for Investment Companies and began accreting discount on fixed income securities on a scientific basis and 
    including paydown gains and losses in interest income.The effect of these changes for the period ended October 31, 
    2002 was to increase net investment income per share and decrease net realized and unrealized gain (loss) on 
    investments per share by less than $.01 and increase the ratio of net investment income to average net assets from 
    4.79% to 4.80%. Per share data and ratios/supplemental data for periods prior to November 1, 2001 have not 
    been restated to reflect this change in presentation. 
b    Based on average shares outstanding at each month end. 
c    The portfolio turnover rate excluding mortgage dollar roll transactions was 144.28%. 
See notes to financial statements. 

28

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 sixteen 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 ten years. The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares. The fund is authorized to issue 250 million shares 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 Financial 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 29

NOTES TO FINANCIAL STATEMENTS (continued)

Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities (excluding short-term investments other than U.S.Treasury Bills), are valued each business day by an independent pricing service (the "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 valued 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. Restricted securities, as well as securities or other assets for which recent market quotations are not readily available, that are not valued by a pricing service approved by the Board of Directors, or are determined by the fund not to reflect accurately fair value (such as when an event occurs after the close of the exchange on which the security is principally traded and that is determined by the fund to have changed the value of the security), are valued at fair value as determined in good faith under the direction of the Board of Directors.The factors that may be considered when fair valuing a security include fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold and public trading in similar secu-

30

rities of the issuer or comparable issuers. 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, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

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

The Fund 31

NOTES TO FINANCIAL STATEMENTS (continued)

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.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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, if any, it is the policy of the fund not to distribute such gain. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed capital gains $671,600 and unrealized appreciation $911,485.

The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003 were as follows: ordinary income $2,148,880 and $2,275,276 and long-term capital gains $53,791 and $0, respectively.

32

During the period ended October 31, 2004, as a result of permanent book to tax differences primarily due to the tax treatment for paydown gains and losses on mortgage-backed securities, the fund increased accumulated undistributed investment income-net by $83,109, decreased accumulated net realized gain (loss) on investments by $70,191 and decreased paid-in capital by $12,918. Net assets were not affected by this reclassification.

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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 based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2004, the fund did not borrow under the Facility.

NOTE 3—Investment Management Fee and Other Transactions With Affiliates:

(a) 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, service fees and expenses, fees and expenses of non-interested Directors (including counsel fees) and

The Fund 33

NOTES TO FINANCIAL STATEMENTS (continued)

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 Company, 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.

During the period ended October 31, 2004, the Distributor retained $8,059 from commissions earned on sales of the fund's Class A shares and $62,973 and $3,858 from contingent deferred sales charges on redemptions of the fund's Class B and Class C shares, respectively.

(b) Under separate Distribution Plans (the "Plans") 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. Class B and Class C shares pay the Distributor for distributing their 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 (the "Service Plan"), under which

34

Class B and Class C shares pay the Distributor for providing certain services to the holders of their shares a fee at the annual rate of .25% of the value of the average daily net assets of Class B and Class C shares.During the period ended October 31, 2004, Class A, Class B and Class C shares were charged $51,529, $103,733 and $54,089, respectively, pursuant to their respective Plans. Class B and Class C shares were charged $51,867 and $27,045, respectively, pursuant to the Service Plan.

Under its terms, the Plans 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 Plans or Service Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $30,021, Rule 12b-1 distribution plan fees $15,636 and service plan fees $5,751.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales (including paydowns) of investment securities, excluding short-term securities, during the period ended October 31, 2004, amounted to $133,166,255 and $140,585,910, respectively, of which $38,176,828 in purchases and $38,323,352 in sales were from dollar roll transactions.

A mortgage dollar roll transaction involves a sale by the fund of mortgage related securities that it holds with an agreement by the fund to repurchase similar securities at an agreed upon price and date. The securities purchased will bear the same interest rate as those sold, but generally will be collateralized by pools of mortgages with different prepayment histories than those securities sold.

At October 31, 2004, the cost of investments for federal income tax purposes was $72,813,617; accordingly, accumulated net unrealized appreciation on investments was $911,485, consisting of $1,103,972 gross unrealized appreciation and $192,487 gross unrealized depreciation.

The Fund 35

NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

36

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  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, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian and broker. As to securities purchased and sold but not yet received and delivered, we performed other appropriate auditing pro-cedures.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, 2004, 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 U. S. generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 37

IMPORTANT TAX INFORMATION (Unaudited)

For federal tax purposes, the fund hereby designates $.0086 per share as a long-term capital gain distribution paid on December 23, 2003.

38

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 39

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
———————
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
———————
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 

Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.

Ruth Marie Adams, Emeritus Board Member
Francis P. Brennan, Emeritus Board Member

40

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 41

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

42

NOTES

For More    Information 
 
Dreyfus Premier    Transfer Agent & 
Limited Term    Dividend Disbursing Agent 
Income Fund     
    Dreyfus Transfer, Inc. 
200 Park Avenue     
    200 Park Avenue 
New York, NY 10166     
    New York, NY 10166 
 
Manager    Distributor 
The Dreyfus Corporation     
    Dreyfus Service Corporation 
200 Park Avenue     
    200 Park Avenue 
New York, NY 10166     
    New York, NY 10166 
Custodian     
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone Call your financial representative or 1-800-554-4611 
Mail The Dreyfus Premier Family of Funds 
144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0345AR1004

  Dreyfus Premier
Midcap Stock Fund

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
8    Understanding Your Fund's Expenses 
8    Comparing Your Fund's Expenses 
With Those of Other Funds
9    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 
32    Report of Independent Registered 
    Public Accounting Firm 
33    Board Members Information 
35    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Premier
Midcap Stock Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Premier Midcap Stock Fund, covering the 12-month period from November 1, 2003, through October 31, 2004. 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 Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, the rate of corporate earnings growth appears to have slowed dramatically and high energy prices threaten to erode the rate of economic growth.Though these factors may suggest the U.S. economy is moving toward a new phase of the business cycle, we believe the current economic cycle still favors higher-quality stocks, which currently offer favorable relative and absolute valuations.

Of course, the specific investments that may be right for you in today's economic and market environment depend on your current needs, future goals, tolerance for risk and the composition of your overall portfolio.As always, your financial advisor may be in the best position to recommend the specific asset classes and investments that will satisfy your financial needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

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, 2004, the fund produced total returns of 8.10% for Class A shares, 7.31% for Class B shares, 7.30% for Class C shares, 8.38% for Class R shares and 7.83% for Class T shares.1 This compares with the fund's benchmark, the Standard & Poor's MidCap 400 Index ("S&P 400 Index"), which produced a total return of 11.04% for the same period.2

We attribute these results to a generally positive environment for midcap stocks. Stock prices generally rose amid evidence of stronger U.S. and global economic growth, which more than made up for weakness stemming from higher energy prices and ongoing geopolitical con-cerns.While the fund shared in the market's overall gains, disappointing results from some holdings, particularly in the health care and financial sectors, caused the fund's returns to lag its benchmark during the first half of the reporting period. However, the fund's relative performance improved during the second half of the reporting period, when market sentiment shifted toward the types of higher-quality, value-oriented stocks in which the fund primarily invests.

What is the fund's investment approach?

The fund seeks capital appreciation. Effective October 1, 2004, the fund changed its investment objective to its current objective. The objective may be changed without shareholder approval.To pursue its goal,the fund normally invests at least 80% of its assets in stocks of midsize companies.

The fund invests primarily in a blended portfolio of growth and value stocks of mid-capitalization companies, which are chosen through a disciplined investment 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 on more than a dozen different

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

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 on our analysis of which inputs are being rewarded by investors, we establish weightings for each input 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 input.

After considering the different valuation factors, our investment management team conducts fundamental research on each stock, which ultimately results in their buy-and-sell recommendations.The fund seeks to own the best-performing stocks within each economic sector of the 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?

Oil and gas prices began to rise sharply early in the reporting period, driven by strong industrial demand in the United States and China and constrained supplies of oil and gas. Prices of energy stocks climbed as a result, and the energy sector proved to be the market's strongest performing sector for the reporting period overall. The fund's energy holdings generated higher returns than the benchmark's energy component, led by refinery operators Valero Energy and Sunoco; independent exploration and production companies, such as Houston Exploration; and natural gas companies, such as Southwestern Energy, which the fund has subsequently sold.

The fund, prior to selling its position, also achieved attractive gains from its investment in poultry processor Pilgrim's Pride, which benefited from greater public acceptance of high-protein, low-carbohydrate diets. The fund's technology holdings undermined returns during the first half of the reporting period, but improved during the second half of the reporting period. In the technology sector, strong results from Cabot Microelectronics and Plantronics offset weaker performers, such as SanDisk.

4

The fund's relative performance was hurt primarily by disappointments among the fund's health care and financial holdings. Generic drug manufacturers Mylan Laboratories and Par Pharmaceutical Companies were sold out of the portfolio as they experienced company-specific problems as well as heightened competitive pressures from large-cap pharmaceutical companies. Unfortunate timing in the purchase of biotechnology stock ImClone Systems further undermined the fund's performance. Declines among some of the fund's financial holdings, such as New York Community Bancorp and Knight Trading Group, which was sold during the reporting period, more than offset gains in other financial stocks, such as New Century Financial.

What is the fund's current strategy?

As investor sentiment shifted toward higher-quality, more value-oriented stocks during the second half of the reporting period, we have continued to place slightly greater emphasis on value criteria than on growth criteria when selecting individual stocks. More specifically, we have emphasized what we believe to be financially sound companies with low debt levels and strong cash flows. In light of recent market volatility, we also have positioned the fund to take advantage of short-term price fluctuations, with an eye toward locking in profits among holdings that have appreciated more rapidly, and moving those proceeds into other attractively valued midcap issues. In our view, these strategies position the fund well in today's environment of moderate economic growth and gradually rising interest rates.

November 15, 2004

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 reinvestment of dividends and, where applicable, 
    capital gain distributions.The Standard & Poor's MidCap 400 Index is a widely accepted, 
    unmanaged total return index measuring the performance of the midsize-company segment of 
    the U.S. market. 

The Fund 5

FUND PERFORMANCE

Comparison of change in value of $10,000 investment in Dreyfus Premier Midcap Stock Fund Class A shares and 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 A shares and Class R shares of Dreyfus Premier Midcap Stock Fund on 10/31/94 to a $10,000 investment made in the Standard & Poor's MidCap 400 Index (the "Index") on that date. 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.

Effective October 1, 2004, the fund changed its investment objective to seek capital appreciation. Historical performance of the fund for periods before such date reflects the prior objective.

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 Index is a widely accepted, unmanaged total return index measuring the performance of the midsize company segment of the U.S. stock market and 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.

6

Average Annual Total Returns as of 10/31/04             
 
    Inception                From 
    Date    1 Year    5 Years    10 Years    Inception 
Class A shares                     
with maximum sales charge (5.75%)    1.86%    4.93%    12.15%     
without sales charge        8.10%    6.18%    12.81%     
Class B shares                     
with applicable redemption charge †    1/16/98    3.31%    5.07%    —    5.81%†† 
without redemption    1/16/98    7.31%    5.39%    —    5.81%†† 
Class C shares                     
with applicable redemption charge †††    1/16/98    6.30%    5.40%    —    5.76% 
without redemption    1/16/98    7.30%    5.40%    —    5.76% 
Class R shares        8.38%    6.45%    13.09%     
Class T shares                     
with applicable sales charge (4.5%)    8/16/99    2.95%    4.94%    —    4.55% 
without sales charge    8/16/99    7.83%    5.91%    —    5.48% 

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

†    The maximum contingent deferred sales charge for Class B shares is 4%.After six years Class B shares convert to 
    Class A shares. 
††    Assumes the conversion of Class B shares to Class A shares at the end of the sixth year following the date of 
    purchase. 
†††    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 7

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Premier Midcap Stock Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment             
assuming actual returns for the six months ended October 31, 2004         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 6.95    $ 10.79    $ 10.79    $ 5.67    $ 8.23 
Ending value (after expenses)    $1,048.30    $1,044.80    $1,044.70    $1,049.70    $1,046.50 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 6.85    $ 10.63    $ 10.63    $ 5.58    $ 8.11 
Ending value (after expenses)    $1,018.35    $1,014.58    $1,014.58    $1,019.61    $1,017.09 

† Expenses are equal to the fund's annualized expense ratio of 1.35% for Class A, 2.10% for Class B, 2.10% for
Class C, 1.10% for Class R and 1.60% for Class T; multiplied by the average account value over the period,
multiplied by 184/366 (to reflect the one-half year period).
8
STATEMENT OF INVESTMENTS
October 31, 2004
Common Stocks—100.2%    Shares    Value ($) 
Consumer Cyclical—14.9%         
Abercrombie & Fitch, Cl. A    41,600    1,629,888 
Aeropostale    49,400 a    1,558,570 
Applebee's International    66,900 b    1,530,003 
Autoliv    30,200    1,291,050 
Bandag    31,500    1,449,000 
Barnes & Noble    46,000 a    1,530,420 
CBRL Group    26,350    955,451 
CEC Entertainment    37,100 a    1,410,542 
Claire's Stores    74,350    1,934,587 
Coach    26,850 a    1,252,016 
Dollar General    70,750    1,361,937 
GTECH Holdings    95,800    2,267,586 
Gentex    46,300    1,528,363 
HNI    27,000    1,090,800 
Harrah's Entertainment    29,350 b    1,717,562 
La-Z-Boy    54,850 b    723,471 
Lear    18,750    1,011,000 
May Department Stores    52,900    1,378,574 
Michaels Stores    70,500    2,051,550 
NBTY    29,800 a    820,692 
Pep Boys-Manny, Moe & Jack    50,950    724,509 
Polaris Industries    22,150    1,314,603 
Timberland, Cl. A    21,400 a    1,313,960 
Tuesday Morning    46,200 a    1,507,968 
V.F.    32,700    1,760,241 
Whole Foods Market    34,900    2,841,907 
        37,956,250 
Consumer Staples—3.4%         
Blyth    56,200    1,689,934 
Del Monte Foods    80,300 a    857,604 
Fresh Del Monte Produce    50,550 b    1,327,948 
Jarden    28,150 a    988,628 
Sensient Technologies    48,650    1,056,678 
Smithfield Foods    47,700 a    1,155,771 
Tyson Foods, Cl. A    112,400 b    1,629,800 
        8,706,363 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Energy Related—10.4%         
Amerada Hess    9,250    746,568 
Cal Dive International    43,700 a    1,547,417 
Energen    28,950    1,556,931 
Grant Prideco    63,600 a    1,307,616 
Houston Exploration    32,300 a    1,892,780 
Hydril    29,350 a    1,291,106 
Magnum Hunter Resources    144,100 a    1,743,610 
Newfield Exploration    27,450 a    1,597,590 
Pogo Producing    39,400    1,806,490 
Precision Drilling    31,800 a    1,960,788 
Questar    64,650    3,103,200 
Sunoco    18,550    1,379,378 
Superior Energy Services    115,650 a    1,490,728 
TETRA Technologies    37,800 a    1,131,732 
Unit    34,200 a    1,268,478 
Valero Energy    34,400    1,478,168 
Varco International    47,300 a    1,309,264 
        26,611,844 
Health Care—10.5%         
Affymetrix    43,300 a    1,320,650 
Apria Healthcare Group    55,425 a    1,516,428 
Beckman Coulter    37,100    2,207,450 
Bradley Pharmaceuticals    43,400 a,b    718,704 
Charles River Laboratories International    33,000 a    1,544,070 
Coventry Health Care    52,700 a,b    2,155,430 
Diagnostic Products    26,750    1,181,012 
Health Net    71,450 a    1,733,377 
Henry Schein    30,450 a    1,925,354 
IVAX    132,450 a    2,397,345 
ImClone Systems    14,250 a    624,150 
Invacare    24,650    1,138,337 
Millipore    32,150 a    1,478,578 
PacifiCare Health Systems    50,200 a    1,788,124 
Select Medical    60,700    1,043,433 
Varian Medical Systems    75,550 a    3,033,333 
Watson Pharmaceuticals    35,100 a    983,853 
        26,789,628 

10

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive—18.8%         
Astoria Financial    44,700    1,747,323 
Bank of Hawaii    49,550    2,366,013 
Bear Stearns Cos.    18,850    1,786,037 
CIT Group    45,900    1,854,360 
CharterMac    34,200    792,072 
Cincinnati Financial    37,550    1,567,713 
Colonial BancGroup    93,500 b    2,024,275 
Commerce Bancshares    34,200    1,679,220 
Dime Bancorp (Warrants)    68,300 a    8,196 
Doral Financial    38,100    1,599,438 
Everest Re Group    31,550    2,504,123 
FelCor Lodging Trust    106,300 a    1,235,206 
Fidelity National Financial    85,087    3,211,183 
First American    65,300    2,036,707 
First Horizon National    33,600    1,454,208 
General Growth Properties    35,700    1,177,743 
General Growth Properties (Warrants)    3,610    — 
Hibernia, Cl. A    99,700 b    2,891,300 
Huntington Bancshares    64,050    1,533,998 
Investors Financial Services    54,500    2,097,705 
Jefferies Group    35,600 b    1,428,628 
Lincoln National    38,400    1,681,920 
New Century Financial    27,750 b    1,530,413 
New York Community Bancorp    67,233    1,234,398 
Northwest Bancorp    31,650    753,270 
Phoenix Cos.    96,300 b    1,015,965 
Piper Jaffray Cos.    26,200 a,b    1,145,726 
South Financial Group    13,500    405,270 
Trizec Properties    67,450    1,075,827 
Unitrin    35,200    1,519,936 
Webster Financial    26,950    1,288,210 
Weingarten Realty Investors    38,100    1,377,696 
        48,024,079 
Producer Goods & Services—14.8%         
Albemarle    41,200    1,477,020 
Baldor Electric    40,000    937,200 
Bemis    61,000    1,614,670 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Producer Goods & Services (continued)         
Cabot    46,500    1,584,720 
Cooper Industries, Cl. A    21,900    1,399,410 
Crane    39,350    1,096,685 
Energizer Holdings    42,500 a    1,973,275 
Harsco    30,400    1,472,880 
Hovnanian Enterprises, Cl. A    35,350 a,b    1,327,039 
Hunt (J.B.) Transport Services    62,300    2,545,578 
KB HOME    19,550    1,607,987 
Lennar, Cl. A    63,550    2,858,479 
Lubrizol    56,100    1,948,353 
Orbital Sciences    89,800 a    929,430 
Overnite    37,900    1,226,444 
Overseas Shipholding Group    36,900    2,101,455 
Rockwell Automation    36,600    1,525,854 
Ryland Group    21,050    2,007,960 
Sherwin-Williams    27,150    1,159,848 
Sigma-Aldrich    23,150 b    1,288,066 
Teledyne Technologies    37,400 a    956,318 
Timken    59,600    1,430,400 
W.W. Grainger    26,300    1,540,917 
York International    49,950    1,590,408 
        37,600,396 
Services—10.4%         
Acxiom    78,800    1,970,000 
Catalina Marketing    43,800    1,121,718 
ChoicePoint    45,400 a    1,890,002 
Cox Radio, Cl. A    59,350 a    943,665 
Equifax    45,100    1,179,365 
FactSet Research Systems    35,150 b    1,751,876 
Gemstar-TV Guide International    190,600 a    1,095,950 
Getty Images    29,600 a,b    1,750,248 
Hearst-Argyle Television    29,150    759,649 
Hewitt Associates, Cl. A    61,000 a    1,709,830 
ITT Educational Services    34,550 a,b    1,313,246 
MPS Group    152,650 a    1,607,404 

12
Common Stocks (continued)    Shares    Value ($) 
Services (continued)         
Manpower    46,900    2,122,225 
Media General, Cl. A    26,000    1,515,800 
Republic Services    83,800    2,581,040 
Washington Post, Cl. B    3,450    3,156,750 
        26,468,768 
Technology—12.4%         
Activision    110,050 a    1,593,524 
Altera    48,750 a    1,108,088 
Amphenol, Cl. A    52,500 a    1,802,325 
Arrow Electronics    98,400 a    2,357,664 
Cabot Microelectronics    45,300 a,b    1,632,159 
CheckFree    41,900 a,b    1,298,900 
Citrix Systems    58,050 a    1,400,746 
Digital River    55,900 a    1,861,470 
Harris    47,100    2,898,063 
Integrated Circuit Systems    71,950 a,b    1,622,472 
Lam Research    90,200 a,b    2,347,906 
McAfee    96,600 a    2,337,720 
Microchip Technology    43,700    1,321,925 
Plantronics    36,200    1,574,700 
SanDisk    47,900 a,b    999,673 
Storage Technology    75,050 a,b    2,027,851 
Tech Data    42,200 a    1,704,458 
Zebra Technologies, Cl. A    33,250 a    1,761,918 
        31,651,562 
Utilities—4.6%         
Alliant Energy    81,550    2,151,289 
CenturyTel    30,300    972,327 
Great Plains Energy    66,000    1,880,340 
Northeast Utilities    120,900    2,336,997 
SCANA    63,750    2,365,125 
WPS Resources    44,150    2,097,125 
        11,803,203 
Total Common Stocks         
(cost $219,258,429)        255,612,093 

The Fund 13

STATEMENT OF INVESTMENTS (continued)

    Principal     
Short-Term Investments—.4%    Amount ($)    Value ($) 
Repurchase Agreements;         
Goldman Sachs & Co., Tri-Party Repurchase         
Agreement, 1.75%, dated 10/31/2004,         
due 11/1/2004 in the amount of $1,000,146         
(fully collateralized by $718,000 U.S. Treasury Bonds,     
8.00% due 11/15/2021, value $1,021,057)         
(cost $1,000,000)    1,000,000    1,000,000 
 
Investment of Cash Collateral         
for Securities Loaned—7.4%    Shares    Value ($) 
Registered Investment Company;         
Dreyfus Institutional Cash Advantage Fund         
(cost $18,857,700)    18,857,700 c    18,857,700 
 
Total Investments (cost $239,116,129)    108.0%    275,469,793 
Liabilities, Less Cash and Receivables    (8.0%)    (20,405,710) 
Net Assets    100.0%    255,064,083 

a Non-income producing. 
b All or a portion of these securities are on loan.At October 31, 2004, the total market value of the fund's securities 
on loan is $18,153,011 and the total market value of the collateral held by the fund is $18,857,700. 
c Investment in affiliated money market mutual fund. 

Portfolio Summary (Unaudited) †         
 
    Value (%)    Value (%) 
Interest Sensitive    18.8    Services    10.4 
Consumer Cyclical    14.9    Short-Term/Money Market Investments    7.8 
Producer Goods & Services    14.8    Utilities    4.6 
Technology    12.4    Consumer Staples    3.4 
Health Care    10.5         
Energy Related    10.4        108.0 

† Based on net assets.
See notes to financial statements.

14

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

        Cost    Value 
Assets ($):             
Investments in securities—             
See Statement of Investments    (including securities         
on loan, valued at$18,153,011)—Note 1(b):         
Unaffiliated issuers        220,258,429    256,612,093 
Affiliated issuers        18,857,700    18,857,700 
Cash            111,250 
Receivable for investment securities sold        1,017,862 
Receivable for shares of Capital Stock subscribed        318,243 
Dividends and interest receivable        136,806 
            277,053,954 
Liabilities ($):             
Due to The Dreyfus Corporation and affiliates—Note 3(b)        332,665 
Payable for investment securities purchased        1,498,495 
Liability for securities on loan—Note 1(b)        18,857,700 
Payable for shares of Capital Stock redeemed        1,300,856 
Loan commitment fees payable            155 
            21,989,871 
Net Assets ($)            255,064,083 
Composition of Net Assets ($):         
Paid-in capital            214,591,705 
Accumulated undistributed investment income—net        1,381 
Accumulated net realized gain (loss) on investments        4,117,333 
Accumulated net unrealized appreciation         
(depreciation) on investments            36,353,664 
Net Assets ($)            255,064,083 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    157,482,865    40,755,448    16,041,218    39,214,648    1,569,904 
Shares Outstanding    8,739,385    2,393,857    940,419    2,134,860    88,328 
Net Asset Value                     
Per Share ($)    18.02    17.03    17.06    18.37    17.77 

See notes to financial statements.

The Fund 15

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Cash dividends (net of $3,734 foreign taxes withheld at source):     
Unaffiliated issuers    3,182,024 
Affiliated issuers    19,858 
Income on securities lending    21,985 
Total Income    3,223,867 
Expenses:     
Management fee—Note 3(a)    2,991,660 
Distribution and service plan fees—Note 3(b)    1,039,339 
Loan commitment fees—Note 2    2,116 
Interest expense—Note 2    3,312 
Total Expenses    4,036,427 
Investment (Loss)—Net    (812,560) 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    36,810,135 
Net unrealized appreciation (depreciation) on investments    (15,814,013) 
Net Realized and Unrealized Gain (Loss) on Investments    20,996,122 
Net Increase in Net Assets Resulting from Operations    20,183,562 

See notes to financial statements.

16

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment (loss)—net    (812,560)    (834,449) 
Net realized gain (loss) on investments    36,810,135    4,254,603 
Net unrealized appreciation         
(depreciation) on investments    (15,814,013)    53,181,380 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    20,183,562    56,601,534 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    56,193,672    64,031,243 
Class B shares    3,658,021    6,685,895 
Class C shares    2,562,830    3,938,123 
Class R shares    8,758,567    16,213,510 
Class T shares    932,981    7,066,708 
Cost of shares redeemed:         
Class A shares    (57,453,703)    (52,342,850) 
Class B shares    (17,127,091)    (8,362,790) 
Class C shares    (3,802,293)    (2,592,427) 
Class R shares    (32,606,811)    (43,208,527) 
Class T shares    (965,386)    (6,711,443) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    (39,849,213)    (15,282,558) 
Total Increase (Decrease) in Net Assets    (19,665,651)    41,318,976 
Net Assets ($):         
Beginning of Period    274,729,734    233,410,758 
End of Period    255,064,083    274,729,734 

The Fund 17

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Year Ended October 31, 
    2004    2003 
Capital Share Transactions:         
Class A a         
Shares sold    3,211,337    4,475,622 
Shares redeemed    (3,284,588)    (3,674,986) 
Net Increase (Decrease) in Shares Outstanding    (73,251)    800,636 
Class B a         
Shares sold    218,577    496,630 
Shares redeemed    (1,030,451)    (624,968) 
Net Increase (Decrease) in Shares Outstanding    (811,874)    (128,338) 
Class C         
Shares sold    154,672    292,590 
Shares redeemed    (230,764)    (192,486) 
Net Increase (Decrease) in Shares Outstanding    (76,092)    100,104 
Class R         
Shares sold    491,604    1,141,554 
Shares redeemed    (1,852,057)    (3,158,056) 
Net Increase (Decrease) in Shares Outstanding    (1,360,453)    (2,016,502) 
Class T         
Shares sold    54,433    503,176 
Shares redeemed    (56,275)    (469,246) 
Net Increase (Decrease) in Shares Outstanding    (1,842)    33,930 

a During the period ended October 31, 2004, 538,483 Class B shares representing $8,971,983 were automatically
converted to 510,118 Class A shares and during the period ended October 31, 2003, 20,828 Class B shares
representing $291,034 were automatically converted to 19,874 Class A shares.
See notes to financial statements.
18
  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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    16.68    13.16    13.73    19.99    16.69 
Investment Operations:                     
Investment (loss)—net a    (.03)    (.03)    (.03)    (.04)    (.03) 
Net realized and unrealized gain                     
(loss) on investments    1.37    3.55    (.54)    (2.69)    3.66 
Total from Investment Operations    1.34    3.52    (.57)    (2.73)    3.63 
Distributions:                     
Dividends from net realized                     
gain on investments    —    —    —    (3.53)    (.33) 
Net asset value, end of period    18.02    16.68    13.16    13.73    19.99 
Total Return (%) b    8.10    26.67    (4.15)    (15.81)    22.14 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.35    1.35    1.35    1.35    1.36 
Ratio of net investment                     
(loss) to average net assets    (.17)    (.24)    (.24)    (.31)    (.17) 
Portfolio Turnover Rate    77.47    92.97    65.85    82.49    122.19 
Net Assets, end of period                     
($ x 1,000)    157,483    146,958    105,449    81,028    78,425 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 19

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class B shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    15.87    12.62    13.26    19.57    16.46 
Investment Operations:                     
Investment (loss)—net a    (.15)    (.13)    (.14)    (.14)    (.17) 
Net realized and unrealized                     
gain (loss) on investments    1.31    3.38    (.50)    (2.64)    3.61 
Total from Investment Operations    1.16    3.25    (.64)    (2.78)    3.44 
Distributions:                     
Dividends from net realized                     
gain on investments    —    —    —    (3.53)    (.33) 
Net asset value, end of period    17.03    15.87    12.62    13.26    19.57 
Total Return (%) b    7.31    25.75    (4.83)    (16.47)    21.22 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.10    2.10    2.10    2.10    2.11 
Ratio of net investment                     
(loss) to average net assets    (.91)    (.98)    (.98)    (1.06)    (.91) 
Portfolio Turnover Rate    77.47    92.97    65.85    82.49    122.19 
Net Assets, end of period                     
($ x 1,000)    40,755    50,866    42,067    37,556    35,959 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

20

        Year Ended October 31,     
Class C shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    15.90    12.64    13.29    19.59    16.48 
Investment Operations:                     
Investment (loss)—net a    (.15)    (.13)    (.14)    (.14)    (.17) 
Net realized and unrealized                     
gain (loss) on investments    1.31    3.39    (.51)    (2.63)    3.61 
Total from Investment Operations    1.16    3.26    (.65)    (2.77)    3.44 
Distributions:                     
Dividends from net realized                     
gain on investments    —    —    —    (3.53)    (.33) 
Net asset value, end of period    17.06    15.90    12.64    13.29    19.59 
Total Return (%) b    7.30    25.79    (4.89)    (16.40)    21.19 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.10    2.10    2.10    2.10    2.11 
Ratio of net investment                     
(loss) to average net assets    (.92)    (.99)    (.99)    (1.06)    (.91) 
Portfolio Turnover Rate    77.47    92.97    65.85    82.49    122.19 
Net Assets, end of period                     
($ x 1,000)    16,041    16,164    11,587    8,203    7,178 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 21

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class R shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    16.95    13.35    13.89    20.14    16.77 
Investment Operations:                     
Investment income (loss)—net a    .02    .01    .00b    (.01)    .02 
Net realized and unrealized                     
gain (loss) on investments    1.40    3.59    (.54)    (2.71)    3.68 
Total from Investment Operations    1.42    3.60    (.54)    (2.72)    3.70 
Distributions:                     
Dividends from net realized                     
gain on investments    —    —    —    (3.53)    (.33) 
Net asset value, end of period    18.37    16.95    13.35    13.89    20.14 
Total Return (%)    8.38    26.97    (3.89)    (15.56)    22.40 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.10    1.10    1.10    1.10    1.11 
Ratio of net investment income                     
(loss) to average net assets    .09    .04    .02    (.06)    .10 
Portfolio Turnover Rate    77.47    92.97    65.85    82.49    122.19 
Net Assets, end of period                     
($ x 1,000)    39,215    59,256    73,575    86,251    113,318 

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
See notes to financial statements. 

22

        Year Ended October 31,     
Class T shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    16.49    13.05    13.64    19.93    16.68 
Investment Operations:                     
Investment (loss)—net a    (.07)    (.07)    (.12)    (.07)    (.08) 
Net realized and unrealized gain                     
(loss) on investments    1.35    3.51    (.47)    (2.69)    3.66 
Total from Investment Operations    1.28    3.44    (.59)    (2.76)    3.58 
Distributions:                     
Dividends from net realized                     
gain on investments    —    —    —    (3.53)    (.33) 
Net asset value, end of period    17.77    16.49    13.05    13.64    19.93 
Total Return (%) b    7.83    26.28    (4.32)    (16.04)    21.84 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.60    1.60    1.60    1.60    1.61 
Ratio of net investment (loss)                     
to average net assets    (.42)    (.49)    (.83)    (.53)    (.41) 
Portfolio Turnover Rate    77.47    92.97    65.85    82.49    122.19 
Net Assets, end of period                     
($ x 1,000)    1,570    1,486    734    243    109 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 23

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 sixteen series, including the fund. Prior to October 1, 2004, the fund's investment objective was to seek investment returns (consisting of capital appreciation and income) that are consistently superior to the Standard & Poor's 400 MidCap Index. On July 20, 2004, the Board of Directors approved changing the fund's investment objective. Effective October 1, 2004, the fund's investment objective is to seek capital appreciation. The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares. The fund is authorized to issue 488 million shares of $.001 par value Capital Stock.The fund currently offers five classes of shares: Class A (22 million shares authorized), Class B (100 million shares authorized), Class C (100 million shares authorized), Class R (66 million shares authorized) and Class T shares (200 million shares authorized). Class A, Class B, Class C and Class T shares are sold primarily to retail investors through financial intermediaries and bear a distribution fee and/or service fee. Class A and Class T shares are sold with a front-end sales charge, while Class B and Class C shares are subject to a contingent deferred sales charge ("CDSC"). Class 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 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.

24

Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sale price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is avail-able.When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADR's and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. Financial futures are valued at the last sales price.

The Fund 25

NOTES TO FINANCIAL STATEMENTS (continued)

(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, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

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 under-

26

lying 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.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed capital gains $4,216,081 and unrealized appreciation $36,256,297.

During the period ended October 31,2004,as a result of permanent book to tax differences primarily due to the tax treatment for net operating losses and real estate investment trusts, the fund increased accumulated undistributed investment income-net by $813,941,increased accumulated net realized gain (loss) on investments by $84 and decreased paid-in capital by $814,025. Net assets were not affected by this reclassification.

The Fund 27

NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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 31,2004,was approximately $185,520, with a related weighted average annualized interest rate of 1.79% .

NOTE 3—Investment Management Fee And Other Transactions With Affiliates:

(a) 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 Company, 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

28

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.

During the period ended October 31, 2004, the Distributor retained $15,454 and $38 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $98,856 and $2,831 from contingent deferred sales charges on redemptions of the fund's Class B and Class C shares, respectively.

(b) Under separate Distribution Plans (the "Plans") 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. 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, (the "Service Plan") under which Class B, Class C and Class T shares pay the Distributor for providing services to the holders of their shares a fee at the annual rate of .25% of the

The Fund 29

NOTES TO FINANCIAL STATEMENTS (continued)

value of the average daily net assets of Class B, Class C and Class T shares. During the period ended October 31, 2004, Class A, Class B, Class C and Class T shares were charged $389,333, $357,650, $123,716 and $4,092, respectively, pursuant to their respective Plans, and Class B, Class C and Class T shares were charged $119,217, $41,239 and $4,092, respectively, pursuant to the Service Plan.

Under its terms, the Plans 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 Plans or Service Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $250,948, Rule 12b-1 distribution plan fees $12,210, and shareholder services plan fees $69,507.

(c) The Company and the Manager have received an exemptive order from the SEC which, among other things, permits the fund to use cash collateral received in connection with lending the fund's securities and other uninvested cash to purchase shares of one or more registered money market mutual funds advised by the Manager in excess of the limitations imposed by the Act.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended October 31, 2004, amounted to $209,209,312 and $240,007,693, respectively.

At October 31, 2004, the cost of investments for federal income tax purposes was $239,213,496; accordingly, accumulated net unrealized appreciation on investments was $36,256,297, consisting of $41,653,429 gross unrealized appreciation and $5,397,132 gross unrealized depreciation.

30

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

The Fund 31

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004, and the related statement of operations for the year then ended, the statement 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 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian and broker.As to securities purchased and sold but not yet received or delivered, we performed other appropriate auditing procedures.An audit also includes assessing the accounting principles used and significant estimates made by manage-ment,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, 2004, 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 indicated herein, in conformity with U.S. generally accepted accounting principles.

New York, New York
December 13, 2004

32

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 33

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

34

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 35

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The the Manager Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

36

For More    Information 
 
Dreyfus Premier    Transfer Agent & 
Midcap Stock Fund    Dividend Disbursing Agent 
200 Park Avenue     
    Dreyfus Transfer, Inc. 
New York, NY 10166     
    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue     
    Dreyfus Service Corporation 
New York, NY 10166     
    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone Call your financial representative or 1-800-554-4611 
Mail The Dreyfus Premier Family of Funds 
144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0330AR1004

Dreyfus Premier 
Small    Cap 
Value    Fund 

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
8    Understanding Your Fund's Expenses 
8    Comparing Your Fund's Expenses 
With Those of Other Funds
9    Statement of Investments 
17    Statement of Assets and Liabilities 
18    Statement of Operations 
19    Statement of Changes in Net Assets 
21    Financial Highlights 
26    Notes to Financial Statements 
35    Report of Independent Registered 
    Public Accounting Firm 
36    Important Tax Information 
37    Board Members Information 
39    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Premier
Small Cap Value Fund

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus Premier Small Cap Value Fund,covering the 12-month period from November 1,2003, through October 31,2004.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, Mark W. Sikorski, CFA.

The Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, the rate of corporate earnings growth appears to have slowed dramatically and high energy prices threaten to erode the rate of economic growth.Though these factors may suggest the U.S. economy is moving toward a new phase of the business cycle, we believe the current economic cycle still favors higher-quality stocks, which currently offer favorable relative and absolute valuations.

Of course, the specific investments that may be right for you in today's economic and market environment depend on your current needs, future goals, tolerance for risk and the composition of your overall portfolio.As always, your financial advisor may be in the best position to recommend the specific asset classes and investments that will satisfy your financial needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Mark W. Sikorski, CFA, Portfolio Manager

How did Dreyfus Premier Small Cap Value Fund perform relative to its benchmark?

For the 12-month period ended October 31, 2004, the fund's Class A, B, C, R and T shares produced total returns of 20.86%, 20.18%, 20.02%, 21.26% and 20.61%, respectively.1 In comparison, the fund's benchmark, the Russell 2000 Value Index ("the Index"), produced a total return of 17.99% .2

As a group, small-cap value stocks produced above-average returns over the reporting period, which we attribute to better business conditions in a gradually recovering economy. The fund's returns outperformed its benchmark, primarily because we focused on the improving fundamentals of manufacturing and energy companies, and we avoided certain areas of the technology sector that lagged the rest of the market.

What is the fund's investment approach?

The fund seeks capital appreciation. Effective October 1, 2004, the fund changed its investment objective to its current objective. This objective may be changed without shareholder approval.To pursue its goal, the fund normally invests at least 80% of its assets in stocks of small U.S. companies.We use a disciplined process that combines computer modeling techniques, fundamental analysis and risk management to select undervalued stocks for the fund.

In selecting securities, we use disciplined valuation models to identify undervalued stocks. Undervalued stocks are normally characterized by relatively low price-to-earnings and low price-to-book ratios. The models help analyze how a stock is priced relative to its perceived intrinsic value.

Next, based on fundamental analysis, we generally select the most attractive securities, drawing on a variety of sources, including internal as well as Wall Street research and company management.

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

Then the fund is constructed with a commitment to diversification, so that its sector weightings and risk characteristics are generally similar to those of the Index.

What other factors influenced the fund's performance?

The fund benefited from its emphasis on improving business fundamentals and attractive valuations among a carefully selected portfolio of small-cap companies. Indeed, early in the reporting period, a number of small-cap value stocks were selling at what we regarded as compelling prices. In our view, concerns regarding a relatively weak labor market, rising energy prices and ongoing instability in Iraq generally had dulled investors' enthusiasm for stocks.As we expected, prices of small-cap value stocks subsequently rose as their underlying businesses achieved higher earnings in the expanding economy. On average, small-cap value stocks significantly surpassed large-cap and small-cap growth stocks during the reporting period.

Within the small-cap value area, the energy, commodities and manufacturing sectors produced particularly impressive gains. As nations in the emerging markets began to invest more capital in their infrastructures, they turned to U.S. industrial companies for construction and other services. As a result, and with the help of solid domestic demand, the fund's industrial holdings, such as engine manufacturer Cummins, performed well. Similarly, strong demand from customers in China and the United States helped drive commodity prices higher, which helped produce gains for energy and steel stocks. Domestic natural gas producers, such as Houston Exploration, benefited from this environment, as did Quanex, a steel and aluminum manufacturer.

The fund also received positive contributions to performance from its investments in the financial sector. Despite rising short-term interest rates, financial stocks generally produced above-average returns. Profits of financial companies, such as Chicago-based Corus Bankshares, benefited from robust lending demand. Investments in real estate investment trusts also performed well as investors were rewarded by strong growth and attractive dividends.

4

On the other hand, a downturn in demand for various technology products presented difficulties for semiconductor equipment companies and other hardware manufacturers, causing their stock prices to fall. Fortunately, the fund offset some of its losses among hardware manufacturers by locking in gains on technology companies in other areas, such as software maker Novell, which was sold during the reporting period.

What is the fund's current strategy?

The fund's longstanding strategy is to invest in a diversified portfolio of stocks across most economic sectors. We strive to add value by selecting stocks in various industries, focusing on attractively valued companies that have strong earnings potential.

Although small-cap value stocks appreciated significantly during the reporting period, we believe that opportunities are likely to continue to arise in several areas.For example,we currently expect robust customer demand in capacity-constrained industries such as chemicals and trucking to enable companies in these businesses to gain pricing power. On the other hand, we have grown more cautious regarding certain interest-rate sensitive areas,particularly real estate investment trusts,which we believe may be vulnerable to a less accommodative monetary policy.

November 15, 2004

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 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 5

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 (the "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.

Effective October 1, 2004, the fund changed its investment objective to seek capital appreciation. Historical performance of the fund for periods before such date reflects the prior objective.

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 all classes.The 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 Index is an unmanaged index of small-cap stock market performance and is composed of the 2,000 smallest companies in the Russell 3000 Index.The Russell 3000 Index is composed of the 3,000 largest U.S. companies based on total 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.

6
Average Annual Total Returns as of 10/31/04         
 
    Inception            From 
    Date    1 Year    5 Years    Inception 
Class A shares                 
with maximum sales charge (5.75%)    4/1/98    13.94%    13.58%    7.52% 
without sales charge    4/1/98    20.86%    14.93%    8.49% 
Class B shares                 
with applicable redemption charge †    4/1/98    16.18%    13.89%    7.77% 
without redemption    4/1/98    20.18%    14.13%    7.77% 
Class C shares                 
with applicable redemption charge ††    4/1/98    19.02%    14.08%    7.70% 
without redemption    4/1/98    20.02%    14.08%    7.70% 
Class R shares    4/1/98    21.26%    15.25%    8.78% 
Class T shares                 
with applicable sales charge (4.5%)    3/1/00    15.15%    —    15.34% 
without sales charge    3/1/00    20.61%    —    16.49% 

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class B shares assumes the conversion of Class B shares to Class A shares at the end of the sixth year following the date of purchase.

† The maximum contingent deferred sales charge for Class B shares is 4%.After six years 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.

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Premier Small Cap Value Fund from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment             
assuming actual returns for the six months ended October 31, 2004         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 7.85    $ 11.76    $ 11.75    $ 6.54    $ 9.15 
Ending value (after expenses)    $1,080.80    $1,078.80    $1,077.50    $1,082.80    $1,080.00 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 †    $ 7.61    $ 11.39    $ 11.39    $ 6.34    $ 8.87 
Ending value (after expenses)    $1,017.60    $1,013.83    $1,013.83    $1,018.85    $1,016.34 

† Expenses are equal to the fund's annualized expense ratio of 1.50% for Class A, 2.25% for Class B, 2.25% for
Class C, 1.25% for Class R and 1.75% for Class T; multiplied by the average account value over the period,
multiplied by 184/366 (to reflect the one-half year period)..
8
STATEMENT OF INVESTMENTS
October 31, 2004
Common Stocks—95.0%    Shares    Value ($) 
Consumer Cyclical—10.5%         
Aztar    24,500 a    758,275 
Blue Nile    17,600 a,b    427,680 
Bon-Ton Stores    56,300    675,600 
Brown Shoe Company    27,000    737,100 
CBRL Group    26,500    960,890 
CSK Auto    49,500 a    724,680 
Cache    57,800 a    907,171 
Cato, Cl. A    32,500    746,200 
Group 1 Automotive    27,400 a    775,146 
Helen Of Troy Limited    29,500 a    783,225 
K2    57,600 a    934,272 
Landry's Restaurants    33,300    901,764 
Linens ‘n Things    38,000 a    915,040 
Multimedia Games    63,500 a,b    838,200 
NBTY    29,600 a    815,184 
Oakley    52,500    666,750 
Pacific Sunwear of California    37,000 a    867,280 
Pep Boys—Manny, Moe & Jack    60,600    861,732 
Russell    38,000    657,020 
Sonic Automotive    43,100    871,913 
Sports Authority    31,500 a    761,670 
Stage Stores    21,600 a    777,816 
Thor Industries    33,000    917,730 
Toro    10,700    730,275 
Water Pik Technologies    41,000 a    642,060 
        19,654,673 
Consumer Staples—3.0%         
Chiquita Brands International    62,500 a    1,126,250 
Flowers Foods    27,700    702,472 
Hain Celestial Group    37,600 a    608,368 
Jarden    33,800 a    1,187,056 
Lance    29,500    497,960 
Sensient Technologies    36,000    781,920 
Smithfield Foods    28,000 a    678,440 
        5,582,466 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares        Value ($) 
Energy Related—9.5%             
Cimarex Energy    29,200    a    1,047,696 
Comstock Resources    17,000    a    374,000 
Energen    13,500        726,030 
Forest Oil    39,500    a    1,204,750 
Grant Prideco    43,100    a    886,136 
Gulf Island Fabrication    15,000        306,900 
Houston Exploration    27,000    a    1,582,200 
Hydril    14,600    a    642,254 
Key Energy Services    80,800    a    929,200 
Magnum Hunter Resources    55,500    a    671,550 
National Fuel Gas    23,300        652,866 
New Jersey Resources    25,300        1,040,083 
ONEOK    30,500        818,010 
Piedmont Natural Gas    22,200        1,010,766 
Plains Exploration & Production    34,000    a    850,000 
Remington Oil & Gas    29,000    a    737,760 
Superior Energy Services    71,000    a    915,190 
Tesoro Petroleum    34,100    a    1,032,548 
Todco, Cl. A    32,700    a    554,919 
Unit    32,700    a    1,212,843 
Whiting Petroleum    18,500    a    549,080 
            17,744,781 
Financial Services—1.7%             
Asset Acceptance Capital    54,700    a    996,907 
BISYS Group    45,300    a    661,380 
Cash America International    37,500        948,750 
New Century Financial    9,900        545,985 
            3,153,022 
Health Care—5.2%             
Accredo Health    30,400    a    700,112 
Aphton    86,000    a,b    309,600 
Applera—Celera Genomics Group    39,000        499,980 
Bradley Pharmaceuticals    47,200    a,b    781,632 
Cell Genesys    62,500    a,b    410,000 
DaVita    39,000    a    1,155,180 
Diversa    41,000    a    353,420 
Endo Pharmaceuticals Holdings    57,000    a    1,242,600 

10

Common Stocks (continued)    Shares    Value ($) 
Health Care (continued)         
IDEXX Laboratories    16,500 a,b    822,360 
PacifiCare Health Systems    28,600 a    1,018,732 
Quidel    123,000 a    693,720 
Trimeris    47,000 a    540,970 
USANA Health Sciences    15,000 a,b    447,450 
Watson Pharmaceuticals    27,000 a    756,810 
        9,732,566 
Interest Sensitive—24.2%         
ASTA Funding    44,700    807,952 
Allmerica Financial    40,600 a    1,222,060 
American Equity Investment Life Holding    111,000    1,090,020 
American Financial Reality Trust    60,300 b    886,410 
American Home Mortgage Investment    31,000    856,530 
American Land Lease    31,000    615,660 
AmericanWest Bancorporation    35,400 a    702,690 
AmerUs Group    23,000    960,940 
Arch Capital Group    23,700 a    890,409 
Ashford Hospitality Trust    50,800    492,252 
Boykin Lodging    114,000 a    957,600 
CNA Surety    30,000 a    353,100 
Capital City Bank Group    12,800    500,608 
CapitalSource    37,000 a    828,800 
Capitol Bancorp    15,000    460,350 
Central Pacific Financial    33,000    1,008,150 
City Holding    22,100    765,765 
Columbia Banking System    37,085    908,583 
Corus Bankshares    12,700    584,327 
Equity Inns    85,500    812,250 
First Citizens BancShares, Cl. A    8,700    1,026,165 
First Industrial Realty Trust    19,300    744,980 
First Niagara Fianancial Group    84,100    1,172,354 
FirstFed Financial    9,700 a    498,580 
Flagstar Bancorp    51,000    1,065,390 
Franklin Bank    59,700 a    985,050 
Fremont General    63,500    1,365,250 
Glacier Bancorp    23,600    746,940 
Glenborough Realty Trust    29,200    613,200 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Interest Sensitive (continued)         
Gold Banc    43,100    627,105 
Great American Financial Resources    42,000    659,400 
HRPT Properties Trust    93,500    1,046,265 
Hanmi Financial    31,500    956,970 
Heritage Property Investment Trust    24,200 b    740,278 
ITLA Capital    10,000 a    484,210 
Integra Bank    35,000    767,200 
Irwin Financial    38,700    964,791 
La Quinta    81,000 a    652,050 
Lakeland Financial    19,600    696,584 
LandAmerica Financial Group    14,400    704,880 
MFA Mortgage Investments    30,000    253,200 
MainSource Financial Group    39,000    840,450 
Mercantile Bank    16,195    609,256 
MeriStar Hospitality    195,000 a    1,138,800 
Mid-State Bancshares    22,500    603,675 
Odyssey Re Holdings    32,200 b    703,892 
Ohio Casualty    39,500 a    824,760 
Phoenix Cos.    73,000    770,150 
Platinum Underwriters Holdings    22,500    658,125 
PrivateBancorp    24,000    776,400 
Senior Housing Properties Trust    43,600    817,936 
South Financial Group    25,000    750,500 
Southwest Bancorp    28,000    657,440 
Taylor Capital Group    25,000    733,750 
TierOne    20,000    445,600 
UCBH Holdings    15,700    676,513 
Umpqua Holdings    30,400    756,352 
WSFS Financial    18,300    993,782 
        45,232,679 
Producer Goods & Services—22.2%         
Agrium    45,000    746,550 
Airgas    28,600    703,560 
Albermarle    18,200    652,470 
Anchor Glass Container    58,872    506,299 
Arch Chemicals    28,200    799,470 
Arch Coal    20,600    669,912 

12

Common Stocks (continued)    Shares    Value ($) 
Producer Goods & Services (continued)         
Beazer Homes USA    10,700 b    1,174,646 
Belden CDT    25,000 b    555,750 
Building Materials Holding    33,500    968,150 
CIRCOR International    9,100    172,445 
CLARCOR    21,000    1,035,300 
CNH Global    48,000    818,400 
Calgon Carbon    71,000    488,480 
Carlisle Cos.    14,000    813,820 
Century Aluminum    37,000 a    856,180 
Cleveland-Cliffs    7,700 a,b    561,330 
Covenant Transport, Cl. A    42,000 a    727,230 
Crown Holdings    97,500 a    1,106,625 
Cummins    11,900    833,952 
Cytec Industries    14,700    683,697 
Dominion Homes    25,000 a    520,500 
Eagle Materials    13,700    946,807 
EnPro Industries    41,500 a    911,340 
FMC    15,500 a    679,675 
Flowserve    31,000 a    668,980 
Georgia Gulf    6,100    276,147 
Gibraltar Industries    25,500    892,755 
Griffon    41,700 a    927,825 
Hercules    46,500 a    664,020 
Hovnanian Enterprises, Cl. A    24,200 a    908,468 
Hughes Supply    22,000    625,020 
J.B. Hunt Transport Services    18,500    755,910 
Jacuzzi Brands    101,000 a    873,650 
Kadant    43,800 a    790,590 
Moog, Cl. A    20,300 a    761,859 
Mueller Industries    17,600    469,216 
Orbital Sciences    69,500 a    719,325 
Owens-Illinois    26,500 a,b    491,045 
Pacer International    65,600 a    1,164,400 
PolyOne    89,000 a    673,730 
Quanex    13,600    689,520 
RPM International    44,000    775,720 
Regal-Beloit    32,200    753,480 

The Fund 13

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares    Value ($) 
Producer Goods & Services (continued)     
Schulman, (A.)    34,000    674,900 
Sonoco Products    28,000    746,200 
Spartech    30,800    776,160 
Swift Transportation Co.    38,200 a    721,980 
Terex    17,800 a    676,400 
Terra Industries    83,000 a    634,950 
Tredegar    26,000    435,500 
URS    22,500 a    621,000 
USF    16,400    587,776 
USG    55,900 a,b    1,251,601 
WCI Communities    42,000 a    991,200 
Yellow Roadway    18,000 a    863,820 
York International    18,700    595,408 
        41,391,143 
Services—7.1%         
BrightPoint    24,000 a    364,560 
CIBER    97,000 a    876,880 
Century Business Services    137,000 a    606,910 
Corillian    148,000 a    728,160 
Cornell Cos.    83,800 a    1,156,440 
Entravision Communications, Cl.A    78,500 a    631,925 
Euronet Worldwide    36,000 a    825,120 
Gray Television    64,600    857,888 
Healthcare Services Group    53,000    982,090 
Labor Ready    57,800 a    829,430 
MPS Group    107,000 a    1,126,710 
Perot Systems, Cl. A    33,500 a    537,005 
Rent-A-Center    28,100 a    674,119 
Sykes Enterprises    102,000 a    608,430 
Thomas Nelson    36,000    797,040 
Volt Information Sciences    23,100 a    671,055 
Waste Connections    11,500 a    362,480 
Watson Wyatt & Company Holdings    19,500    517,725 
        13,153,967 
Technology—9.4%         
Amphenol, Cl. A    21,800 a    748,394 

14

Common Stocks (continued)    Shares    Value ($) 
Technology (continued)         
Artesyn Technologies    27,000 a    261,900 
AsiaInfo Holdings    100,000 a    470,000 
Axcelis Technologies    93,000 a    799,800 
Brocade Communications Systems    53,500 a    363,265 
C-COR    98,000 a    736,960 
Checkpoint Systems    58,500 a    1,000,350 
Comtech Telecommunications    19,500 a    534,495 
Electro Scientific Industries    29,700 a    503,712 
Foundry Networks    64,000 a    776,320 
Heidrick & Struggles International    21,800 a    624,243 
Hypercom    52,000 a    336,960 
Integrated Device Technology    54,000 a    638,280 
Intervoice    63,000 a    779,940 
Interwoven    60,000 a    544,200 
Lionbridge Technologies    115,000 a    539,350 
MEMC Electronic Materials    91,300 a    858,220 
Metrologic Instruments    43,800 a    816,870 
MicroStrategy, Cl. A    12,900 a    773,742 
PalmOne    24,000 a,b    695,280 
Ptek Holdings    140,000 a    1,394,400 
RadiSys    65,200 a    865,856 
Skyworks Solutions    36,000 a    320,040 
Standard Microsystems    38,100 a    838,962 
Symbol Technologies    48,000    705,120 
UTStarcom    38,200 a    653,984 
        17,580,643 
Utilities—2.2%         
ALLETE    24,500    832,510 
Alliant Energy    31,800    838,884 
Black Hills    19,400    571,524 
Calpine    157,000 a,b    390,930 
Cleco    45,500    829,010 
Great Plains Energy    21,100    601,139 
        4,063,997 
Total Common Stocks         
(cost $166,180,048)        177,289,937 

The Fund 15

STATEMENT OF INVESTMENTS (continued)

    Principal     
Bonds and Notes—.1%    Amount ($)    Value ($) 
Producer Goods & Services;         
Mueller Industries, Notes,         
6%, 2014         
(cost $145,000)    145,350    143,387 
 
Short-Term Investments—5.0%         
Repurchase Agreements;         
Greenwich Capital Markets, Tri-Party         
Repurchase Agreement, 1.77% dated         
10/29/2004 to be repurchased at $9,301,372     
on 11/1/2004, collateralized by $9,040,000     
Federal Home Loan Mortgage Corp. Notes,     
5% due 7/15/2014, value $9,488,524         
(cost $9,300,000)    9,300,000    9,300,000 
 
Investment of Cash Collateral         
for Securities Loaned—4.4%    Shares    Value ($) 
Dreyfus Institutional Cash Advantage Plus         
(cost $8,241,651)    8,241,651 c    8,241,651 
 
Total Investments (cost $183,866,699)    104.5%    194,974,975 
Liabilities, Less Cash and Receivables    (4.5%)    (8,400,167) 
Net Assets    100.0%    186,574,808 

a Non-income producing. b All or a portion of these securities are on loan.At October 31, 2004, the total market value of the fund's securities on loan is $7,859,156 and the total market value of the collateral held by the fund is $8,241,651. c Investment in affiliated money market mutual fund.

Portfolio Summary (Unaudited) †         
 
    Value (%)    Value (%) 
Interest Sensitive    24.2    Short-Term/Money Market Investments    9.4 
Producer Goods & Services    22.2    Services    7.1 
Consumer Cyclical    10.5    Health Care    5.2 
Energy Related    9.5    Other    7.0 
Technology    9.4        104.5 

† Based on net assets.
See notes to financial statements.

16

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—See Statement         
of Investments (including securities on loan,     
valued at $7,859,156)—Note 1(b):         
Unaffiliated issuers    175,625,048    186,733,324 
Affiliated issuers    8,241,651    8,241,651 
Cash        2,234,042 
Receivable for investment securities sold        2,705,576 
Receivable for shares of Capital Stock subscribed    1,466,608 
Dividends and interest receivable        100,867 
        201,482,068 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)    250,920 
Liability for securities on loan—Note 1(b)        8,241,651 
Payable for investment securities purchased    6,244,206 
Payable for shares of Capital Stock redeemed    170,083 
Loan commitment fee payable        400 
        14,907,260 
Net Assets ($)        186,574,808 
Composition of Net Assets ($):         
Paid-in capital        163,174,543 
Accumulated undistributed investment income—net    77,858 
Accumulated net realized gain (loss) on investments    12,214,131 
Accumulated net unrealized appreciation         
(depreciation) on investments        11,108,276 
Net Assets ($)        186,574,808 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    116,827,884    23,897,191    26,827,573    15,740,332    3,281,828 
Shares Outstanding    5,786,579    1,229,015    1,378,930    772,111    164,172 
Net Asset Value                     
Per Share ($)    20.19    19.44    19.46    20.39    19.99 

See notes to financial statements.

The Fund 17

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Cash dividends (net of $665 foreign taxes withheld at source)    1,505,206 
Interest    45,159 
Income on securities lending    37,849 
Total Income    1,588,214 
Expenses:     
Management fee—Note 3(a)    1,216,281 
Distribution and service plan fees—Note 3(b)    511,605 
Loan commitment fees—Note 2    1,098 
Interest expense—Note 2    64 
Total Expenses    1,729,048 
Investment (Loss)—Net    (140,834) 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    12,397,840 
Net unrealized appreciation (depreciation) on investments    5,335,770 
Net Realized and Unrealized Gain (Loss) on Investments    17,733,610 
Net Increase in Net Assets Resulting from Operations    17,592,776 

See notes to financial statements.

18

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment (loss)—net    (140,834)    (54,202) 
Net realized gain (loss) on investments    12,397,840    3,119,371 
Net unrealized appreciation         
(depreciation) on investments    5,335,770    8,462,478 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    17,592,776    11,527,647 
Dividends to Shareholders from ($):         
Net realized gain on investments:         
Class A shares    (1,482,128)    — 
Class B shares    (909,498)    — 
Class C shares    (361,973)    — 
Class R shares    (94,350)    — 
Class T shares    (42,850)    — 
Total Dividends    (2,890,799)    — 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    105,146,002    9,519,048 
Class B shares    7,446,672    6,159,042 
Class C shares    19,999,283    2,298,111 
Class R shares    14,181,672    848,385 
Class T shares    2,999,650    700,107 
Dividends reinvested:         
Class A shares    1,257,906    — 
Class B shares    684,460    — 
Class C shares    267,228    — 
Class R shares    93,752    — 
Class T shares    42,331    — 
Cost of shares redeemed:         
Class A shares    (16,132,681)    (3,771,298) 
Class B shares    (6,754,808)    (4,687,834) 
Class C shares    (2,077,462)    (2,478,592) 
Class R shares    (1,317,059)    (453,807) 
Class T shares    (774,730)    (288,861) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    125,062,216    7,844,301 
Total Increase (Decrease) in Net Assets    139,764,193    19,371,948 
Net Assets ($):         
Beginning of Period    46,810,615    27,438,667 
End of Period    186,574,808    46,810,615 
Undistributed investment income—net    77,858    — 

The Fund 19

STATEMENT OF CHANGES IN NET ASSETS (continued)

    Year Ended October 31, 
    2004    2003 
Capital Share Transactions:         
Class Aa         
Shares sold    5,536,356    625,140 
Shares issued for dividends reinvested    71,004    — 
Shares redeemed    (847,803)    (268,806) 
Net Increase (Decrease) in Shares Outstanding    4,759,557    356,334 
Class B a         
Shares sold    403,222    436,213 
Shares issued for dividends reinvested    39,935    — 
Shares redeemed    (368,447)    (345,734) 
Net Increase (Decrease) in Shares Outstanding    74,710    90,479 
Class C         
Shares sold    1,087,810    155,862 
Shares issued for dividends reinvested    15,546    — 
Shares redeemed    (113,931)    (180,679) 
Net Increase (Decrease) in Shares Outstanding    989,425    (24,817) 
Class R         
Shares sold    721,226    54,832 
Shares issued for dividends reinvested    5,255    — 
Shares redeemed    (68,288)    (34,244) 
Net Increase (Decrease) in Shares Outstanding    658,193    20,588 
Class T         
Shares sold    157,160    47,319 
Shares issued for dividends reinvested    2,409    — 
Shares redeemed    (41,358)    (19,725) 
Net Increase (Decrease) in Shares Outstanding    118,211    27,594 

a During the period ended October 31, 2004, 47,407 Class B shares representing $876,275 were automatically
converted to 45,765 Class A shares and during the period ended October 31, 2003, 20,695 Class B shares
representing $283,288 were automatically converted to 20,149 Class A shares.
See notes to financial statements.
20

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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    17.43    12.32    12.11    11.75    10.63 
Investment Operations:                     
Investment income—net a    .03    .04    .05    .10    .06 
Net realized and unrealized                     
gain (loss) on investments    3.50    5.07    .25    .32    1.06 
Total from Investment Operations    3.53    5.11    .30    .42    1.12 
Distributions:                     
Dividends from investment income—net    —    —    (.06)    (.06)    — 
Dividends from net realized                     
gain on investments    (.77)    —    (.03)    —    — 
Total Distributions    (.77)    —    (.09)    (.06)    — 
Net asset value, end of period    20.19    17.43    12.32    12.11    11.75 
Total Return (%) b    20.86    41.48    2.47    3.55    10.54 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.50    1.50    1.50    1.51    1.50 
Ratio of net investment income                     
to average net assets    .16    .27    .33    .82    .59 
Portfolio Turnover Rate    136.35    147.81    95.03    112.09    101.02 
Net Assets, end of period ($ x 1,000)    116,828    17,901    8,260    4,574    4,392 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 21

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class B shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    16.91    12.04    11.89    11.56    10.54 
Investment Operations:                     
Investment income (loss)—net a    (.13)    (.06)    (.06)    .00b    (.02) 
Net realized and unrealized                     
gain (loss) on investments    3.43    4.93    .26    .33    1.04 
Total from Investment Operations    3.30    4.87    .20    .33    1.02 
Distributions:                     
Dividends from investment income—net    —    —    (.02)    —    — 
Dividends from net realized                     
gain on investments    (.77)    —    (.03)    —    — 
Total Distributions    (.77)    —    (.05)    —    — 
Net asset value, end of period    19.44    16.91    12.04    11.89    11.56 
Total Return (%) c    20.18    40.45    1.69    2.85    9.68 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.25    2.25    2.25    2.27    2.25 
Ratio of net investment income                     
(loss) to average net assets    (.73)    (.45)    (.44)    .03    (.15) 
Portfolio Turnover Rate    136.35    147.81    95.03    112.09    101.02 
Net Assets, end of period ($ x 1,000)    23,897    19,519    12,804    6,591    1,658 

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
See notes to financial statements. 

22

        Year Ended October 31,     
Class C shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    16.94    12.06    11.90    11.57    10.55 
Investment Operations:                     
Investment income (loss)—net a    (.12)    (.06)    (.06)    .01    (.02) 
Net realized and unrealized                     
gain (loss) on investments    3.41    4.94    .25    .32    1.04 
Total from Investment Operations    3.29    4.88    .19    .33    1.02 
Distributions:                     
Dividends from net realized                     
gain on investments    (.77)    —    (.03)    —    — 
Net asset value, end of period    19.46    16.94    12.06    11.90    11.57 
Total Return (%) b    20.02    40.46    1.61    2.85    9.67 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.25    2.25    2.25    2.27    2.25 
Ratio of net investment income                     
(loss) to average net assets    (.63)    (.45)    (.44)    .05    (.17) 
Portfolio Turnover Rate    136.35    147.81    95.03    112.09    101.02 
Net Assets, end of period ($ x 1,000)    26,828    6,598    4,996    2,012    1,014 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 23

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class R shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    17.54    12.36    12.17    11.80    10.65 
Investment Operations:                     
Investment income—net a    .10    .08    .08    .14    .09 
Net realized and unrealized                     
gain (loss) on investments    3.52    5.10    .25    .32    1.06 
Total from Investment Operations    3.62    5.18    .33    .46    1.15 
Distributions:                     
Dividends from investment income—net    —    —    (.11)    (.09)    — 
Dividends from net realized                     
gain on investments    (.77)    —    (.03)    —    — 
Total Distributions    (.77)    —    (.14)    (.09)    — 
Net asset value, end of period    20.39    17.54    12.36    12.17    11.80 
Total Return (%)    21.26    41.91    2.64    3.88    10.80 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.25    1.25    1.25    1.26    1.25 
Ratio of net investment income                     
to average net assets    .58    .55    .58    1.07    .84 
Portfolio Turnover Rate    136.35    147.81    95.03    112.09    101.02 
Net Assets, end of period ($ x 1,000)    15,740    1,998    1,154    589    631 

a Based on average shares outstanding at each month end.
See notes to financial statements.

24

        Year Ended October 31,     
Class T shares    2004    2003    2002    2001    2000 a 
Per Share Data ($):                     
Net asset value, beginning of period    17.30    12.25    12.10    11.72    10.34 
Investment Operations:                     
Investment income (loss)—net b    (.02)    .00c    .01    .06    .02 
Net realized and unrealized                     
gain (loss) on investments    3.48    5.05    .25    .35    1.36 
Total from Investment Operations    3.46    5.05    .26    .41    1.38 
Distributions:                     
Dividends from investment income—net    —    —    (.08)    (.03)    — 
Dividends from net realized                     
gain on investments    (.77)    —    (.03)    —    — 
Total Distributions    (.77)    —    (.11)    (.03)    — 
Net asset value, end of period    19.99    17.30    12.25    12.10    11.72 
Total Return (%) d    20.61    41.22    2.09    3.46    13.35e 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.75    1.75    1.75    1.77    1.17e 
Ratio of net investment income                     
(loss) to average net assets    (.12)    .00f    .05    .52    .21e 
Portfolio Turnover Rate    136.35    147.81    95.03    112.09    101.02 
Net Assets, end of period ($ x 1,000)    3,282    795    225    48    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    Amount represents less than $.01. 
d    Exclusive of sales charge. 
e    Not annualized. 
f    Amount represents less than .01%. 
See notes to financial statements. 

The Fund 25

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 sixteen series, including the fund. Prior to October 1, 2004, the fund's investment objective was to seek investment returns (consisting of capital appreciation and income) that are consistently superior to the Russell 2000 Value Index. On July 20, 2004, the Board of Directors approved changing the fund's objective. Effective October 1, 2004, the fund's investment objective is to seek capital appreciation. The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares.The fund is authorized to issue 100 million shares of $.001 par value Capital Stock in each of the following classes: Class A, Class B, Class C and Class R 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 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

26

voting rights on matters affecting a single class. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sale price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is avail-able.When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADR's and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and

The Fund 27

NOTES TO FINANCIAL STATEMENTS (continued)

duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. Financial futures are valued at the last sales price.

(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, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of the Manager, the fund may lend securities to qualified institutions.At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by the Manager. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

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

28

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.

(c) Affiliated issuers: Investments in other investment companies advised by the Manager are defined as "affiliated" in the Act.

(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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $9,145,414, undistributed capital gains $3,135,326 and unrealized appreciation $11,119,525.

The Fund 29

NOTES TO FINANCIAL STATEMENTS (continued)

The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003, were as follows: ordinary income $1,824,436 and $0 and long term capital gain $1,066,363 and $0, respectively.

During the period ended October 31, 2004, as a result of permanent book to tax differences primarily due to net operating losses and real estate investment trusts, the fund increased accumulated undistributed investment income-net by $218,692, decreased accumulated net realized gain (loss) on investments by $158,954 and decreased paid-in capital by $59,738. Net assets were not affected by this reclassification.

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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, 2004, was approximately $4,500, with a related weighted average annualized interest rate of 1.43% .

NOTE 3—Investment Management Fee and Other Transactions With Affiliates:

(a) 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

30

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 Company, 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.

During the period ended October 31, 2004, the Distributor retained $49,360 and $606 from commissions earned on sales of fund's Class A and T shares, respectively, and $33,991 and $5,983 from contingent deferred sales charges on redemptions of the fund's Class B and C shares, respectively.

(b) Under separate Distribution Plans (the "Plans") 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

The Fund 31

NOTES TO FINANCIAL STATEMENTS (continued)

Distributor for shareholder servicing activities and expenses primarily intended to result in the sale of Class A shares. 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 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 (the "Service Plan"), under which Class B, Class C and Class T shares pay the Distributor for providing certain services to the holders of their 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, 2004, Class A, Class B, Class C and Class T shares were charged $136,440, $164,340, $110,719 and $4,210, respectively, pursuant to their respective Plans, and Class B, Class C and Class T shares were charged $54,780, $36,906 and $4,210, respectively, pursuant to the Service Plan.

Under its terms, the Plans 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 Plans or Service Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consists of: management fees $185,839, Rule 12b-1 distribution plan fees $54,272 and shareholder services plan fees $10,809.

(c) The Company and the Manager have received an exemptive order from the SEC which, among other things, permits the fund to use cash collateral received in connection with lending the fund's securities and

32

other uninvested cash to purchase shares of one or more registered money market mutual funds advised by the Manager in excess of the limitations imposed by the Act.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended October 31, 2004, amounted to $243,882,374 and $130,467,396, respectively.

At October 31, 2004, the cost of investments for federal income tax purposes was $183,855,450; accordingly, accumulated net unrealized appreciation on investments was $11,119,525, consisting of $14,985,128 gross unrealized appreciation and $3,865,603 gross unrealized depreciation.

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on

The Fund 33

NOTES TO FINANCIAL STATEMENTS (continued)

September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

34

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  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, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian and broker. As to securities purchased and sold but not received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier Small Cap Value Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 35

IMPORTANT TAX INFORMATION (Unaudited)

For federal tax purposes, the fund hereby designates $.2740 per share as a long-term capital gain distribution of the $.7470 per share paid on December 12, 2003 and also designates $.0090 per share as a long-term capital gain distribution of the $.0210 per share paid on March 31, 2004.

The fund also designates 100% of the ordinary dividends paid during the fiscal year ended October 31, 2004 as qualifying for the corporate dividends received deduction. For the fiscal year ended October 31, 2004, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $225,923 represents the maximum amount that may be considered qualified dividend income. Shareholders will receive notification in January 2005 of the percentage applicable to the preparation of their 2004 income tax returns.

36

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 37

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
———————
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
———————
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 

Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.

Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

38

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

The Fund 39

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The the Manager Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

40

For More    Information 
 
Dreyfus Premier    Transfer Agent & 
Small Cap Value Fund    Dividend Disbursing Agent 
200 Park Avenue     
    Dreyfus Transfer, Inc. 
New York, NY 10166     
    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue     
    Dreyfus Service Corporation 
New York, NY 10166     
    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone Call your financial representative or 1-800-554-4611 
Mail The Dreyfus Premier Family of Funds 
144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0148AR1004

  Dreyfus Premier
Tax Managed
Growth Fund

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Fund Performance 
8    Understanding Your Fund's Expenses 
8    Comparing Your Fund's Expenses 
With Those of Other Funds
9    Statement of Investments 
12    Statement of Assets and Liabilities 
13    Statement of Operations 
14    Statement of Changes in Net Assets 
16    Financial Highlights 
21    Notes to Financial Statements 
29    Report of Independent Registered 
    Public Accounting Firm 
30    Important Tax Information 
31    Board Members Information 
33    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus Premier
Tax Managed Growth Fund

The Fund

LETTER FROM THE CHAIRMAN

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, 2003, through October 31, 2004. 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 Federal Reserve Board has raised short-term interest rates three times since the beginning of the summer, the rate of corporate earnings growth appears to have slowed dramatically and high energy prices threaten to erode the rate of economic growth.Though these factors may suggest the U.S. economy is moving toward a new phase of the business cycle, we believe the current economic cycle still favors higher-quality stocks, which currently offer favorable relative and absolute valuations.

Of course, the specific investments that may be right for you in today's economic and market environment depend on your current needs, future goals, tolerance for risk and the composition of your overall portfolio.As always, your financial advisor may be in the best position to recommend the specific asset classes and investments that will satisfy your financial needs most effectively.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

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, 2004, the fund produced total returns of 3.48% for Class A shares, 2.77% for Class B shares, 2.73% for Class C shares and 3.25% for Class T shares.1 From inception on May 14, 2004, through October 31, 2004, the fund's Class R shares produced a -1.80% total return. For the full reporting period, the fund's benchmark, the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), provided a 9.41% total return.2

Although stocks generally gained value over the reporting period, the market's strength was concentrated primarily among stocks at the lower end of the S&P 500 Index's capitalization range. The fund's returns were lower than the S&P 500 Index, primarily because the larger high-quality stocks on which the fund focuses continued to be out of favor. In addition, the fund's returns were hindered by a handful of company-specific disappointments.

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 year,which may

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

help reduce investors' tax liabilities and the fund's trading costs. During the reporting period, the fund's portfolio turnover rate was 0.72% .3

What other factors influenced the fund's performance?

Despite generally strong earnings reports from large-cap companies, stocks failed to advance significantly after staging a rally during the closing months of 2003. Over the first 10 months of 2004, the stock market traded within a relatively narrow range, with returns constrained by uncertainty related to a fitfully growing economy, rising short-term interest rates, the U.S. presidential elections and the insurgency in Iraq.

In this challenging economic environment, investors generally continued to favor smaller stocks that, in their view, had greater potential for growth than large, well-established companies.As a result, the dominant multinational corporations in which the fund invests — most of which rank among the 100 largest stocks within the S&P 500 Index — produced relatively lackluster results.

In addition, the fund's emphasis on consumer, financial and health care stocks hurt the fund's relative performance, largely because investors apparently believed they could find more "exciting" growth opportunities in other sectors. In the financials sector, the fund's returns also were held back by its investment in insurance and investment firm Marsh & McLennan Cos., which experienced turmoil related to allegations of unfair business practices. Returns from the fund's health care holdings suffered when industry bellwether Merck & Co. recalled one of its better-selling drugs due to safety issues. In the consumer area, Coca-Cola saw its stock price fall in the wake of slower sales in Germany and North America, and consumer goods producer Colgate-Palmolive stumbled when heightened competitive pressures threatened the market share of key products.

On the other hand, the fund's performance received positive contributions from its energy holdings. Integrated oil companies, including Exxon Mobil, ChevronTexaco and BP, benefited from surging oil and gas prices during the reporting period. In the industrials area, shares of General Electric rose as investors responded to the diversified com-

4

pany's renewed focus on growth businesses, which is expected to boost financial results in 2005. Food and tobacco giant Altria Group gained value when the company began to consider the possibility of separating its business units into independent entities.

Changes to the portfolio during the reporting period included the elimination of the fund's positions in International Business Machines, Kraft Foods and The Royal Dutch/Shell Group of Companies. We added ConocoPhillips, the largest operator of U.S. refineries, to the fund's holdings in the energy sector because limited refinery capacity has been a key factor supporting energy prices. Holdings which detracted from the fund's performance during the reporting period included Intel, Coca-Cola, Colgate-Palmolive, Marsh & McLennan, American International Group, Merck & Co., and Pfizer.

What is the fund's current strategy?

Although they were out of favor for much of the reporting period, we have maintained our longstanding focus on large, high-quality corporations with dominant market positions.Valuations of the largest companies in the S&P 500 Index have fallen below historical norms, which we believe makes them attractive opportunities in a moderately growing economic environment. Indeed, many of the fund's holdings ended the reporting period with record levels of cash on their balance sheets, which can be used to grow existing businesses, enter new ones or enhance shareholder value through stock buy-backs or dividend increases.

November 15, 2004

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 monthly 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. 
3    Portfolio turnover rates are subject to change. Portfolio turnover rates alone do not automatically 
    result in high or low distribution levels.There can be no guarantee that the fund will generate any 
    specific level of distributions annually. 

The Fund 5

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 (the "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. Performance for Class R shares will vary from the performance of Class A, Class B, Class C and Class T 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 charges on Class A and Class T shares and all other applicable fees and expenses on all classes.The 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.

6

Average Annual Total Returns as of 10/31/04         
 
    Inception            From 
    Date    1 Year    5 Years    Inception 
Class A shares                 
with maximum sales charge (5.75%)    11/4/97    (2.50)%    (3.89)%    2.15% 
without sales charge    11/4/97    3.48%    (2.74)%    3.02% 
Class B shares                 
with applicable redemption charge †    11/4/97    (1.23)%    (3.85)%    2.36% 
without redemption    11/4/97    2.77%    (3.46)%    2.36% 
Class C shares                 
with applicable redemption charge ††    11/4/97    1.73%    (3.46)%    2.26% 
without redemption    11/4/97    2.73%    (3.46)%    2.26% 
Class T shares                 
with applicable sales charge (4.5%)    11/4/97    (1.40)%    (3.89)%    2.09% 
without sales charge    11/4/97    3.25%    (3.00)%    2.76% 

Actual Aggregate Total Returns as of 10/31/04         
    Inception            From 
    Date    1 Year    5 Years    Inception 
Class R shares    5/14/04    —    —    (1.80)% 

Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class B shares assumes the conversion of Class B shares to Class A shares at the end of the sixth year following the date of purchase.

† The maximum contingent deferred sales charge for Class B shares is 4%.After six years 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 7

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Premier Tax Managed Growth Fund from May 1, 2004 to October 31, 2004†. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment             
assuming actual returns for the six months ended October 31, 2004 †         
    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 ††    $ 6.67    $ 10.37    $ 10.37    $ 5.09    $ 7.91 
Ending value (after expenses)    $967.00    $964.40    $964.30    $982.00    $966.00 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004†

    Class A    Class B    Class C    Class R    Class T 
Expenses paid per $1,000 ††    $ 6.85    $ 10.63    $ 10.63    $ 5.19    $ 8.11 
Ending value (after expenses)    $1,018.35    $1,014.58    $1,014.58    $1,018.22    $1,017.09 

† For Class A, Class B, Class C and Class T shares and from May 14, 2004 (commencement of initial offering) to
October 31, 2004 for Class R shares.
Expenses are equal to the fund's annualized expense ratio of 1.35% for Class A, 2.10% for Class B, 2.10% for
Class C, 1.10% for Class R and 1.60% for Class T, multiplied by the average account value over the period,
multiplied by 184/366 for Class A, Class B, Class C and Class T and 171/366 for Class R (to reflect the one-
half year period for Class A, Class B, Class C and Class T shares and actual days since inception for Class R shares).
8
STATEMENT OF INVESTMENTS
October 31, 2004
Common Stocks—99.5%    Shares    Value ($) 
Banking—5.1%         
Bank of America    81,896    3,668,122 
Federal Home Loan Mortgage    10,000    666,000 
Federal National Mortgage Association    73,000    5,120,950 
SunTrust Banks    45,000    3,167,100 
        12,622,172 
Capital Goods—6.3%         
Emerson Electric    55,000    3,522,750 
General Electric    355,000    12,112,600 
        15,635,350 
Diversified Financial Services—9.7%         
American Express    118,000    6,262,260 
Citigroup    240,833    10,685,760 
J.P. Morgan Chase & Co.    134,500    5,191,700 
Merrill Lynch    37,000    1,995,780 
        24,135,500 
Energy—16.4%         
BP, ADR    150,000    8,737,500 
ChevronTexaco    178,000    9,444,680 
ConocoPhillips    24,500    2,065,595 
Exxon Mobil    421,612    20,751,743 
        40,999,518 
Food, Beverage & Tobacco—18.0%         
Altria Group    315,000    15,264,900 
Anheuser-Busch Cos.    108,000    5,394,600 
Coca-Cola    250,000    10,165,000 
Nestle, ADR    100,000    5,929,205 
PepsiCo    166,000    8,230,280 
        44,983,985 
Hotel Restaurants & Leisure—1.2%         
McDonald's    100,000    2,915,000 
Household & Personal Products—5.0%         
Colgate-Palmolive    75,000    3,346,500 
Estee Lauder Cos., Cl. A    30,000    1,288,500 
Procter & Gamble    156,000    7,984,080 
        12,619,080 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Common Stocks (continued)    Shares        Value ($) 
Insurance—5.0%             
American International Group    68,425        4,154,082 
Berkshire Hathaway, Cl. A    60    a    5,055,000 
Marsh & McLennan Cos.    123,000        3,402,180 
            12,611,262 
Media—4.6%             
Fox Entertainment Group, Cl. A    25,000    a    741,500 
McGraw-Hill Cos.    89,500        7,719,375 
Time Warner    30,000    a    499,200 
Viacom, Cl. B    70,000        2,554,300 
            11,514,375 
Pharmaceuticals & Biotechnology—13.1%         
Abbott Laboratories    127,000        5,414,010 
Johnson & Johnson    125,000        7,297,500 
Lilly (Eli) & Co.    92,000        5,051,720 
Merck & Co.    109,000        3,412,790 
Pfizer    400,000        11,580,000 
            32,756,020 
Retailing—6.6%             
Wal-Mart Stores    150,000        8,088,000 
Walgreen    238,000        8,541,820 
            16,629,820 
Semiconductors & Semiconductor Equipment—4.4%         
Intel    490,000        10,907,400 
Software & Services—2.8%             
Microsoft    250,000        6,997,500 
Transportation—1.3%             
United Parcel Service, Cl. B    40,000        3,167,200 
Total Common Stocks             
(cost $230,048,100)            248,494,182 

10
Preferred Stocks—.7%    Shares    Value ($) 
Media;         
News Corp, ADR, Cum., $.2153         
(cost $1,391,500)    55,000    1,729,200 
Total Investments (cost $231,439,600)    100.2%    250,223,382 
Liabilities, Less Cash and Receivables    (.2%)    (424,079) 
Net Assets    100.0%    249,799,303 

  ADR—American Depository Receipts
a Non-income producing.
Portfolio Summary (Unaudited) †         
 
    Value (%)        Value (%) 
Food, Beverage & Tobacco    18.0    Banking    5.1 
Energy    16.4    Household & Personal Products    5.0 
Pharmaceuticals & Biotechnology    13.1    Insurance    5.0 
Diversified Financial Services    9.7    Other    15.0 
Retailing    6.6         
Capital Goods    6.3        100.2 

† Based on net assets.
See notes to financial statements.

The Fund 11

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments    231,439,600    250,223,382 
Cash        4,229 
Receivable for investment securities sold        1,015,208 
Dividends receivable        353,482 
Receivable for shares of Capital Stock subscribed        19,602 
        251,615,903 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        386,689 
Bank note payable—Note 2        1,050,000 
Payable for shares of Capital Stock redeemed        379,322 
Interest payable—Note 2        589 
        1,816,600 
Net Assets ($)        249,799,303 
Composition of Net Assets ($):         
Paid-in capital        269,683,581 
Accumulated undistributed investment income—net        618,164 
Accumulated net realized gain (loss) on investments        (39,286,224) 
Accumulated net unrealized appreciation         
(depreciation) on investments        18,783,782 
Net Assets ($)        249,799,303 

Net Asset Value Per Share                 
    Class A    Class B    Class C    Class R    Class T 
Net Assets ($)    91,758,677    102,007,272    51,391,249    982    4,641,123 
Shares Outstanding    6,012,656    6,984,962    3,521,549    64.267    308,578 
Net Asset Value                     
Per Share ($)    15.26    14.60    14.59    15.28    15.04 

See notes to financial statements.

12

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Income:     
Cash dividends (net of $28,197 foreign taxes withheld at source):     
Unaffilliated issuers    5,958,961 
Affiliated issuers    979 
Income from securities lending    5,471 
Total Income    5,965,411 
Expenses:     
Management fee—Note 3(a)    3,087,545 
Distribution and service plan fees—Note 3(b)    2,094,084 
Interest expense—Note 2    6,556 
Loan commitment fees—Note 2    2,235 
Total Expenses    5,190,420 
Investment Income—Net    774,991 
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    (7,859,918) 
Net unrealized appreciation (depreciation) on investments    16,595,756 
Net Realized and Unrealized Gain (Loss) on Investments    8,735,838 
Net Increase in Net Assets Resulting from Operations    9,510,829 

See notes to financial statements.

The Fund 13

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004 a    2003 
Operations ($):         
Investment income—net    774,991    593,589 
Net realized gain (loss) on investments    (7,859,918)    (8,603,573) 
Net unrealized appreciation         
(depreciation) on investments    16,595,756    33,313,308 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    9,510,829    25,303,324 
Dividends to Shareholders from ($):         
Investment income—net:         
Class A shares    (650,724)    — 
Class B shares    (37,571)    — 
Class C shares    (36,071)    — 
Class T shares    (26,050)    — 
Total Dividends    (750,416)    — 
Capital Stock Transactions ($):         
Net proceeds from shares sold:         
Class A shares    38,531,514    25,359,780 
Class B shares    6,056,735    11,478,601 
Class C shares    6,118,260    10,978,619 
Class R shares    1,000    — 
Class T shares    356,271    254,677 
Dividends reinvested:         
Class A shares    501,464    — 
Class B shares    25,428    — 
Class C shares    20,219    — 
Class T shares    22,338    — 
Cost of shares redeemed:         
Class A shares    (29,475,785)    (21,125,423) 
Class B shares    (51,836,306)    (26,857,128) 
Class C shares    (15,484,466)    (15,167,098) 
Class T shares    (1,030,353)    (1,197,288) 
Increase (Decrease) in Net Assets from         
Capital Stock Transactions    (46,193,681)    (16,275,260) 
Total Increase (Decrease) in Net Assets    (37,433,268)    9,028,064 
Net Assets ($):         
Beginning of Period    287,232,571    278,204,507 
End of Period    249,799,303    287,232,571 
Undistributed investment income—net    618,164    593,589 

14

    Year Ended October 31, 
    2004 a    2003 
Capital Share Transactions:         
Class A b         
Shares sold    2,461,694    1,900,719 
Shares issued for dividends reinvested    33,232    — 
Shares redeemed    (1,892,695)    (1,535,716) 
Net Increase (Decrease) in Shares Outstanding    602,231    365,003 
Class B b         
Shares sold    403,107    874,043 
Shares issued for dividends reinvested    1,749    — 
Shares redeemed    (3,452,347)    (2,053,559) 
Net Increase (Decrease) in Shares Outstanding    (3,047,491)    (1,179,516) 
Class C         
Shares sold    407,303    833,021 
Shares issued for dividends reinvested    1,391    — 
Shares redeemed    (1,037,421)    (1,157,605) 
Net Increase (Decrease) in Shares Outstanding    (628,727)    (324,584) 
Class R         
Shares sold    64    — 
Class T         
Shares sold    23,113    19,186 
Shares issued for dividends reinvested    1,499    — 
Shares redeemed    (66,702)    (88,898) 
Net Increase (Decrease) in Shares Outstanding    (42,090)    (69,712) 

a Effective May 14, 2004 (commencement of initial offering) to October 31, 2004, for Class R shares.
b During the period ended October 31, 2004, 1,344,093 Class B shares representing $20,203,076 were
automatically converted to 1,289,769 Class A shares and during the period ended October 31, 2003, 47,406
Class B shares representing $651,739 were automatically converted to 45,473 Class A shares.
See notes to financial statements.

The Fund 15

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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    14.86    13.51    15.27    18.88    17.67 
Investment Operations:                     
Investment income—net a    .12    .10    .07    .05    .02 
Net realized and unrealized                     
gain (loss) on investments    .40    1.25    (1.83)    (3.66)    1.19 
Total from Investment Operations    .52    1.35    (1.76)    (3.61)    1.21 
Distributions:                     
Dividends from investment income—net    (.12)    —    —    —    — 
Net asset value, end of period    15.26    14.86    13.51    15.27    18.88 
Total Return (%) b    3.48    9.99    (11.53)    (19.12)    6.85 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.35    1.35    1.35    1.35    1.35 
Ratio of net investment income                     
to average net assets    .77    .74    .44    .27    .10 
Portfolio Turnover Rate    .72    3.51    7.25    3.56    4.21 
Net Assets, end of period ($ x 1,000)    91,759    80,401    68,183    70,431    89,166 

a    Based on average shares outstanding at each month end. 
b    Exclusive of sales charge. 
See notes to financial statements. 

16

        Year Ended October 31,     
Class B shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    14.22    13.03    14.83    18.48    17.43 
Investment Operations:                     
Investment income (loss)—net a    .00b    .00b    (.05)    (.08)    (.12) 
Net realized and unrealized                     
gain (loss) on investments    .38    1.19    (1.75)    (3.57)    1.17 
Total from Investment Operations    .38    1.19    (1.80)    (3.65)    1.05 
Distributions:                     
Dividends from investment income—net    (.00)b    —    —    —    — 
Net asset value, end of period    14.60    14.22    13.03    14.83    18.48 
Total Return (%) c    2.77    9.13    (12.14)    (19.75)    6.02 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.10    2.10    2.10    2.10    2.10 
Ratio of net investment income                     
(loss) to average net assets    .02    .01    (.32)    (.48)    (.65) 
Portfolio Turnover Rate    .72    3.51    7.25    3.56    4.21 
Net Assets, end of period ($ x 1,000)    102,007    142,689    146,118    182,073    227,555 

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
See notes to financial statements. 

The Fund 17

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class C shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    14.22    13.03    14.82    18.47    17.42 
Investment Operations:                     
Investment income (loss)—net a    .00b    .00b    (.05)    (.08)    (.12) 
Net realized and unrealized                     
gain (loss) on investments    .38    1.19    (1.74)    (3.57)    1.17 
Total from Investment Operations    .38    1.19    (1.79)    (3.65)    1.05 
Distributions:                     
Dividends from investment income—net    (.01)    —    —    —    — 
Net asset value, end of period    14.59    14.22    13.03    14.82    18.47 
Total Return (%) c    2.73    9.13    (12.08)    (19.76)    6.03 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    2.10    2.10    2.10    2.10    2.10 
Ratio of net investment income                     
(loss) to average net assets    .02    .01    (.31)    (.48)    (.64) 
Portfolio Turnover Rate    .72    3.51    7.25    3.56    4.21 
Net Assets, end of period ($ x 1,000)    51,391    59,007    58,289    59,104    70,239 

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
See notes to financial statements. 

18

    Period Ended 
Class R Shares    October 31, 2004 a 
Per Share Data ($):     
Net asset value, beginning of period    15.56 
Investment Operations:     
Investment income—net b    .06 
Net realized and unrealized     
gain (loss) on investments    (.34) 
Total from Investment Operations    (.28) 
Net asset value, end of period    15.28 
Total Return (%) c    (1.80) 
Ratios/Supplemental Data (%):     
Ratio of total expenses to average net assets c    .51 
Ratio of net investment income     
to average net assets c    .41 
Portfolio Turnover Rate    .72 
Net Assets, end of period ($ x 1,000)    1 

a    From May 14, 2004 (commencement of initial offering) to October 31, 2004. 
b    Based on average shares outstanding at each month end. 
c    Not annualized. 
See notes to financial statements. 

The Fund 19

FINANCIAL HIGHLIGHTS (continued)

        Year Ended October 31,     
Class T shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    14.64    13.36    15.12    18.75    17.60 
Investment Operations:                     
Investment income (loss)—net a    .08    .07    .03    .00b    (.03) 
Net realized and unrealized                     
gain (loss) on investments    .39    1.21    (1.79)    (3.63)    1.18 
Total from Investment Operations    .47    1.28    (1.76)    (3.63)    1.15 
Distributions:                     
Dividends from investment income—net    (.07)    —    —    —    — 
Net asset value, end of period    15.04    14.64    13.36    15.12    18.75 
Total Return (%) c    3.25    9.58    (11.64)    (19.36)    6.53 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    1.60    1.60    1.60    1.60    1.60 
Ratio of net investment income                     
(loss) to average net assets    .52    .51    .18    .02    (.14) 
Portfolio Turnover Rate    .72    3.51    7.25    3.56    4.21 
Net Assets, end of period ($ x 1,000)    4,641    5,135    5,615    7,404    8,290 

a    Based on average shares outstanding at each month end. 
b    Amount represents less than $.01 per share. 
c    Exclusive of sales charge. 
See notes to financial statements. 

20

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 sixteen 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 ("Dreyfus") serves as the fund's investment adviser. Dreyfus is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial"). Fayez Sarofim & Co. ("Sarofim & Co.") serves as the fund's sub-investment adviser.

On January 29, 2004, the fund's Board of Directors approved, effective May 14, 2004, the addition of Class R shares.

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund's shares.The fund is authorized to issue 100 million shares of $.001 par value Capital Stock in each of the following classes of shares: Class A, Class B, Class C, Class R 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. Class R shares are sold primarily to bank trust departments and other financial service providers (including Mellon Financial 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. Income, expenses (other than

The Fund 21

NOTES TO FINANCIAL STATEMENTS (continued)

expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

As of October 31, 2004, MBC Investments Corp., an indirect subsidiary of Mellon Financial, held all of the Class R shares.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

(a) Portfolio valuation: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used for valuation purposes. Bid price is used when no asked price is avail-able.When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of the security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the funds calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADR'S and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and

22

duration of restrictions on disposition, an evaluation of the forces that influence the market in which securities are purchased and sold and public trading in similar securities of the issuer or comparable issuers.

(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, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.

Pursuant to a securities lending agreement with Mellon Bank, N.A., an affiliate of Dreyfus, the fund may lend securities to qualified institutions. At origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by Dreyfus.The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner.

(c) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as "affiliated" in the Act.

(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

The Fund 23

NOTES TO FINANCIAL STATEMENTS (continued)

not to distribute such gain. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

(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.

At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $618,164, accumulated capital losses $39,286,224 and unrealized appreciation $18,783,782.

The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to October 31, 2004. If not applied, $235,550 of the carryover expires in fiscal 2007, $3,064,821 expires in fiscal 2008, $5,341,001 expires in fiscal 2009, $14,181,361 expires in fiscal 2010, $8,603,573 expires in fiscal 2011 and $7,859,918 expires in fiscal 2012.

The tax character of distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003 were as follows: ordinary income $750,416 and $0, respectively.

NOTE 2—Bank Line of Credit:

The fund participates with other Dreyfus-managed funds in a $350 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 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 31,2004,was approximately $410,800, with a related weighted average annualized interest rate of 1.57% .

24

NOTE 3—Investment Management Fee and Other Transactions With Affiliates:

(a) Pursuant to an Investment Management Agreement with Dreyfus, Dreyfus 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. Dreyfus 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 Dreyfus 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, Dreyfus 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, Dreyfus 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 Company, 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

The Fund 25

NOTES TO FINANCIAL STATEMENTS (continued)

of the management fee payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested Directors.

Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and Sarofim & Co., Dreyfus pays Sarofim & Co. an annual fee of .30 of 1% of the value of the fund's average daily net assets, payable monthly.

During the period ended October 31, 2004, the Distributor retained $21,811 and $553 from commissions earned on sales of the fund's Class A and Class T shares, respectively, and $346,267 and $10,118 from contingent deferred sales charges on redemptions of the fund's Class B and Class C shares, respectively.

(b) Under separate Distribution Plans (the "Plans") 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. 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 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 (the "Service Plan"), under which Class B, Class C and Class T shares pay the Distributor for providing certain services to the holders of their 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, 2004, Class A, Class B, Class C and Class T shares were charged $229,131, $948,052, $431,628 and $12,690, respectively, pursuant to their respective Plans. During the period ended October 31, 2004, Class B, Class C and Class T shares were charged $316,017, $143,876 and $12,690, respectively, pursuant to the Service Plan.

26

Under its terms, the Plans 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 Plans or Service Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $234,190, Rule 12b-1 distribution plan fees $118,753 and service plan fees $33,746.

(c) Pursuant to an exemptive order from the Securities and Exchange Commission, the fund may invest its available cash balances in affiliated money market mutual funds. Management fees of the underlying money market mutual funds have been waived by Dreyfus.

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended October 31, 2004, amounted to $2,022,001 and $47,957,063, respectively.

At October 31, 2004, the cost of investments for federal income tax purposes was $231,439,600; accordingly, accumulated net unrealized appreciation on investments was $18,783,782, consisting of $38,007,112 gross unrealized appreciation and $19,223,330 gross unrealized depreciation.

NOTE 5—Legal Matters:

Two class actions have been filed against Mellon Financial, Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that

The Fund 27

NOTES TO FINANCIAL STATEMENTS (continued)

such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper. The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13, 2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  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, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian. As to securities sold but not yet delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier Tax Managed Growth Fund of The Dreyfus/Laurel Funds, Inc. as of October 31, 2004, 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 U.S. generally accepted accounting principles.

  New York, New York
December 13, 2004

The Fund 29

IMPORTANT TAX INFORMATION (Unaudited)

In accordance with federal tax law, the fund hereby designates 100% of the ordinary dividends paid during the fiscal year ended October 31, 2004 as qualifying for the corporate dividends received deduction. For the fiscal year ended October 31, 2004, certain dividends paid by the fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, $750,416 represents the maximum amount that may be considered qualified dividend income. Shareholders will receive notification in January 2005 of the percentage applicable to the preparation of their 2004 income tax returns.

30

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

The Fund 31

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

32

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of Dreyfus, and an officer of 93 investment companies (comprised of 186 portfolios) managed by Dreyfus. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of Dreyfus. He is 59 years old and has been an employee of Dreyfus since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of Dreyfus, and an officer of 93 investment companies (comprised of 186 portfolios) managed by Dreyfus. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of Dreyfus. He is 51 years old and has been an employee of Dreyfus since January 2000. Prior to joining Dreyfus, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of Dreyfus, and an officer of 94 investment companies (comprised of 202 portfolios) managed by Dreyfus. He is 58 years old and has been an employee of Dreyfus since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of Dreyfus, and an officer of 94 investment companies (comprised of 202 portfolios) managed by Dreyfus. He is 55 years old and has been an employee of Dreyfus since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of Dreyfus, and an officer of 4 investment companies (comprised of 24 portfolios) managed by Dreyfus. He is 38 years old and has been an employee of Dreyfus since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of Dreyfus, and an officer of 26 investment companies (comprised of 88 portfolios) managed by Dreyfus. He is 39 years old and has been an employee of Dreyfus since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of Dreyfus, and an officer of 91 investment companies (comprised of 195 portfolios) managed by Dreyfus. He is 44 years old and has been an employee of Dreyfus since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of Dreyfus, and an officer of 94 investment companies (comprised of 202 portfolios) managed by Dreyfus. He is 46 years old and has been an employee of Dreyfus since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of Dreyfus, and an officer of 26 investment companies (comprised of 101 portfolios) managed by Dreyfus. He is 44 years old and has been an employee of Dreyfus since September 1982.

The Fund 33

OFFICERS OF THE FUND (Unaudited) (continued)

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of Dreyfus, and an officer of 19 investment companies (comprised of 74 portfolios) managed by Dreyfus. He is 36 years old and has been an employee of Dreyfus since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of Dreyfus, and an officer of 39 investment companies (comprised of 85 portfolios) managed by Dreyfus. He is 40 years old and has been an employee of Dreyfus since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of Dreyfus, and an officer of 27 investment companies (comprised of 106 portfolios) managed by Dreyfus. He is 37 years old and has been an employee of Dreyfus since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of Dreyfus, and an officer of 94 investment companies (comprised of 202 portfolios) managed by Dreyfus. He is 50 years old and has been an employee of Dreyfus since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of Dreyfus and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with Dreyfus since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by Dreyfus. He is 33 years old and has been an employee of the Distributor since October 1998.

34

NOTES

For More    Information 
 
 
 
Dreyfus Premier    Custodian 
 
Tax Managed Growth Fund     
    Mellon Bank, N.A. 
200 Park Avenue     
    One Mellon Bank Center 
New York, NY 10166     
    Pittsburgh, PA 15258 
 
 
Investment Adviser    Transfer Agent & 
 
The Dreyfus Corporation    Dividend Disbursing Agent 
 
200 Park Avenue     
    Dreyfus Transfer, Inc. 
New York, NY 10166     
    200 Park Avenue 
 
Sub-Investment Adviser    New York, NY 10166 
 
Fayez Sarofim & Co.    Distributor 
 
Two Houston Center     
    Dreyfus Service Corporation 
Suite 2907     
    200 Park Avenue 
Houston,TX 77010     
    New York, NY 10166 

Telephone Call your financial representative or 1-800-554-4611 
Mail The Dreyfus Premier Family of Funds 
144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
A description of the policies and procedures that the fund uses to determine how to vote 
proxies relating to portfolio securities, and information regarding how the fund voted these 
proxies for the 12-month period ended June 30, 2004, is available through the fund's 
website at http://www.dreyfus.com and on the SEC's website at http://www.sec.gov. The 
description of the policies and procedures is also available without charge, upon request, 
by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0149AR1004

  Dreyfus
U.S. Treasury
Reserves

ANNUAL REPORT October 31, 2004

The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    Letter from the Chairman 
3    Discussion of Fund Performance 
6    Understanding Your Fund's Expenses 
6    Comparing Your Fund's Expenses 
With Those of Other Funds
7    Statement of Investments 
9    Statement of Assets and Liabilities 
10    Statement of Operations 
11    Statement of Changes in Net Assets 
12    Financial Highlights 
14    Notes to Financial Statements 
20    Report of Independent Registered 
    Public Accounting Firm 
21    Important Tax Information 
22    Board Members Information 
24    Officers of the Fund 
FOR MORE INFORMATION
    Back Cover 

  Dreyfus
U.S. Treasury Reserves

The Fund

LETTER FROM THE CHAIRMAN

Dear Shareholder:

We are pleased to present this annual report for Dreyfus U.S.Treasury Reserves, covering the 12-month period from November 1, 2003, through October 31, 2004. 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.

Although the U.S. economy recently has shown signs of weakness, the Federal Reserve Board raised short-term interest rates three times since the beginning of the summer.This shift in monetary policy represents the first increases in short-term rates in more than four years, and many analysts believe that additional increases are likely to follow. As a result, money-market yields have begun to rise from the historically low levels of the past few years.

At times such as these, when market conditions are in a period of transition, we believe it is especially important for investors to stay in close touch with their financial advisors.Your financial advisor can help you rebalance your portfolio in a way that is designed to respond to the challenges and opportunities of today's changing investment environment.

Thank you for your continued confidence and support.

Sincerely,

  Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
November 15, 2004

2

DISCUSSION OF FUND PERFORMANCE

Laurie Carroll, Portfolio Manager

How did Dreyfus U.S. Treasury Reserves perform during the period?

For the 12-month period ended October 31, 2004, the fund's Investor shares produced a 0.42% yield while its Class R shares produced a 0.62% yield. Taking into account the effects of compounding, the fund's Investor shares and Class R shares also produced effective yields of 0.42% and 0.62%, respectively.1

We attribute the fund's performance to low interest rates and low inflation in a gradually recovering economy, which resulted in generally low yields for U.S. Treasury bills and notes. However, yields rose during the second half of the reporting period when the Federal Reserve Board (the "Fed") raised its target for the overnight federal funds rate in three separate moves, increasing it from 1% to 1.75% .

What is the fund's investment approach?

The fund seeks a high level of current income consistent with stability of principal.As a U.S.Treasury money market fund, we attempt to provide shareholders with an investment vehicle that is made up of Treasury bills and notes issued by the U.S.government as well as repurchase agreements with securities dealers, which are backed by U.S.Treasuries.To pursue its goal, the fund invests exclusively in direct obligations of the U.S.Treasury and in repurchase agreements secured by these obligations.

What other factors influenced the fund's performance?

When the reporting period began, the economy already had begun to strengthen, even as labor markets remained sluggish and inflation appeared to stay low. As a result, the Fed left short-term interest rates unchanged at 1% during the final months of 2003, suggesting that it

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

could be "patient" before raising short-term interest rates in the recovering economy.With no rate-hikes imminent, we extended the fund's weighted average maturity to a position we considered slightly longer than average, enabling the fund to capture modestly higher yields from money market instruments toward the longer end of their maturity range. We generally maintained this position through the first quarter of 2004.

In April 2004, however, market conditions began to change. Surging oil and gas prices and unexpectedly strong labor statistics indicated that inflationary pressures might be resurfacing.Accordingly, investors began to revise forward their expectations of the timing of eventual rate-hikes from the Fed, and yields at the longer end of the maturity range began to rise. We adjusted the fund's investment posture to reflect a more defensive posture, reducing its weighted average maturity toward a range that we considered to be in line with industry averages.

Our move to a more neutral weighted average maturity proved to be a prudent one. In late June, the Fed implemented a rate increase of 25 basis points, its first increase of short-term interest rates in more than four years.Two additional rate-hikes, each of 25 basis points, followed, bringing the overnight federal funds rate to 1.75% . As interest rates rose, so did yields of shorter-term money market instruments.

The fund's performance also was influenced by a rising supply of newly issued U.S. Treasury securities during the first half of the reporting period, which were needed to finance a ballooning federal budget deficit. Because more securities were competing for investors' attention, the greater supply of U.S.Treasury securities put downward pressure on yields.

4

What is the fund's current strategy?

As of the end of the reporting period, we have reduced the fund's weighted average maturity to a neutral position relative to industry averages.The fund's weighted average maturity on October 31, 2004, was 25 days, compared to 36 days when the reporting period began.

As of the reporting period's end, approximately 60% of the fund's assets were invested in U.S.Treasury securities and 40% in repurchase agreements. Of course, we intend to continue to monitor economic and market conditions, and we are prepared to adjust the fund's composition and weighted average maturity as conditions evolve.

November 15, 2004

1 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 any other government agency.Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The Fund 5

UNDERSTANDING YOUR FUND'S EXPENSES (Unaudited)

As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.

Review your fund's expenses

The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus U.S.Treasury Reserves from May 1, 2004 to October 31, 2004. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Expenses and Value of a $1,000 Investment     
assuming actual returns for the six months ended October 31, 2004     
    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.52    $ 2.52 
Ending value (after expenses)    $1,002.80    $1,003.80 

COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)

Using the SEC's method to compare expenses

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended October 31, 2004

    Investor Shares    Class R Shares 
Expenses paid per $1,000 †    $ 3.56    $ 2.54 
Ending value (after expenses)    $1,021.62    $1,022.62 

† Expenses are equal to the fund's annualized expense ratio of .70% for Investor shares and .50% for Class R shares;
multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS
October 31, 2004
    Annualized         
    Yield on         
    Date of    Principal     
U.S. Treasury Bills—47.4%    Purchase (%)    Amount ($)    Value ($) 
11/4/2004    1.43    15,000,000    14,998,215 
11/12/2004    1.58    5,000,000    4,997,598 
11/18/2004    1.47    10,000,000    9,993,106 
11/26/2004    1.52    5,000,000    4,994,757 
12/2/2004    1.55    5,000,000    4,993,337 
12/9/2004    1.56    1,000,000    998,362 
12/16/2004    1.63    10,000,000    9,979,650 
12/23/2004    1.57    10,000,000    9,977,539 
1/13/2005    1.85    5,000,000    4,981,344 
1/20/2005    1.76    10,000,000    9,961,167 
Total U.S. Treasury Bills             
(cost $75,875,075)            75,875,075 
 
U.S. Treasury Notes—12.5%             
2.00%, 11/30/2004    1.64    10,000,000    10,002,565 
1.75%, 12/31/2004    1.76    10,000,000    9,999,023 
Total U.S. Treasury Notes             
(cost $20,001,588)            20,001,588 
 
Repurchase Agreements—43.2%         
Goldman Sachs & Co.             
dated 10/29/2004, due 11/1/2004 in the         
amount of $39,070,287 (fully collateralized         
by $9,410,000 U.S. Treasury Bonds         
8%, due 11/15/2021 and $24,926,000         
U.S. Treasury Notes 5.875%, due 11/15/2005,         
value $39,847,100)    1.75    39,064,590    39,064,590 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

    Annualized         
    Yield on         
    Date of    Principal     
Repurchase Agreements (continued)    Purchase (%)    Amount ($)    Value ($) 
Greenwich Capital Markets, Inc.             
dated 10/29/2004, due 11/1/2004 in the             
amount of $30,004,425 (fully collateralized         
by $30,475,000 U.S. Treasury Notes             
4%, due 2/15/2014, value $30,603,063)    1.77    30,000,000    30,000,000 
Total Repurchase Agreements             
(cost $69,064,590)            69,064,590 
 
Total Investments (cost $164,941,253)        103.1%    164,941,253 
 
Liabilities, Less Cash and Receivables        (3.1%)    (4,986,921) 
 
Net Assets        100.0%    159,954,332 

Portfolio Summary (Unaudited) †     
 
    Value (%) 
Repurchase Agreements    59.9 
U.S. Government    43.2 
    103.1 

† Based on net assets.
See notes to financial statements.

8

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2004

    Cost    Value 
Assets ($):         
Investments in securities—         
See Statement of Investments (including         
Repurchase Agreements of $69,064,590)—Note 1(b)    164,941,253    164,941,253 
Cash        71,376 
Interest receivable        153,242 
        165,165,871 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(b)        82,820 
Payable for investment securities purchased        4,981,344 
Dividend payable        141,607 
Payable for shares of Capital Stock redeemed        5,768 
        5,211,539 
Net Assets ($)        159,954,332 
Composition of Net Assets ($):         
Paid-in capital        159,953,501 
Accumulated undistributed investment income—net        831 
Net Assets ($)        159,954,332 

Net Asset Value Per Share         
    Investor Shares    Class R Shares 
Net Assets ($)    77,043,270    82,911,062 
Shares Outstanding    77,042,790    82,910,711 
Net Asset Value Per Share ($)    1.00    1.00 

See notes to financial statements.

The Fund 9

STATEMENT OF OPERATIONS
Year Ended October 31, 2004
Investment Income ($):     
Interest Income    1,797,575 
Expenses:     
Management fee—Note 3(a)    802,388 
Distribution fees (Investor Shares)—Note 3(b)    165,489 
Total Expenses    967,877 
Investment Income—Net, representing net increase     
in net assets resulting from operations    829,698 

See notes to financial statements.

10

STATEMENT OF CHANGES IN NET ASSETS

    Year Ended October 31, 
    2004    2003 
Operations ($):         
Investment income—net    829,698    906,543 
Net realized gain (loss) on investments    —    831 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    829,698    907,374 
Dividends to Shareholders from ($):         
Investment income—net:         
Investor shares    (343,668)    (466,429) 
Class R shares    (486,030)    (440,114) 
Total Dividends    (829,698)    (906,543) 
Capital Stock Transactions ($1.00 per share):     
Net proceeds from shares sold:         
Investor shares    82,157,828    86,938,807 
Class R shares    153,742,606    213,811,534 
Dividends reinvested:         
Investor shares    331,734    460,432 
Class R shares    74,307    7,004 
Cost of shares redeemed:         
Investor shares    (97,433,041)    (85,362,778) 
Class R shares    (131,203,115)    (219,368,808) 
Increase (Decrease) in Net Assets         
from Capital Stock Transactions    7,670,319    (3,513,809) 
Total Increase (Decrease) in Net Assets    7,670,319    (3,512,978) 
Net Assets ($):         
Beginning of Period    152,284,013    155,796,991 
End of Period    159,954,332    152,284,013 
Undistributed investment income—net    831    — 

See notes to financial statements.

The Fund 11

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    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .004    .005    .012    .046    .053 
Net realized and unrealized                     
gain (loss) on investments    —    —    —    .002    — 
Total from Investment Operations    .004    .005    .012    .048    .053 
Distributions:                     
Dividends from investment income—net    (.004)    (.005)    (.012)    (.046)    (.053) 
Dividends from net realized                     
gain on investments    —    —    —    (.002)    — 
Total Distributions    (.004)    (.005)    (.012)    (.048)    (.053) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .42    .51    1.23    4.66    5.42 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .70    .70    .70    .70    .70 
Ratio of net investment income                     
to average net assets    .42    .51    1.20    4.25    5.28 
Net Assets, end of period ($ x 1,000)    77,043    91,987    89,950    45,969    34,482 

See notes to financial statements.

12
        Year Ended October 31,     
Class R Shares    2004    2003    2002    2001    2000 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .006    .007    .014    .048    .055 
Net realized and unrealized                     
gain (loss) on investments    —    —    —    .002    — 
Total from Investment Operations    .006    .007    .014    .050    .055 
Distributions:                     
Dividends from investment income—net    (.006)    (.007)    (.014)    (.048)    (.055) 
Dividends from net realized                     
gain on investments    —    —    —    (.002)    — 
Total Distributions    (.006)    (.007)    (.014)    (.050)    (.055) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    .62    .72    1.43    4.88    5.64 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .50    .50    .50    .50    .50 
Ratio of net investment income                     
to average net assets    .63    .72    1.43    4.95    5.49 
Net Assets, end of period ($ x 1,000)    82,911    60,297    65,847    101,909    591,466 

See notes to financial statements.

The Fund 13

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 sixteen 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 direct obligations of U.S.Treasury and repurchase agreements secured by these obligations. The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser.The Manager is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").

Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares.The fund is authorized to issue 1 billion shares of $.001 par value Capital Stock in each of the following classes of shares: Investor and Class R. Investor shares are sold primarily to retail investors and bear a distribution fee. Class R shares are sold primarily to bank trust departments and other financial service providers (including Mellon 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. Income, expenses (other expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

14

(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 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 accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Cost of investments represents amortized cost.

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 15

NOTES TO FINANCIAL STATEMENTS (continued)

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.

(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, if any, 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.

At October 31, 2004, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The tax character of all distributions paid to shareholders during the fiscal periods ended October 31, 2004 and October 31, 2003 was all ordinary income.

During the period ended October 31, 2004, as a result of permanent book to tax differences, the fund decreased accumulated net realized gain (loss) on investments by $831 and increased accumulated undistributed investment income-net by the same amount. Net assets were not affected by this reclassification.

At October 31, 2004, 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).

16

NOTE 2—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 based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2004, the fund did not borrow under the line of credit.

NOTE 3—Investment Management Fee and Other Transactions with Affiliates:

(a) 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 Company,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

The Fund 17

NOTES TO FINANCIAL STATEMENTS (continued)

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) 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. During the period October 31, 2004, Investor shares were charged $165,489 pursuant to the Plan.

Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of majority of those Directors who are not "interested persons" of the Company and who have no direct or indirect financial interest in the operation of or in any agreement related to the Plan.

The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $69,598 and Rule 12b-1 distribution plan fees $13,222.

NOTE 4—Legal Matters:

Two class actions have been filed against Mellon Financial,Mellon Bank, N.A., Dreyfus, Founders Asset Management LLC and the directors of all or substantially all of the Dreyfus funds, on behalf of a purported class

18

and derivatively on behalf of said funds, alleging violations of the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the common law. The complaints alleged, among other things, (i) that 12b-1 fees and directed brokerage were improperly used to pay brokers to recommend Dreyfus funds over other funds, (ii) that such payments were not disclosed to investors, (iii) that economies of scale and soft-dollar benefits were not passed on to investors and (iv) that 12b-1 fees charged to certain funds that were closed to new investors were also improper.The complaints sought compensatory and punitive damages, rescission of the advisory contracts and an accounting and restitution of any unlawful fees, as well as an award of attorneys' fees and litigation expenses. On April 22, 2004, the actions were consolidated under the caption In re Dreyfus Mutual Funds Fee Litigation, and a consolidated amended complaint was filed on September 13,2004.While adding new parties and claims under state and federal law, the allegations in the consolidated amended complaint essentially track the allegations in the prior complaints pertaining to 12b-1 fees, directed brokerage, soft dollars and revenue sharing. Dreyfus and the funds believe the allegations to be totally without merit and intend to defend the action vigorously.

Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Dreyfus nor the Dreyfus funds believe that any of the pending actions will have a material adverse effect on the Dreyfus funds or Dreyfus' ability to perform its contracts with the Dreyfus funds.

The Fund 19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004, and the related statement of operations for the year then ended, the statement 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 the standards of the Public Company Accounting Oversight Board (United States).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, 2004, by correspondence with the custodian and bro-ker.As to securities purchased but not yet received, we performed other appropriate audit 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, 2004, 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 U.S. generally accepted accounting principles.

New York, New York
December 13, 2004

20

IMPORTANT TAX INFORMATION (Unaudited)

For State individual income tax purposes, the fund hereby designates 58.91% of the ordinary income dividends paid during its fiscal year ended October 31, 2004 as attributable to interest income from direct obligations of the United States of America. 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 21

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (61) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Levcor International, Inc., an apparel fabric processor, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Azimuth Trust, an institutional asset management firm, Member of Board of Managers and 
Advisory Board 
No. of Portfolios for which Board Member Serves: 186 
——————— 
James Fitzgibbons (70) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Davidson Cotton Company (1998-2002) 
No. of Portfolios for which Board Member Serves: 23 
——————— 
J. Tomlinson Fort (76) 
Board Member (1987) 
Principal Occupation During Past 5 Years: 
• Retired; Of Counsel, Reed Smith LLP (1998-2004) 
Other Board Memberships and Affiliations: 
• Allegheny College, Emeritus Trustee 
• Pittsburgh Ballet Theatre,Trustee 
• American College of Trial Lawyers, Fellow 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Kenneth A. Himmel (58) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 23 

22

Stephen J. Lockwood (57) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
• Chairman of the Board and CEO, LDG Reinsurance Corporation (1977-2000) 
Other Board Memberships and Affiliations: 
• BDML Holdings, an insurance company, Chairman of the Board 
• Affiliated Managers Group, an investment management company, Director 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Roslyn Watson (55) 
Board Member (1994) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Centurion Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Benaree Pratt Wiley (58) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,The Partnership, an organization dedicated to increasing the representa- 
tion of African Americans in positions of leadership, influence and decision-making in 
Boston, MA (1991-present) 
Other Board Memberships and Affiliations: 
• Boston College, Associate Trustee 
• The Greater Boston Chamber of Commerce, Director 
• Mass. Development, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Advisory Board 
No. of Portfolios for which Board Member Serves: 23 
——————— 
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o 
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166.Additional information about the Board 
Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of 
charge by calling this toll free number: 1-800-554-4611. 
Ruth Marie Adams, Emeritus Board Member 
Francis P. Brennan, Emeritus Board Member 

The Fund 23

OFFICERS OF THE FUND (Unaudited)

STEPHEN E. CANTER, President since March 2000.

Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 59 years old and has been an employee of the Manager since May 1995.

STEPHEN R. BYERS, Executive Vice President since November 2002.

Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 93 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 51 years old and has been an employee of the Manager since January 2000. Prior to joining the Manager, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C.

MARK N. JACOBS, Vice President since March 2000.

Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since June 1977.

STEVEN F. NEWMAN, Secretary since March 2000.

Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since July 1980.

JAMES BITETTO, Assistant Secretary since October 2004.

Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 4 investment companies (comprised of 24 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since December 1996.

JEFF PRUSNOFSKY, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 26 investment companies (comprised of 88 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since October 1990.

MICHAEL A. ROSENBERG, Assistant Secretary since March 2000.

Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1991.

JAMES WINDELS, Treasurer since November 2001.

Director – Mutual Fund Accounting of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since August 2003.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 26 investment companies (comprised of 101 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since September 1982.

24

ERIK D. NAVILOFF, Assistant Treasurer since December 2002.

Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 19 investment companies (comprised of 74 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Manager since November 1992.

ROBERT S. ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager – Money Market Funds of the Manager, and an officer of 39 investment companies (comprised of 85 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1988.

ROBERT SVAGNA, Assistant Treasurer since December 2002.

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 27 investment companies (comprised of 106 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1990.

KENNETH J. SANDGREN, Assistant Treasurer since November 2001.

Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 202 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since June 1993.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (94 investment companies, comprising 202 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 47 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 89 investment companies (comprised of 197 portfolios) managed by the Manager. He is 33 years old and has been an employee of the Distributor since October 1998.

The Fund 25

For More    Information 
 
Dreyfus    Transfer Agent & 
U.S. Treasury Reserves    Dividend Disbursing Agent 
200 Park Avenue    Dreyfus Transfer, Inc. 
New York, NY 10166    200 Park Avenue 
Manager    New York, NY 10166 
The Dreyfus Corporation    Distributor 
200 Park Avenue    Dreyfus Service Corporation 
New York, NY 10166    200 Park Avenue 
Custodian    New York, NY 10166 
Mellon Bank, N.A.     
One Mellon Bank Center     
Pittsburgh, PA 15258     

Telephone 1-800-645-6561 
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 
E-mail Send your request to info@dreyfus.com 
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com 
The fund files its complete schedule of portfolio holdings with the Securities and Exchange 
Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The 
fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be 
reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on 
the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 
Information regarding how the fund voted proxies relating to portfolio securities for the 12- 
month period ended June 30, 2004, is available on the SEC's website at http://www.sec.gov 
and without charge, upon request, by calling 1-800-645-6561. 

© 2004 Dreyfus Service Corporation 0326AR1004

Item 2. Code of Ethics.

The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There have been no amendments to, or waivers in connection with, the Code of Ethics during the period covered by this Report.

Item 3. Audit Committee Financial Expert.

The Registrant's Board has determined that Joseph S. DiMartino, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC"). Joseph S. DiMartino is "independent" as defined by the SEC for purposes of audit committee financial expert determinations.

Item 4. Principal Accountant Fees and Services

(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $362,900 in 2003 and $368,900 in 2004.

(b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $93,750 in 2003 and $5,417 in 2004. These services consisted of security counts required by Rule 17f-2 under the Investment Company Act of 1940, as amended.

The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $0 in 2003 and $0 in 2004.

Note: For the second paragraph in each of (b) through (d) of this Item 4, certain of such services were not pre-approved prior to May 6, 2003, when such services were required to be pre-approved. On and after May 6, 2003, 100% of all services provided by the Auditor were pre-approved as required. For comparative purposes, the fees shown assume that all such services were pre-approved, including services that were not pre-approved prior to the compliance date of the pre-approval requirement.

(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning ("Tax Services") were $49,557 in 2003 and $28,267 in 2004. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or

administrative developments, (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held, and (iv) determination of Passive Foreign Investment Companies.

The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates which required pre-approval by the Audit Committee were $0 in 2003 and $0 in 2004.

(d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $0 in 2003 and $0 in 2004. These services consisted of a review of the Registrant's anti-money laundering program.

The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) and (c) of this Item, which required pre-approval by the Audit Committee were $0 in 2003 and $0 in 2004.

Audit Committee Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates without specific case-by-case consideration. Pre-approval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.

Non-Audit Fees. The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $1,250,000 in 2003 and $2,800,000 in 2004.

Auditor Independence. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates which were not pre-approved (not requiring pre-approval) is compatible with maintaining the Auditor's independence.

Item 5. Audit Committee of Listed Registrants.

Not applicable. [CLOSED-END FUNDS ONLY]

Item 6. Schedule of Investments.

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable. [CLOSED-END FUNDS ONLY]

Item 8. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.

Not applicable. [CLOSED-END FUNDS ONLY]

Item 9. Submission of Matters to a Vote of Security Holders.

The Registrant has a Nominating Committee (the "Committee"), which is responsible for selecting and nominating persons for election or appointment by the Registrant's Board as Board members. The Committee has adopted a Nominating Committee Charter (the "Charter"). Pursuant to the Charter, the

Committee will consider recommendations for nominees from shareholders submitted to the Secretary of the Registrant, c/o The Dreyfus Corporation Legal Department, 200 Park Avenue, 8th Floor West, New York, New York 10166. A nomination submission must include information regarding the recommended nominee as specified in the Charter. This information includes all information relating to a recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Board members, as well as information sufficient to evaluate the factors to be considered by the Committee, including character and integrity, business and professional experience, and whether the person has the ability to apply sound and independent business judgment and would act in the interests of the Registrant and its shareholders.

Nomination submissions are required to be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Committee.

Item 10. Controls and Procedures.

(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the Registrant's most recently ended fiscal half-year that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 11. Exhibits.

(a)(1) Code of ethics referred to in Item 2.

(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.

(a)(3) Not applicable.

(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

The Dreyfus/Laurel Funds, Inc. (see Attachment A)

By:    Stephen E. Canter 
    Stephen E. Canter 
President
 
Date:    December 28, 2004 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:    Stephen E. Canter 
    Stephen E. Canter 
    Chief Executive Officer 
 
Date:    December 28, 2004 
 
By:    James Windels 
James Windels
    Chief Financial Officer 
 
Date:    December 28, 2004 

EXHIBIT INDEX

(a)(1) Code of ethics referred to in Item 2.

(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)

(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)